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: 3909 Rush Mendon Road
Mendon, New York 14506
Name and address of agent for service: Christopher Carosa, President,
Bullfinch Fund, Inc., 3909 Rush Mendon Road,
Mendon, New York 14506
Mailing address: 3909 Rush Mendon Road
Mendon, New York 14506
Registrant's telephone number, including area code: (585) 624-3150
Date of fiscal year end: 06/30/08
Date of reporting period: 07/01/07 - 6/30/08
Item 1 - Attach shareholder report
BULLFINCH FUND, INC.
3909 Rush Mendon Road
Mendon, New York 14506
(585) 624-3150
1-888-BULLFINCH
(1-888-285-5346)
Annual Report
June 30, 2008
Management's Discussion of Fund Performance
August 25, 2008
Dear Fellow Shareholders:
We are very proud to present the June 2008 Annual Report of the Bullfinch Fund,
Inc. This report contains the audited financial statements for both the
Unrestricted Series and the Greater Western New York Series.
For the overall market, the first quarter of 2008 was the worst performing
quarter since September 2002 with the S&P 500 dropping nearly 10%. A rise in
oil prices, the housing slump, the still lingering effects of the sub-prime
market debacle and encroaching inflation helped fuel this downward slide.
Nothing spoke of this market despair more than the March 26th Wall Street
Journal headline that blared out "Stocks Tarnished by 'Lost Decade.'" The
basic summary of the article: Investors who had their money in a index fund
since 1999 are barely even and are actually losing money had they invested in
2000.
The second quarter of 2008 was ushered in with small gains in April and May,
though the financial sector of the market was hit hard in June, which led to
negative returns in the second quarter of 2008. The blight of continued rising
oil prices tarnished the Federal Reserve rate cut to 2% on April 30th. The S&P
dropped 2.75% during the quarter leaving the index at negative (12.83%) for the
calendar year through June and down 13.12% for the past 12 month period. June
was cited as the worst month on record for the S&P 500 since 1930.
The news gets worse had you been in foreign markets. With the exception of
Brazil, many of the most popular foreign markets suffered far worse declines
than our own S&P 500. Through the middle of April, the S&P 500 was down 10.6%
from its October peak. Europe and Britain fared slightly better, being down
only 8.4%-8.9%. Germany and India both fell more than 15%, whereas Japan
dropped 22.4%. The worst, though, was China, down 38.6% (it had fallen nearly
50% since October but bounced back after the government lowered transaction
taxes).
The foreign markets continue to slide with Developed international markets and
emerging markets down (8.16%) and (9.96%) just during the month of June. We
have avoided these markets since we have intentionally stayed within the US
domestic stocks with multinational exposures; thereby getting overseas growth
without the geopolitical and currency risk exposure.
One of the areas we saw as an opportunity at the end of last year was the more
defensive-oriented pharmaceutical and biotechnology industries. It was also
clear the market had really become a stock-pickers market, with many solid
companies falling in tandem with their more leveraged counterparts. A
disciplined methodology focusing on down-side risk seemed most appropriate in
the kind of market turbulence we've just experienced (and may experience in
the near-term).
Indeed, these defensive-oriented positions have held up well in the first half
of the year; remember regardless of economics, health care is needed on a
day-to-day basis whatever the stock market does. Our concentration of buying
some of our stocks with attractive dividends continues to pay us while their
prices may be depressed; therefore benefiting us quarterly during a weak
market. The best performing sectors were the Oil & Related and the Medical
Products & Supplies sectors. The worst performing was the Banking & Finance
sector, given the continuing concerns and fall-out from the sub-prime crisis.
In the end, while past performance can never guarantee future results,
we've been very grateful to see both Series rank this year among the top 10
performers in their respective Lipper Leader categories on a year-to-date
basis, showing our conservative style has done well. While the benchmark for
each Series - the Value Line Geometric Index - fell nearly 25% in the twelve
months ending June 30, 2008, both Series fell by less than half of that
(between 10% and 11%). Each Series remains in a temporarily defensive
position and, as a result of this position to not be fully invested in
equities, each Series may not achieve its objective.
We wish to thank our shareholders for expressing their confidence in us and
wish you continued good fortune.
Best Regards,
Bullfinch Fund, Inc.
Christopher Carosa, CTFA
President
BULLFINCH FUND, INC.
PERFORMANCE SUMMARY
The graph below represents the changes in value for an initial $10,000
investment in the BULLFINCH Fund from 7/1/98 to 6/30/08. These changes are
then compared to a $10,000 investment in the Value Line Geometric Index,
The Value Line Geometric Index (VLG) is an unmanaged index of between 1,600
and 1,700 stocks. Value Line states "The VLG was intended to provide a rough
approximation of how the median stock in the Value Line Universe performed.
The VLG also has appeal to institutional investors as a proxy for the so-called
'multi-cap' market because it includes large cap, mid cap and small cap stocks
alike." The Fund's returns include the reinvestment of all dividends, but do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemptions of fund shares. Past performance is not
predictive of future performance. Investment return and principal value
will fluctuate, so that your shares, when redeemed, may be worth more or less
than the original cost.
(GRAPH OMITTED)
Year Bullfinch Fund, Inc. Value Line
Ending Unrestricted Series Geometric Index
$10,000 $10,000
6/30/1999 $10,353 $9,771
6/30/2000 $10,711 $8,919
6/30/2001 $12,452 $8,744
6/30/2002 $11,269 $7,093
6/30/2003 $12,007 $6,468
6/30/2004 $14,091 $8,241
6/30/2005 $14,485 $8,639
6/30/2006 $14,672 $9,253
6/30/2007 $17,394 $10,795
6/30/2008 $15,523 $8,136
Annualized
Returns
Ending Bullfinch Fund, Inc. Value Line
6/30/2008 Unrestricted Series Geometric Index
One-Year -10.76% -24.63%
Five-Year + 5.27% + 4.69%
Ten-Year + 4.50% - 2.04%
(GRAPH OMITTED)
Year Bullfinch Fund, Inc. Value Line
Ending Greater Western New York Series Geometric Index
$10,000 $10,000
6/30/1999 $8,852 $9,771
6/30/2000 $8,617 $8,919
6/30/2001 $8,890 $8,744
6/30/2002 $8,073 $7,093
6/30/2003 $8,608 $6,468
6/30/2004 $10,734 $8,241
6/30/2005 $11,314 $8,639
6/30/2006 $12,510 $9,253
6/30/2007 $14,077 $10,795
6/30/2008 $12,643 $8,136
Annualized
Returns
Ending Bullfinch Fund, Inc. Value Line
6/30/2008 Greater Western New York Series Geometric Index
One-Year -10.18% -24.63%
Five-Year + 7.99% + 4.69%
Ten-Year + 2.37% - 2.04%
UNRESTRICTED SERIES
(A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
TOGETHER WITH INDEPENDENT AUDITORS' REPORT
ROTENBERG & CO.
Certified Public Accountants
1870 Winton Road South
Suite 200
Rochester, NY 14618
Tel 585-295-2400
Fax 585-295-2150
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Bullfinch Fund, Inc. - Unrestricted Series
We have audited the accompanying statement of assets and liabilities of
Bullfinch Fund, Inc - Unrestricted Series (a series within the Bullfinch Fund,
Inc.), including the schedule of investments, as of June 30 2008, and the
related statements of operations and changes in net assets for the years ended
June 30, 2008, 2007 and 2006, and the financial highlights for each of the
five years ended June 30, 2008. 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 audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements 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, 2008 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 audits provide 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 Bullfinch Fund, Inc - Unrestricted Series (a series within the
Bullfinch Fund, Inc.) as of June 30, 2008, and the results of its operations
and changes in net assets for the years ended June 30, 2008, 2007, and 2006
and its financial highlights for each of the five years ended June 30, 2008 in
conformity with accounting principles generally accepted in the United States
of America.
/s/ Rotenberg & Co., LLP
Rotenberg & Co., LLP
Rochester, New York
August 23, 2008
UNRESTRICTED SERIES
(A SERIES WITHIN THE BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2008
ASSETS
Investments in Securities, at Fair Value,
Identified Cost of $3,164,439 $ 3,579,284
Cash 1,049,023
Accrued Interest and Dividends 8,722
Prepaid Expenses 749
Total Assets $ 4,637,778
LIABILITIES AND NET ASSETS
LIABILITIES
Accrued Expenses $ 16,612
Unsettled Trades (283,022)
NET ASSETS
Net Assets (Equivalent to $12.94 per share
based on 378,856.325 shares of stock outstanding) 4,904,188
Total Liabilities and Net Assets $ 4,637,778
COMPOSITION OF NET ASSETS
Shares of Common Stock - Par Value $.01;
10,000,000 Shares Authorized,
378,856.325 Shares Outstanding $ 4,809,289
Accumulated Net Investment Loss (319,946)
Net Unrealized Appreciation on Investments 414,845
Net Assets at June 30, 2008 $ 4,904,188
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, 2008
Historical
Common Stocks - 100% Shares Cost Value
Computers - Software - 15.0%
Microsoft Corp. 6,200 151,626 170,562
Oracle 11,000 119,262 231,000
Synopsis, Inc. 5,600 115,460 133,840
--------- ---------
386,348 535,402
Medical Products and Supplies -8.6%
Johnson & Johnson 2,400 136,714 154,416
Medtronic Inc. 3,000 147,940 155,250
--------- ---------
284,654 309,666
Electrical Equipment - 8.5%
Corning Inc. 7,300 71,366 168,265
General Electric Co. 5,100 145,357 136,119
--------- ---------
216,723 304,384
Banking and Finance - 7.4%
Fiserv, Inc. 3,000 75,229 136,110
Fannie Mae 4,200 140,730 81,942
Fifth Third Bancorp. 4,600 96,271 46,828
--------- ---------
312,230 264,880
Pharmaceuticals -7.0%
Mylan Inc. 10,800 179,051 130,356
Pfizer Inc. 6,800 155,526 118,796
--------- ---------
334,577 249,152
Oil & Related - 5.6%
Helmerich & Paine 2,800 69,200 201,656
Retail - Specialty - 5.5%
Fastenal Co. 4,600 160,394 198,536
Office Equipment - 4.9%
Xerox Corp. 13,000 177,294 176,280
Biotech - 4.9%
Genentech Inc. 2,300 154,107 174,570
Semiconductors - 4.8%
Intel Corp. 4,100 80,666 88,068
National
Semiconductor Corp. 4,100 77,257 84,214
--------- ---------
157,923 172,282
Historical
Common Stocks - 100% Shares Cost Value
Retail - General - 4.7%
Fred's Inc. Class A 15,000 152,560 168,600
Automotive - 4.2%
Gentex Corp. 10,300 147,681 148,732
Commercial Services - 3.2%
Paychex, Inc. 3,625 120,153 113,390
Foods & Beverages - 3.1%
Sensient Technologies 4,000 80,550 112,640
Paper & Related Products - 2.7%
Avery Dennison Corp. 2,200 114,734 96,646
Computers - Hardware - 2.7%
Dell Corp. 4,350 90,055 95,178
Insurance - 2.5%
Gallagher Arthur J&Co. 3,700 92,691 89,170
Computers- Networking - 2.5%
Cisco Systems, Inc. 3,800 55,371 88,388
Utilities - Natural Resources - 2.2%
Chesapeake Utilities
Corp. 3,100 57,194 79,732
Schwab Money Market 1,049,023
Total Investments in Securities $ 3,164,439 $ 4,728,307
Table of Industries
Industry Market Value Pct.
- ------------------------------ -------------- -----
Automotive $ 148,732 3.21%
Banking and Finance $ 264,880 5.72%
Biotech $ 174,570 3.77%
Commercial Services $ 113,390 2.45%
Computers - Hardware $ 95,178 2.06%
Computers - Networking $ 88,388 1.91%
Computers - Software $ 535,402 11.57%
Electrical Equipment $ 304,384 6.58%
Foods & Beverages $ 112,640 2.43%
Insurance $ 89,170 1.93%
Medical Products and Supplies $ 309,666 6.69%
Office Equipment $ 176,280 3.81%
Oil & Related $ 201,656 4.36%
Paper and Related Products $ 96,646 2.09%
Pharmaceuticals $ 249,152 5.38%
Retail - General $ 168,600 3.64%
Retail - Specialty $ 198,536 4.29%
Semiconductors $ 172,282 3.72%
Utilities - Natural Resources $ 79,732 1.72%
- ----------------------------- ------------- -------
Total Equities $3,579,284 77.33%
Cash and Equivalents $1,049,023 22.67%
-------------- -------
Total Invested Assets $4,628,307 100.00%
============== =======
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, 2008, 2007 AND 2006
2008 2007 2006
INVESTMENT INCOME:
Dividends $ 121,723 $ 120,940 $ 87,909
EXPENSES:
Management fees 53,669 52,868 46,736
Legal and Professional 12,020 11,468 12,113
Director's Fees 1,200 1,200 1,200
D&O/E&O 7,685 5,129 11,340
Fidelity Bond 1,058 1,058 936
Taxes 309 472 518
Telephone 137 208 234
Registration Fees 1,275 1,137 969
Custodian Fees 2,865 2,772 2,751
Dues and Subscriptions 2,484 2,075 1,926
-------- -------- --------
Total expense 82,702 78,387 78,723
-------- -------- --------
Net investment income (loss) 39,021 42,553 9,186
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from
securities transactions 2,740 271,683 236,874
Unrealized appreciation
(depreciation) during
the period (598,228) 546,434 (197,111)
-------- -------- --------
Net gain (loss) on
investments (595,488) 818,117 39,763
-------- -------- --------
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $(556,467) $860,670 $ 48,949
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED
JUNE 30, 2008, 2007 AND 2006
2008 2007 2006
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 39,021 $ 42,553 $ 9,186
Net realized gain (loss) from
security transactions 2,740 271,683 236,874
Net change in unrealized appreciation
(depreciation) of investments (598,228) 546,434 (197,111)
------------ ----------- -------------
Increase (decrease) in net assets
resulting from operations (556,467) 860,670 48,949
CAPITAL SHARE TRANSACTION:
Sales 368,454 483,725 535,360
Redemptions (71,018) (678,722) (181,377)
Total capital share transactions 297,436 (194,997) 353,983
------------ ----------- -------------
Increase in net assets (259,031) 665,673 402,932
NET ASSETS:
Beginning of period 5,163,219 4,497,546 4,094,614
End of period $4,904,188 $5,163,219 $4,497,546
The accompanying notes are an integral part of these statements.
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008
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.
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 $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. The Series made a distribution of its long term capital gains of
$74,306, its short term capital gains of $70,928 and ordinary income of $17,901
to its shareholders on June 27, 2007 in the form of stock dividends equal to
10,992.948 shares of stock. The Series made a distribution of its long term
capital gains of $86,821 and ordinary income of $22,790 to its shareholders on
December 26, 2007 in the form of stock dividends equal to 7,735.411 shares of
stock. The Series made a distribution of its ordinary income of $14,355 to its
shareholders on June 27, 2008 in the form of stock dividends equal to
1,104.207 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, 2008, the Series purchased $1,509,753 of common
stock. During the same period, the Series sold $1,275,745 of common stock.
For the year ended June 30, 2007, the Series purchased $1,524,478 of common
stock. During the same period, the Series sold $1,660,698 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.
At June 30, 2008, the gross unrealized appreciation for all securities totaled
$647,125 and the gross unrealized depreciation for all securities totaled
$232,280, or a net unrealized appreciation of $414,845. The aggregate cost of
securities for federal income tax purposes at June 30, 2008 was $3,164,439.
At June 30, 2007 the gross unrealized appreciation for all securities totaled
$1,025,092 and the gross unrealized depreciation for all securities totaled
$12,020, or a net unrealized appreciation of $1,013,072. The aggregate cost of
securities for federal income tax purposes at June 30, 2007 was $2,927,692.
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.
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, 2008, 2007 and 2006, the fund paid
investment advisory fees of $53,669, $52,868 and $46,736, respectively.
On June 30, 2008, the fund had $4,412 included in accrued expenses, as owed
to Carosa, Stanton & DePaolo Asset Management, LLC.
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, 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 2007 34,186.763 483,725
Shares Redeemed During 2007 (45,494.035) (678,722)
Reinvestment of Distributions,
December 27, 2006 10,586.286 150,219
Reinvestment of Distributions,
June 27, 2007 10,992.948 163,135
Balance at June 30, 2007 348,746.944 $ 4,387,887
Shares sold during 2008 26,404.727 368,454
Shares Redeemed During 2008 (5,134.964) (71,018)
Reinvestment of Distributions,
December 26, 2007 7,735.411 109,611
Reinvestment of Distributions,
June 27, 2008 1,104.207 14,355
Balance at June 30, 2008 378,856.325 $ 4,809,289
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS (SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING)
FOR THE YEARS ENDED JUNE 30, 2008, 2007, 2006, 2005, and 2004
2008 2007 2006 2005 2004
NET ASSET VALUE,
beginning of period $ 14.81 $ 13.29 $ 13.97 $ 14.49 $ 12.69
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income (loss) 0.10 0.12 0.03 0.02 (0.03)
Net gain (loss) on
securities both
realized and
unrealized (2.31) 0.49 (1.56) (1.47) 1.44
Total from investment
operations (2.21) 0.61 (1.53) (1.45) 1.41
DISTRIBUTIONS
Dividends 0.34 0.91 0.85 0.93 0.39
NET ASSET VALUE,
end of period $ 12.94 $ 14.81 $ 13.29 $ 13.97 $ 14.49
NET ASSETS,
end of period $4,904,188 $5,163,219 $4,497,546 $4,094,614 $3,932,293
Actual Actual Actual Actual Actual
RATIO OF EXPENSES
TO AVERAGE NET ASSETS* 1.62% 1.56% 1.78% 1.64% 1.61%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS* 0.77% 0.85% 0.21% 0.18% (0.23)%
PORTFOLIO TURNOVER RATE* 25.03% 30.41% 15.33% 18.22% 22.58%
TOTAL RETURN (10.76)% 18.55% 1.30% 2.79% 17.35%
* Per share amounts calculated using the average shares method
The accompanying notes are an integral part of these statements.
GREATER WESTERN NEW YORK SERIES (A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF JUNE 30, 2006
TOGETHER WITH INDEPENDENT AUDITORS' REPORT
ROTENBERG & CO.
Certified Public Accountants
1870 Winton Road South
Suite 200
Rochester, NY 14618
Tel 585-295-2400
Fax 585-295-2150
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Bullfinch Fund, Inc. - Western New York Series
We have audited the accompanying statement of assets and liabilities of
Bullfinch Fund, Inc - Western New York Series (a series within the Bullfinch
Fund, Inc.), including the schedule of investments, as of June 30 2008, and
the related statements of operations and changes in net assets for the years
ended June 30, 2008, 2007 and 2006, and the financial highlights for each of
the five years ended June 30, 2008. 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 audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements 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, 2008 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 audits provide 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 Bullfinch Fund, Inc - Western New York Series (a series within
the Bullfinch Fund, Inc.) as of June 30, 2008, and the results of its
operations and changes in net assets for the years ended June 30, 2008, 2007,
and 2006 and its financial highlights for each of the five years ended
June 30, 2008 in conformity with accounting principles generally accepted
in the United States of America.
/s/ Rotenberg & Company, LLP
Rotenberg & Company, LLP
Rochester, New York
August 23, 2008
GREATER WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2008
ASSETS
Investments in securities, at fair value,
identified cost of $513,973 $ 651,777
Cash 113,268
Accrued interest and dividends 1,285
Prepaid expenses 675
Due from investment advisor 156
Total assets $ 767,161
LIABILITIES AND NET ASSETS
LIABILITIES
Accrued Expenses $ 3,217
NET ASSETS
Net assets (equivalent to $12.90 per share
based on 59,214.456 shares of stock outstanding) 763,944
Total Liabilities and Net Assets $ 767,161
COMPOSITION OF NET ASSETS
Shares of common Stock - Par Value $.01;
10,000,000 Shares Authorized,
59,214.456 Shares Outstanding $ 656,537
Accumulated net investment loss (30,397)
Net unrealized appreciation on investments 137,804
Net assets at June 30, 2008 $ 763,944
The accompanying notes are an integral part of these statements.
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES JUNE 30, 2008
Historical
Common Stocks - 100% Shares Cost Value
Electrical Equipment - 10.4%
Corning, Inc. 1,000 7,874 23,050
General Electric Co. 800 23,546 21,352
Ultralife Batteries,
Inc. 2,200 12,432 23,518
-------- --------
43,852 67,920
Metal Fabrication & Hardware - 8.5%
Graham Corp. 750 2,279 55,582
Banking & Finance - 8.1%
Community Bank System 1,200 23,452 24,744
M&T Bank Corp. 400 38,896 28,216
-------- --------
62,348 52,960
Real Estate & Related - 6.8%
Home Properties Inc. 400 16,297 19,224
Sovran Self Storage 600 23,459 24,936
-------- --------
39,756 44,160
Medical Products & Supplies - 5.2%
Greatbatch Technologies 850 18,984 14,705
Johnson & Johnson 300 17,108 19,302
-------- --------
36,092 34,007
Steel - 4.9%
Gilbraltar Industries
Inc. 2,000 25,111 31,940
Railroads - 4.7%
Genesee & Wyoming
Class A 900 2,522 30,618
Utilities - Natural Resources - 4.5%
National Fuel Gas Co. 500 11,250 29,740
Retail - Specialty - 4.4%
Christopher & Banks
Corp. 700 12,106 4,760
Fastenal Co. 550 19,186 23,738
-------- --------
31,292 28,498
Electronic Components - 4.4%
Astronics Corp. 1,400 15,396 19,474
IEC Electronics
Corp. 4,518 6,984 8,991
-------- --------
22,380 28,465
Commercial Services - 4.2%
Harris Interactive,
Inc. 6,600 23,306 13,266
Paychex, Inc. 450 11,885 14,076
-------- --------
35,191 27,342
Computers - Software - 4.2%
Oracle 1,300 $ 16,642 $ 27,300
Historical
Common Stocks - 100% Shares Cost Value
Aerospace - 4.0%
Moog, Inc. Class A 337 2,926 12,550
Northrop Grumman 200 2,536 13,380
-------- --------
5,462 25,930
Automotive - 3.6%
Monro Muffler Brake
Inc. 1,500 23,212 23,250
Photographic Equipment and Suppliers - 3.5%
Eastman Kodak 1,600 34,170 23,088
Telecommunications - 3.1%
Citizens
Communications 1,800 20,663 20,412
Office Equipment - 3.1%
Xerox Corp. 1,475 21,399 20,001
Computers - Services - 2.7%
Computer Task Group,
Inc. 3,500 11,872 17,920
Apparel - 2.7%
Hartmarx Corp. 8,000 31,788 17,360
Foods & Beverages - 2.4%
Constellation Brands,
Inc. 800 5,017 15,888
Computers - Hardware - 1.2%
Dell Corporation 350 10,734 7,658
Computers - Distributors - 1.1%
Ingram Micro 400 4,230 7,100
Packaging and Containers - 1.0%
Mod Pac Corporation 1,500 7,002 6,330
Airlines - 0.5%
Southwest Airlines Co. 250 3,447 3,260
Machinery - 0.4%
Columbus McKinnon Corp. 100 2,344 2,408
Industrial Materials - 0.2%
Servotronics, Inc. 100 937 1,500
Health Care Service Provider -0.2%
VirtualScopics Inc. 2,000 2,981 1,140
Schwab Money Market 113,268
Total Investments in Securities $ 513,973 $ 765,045
Table of Industries
Industry Market Value Pct.
- ------------------------------ -------------- -----
Aerospace $ 25,930 3.39%
Airlines $ 3,260 0.43%
Apparel $ 17,360 2.27%
Automotive $ 23,250 3.04%
Banking and Finance $ 52,960 6.92%
Commercial Services $ 27,342 3.57%
Computers - Distributors $ 7,100 0.93%
Computers - Hardware $ 7,658 1.00%
Computers - Services $ 17,920 2.34%
Computers - Software $ 27,300 3.57%
Electrical Equipment $ 67,920 8.88%
Electronics Components $ 28,465 3.72%
Foods & Beverages $ 15,888 2.08%
Health Care Service Provider $ 1,140 0.15%
Industrial Materials $ 1,500 0.20%
Machinery $ 2,408 0.31%
Medical Products and Supplies $ 34,007 4.45%
Metal Fabrication & Hardware $ 55,583 7.27%
Office Equipment $ 20,001 2.61%
Packaging & Containers $ 6,330 0.83%
Photographic Equipment and Suppliers $ 23,088 3.02%
Railroads $ 30,618 4.00%
Real Estate & Related $ 44,160 5.77%
Retail - Specialty $ 28,498 3.73%
Steel $ 31,940 4.17%
Telecommunications $ 20,412 2.67%
Utilities - Natural Resources $ 29,740 3.89%
-------------- ------
Total Equity $651,777 85.19%
Cash & Equivalents $113,268 14.81%
-------------- ------
Total Invested Assets $765,045 100.00%
============== ======
The accompanying notes are an integral part of these statements.
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2008, 2007, AND 2006
2008 2007 2006
INVESTMENT INCOME:
Dividends $ 15,049 $ 9,665 $ 8,146
EXPENSES:
Management fees 9,448 8,117 7,292
Reimbursement of Management Fees (156) (1,000) (2,520)
Legal and Professional 1,380 1,384 1,515
Director's Fees 1,200 1,200 1,200
D&O/E&O 902 522 1,260
Fidelity Bond 117 117 104
Taxes 150 454 450
Telephone 137 208 234
Registration Fees 300 418 418
Custodian Fees 394 224 186
Dues and Subscriptions 1,284 1,275 1,126
------- ------ ------
Total expense 15,156 12,919 11,265
------- ------ ------
Net investment income (loss) (107) (3,254) (3,119)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from securities
transactions 21,036 3,805 37,655
Unrealized appreciation
(depreciation) during the period (100,995) 80,397 23,218
------- ------ ------
Net gain (loss) on investments (79,959) 84,202 60,873
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (80,066) $ 80,948 $ 57,754
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED
JUNE 30, 2008, 2007, AND 2006
2008 2007 2006
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ (107) $ (3,254) $ (3,119)
Net realized gain (loss) from
security transactions 21,036 3,805 37,655
Net change in unrealized appreciation
(depreciation) of investments (100,995) 80,397 23,218
----------- ----------- -----------
Increase (decrease) in net assets
resulting from operations (80,066) 80,948 57,754
CAPITAL SHARE TRANSACTIONS:
Sales 122,449 15,512 28,003
Redemptions (6,000) - (2,907)
----------- ----------- -----------
Total capital share transactions 116,449 15,512 25,096
----------- ----------- -----------
Increase in net assets 36,383 96,460 82,850
NET ASSETS:
Beginning of period 727,561 631,101 548,251
End of period $ 763,944 $ 727,561 $ 631,101
The accompanying notes are an integral part of these statements.
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008
NOTE A - SCOPE OF BUSINESS
The Greater 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.
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 $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 286.269 shares of stock. The
Series made a distribution of its long-term capital gains of $24,796 to its
shareholders on December 26, 2007, in the form of stock dividends equal to
1,711.274 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, 2008, the Series purchased $216,441 of common
stock. During the same period, the Series sold $122,654 of common stock.
For the year ended June 30, 2007, the Series purchased $54,739 of common
stock. During the same period, the Series sold $32,472 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.
At June 30, 2008, the gross unrealized appreciation for all securities totaled
$205,277 and the gross unrealized depreciation for all securities totaled
$67,473, or a net unrealized appreciation of $137,804. The aggregate cost of
securities for federal income tax purposes at June 30, 2008 was $513,973.
At June 30, 2007, the gross unrealized appreciation for all securities totaled
$255,545 and the gross unrealized depreciation for all securities totaled
$16,747, or a net unrealized appreciation of $238,798. The aggregate cost of
securities for federal income tax purposes at June 30, 2007 was $399,149.
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.
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, 2008, 2007 and 2006, the fund paid
investment advisory fees of $9,292, $7,117 and $4,772, respectively.
On June 30, 2008, the fund had $816 included in accrued expenses, as owed to
Carosa, Stanton and DePaolo Asset Management, LLC.
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, 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 2007 1,143.476 15,512
Shares redeemed during 2007 - -
Reinvestment of Distributions, December 27, 2006 286.269 3,850
Balance at June 30, 2007 48,994.697 $ 515,292
Shares sold during 2008 8,926.488 122,449
Shares redeemed during 2008 (418.003) (6,000)
Reinvestment of Distributions, December 26, 2007 1,711.274 24,796
Balance at June 30, 2008 59,214.456 $ 656,537
GREATER WESTERN NEW YORK SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS (SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING)
FOR THE YEARS ENDED JUNE 30, 2008, 2007, 2006, 2005, and 2004
2008 2007 2006 2005 2004
NET ASSET VALUE,
beginning of period $ 14.85 $ 13.27 $ 12.88 $ 12.22 $ 9.80
INCOME FROM INVESTMENT OPERATIONS
Net investment income
(loss) (0.00) (0.07) (0.07) (0.10) (0.11)
Net gain (loss) on
securities both
realized and
unrealized (2.43) 1.57 (0.49) 0.76 2.53
Total from investment
operations (2.43) 1.50 (0.56) 0.66 2.42
DISTRIBUTIONS
Dividends .48 .08 .95 - -
NET ASSET VALUE,
end of period $ 12.90 $ 14.85 $ 13.27 $ 12.88 $ 12.22
NET ASSETS, end of period $763,944 $727,561 $631,101 $548,251 $490,582
Actual Actual Actual Actual Actual
RATIO OF EXPENSES TO
AVERAGE NET ASSETS* 2.00% 2.00% 1.92% 2.00% 2.00%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE REIMBURSEMENT* 2.03% 2.13% 2.35% 2.26% 2.40%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS* (0.01)% (0.50)% (0.53)% (0.87)% (0.92)%
PORTFOLIO TURNOVER RATE* 16.22% 4.98% 15.79% 4.64 11.31%
TOTAL RETURN (10.18)% 12.53% 10.57% 5.40% 24.69%
* Per share amounts calculated using the average shares method
The accompanying notes are an integral part of these statements.
ADDITIONAL INFORMATION
EXPENSE TABLE Beginning Ending
Account Value Account Value Annualized Expenses Paid
ACTUAL 1/1/08 6/30/08 Expense Ratio During Period+
Unrestricted Series $ 1,000.00 $ 926.93 1.6% $ 7.64
Greater Western
New York Series 1,000.00 918.21 2.0% $ 9.51
HYPOTHETICAL++
Unrestricted Series 1,000.00 1,025.00 1.6% $ 8.03
Greater Western
New York Series 1,000.00 1,025.00 2.0% $10.04
+ Expenses are equal to each Series' annualized expense ratio multiplied
by the average account value over the period, multiplied by the number of days
(181) in the most recent fiscal half-year, then divided by 365.
++ 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 (January 1, 2008 to June 30, 2008).
The Expense Table illustrates your Fund's costs in two ways.
* 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.
* 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. 3909 Rush Mendon Road, Mendon,
New York 14506
The directors and officers of the Fund are:
<Table>
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, 48 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, 49 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, 46 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, 52 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.
Betsy Kay Carosa, 48 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, 49 Director;Audit Term of Office: Teacher 2 N/A
73 San Gabriel Drive Committee N/A Pittsford Mendon HS
Rochester Length of Time
NY, 14610 Served:
Since 2006
John P. Lamberton, 48 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, 48 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
Michael J. Morris, 47 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
Lois Niland, 56 Director Term of Office: Marketing Consultant 2 N/A
33 Oak Meadow Trail N/A VP Sales & Marketing,
Pittsford, Length of Time Complemar Partners
NY 14534 Served: President, Icon Design
Since 2006 General Manager, Xerox
Michael W. Reynolds, 48 Director Term of Office: Marketing Consultant 2 N/A
203 Randwood Drive Audit N/A Sole Proprietor
Getzville, Committee Length of Time Chakra Communications
NY 14068 Served: Vice-President
Since 2000 Quinlan & Company
</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 as well as a record of how the Fund
voted proxies relating to portfolio securities during the most recent twelve
month period under June 30th are available without charge, upon request, by
calling (555) 624-3150 or 1-888-BULLFINCH. The Fund's Proxy Voting Guidelines
are available on the SEC's website at http://www.sec.gov.
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 were:
1. Nature, extent and quality of service provided by the Adviser - the
independent directors noted the unprecedented access they have to the adviser,
the quick responsiveness to requests and the positive review following Mr.
Lamberton's multi-day visits all show the high quality of service provided by
the Adviser;
2. The overall performance of the Series' relative to the performance of other
funds in the Funds' peer group and its benchmark - the independent directors
noted the Series' long-term performance exceeded the benchmarks and were
in-line with or better than it peers (as reported by Lipper).
3. The cost of Adviser services and the profits realized by the Adviser - the
independent directors noted the Adviser is not charging and is not receiving
an excessive amount of profit for, among other reasons, its continued
subsidization of the Greater Western New York Series.
4. Extent to which economies of scale would be realized as a fund group -
the independent directors noted the advisery fee schedule includes
breakpoints and that the Fund is not subject to sales charges or Rule 12b-1
fees.
5. Do fee levels reflect economies of scale for the benefit of fund investors?
- - the independent directors noted the adviser has already agreed to cap the
fees at 2% and reduce that cap to 1.5% when a Series' assets exceed $10
million. The independent directors noted there was an increase in expenses
primarily due to the D&O/E&O costs and expressed a desire for increased
direct marketing in order to further take advantage of economies of scale.
6. For the above comparison of fees and services, the board relied on material
provided by the adviser, and, because much of this material came from third
party sources, the board did not obtain information independent of the
investment adviser.
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.
06/30/2008 06/30/2007
Audit Fees $10,200 $9,600
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: October 30, 2008
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: October 30, 2008