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: June 30
Date of reporting period: 07/01/06 - 12/31/06
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)
Unrestricted Series
Greater Western New York Series
Semi-Annual Report
December 31, 2006
(Unaudited)
Management's Discussion of Fund Performance
February 27, 2007
Dear Fellow Shareholders:
We are very proud to present the December 2006 Semi-Annual Report of the
Bullfinch Fund, Inc. This report contains the unaudited financial statements
for both the Unrestricted Series and the Western New York Series.
When history reviews the markets of 2006, the third week of July will loom
large. Some may even consider it a watershed turning point in this particular
market cycle. The third week of July saw the peak in oil prices. Since that
time, we've seen oil fall from hovering around $75 a barrel to hovering around
$50-$55 a barrel. Not that this was a surprising move. Indeed, many felt no
fundamental reason existed for oil's surge in the first half of the year. While
some, like us, anticipated a peak in oil, the peak came with little fanfare but
with broad and almost immediate implications.
First, and most obvious, along with the peak in oil prices, we also saw the
peak in oil and energy-related stocks. As a result, market leadership began to
shift to long neglected industry sectors - including technology. With the
cessation of rising oil prices, the talk of inflation eased (although not
officially, according to the Fed). Today we have an inverted yield curve. This
tells us investors believe the inflation problem will resolve itself shortly.
Finally, diminishing inflation fears have led to a cessation of rising interest
rates. Not only did the Fed take a break, (although it continues to threaten to
resume rate hikes), but bond investors felt the long term direction of rates
would be down. In fact, the dramatically inverted yield curve makes bond
investing fairly speculative.
Let's put this all together now. Start with oil prices stabilizing at a lower
price level. Then add steady to possibly falling interests. Finally, mix in
reduced inflation fears. What are we left with? The possibility of a very
strong and sustained rise in equity markets. So, the natural question is: "Have
we already experienced this market rise and, if so, what should we do?"
Remember, we know (and we want you to know) past performance can never
guarantee future performance. Still, the combination of the current fundamental
strength of the economy with the positive fundamental changes in oil prices,
inflation and interest rates suggests a rosy forecast for equity markets in the
near-term.
The final six months of the calendar year of 2006 saw a dramatic turnaround in
the performance of the Unrestricted Series, due mostly for the reasons stated
above. The Greater Western New York Series, on the other hand, saw the bulk of
its annual returns gained in the first half of the year. As a result, it had
a less spectacular second half as investors apparently secured those gains by
selling stock. As usual, the smaller stocks in this series have historically
tended to be heavily influenced by liquidity pressure both on the upside and on
the downside. We experienced the upside benefits in the first six months of the
calendar year and the flipside in the final six months of the year.
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 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
December 31, 2006
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006 (UNAUDITED)
ASSETS
Investments in Securities, at Fair Value,
identified Cost of $2,773,377 $ 3,542,426
Cash 1,531,518
Accrued Interest and Dividends 4,270
Prepaid Expenses 14,153
Due from Shareholder Transaction (3,150)
Total Assets $ 5,089,217
LIABILITIES
Accounts payable 10,610
NET ASSETS
Net assets (equivalent to $ 14.11 based on 359,933.837
shares of stock outstanding) $ 5,078,607
COMPOSITION OF NET ASSETS
Shares of Common Stock - Par Value $.01;
10,000,000 Shares Authorized,
359,933.837 Shares Outstanding $ 4,566,641
Accumulated Net Investment Loss (257,083)
Net Unrealized Appreciation on Investments 769,049
Net Assets at December 31, 2006 $ 5,078,607
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
DECEMBER 31, 2006 (UNAUDITED)
Historical
Common Stocks - 100% Shares Cost Value
Medical Products and Supplies - 17.9%
Biomet Inc. 4,500 $ 146,144 $ 185,715
Johnson & Johnson 2,400 136,714 158,448
Medtronic Inc. 3,000 147,940 160,530
Polymedica Corporation 3,200 83,193 129,312
513,991 634,005
Computers - Software - 14.8%
Microsoft Corp. 6,200 151,626 185,132
Oracle 11,000 119,262 188,540
Synopsis, Inc. 5,600 115,459 149,688
386,347 523,360
Banking & Finance - 10.6%
FIserv, Inc. 3,000 75,229 157,260
National City Corp. 2,200 55,431 80,432
NY Community Bancorp. 8,500 142,304 136,850
272,964 374,542
Electrical Equipment - 8.4%
Corning Inc. 7,300 71,366 136,583
General Electric Co. 4,300 125,562 160,003
196,928 296,586
Computers - Networking - 6.2%
Cisco Systems, Inc. 3,800 55,371 103,854
Spectralink Corp. 13,400 115,996 115,240
171,367 219,094
Commercial Services - 6.0%
Affiliated Computer Services Inc. 2,700 134,417 131,868
Paychex, Inc. 2,000 64,090 79,080
198,507 210,948
Automotive - 4.5%
Gentex Corp. 10,300 147,681 160,268
Utilities - Natural Resources - 4.4%
Chesapeake Utilities Corp. 3,100 57,194 95,015
NiSource Inc. 2,500 46,325 60,250
103,519 155,265
Paper & Related Products - 4.2%
Avery Dennison Corp. 2,200 114,734 149,446
Office Equipment - 3.8%
Xerox Corp. 8,000 118,582 135,600
Insurance -3.1%
Gallagher Arthur J & Co. 3,700 99,355 109,335
Pharmaceuticals - 3.0%
Mylan Laboratories Inc. 5,400 110,246 107,784
Food & Beverages - 2.8%
Sensient Technologies 4,000 80,550 98,400
Semiconductors - 2.3%
Intel Corp. 4,100 80,666 83,025
Computers - Hardware - 2.3%
Dell Corp. 3,250 66,364 81,543
Instruments - 2.1%
Checkpoint Systems, Inc. 3,700 32,717 74,740
Retail - General - 1.8%
Dollar General 4,052 53,029 65,075
Shoes & Leather - 1.8%
Genesco Inc. 1,700 25,830 63,410
Total Investments in Securities $ 2,773,377 $ 3,542,426
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JULY 1, 2006 TO DECEMBER 31, 2006 AND
FOR THE YEARS ENDED JUNE 30, 2006, 2005 AND 2004 (UNAUDITED)
12/2006 6/2006 6/2005 6/2004
INVESTMENT INCOME:
Dividends $ 59,575 $ 87,909 $ 70,818 $ 45,850
EXPENSES:
Management fees 25,499 46,736 41,125 35,915
Legal and Professional 5,803 12,113 10,562 9,048
Director's Fees 605 1,200 1,200 1,200
D&O/E&O 687 11,340 4,482 -
Fidelity Bond 1,058 936 936 1,400
Taxes 245 518 455 450
Telephone 95 234 289 226
Registration Fees 481 969 1,134 1,024
Custodian Fees 2,772 2,751 2,107 2,055
Dues and Subscriptions 1,360 1,926 1,698 2,162
Total expense 38,605 78,723 63,988 53,480
Net investment income (loss) 20,970 9,186 6,830 (7,630)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss)
from securities transactions 110,788 236,874 147,001 102,654
Unrealized appreciation
(depreciation) during the period 302,411 (197,111) (45,245) 397,468
Net gain (loss) on investments 413,199 39,763 101,756 500,122
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $434,169 $ 48,949 $108,586 $492,492
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD JULY 1, 2006 TO DECEMBER 31, 2006 AND
FOR THE YEARS ENDED JUNE 30, 2006, 2005 AND 2004 (UNAUDITED)
12/2006 6/2006 6/2005 6/2004
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 20,970 $ 9,186 $ 6,830 $ (7,630)
Net realized gains (loss)
from securities transactions 110,788 236,874 147,001 102,654
Net change in unrealized
appreciation of investments 302,411 (197,111) (45,245) 397,468
Increase (decrease) in net
assets from operations 434,169 48,949 108,586 492,492
CAPITAL SHARE TRANSACTIONS:
Sales 266,167 535,360 473,324 1,026,695
Redemptions (119,275)(181,377)(419,589) (124,930)
Total capital share
Transactions 146,892 353,983 53,735 901,765
Increase in net assets 581,061 402,932 162,321 1,394,257
NET ASSETS:
Beginning of period $ 4,497,546 4,094,614 3,932,293 2,538,036
End of period $ 5,078,607 4,497,546 4,094,614 3,932,293
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
1. The Organization
The Unrestricted Series (the "Series") is a series of the Bullfinch Fund,
Inc. (the "Fund"), which was organized as a Maryland corporation registered
under the Investment Company Act of 1940 as an open-end 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.
2. 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.
Federal 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 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 are being 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 long term
capital gains of $103,035 to its shareholders on June 29, 2004, in the form of
stock dividends equal to 7,145.311 shares of stock. The Series made a
distribution of its long term capital gains of $17,260 to its shareholders on
December 28, 2004 in the form of stock dividends equal to 1,137.790 shares of
stock. The Series made a distribution of its long term capital gains of
$234,457 and ordinary income of $6,615 to its shareholders on June 29, 2005, in
the form of stock dividends equal to 17,183.492 shares of stock. The Series
made a distribution of its long term capital gains of $18,898 to its
shareholders on December 28, 2005 in the form of stock dividends equal to
1,338.392 shares of stock. The Series made a distribution of its long term
capital gains of $242,509 and ordinary income of $9,254 to its shareholders on
June 28, 2006, in the form of stock dividends equal to 19,233.233 shares of
stock. The Series made a distribution of its long term capital gains of
$125,765 and ordinary income of $24,454 to its shareholders on December 27,
2006, in the form of stock dividends equal to 10,586.286 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 or 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.
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 could differ from those estimates.
3. Investments
For the period July 1, 2006 to December 31, 2006, the Series purchased
$874,577 common stock. During the same period, the Series sold $1,004,217 of
common stock.
For the year ended June 30, 2006, the Series purchased $677,002 of common
stock. During the same period, the Series sold $1,369,364 of common stock.
For the year ended June 30, 2005, the Series purchased $853,288 of common
stock. During the same period, the Series sold $709,374 of common stock.
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.
At December 31, 2006, the gross unrealized appreciation for all securities
totaled $780,270 and the gross unrealized depreciation for all securities
totaled $11,221, or a net unrealized appreciation of $769,049. The aggregate
cost of securities for federal income tax purposes at December 31, 2006 was
$2,773,377.
At June 30, 2006, the gross unrealized appreciation for all securities
totaled $603,934 and the gross unrealized depreciation for all securities
totaled $137,296, or a net unrealized appreciation of $466,638. The aggregate
cost of securities for federal income tax purposes at June 30, 2006 was
$2,792,229.
At June 30, 2005 the gross unrealized appreciation for all securities
totaled $828,871 and the gross unrealized depreciation for all securities
totaled $165,121, or a net unrealized appreciation of 663,750. The aggregate
cost of securities for federal income tax purposes at June 30, 2005 was
$3,247,717.
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.
4. 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 Series' portfolio which includes selecting the 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 period from July 1, 2006 to December 31, 2006 and the fiscal
years ended June 30, 2006, 2005 and 2004, the fund paid investment advisory
fees of $25,499, $46,736, $41,125 and $35,915 respectively.
On December 31, 2006, the fund had $4,516 included in accounts payable, as
owed to Carosa, Stanton & DePaolo Asset Management, LLC.
5. 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, 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 Distribution June 29, 2004 7,145.311 103,035
Balance at June 30, 2004 271,338.635 $ 3,332,819
Shares sold during 2005 32,575.497 473,324
Shares redeemed during 2005 (29,211.603) (419,589)
Reinvestment of Distributions,
December 28, 2004 1,137.790 17,260
Reinvestment of Distributions, June 29, 2005 17,183.492 241,072
Balance at June 30, 2005 293,023.811 $ 3,644,886
Shares sold during 2006 37,416.865 535,360
Shares redeemed during 2006 (12,537.319) (181,377)
Reinvestment of Distributions,
December 28, 2005 1,338.392 18,898
Reinvestment of Distributions, June 28, 2006 19,233.233 251,763
Balance at June 30, 2006 338,474.982 $4,269,530
Shares sold during period 19,219.345 266,167
Shares redeemed during period (8,346.776) (119,275)
Reinvestment of Distributions,
December 27, 2006 10,586.286 150,219
Balance at December 31, 2006 359,933.837 $ 4,566,641
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/SUPPLEMENTAL DATA FOR A SHARE
OUTSTANDING FOR THE PERIOD FROM JULY 1 TO DECEMBER 31, 2006 AND
FOR THE YEARS ENDED JUNE 30, 2006, 2005, 2004 (UNAUDITED)
12/2006 6/2006 6/2005 6/2004
NET ASSET VALUE, beginning of period $13.29 $13.97 $14.49 $12.69
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.06 0.03 0.02 (0.03)
Net gain (loss) on securities both
realized and unrealized 0.33 (1.56) (1.47) 1.44
Total from investment operations 0.39 (1.53) (1.45) 1.41
DISTRIBUTIONS
Dividends 0.43 0.85 0.93 0.39
NET ASSET VALUE, end of period $14.11 $13.29 $13.97 $14.49
NET ASSETS, end of period $5,078,607 $4,497,546 $4,094,614 $3,932,293
Actual** Actual Actual Actual
RATIO OF EXPENSES TO AVERAGE NET ASSETS* 0.8%** 1.8 % 1.6 % 1.6 %
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS* 0.4%** 0.2% 0.2% (0.2)%
PORTFOLIO TURNOVER RATE* 18.2%** 15.3% 18.2% 22.6%
TOTAL RETURN 9.4% 1.3% 2.8% 17.4%
*Per share amounts calculated using the average shares method
** The ratios presented were calculated using operating data for the six-month
period from July 1, 2006 to December 31, 2006
GREATER WESTERN NEW YORK SERIES
(A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 2006
(UNAUDITED)
GREATER WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006(UNAUDITED)
ASSETS
Investments in securities, at fair value, identified cost $385,775 $ 553,348
Cash 91,061
Accrued interest and dividends 482
Prepaid expenses 2,692
Total assets $ 647,583
LIABILITIES
Accounts payable 2,097
NET ASSETS
Net assets (equivalent to $13.34 per share based on
48,395.971 shares of stock outstanding) $ 645,486
COMPOSITION OF NET ASSETS
Shares of common Stock - Par Value $.01;
10,000,000 Shares Authorized,
48,395.971 Shares Outstanding $ 507,280
Accumulated net investment loss (29,367)
Net unrealized (depreciation) on investments 167,573
Net assets at December 31, 2006 $ 645,486
GREATER WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
DECEMBER 31, 2006 (UNAUDITED)
Common Stocks - 100% Historical
Shares Cost Value
Medical Products & Supplies - 15.1%
Bausch & Lomb Inc. 600 $ 31,473 $ 31,236
Greatbatch Technologies 1,200 31,766 32,304
Johnson & Johnson 300 17,108 19,806
80,347 83,346
Electrical Equipment - 11.5%
Corning, Inc. 1,000 7,874 18,710
General Electric Co. 550 15,917 20,466
Ultralife Batteries, Inc. 2,200 12,432 24,222
36,223 63,398
Automotive - 5.8%
Monro Muffler Brake Inc. 500 9,880 17,550
Pep Boys - Manny, Moe & Jack 1,000 14,532 14,860
24,412 32,410
Commercial Services - 5.5%
Harris Interactive, Inc. 2,600 8,918 13,104
Paychex, Inc. 450 11,885 17,793
20,803 30,897
Electronics Components - 5.0%
Astronics Corp. 1,431 7,065 24,513
IEC Electronics Corp. 2,000 1,530 3,000
8,595 27,513
Aerospace - 4.8%
Moog, Inc. Class A 337 2,926 12,870
Northrop Grumman 200 2,536 13,540
5,462 26,410
Real Estate & Related - 4.7%
Home Properties Inc. 200 5,624 11,854
Sovran Self Storage 250 6,892 14,320
12,516 26,174
Railroads - 4.3%
Genesee & Wyoming Class A 900 2,522 23,616
Food & Beverages - 4.2%
Constellation Brands Inc. 800 5,018 23,216
Computers - Software - 4.2%
Oracle 1,300 16,642 22,282
Veramark Tech., Inc. 1,050 6,181 840
22,823 23,122
Photographic Equipment and Suppliers - 3.7%
Eastman Kodak Co. 800 20,746 20,640
Utilities - Natural Resources - 3.5%
National Fuel Gas Co. 500 11,250 19,270
Office Equipment - 3.4%
Xerox Corp. 1,100 18,570 18,645
Steel - 3.2%
Gibraltar Industries Inc. 750 8,975 17,632
Computers - Services - 3.2%
Computer Task Group Inc. 3,700 15,799 17,575
Metal Fabrication & Hardware - 2.9%
Graham Corp. 1,200 4,804 15,745
Computers - Networking - 2.8%
Performance Technologies, Inc. 2,600 22,250 15,392
Retail - Specialty - 2.4%
Christopher & Banks Corp. 700 12,105 13,062
Airlines - 2.3%
Southwest Airlines Co. 850 15,105 13,022
Computers - Distributors - 2.2%
Ingram Micro 600 10,909 12,246
Retail - General - 1.9%
Dollar General 650 9,065 10,439
Computers - Hardware - 1.5%
Dell Corporation 350 10,734 8,782
Packaging & Containers - 1.4%
Mod Pac Corporation 715 3,461 7,865
Machinery - 0.4%
Columbus McKinnon Corp. 100 2,344 2,102
Industrial Materials - 0.1%
Servotronics, Inc. 100 937 829
Total Investments in Securities $ 385,775 $ 553,348
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JULY 1, 2006 TO DECEMBER 31, 2006 AND
FOR THE YEARS ENDED JUNE 30, 2006, 2005 AND 2004 (UNAUDITED)
12/2006 6/2006 6/2005 6/2004
INVESTMENT INCOME:
Dividends $ 4,749 $ 8,146 $ 5,710 $ 4,786
EXPENSES:
Management Fees 3,967 7,292 6,265 5,591
Reimbursement of Management Fees - (2,520) (1,302) (1,767)
Legal and Professional 721 1,515 1,224 1,049
Director's Fees 605 1,200 1,200 1,200
Fidelity Bond 117 104 104 155
D&O/E&O 76 1,260 498 -
Taxes 227 450 433 250
Telephone 95 234 289 226
Registration Fees 118 418 200 270
Custodian Fees 224 186 99 705
Dues and Subscription 561 1,126 898 1,362
Total expense 6,711 11,265 9,908 9,041
Net investment income (loss) (1,962) (3,119) (4,198) (4,255)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from
securities transactions (325) 37,655 (155) (136)
Unrealized appreciation (depreciation)
during the period 9,172 23,218 32,113 95,527
Net gain (loss) on investments 8,847 60,873 31,958 95,391
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,885 $ 57,754 $ 27,760 $ 91,136
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JULY 1, 2006 TO DECEMBER 31, 2006 AND
FOR THE YEARS ENDED JUNE 30, 2006, 2005, AND 2004 (UNAUDITED)
12/2006 6/2006 6/2005 6/2004
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ (1,962) $(3,119) $(4,198) $(4,255)
Net realized (loss) from
securities transactions (325) 37,655 (155) (136)
Net change in unrealized appreciation
(depreciation) of investments 9,172 23,218 32,113 95,527
Increase (decrease) in net assets
from operations 6,885 57,754 27,760 91,136
CAPITAL SHARE TRANSACTIONS:
Sales 7,500 28,003 34,779 41,948
Redemptions - (2,907) (4,870) (9,822)
Total capital share transactions 7,500 25,096 29,909 32,126
Increase in net assets 14,385 82,850 57,669 123,262
NET ASSETS:
Beginning of period 631,101 548,251 490,582 367,320
End of period $645,486 631,101 548,251 490,582
GREATER WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
1. The Organization
The Greater Western New York Series (the "Series") is a series of 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.
2. 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.
Federal 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 are being amortized over a
60-month period.
Distributions to Shareholders - Distributions paid to shareholders are
recorded on the ex-dividend date. The Series made a distribution of its long
term capital gains of $42,105 to its shareholders on June 28, 2006, in the
form of stock dividends equal to 3,243.841 shares of stock. The Series made a
distribution of its long term capital gains of $3,850 to its shareholders on
December 27, 2006, in the form of stock dividends equal to 266.461 shares of
stock. There were no distributions made during the fiscal years ended June 30,
2005 or 2004.
Other - The Series follows industry practice and records security
transactions on the trade date. The specific identification method is used for
determining gains or 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.
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 could differ from those estimates.
3. Investments
For the period from July 1 to December 31, 2006, the Series purchased
$13,550 of common stock. During the same period, the Series sold $528 of common
stock.
For the year ended June 30, 2006, the Series purchased $92,681 of common
stock. During the same period, the Series sold $94,535 of common stock.
For the year ended June 30, 2005, the Series purchased $54,053 of common
stock. During the same period, the Series sold $23,356 of common stock.
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.
At December 31, 2006, the gross unrealized appreciation for all securities
totaled $ 184,501 and the gross unrealized depreciation for all securities
totaled $16,928, or a net unrealized appreciation of $167,573. The aggregate
cost of securities for federal income tax purposes at December 31, 2006 was
$385,775.
At June 30, 2006, the gross unrealized appreciation for all securities
totaled $185,791 and the gross unrealized depreciation for all securities
totaled $27,391, or a net unrealized appreciation of $158,400. The aggregate
cost of securities for federal income tax purposes at June 30, 2006 was
$373,078.
At June 30, 2005, the gross unrealized appreciation for all securities
totaled $176,655 and the gross unrealized depreciation for all securities
totaled $41,472, or a net unrealized appreciation of $135,183. The aggregate
cost of securities for federal income tax purposes at June 30, 2005 was
$337,278.
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.
4. 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 period from July 1, 2006 to December 31, 2006 and during the
fiscal years ended June 30, 2006, 2005, and 2004 the fund paid investment
advisory fees of $3,967, $4,772, $4,963, and $3,824 respectively.
On December 31, 2006 the fund had $681 included in accounts payable, as
owed to Carosa, Stanton & DePaolo Asset Management, LLC.
5. 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, 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
Shares sold during 2005 2,801.149 34,779
Shares redeemed during 2005 (382.933) (4,870)
Balance at June 30, 2005 42,573.698 $ 428,729
Shares sold during 2006 1,951.828 28,003
Shares redeemed during 2006 (204.415) (2,907)
Reinvestment of Distributions, June 28, 2006 3,243.841 42,105
Balance at June 30, 2006 47,564.952 $ 495,930
Shares sold during period 564.558 7,500
Shares redeemed during period - -
Reinvestment of Distributions,
December 27, 2006 266.461 3,850
Balance at December 31, 2006 48,395.971 $ 507,280
GREATER WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/
SUPPLEMENTAL DATA FOR A SHARE
OUTSTANDING FOR THE PERIOD FROM JULY 1 TO DECEMBER 31, 2006 AND
FOR THE YEARS ENDED JUNE 30, 2006, 2005 AND 2004 (UNAUDITED)
12/2006 6/2006 6/2005 6/2004
NET ASSET VALUE, beginning of period $ 13.27 $ 12.88 $ 12.22 $ 9.80
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.04) (0.07) (0.10) (0.11)
Net gain (loss) on securities both
realized and unrealized 0.03 (0.49) 0.76 2.53
Total from investment operations (0.01) (0.56) 0.66 2.42
DISTRIBUTIONS
Dividends 0.08 0.95 - -
NET ASSET VALUE, end of period $ 13.34 $13.27 $12.88 $ 12.22
NET ASSETS, end of period $645,486 $631,101 $548,251 $490,582
Actual** Actual Actual Actual
RATIO OF EXPENSES TO AVERAGE NET ASSETS* 1.1%** 1.9% 2.0% 2.0%
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.1%** 2.4% 2.2% 2.4%
BEFORE REIMBURSEMENT*
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS* (0.3)%** (0.5)% (0.8)% (1.0)%
PORTFOLIO TURNOVER RATE* 0.1%** 15.8% 4.6% 11.3%
TOTAL RETURN 1.1% 10.6% 5.4% 24.7%
*Per share amounts calculated using the average shares method
** The ratios presented were calculated using operating data for the six-month
period from July 1, 2006 to December 31, 2006.
ADDITIONAL INFORMATION
EXPENSE TABLE BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE ANNUALIZED EXPENSES
PAID
7/1/06 12/31/06 EXPENSE RATIO DURING
PERIOD+
- -----------------------------------------------------------------------------
ACTUAL
Unrestricted Series $1,000.00 $1,093.87 0.8% $ 8.31
Greater Western New York Series 1,000.00 1,010.84 1.1% $10.97
HYPOTHETICAL++
Unrestricted Series 1,000.00 1,015.08 0.8% $ 8.02
Greater Western New York Series 1,000.00 1,011.12 1.1% $10.99
+ Expenses are equal to each Series' semi-annualized expense ratio
multiplied by the average account value over the period.
++ Assumes annual return of 5% before expenses.
All mutual funds have operating expenses. As a shareholder of the Fund, you
incur operating expenses including investment advisory fees, regulatory fees
and other Fund expenses. Such expenses, which are deducted from the
Fund's gross income, directly reduce the investment return of the Fund. The
Fund's expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The Expense Table is intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period (July 1, 2006 to December 31, 2006).
The Expense Table illustrates your Fund's costs in two ways.
o ACTUAL EXPENSES. This section helps you to estimate the actual expenses
after fee waivers that you paid over the period. The "Ending Account
Value" shown is derived from the Fund's actual return, and "Expenses Paid
During Period" shows the dollar amount that would have been paid by an
investor who started with $1,000 in the Fund.
o HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. This section is intended to
help you compare your Fund's costs with those of other mutual funds. It
is based on your Fund's actual expense ratio and assumes that your Fund
had an annual return of 5% before expenses during the period shown. In
this case - because the return used is not your Fund's actual return -
the results may not be used to estimate your actual ending account value
or expenses you paid during this period. The example is useful in making
comparisons between your Fund and other funds because the Securities and
Exchange Commission (the "SEC") requires all mutual funds to calculate
expenses based on an annual 5% return. You can assess your Fund's costs by
comparing this hypothetical example with the hypothetical examples that
appear in shareholder reports of other funds.
BOARD OF DIRECTORS INFORMATION
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Directors. Information pertaining to the Directors of the
Fund are set forth below. The Fund's SAI includes additional information about
the Fund's Directors, and is available without charge, by calling
(585) 624-3150 or 1-888-BULLFINCH. Each director may be contacted by writing
to the director c/o Bullfinch Fund, Inc. 1370 Pittsford Mendon Road, Mendon,
New York 14506
INDEPENDENT DIRECTORS
The directors and officers of the Fund are:
NAME, AGE POSITON(S) TERM OF OFFICE PRINCIPLE NUMBER OF OTHER
ADDRESS HELD WITH AND LENGTH OF OCCUPATION(S) PORTFOLIOS DIRECTORSHIPS
FUND TIME SERVED DURING PAST IN FUND HELD BY
5 YEARS COMPLEX DIRECTOR
OVERSEEN BY
DIRECTOR
- -----------------------------------------------------------------------------------------------------
INTERESTED PERSONS*
Christopher Carosa, 46 President; Term of Office: President, Founder 2 N/A
2 Lantern Lane Director; N/A Carosa, Stanton &
Honeoye Falls, Chairman of Length of Time DePaolo Asset
New York 14472 Board; Chief Served: Management, LLC;
Compliance Since 1997 President, Director
Officer and Chairman of the
Board, Bullfinch Fund, Inc.
Gordon Stanton, 48 Vice-President; Term of Office: Vice-President, Founder 2 N/A
17 East 96 St. Director; N/A Carosa, Stanton &
Apt 7C Length of Time DePaolo Asset
New York, Served: Management, LLC;
NY 10128 Since 1997 Vice-President,
and Director,
Bullfinch Fund, Inc.;
Associate, Brown Harris
Stevens Residential
Terrance B. Mulhern, 44 Vice-President Term of Office: Executive Vice-President 2 N/A
169 Church Street N/A Carosa, Stanton &
Victor, Length of Time DePaolo Asset
NY 14564 Served: Management, LLC;
Since 2003 Vice-President,
Bullfinch Fund, Inc.;
Senior Vice-President,
Clover Capital;
Bradford L. McAdam, 50 Vice-President Term of Office: Vice-President 2 N/A
7109 Chili-Riga Ctr Rd N/A Carosa, Stanton &
Churchville, Length of Time DePaolo Asset
NY 14428 Served: Management, LLC;
Since 1998 Vice-President,
Bullfinch Fund, Inc.
Thomas S. Carroll, 47 Vice-President Term of Office: Vice-President 2 N/A
47 Chippenham Drive N/A Carosa, Stanton &
Penfield, Length of Time DePaolo Asset
NY 14526 Served: Management, LLC;
Since 2005 Vice-President,
Bullfinch Fund, Inc.
Manager, Studio Sales
Pottery Supply
Betsy Kay Carosa, 46 Corporate Term of Office: Office Manager 2 N/A
2 Lantern Lane Secretary N/A Carosa, Stanton &
Honeoye Falls, Length of Time DePaolo Asset
NY 14472 Served: Management, LLC;
Since 1997 Corporate Secretary,
Bullfinch Fund, Inc.
</Table>
INDEPENDENT DIRECTORS
<Table>
Thomas M. Doeblin, 47 Director; Term of Office: Teacher 2 N/A
73 San Gabriel Drive Audit N/A Pittsford Mendon HS
Rochester, Committee Length of Time
NY 14610 Served:
Since 2006
John P. Lamberton, 46 Director Term of Office: Founder, General Partner 2 N/A
143-49 38th Ave, 3rd Floor N/A Cape Bojador Capital
Flushing, Length of Time Management; Managing
NY 11354 Served: Director, HSBC
Since 2003 Securities
William E.J. Martin, 46 Director Term of Office: Director of Sales 2 N/A
4410 Woodlawn Ave. N N/A Aecon Buildings, Inc.;
Seattle, Length of Time Project Manager,
WA 98103 Served: American Home Builders;
Since 1997 Senior Project Manager,
Mego Construction
Lois Niland, 54 Director Term of Office: Marketing Consultant; 2 N/A
33 Oak Meadow Trail N/A VP Sales & Marketing,
Pittford, Length of Time Complemar Partners;
NY 14534 Served: President,
Since 2006 Icon Design;
General Manager,
Xerox
Michael J. Morris, 46 Director Term of Office: Actuary 2 N/A
72 Lovely Street Audit N/A United Healthcare
Unionville, Committee Length of Time
CT 06085 Served:
Since 1997
Michael W. Reynolds, 46 Director Term of Office: Vice-President 2 N/A
105 Dorchester Road Audit N/A Quinlan & Company
Buffalo, Committee Length of Time
NY 14213 Served:
Since 2000
</Table>
PROXY VOTING GUIDELINES
Carosa, Stanton & DePaolo Asset Management, LLC, the Fund's Investment
Adviser, is responsible for exercising the voting rights associated with the
securities held by the Fund. A description of the policies and procedures used
by the Adviser in fulfilling this responsibility is available without charge,
upon request, by calling (555) 624-3150 or 1-888-BULLFINCH.
QUARTERLY FILING OF PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at
the SEC's Public Reference Room in Washington DC. Information on the operation
of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
DISCLOSURE REGARDING THE BOARD OF DIRECTORS' APPROVAL
OF THE INVESTMENT ADVISORY CONTRACT
At the Board's Annual Meeting, the independent directors of the Board met
separately to discuss the Adviser and reported the conclusions to the Board. In
determining whether to renew the Management and Investment Advisory Agreements
between the Fund and Carosa, Stanton & DePaolo Asset Management, LLC, (the
Adviser), the Board of Directors requested, and the Adviser provided
information relevant to the Board's consideration. Among the factors the Board
considered was the overall performance of the Funds relative to the performance
of other funds in the Funds' peer group. In addition, the Board compared
expenses of each Fund to the expenses of its peers. The Board also considered
the fact that Adviser has implemented breakpoints in the Funds' advisory fee
schedule and the Board agreed that this type of fee structure remained
reasonable and fair to shareholders. They noted the range of investment
advisory and administrative services provided by the Adviser to the Fund. They
also took note of the fact that the Fund is not subject to sales charges or
Rule 12b-1 fees. The Board also reviewed financial information concerning the
Adviser's brokerage practices, including soft dollar arrangements, and noted
that these were reasonable.
Based upon their review and consideration of these factors and other matters
deemed relevant, the Board concluded that the terms of the Investment
Management Agreements are fair and reasonable and the Board voted to renew
the Agreements.
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.
06/30/2006 06/30/2005
Audit Fees $9,000 $8,500
Audit-Related Fees $ 0 $ 0
Tax Fees $2,000 $2,000
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: February 27, 2007
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: February 27, 2007