BULLFINCH FUND, INC.
2 LANTERN LANE
HONEOYE FALLS, NEW YORK 14472
(716) 624-1758
1-888-BULLFINCH
(1-888-285-5346)
Annual Report
June 30, 1998
<PAGE>
August 15, 1998
Dear Shareholders:
We are very pleased to present the 1998 Annual Report of the Bullfinch Fund,
Inc. This report contains the Independent Auditors' Report and the audited
statements for both the Unrestricted Series and the Western New York Series.
This is our first Annual Report and this first year has been very exciting
for the Fund. We introduced the Unrestricted Series on July 24, 1997. The
Western New York Series became effective on December 30, 1997.
We wish to thank our shareholders for expressing their confidence in us and
wish them continued good fortune in the coming year.
Best Regards,
Bullfinch Fund, Inc.
Christopher Carosa
President
<PAGE>
UNRESTRICTED SERIES
(A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF
JUNE 30, 1998 AND 1997
TOGETHER WITH
INDEPENDENT AUDITORS' REPORT
BONADIO & CO, LLP
Certified Public Accountants
1850 South Winton Road
Rochester, NY 14628
716-244-2000
Fax 716-244-5611
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Bullfinch Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of the
Unrestricted Series (a series within Bullfinch Fund, Inc.), including the
schedule of investments in securities, as of June 30, 1998 and 1997, and the
related statements of operations, changes in net assets and the financial
highlights and related ratios/supplemental data for a share outstanding for the
year ended June 30, 1998 and for the period from inception (February 1, 1997)
to June 30, 1997. These financial statements and financial highlights and
related ratios/supplemental data for a share outstanding are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
statements and the financial highlights and related ratios/supplemental data for
a share outstanding based on our audits.
We conducted our audits in accordance with generally accepted auditing stand-
ards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights and related ratios/supplemental data are free of material mis-
statement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include-
ed confirmation of securities owned as of June 30, 1998 and 1997, by corre-
spondence with custodian and brokers. 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 and related
ratios/supplemental data for a share outstanding referred to above present
fairly, in all material respects, the financial position of the Unrestricted
Series (a series within Bullfinch Fund, Inc.) as of June 30, 1998 and 1997, and
the results of its operations, the change in its assets and the financial
highlights and related ratios/supplemental data for a share outstanding for the
year ended June 30, 1998 and for the period from inception (February 1, 1997)
to June 30, 1997, in conformity with generally accepted accounting principles.
BONADIO & CO., LLP
Rochester, New York
August 27, 1998
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 AND 1997
ASSETS
1998 1997
Investments in securities, at fair value,
identified cost $641, 167 and $104,898 respectively $ 645,514 $ 113,175
Cash 100,384 8,411
Accrued interest and dividends 1,193 547
Prepaid expenses 2,255 1,710
Due from Investment Adviser 3,303
Due from Western New York Series 2,032
Organization expenses, net of accumulated
amortization of $1,257 and $444, respectively 2,081 4,883
---------------------
Total assets $ 756,762 $ 128,726
=====================
LIABILITIES
Accounts payable 5,943 7,126
---------------------
NET ASSETS
Net assets (equivalent to $10.99 and $10.74 per share
based on 68,320.177 and 11,325.987 shares of common
stock outstanding) $ 750,819 $ 121,600
======================
COMPOSITION OF NET ASSETS
Shares of common stock $ 746,336 113,260
Accumulated net investment income 136 63
Net unrealized depreciation on investments 4,347 8,277
----------------------
Net assets at June 30, 1998 $ 750,819 121,600
======================
The accompanying notes are an integral part of these statements.
-2-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1998
Historical
Common Stocks - 84.3% Shares Cost Value
Computer software - 24.6%
Oracle Corporation 4,000 $ 109,061 $ 98,250
Network Associates, Inc. 750 23,371 35,906
--------- --------
132,432 134,156
Instruments - 11.0%
Thermedics, Inc. 2,500 42,338 30,937
Coherent, Inc. 1,700 34,250 29,166
--------- --------
76,558 60,103
Airline - 9.1%
ASA Holdings, Inc. 1,000 29,097 49,625
Shoes and Leather - 6.9%
Wolverine World Wide 1,700 36,106 37,400
Mining - 6.8%
Brush Wellman, Inc. 1,800 41,478 37,013
Automotive Parts - 6.5%
Standard Motor Products, Inc. 200 2,800 4,450
Superior Industries Intl 1,100 30,862 31,006
--------- --------
33,662 35,456
Utilities - 6.0%
Empire District Electric Co. 1,250 21,665 26,094
Texas Utilities Company 110 4,455 4,578
Nevada Power Company 80 1,620 2,060
--------- --------
27,740 32,732
Banking and Finance - 5.9%
Fiserv, Inc. 750 22,369 31,852
Electronics Components - 5.8%
Park Electrochemical Corp. 1,500 41,436 31,688
Industrial Services - 5.5%
Olsten Corporation 2,650 44,142 29,647
Medical Products and Supplies - 4.5%
Mentor Corporation 700 17,963 16,975
Vital Signs, Inc. 100 7,760 7,300
--------- --------
25,723 24,275
Leisure and Recreational - 2.3%
International Game Technology 150 2,797 3,637
Jackpot Enterprises, Inc. 726 7,804 9,120
--------- --------
10,601 12,757
Retail - 2.2%
Dollar General Corporation 243 3,857 9,614
Toys R Us, Inc. Holding Company 100 2,500 2,344
--------- --------
6,357 11,958
Beverage - 1.5%
Pepsico Incorporated 200 6,975 8,238
Pre-Fab Housing - 0.6%
Skyline Corporation 100 2,338 3,262
Telecommunications - 0.4%
Vertex Communications Corp. 100 2,125 2,350
Entertainment - 0.3%
Walt Disney Holding Co. 16 1,166 1,681
Restaurants/Food Service - 0.01%
Tricon Global Restaurant, Inc. 20 - 634
--------- ---------
TOTAL COMMON STOCKS $ 540,335 $ 544,827
--------- ---------
U.S. Government Obligations - 15.7%
U.S. Treasury Note - 100% $100,000 $ 100,832 $ 100,687
--------- ---------
TOTAL U.S. GOVERNMENT OBLIGATIONS $ 100,832 $ 100,687
--------- ---------
$ 641,167 $ 645,514
========= =========
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998 AND FOR THE PERIOD
FROM INCEPTION (FEBRUARY 1, 1997) TO JUNE 30, 1997
1998 1997
INVESTMENT INCOME:
Dividends $ 8,559 $ 1,634
Interest 5,301 -
--------- ---------
13,860 1,634
EXPENSES:
Management Fees 6,599 589
Reimbursement of Management Fees (3,303) -
Custody Fee - 35
Legal and Professional 3,000 -
Director's Fee 900 -
Amortization 814 444
Fidelity Bond 689 -
Taxes 637 -
Registration Fees 676 -
Bank Service Charges 404 -
Dues and Subscriptions 110 228
--------------------
10,526 1,296
--------------------
Investment income - net 3,334 338
--------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain from securities transactions 18 514
Unrealized appreciation (depreciation)
during the period (3,930) 8,277
--------------------
Net gain (loss) on investments (3,912) 8,791
====================
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (578) 9,129
====================
The accompanying notes are an integral part of these statements.
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1998 AND FOR THE PERIOD
FROM INCEPTION (FEBRUARY 1, 1997) TO JUNE 30, 1997
1998 1997
DECREASE IN NET ASSETS FROM OPERATIONS:
Investment income - net $ 3,334 $ 338
Net realized gain from securities transaction 18 514
Net change in unrealized appreciation of investments (3,930) 8,277
-------------------
Increase (decrease) in net assets from operations (578) 9,129
CAPITAL SHARE TRANSACTIONS
Sales (73,972.543 and 11,247.184 shares) 832,796 112,471
Redemptions (17,275.449 shares) (202,999) -
-------------------
Total capital share transactions 629,797 112,471
-------------------
Increase in net assets 629,219 121,600
NET ASSETS:
Beginning of period 121,600 -
-------------------
End of period $ 750,819 $ 121,600
===================
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(1) The Organization
The Unrestricted Series (the "Series") is a series of the Bullfinch
Fund, Inc. (the "Fund") was organized as a corporation in Mary-
land on January 29, 1997 and commenced operations on February 1, 1997.
The Fund had no operations prior to February 1, 1997 other than matters
relating to its organization and registration as an open-end, non-divers-
ified management investment company under the Investment Company Act of
1940, and its registration of securities under the Securities Act of
1933. On February 1, 1997, the Fund sold 11,247.184 shares of common
stock ("initial shares") to its initial, joint tenant investors.
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 Fund 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 sec-
urities are valued at amortized cost which approximates market value.
Federal Income Taxes -
For federal income tax purposes, the Fund is expected to qualify as a
regulated investment company under the provisions of the Internal Revenue
Code by distributing substantially all of its taxable net income (both
ordinary and capital gain) to its shareholders and complying with other
requirements for regulated investment companies. Therefore, no provision
for income taxes is required.
-5-
<PAGE>
Organization Expenses -
Organization expenses are being amortized over a 60-month period.
The Fund's initial shareholders have agreed that if any of the initial
shares are redeemed during the first 60 months of the Fund's operations
by any holder thereof, the proceeds of the redemption will be reduced by
the pro rata share of the unamortized organization expenses as of the date
of the redemption. The pro rata share by which the redemption proceeds
shall be reduced shall be derived by dividing the number of original
shares redeemed by the total number of original shares outstanding at the
time of the redemption.
Distributions to Shareholders -
The Series intends to distribute its net investment income and net
realized capital gains to its shareholders on June 30, 1998 and 1997 in
the form of stock dividends equal to 297.096 and 78.803 shares of stock.
Other -
The Series follows industry practice and records security transactions on
the trade date. The specific identification method is used for determin-
ing 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
accompanying notes. Actual results could differ from those estimates.
(3) Investments
For the year ended June 30, 1998, the Series purchased $50,455 of U.S.
Government obligations and $485,826 of common stock. During the same per-
iod, the Series sold $29 of common stock.
For the period ended June 30, 1997, the Series purchased $50,377 of U.S.
Government obligations and $5,541 of common stock. During the same per-
iod, the Series sold $7,663 of common stock and $256 of short-term in-
vestments.
At June 30, 1998, the gross unrealized appreciation for all securities
totaled $62,102 and the gross unrealized depreciation for all securities
totaled $57,755, or a net unrealized appreciation of $4,347. The aggre-
gate cost of securities for federal income tax purposes at June 30,
1998 was $641,167.
At June 30, 1997, the gross unrealized appreciation for all securities
totaled $9,862 and the gross unrealized depreciation for all securities
totaled $1,585, or a net unrealized appreciation of $8,277. The aggre-
gate cost of securities for federal income tax purposes at June 30,
1997 was $104,898.
(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 include selecting the investments and handling its business affairs.
-6-
<PAGE>
As compensation for its services to the Fund, the investment advisor re-
ceives 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.
(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 liquid-
ation rights. Transactions in capital stock were as follows:
Shares Amount
Shares sold during 1997 11,247.184 $ 112,471
Shares issued in 6/30/97 stock dividend 78.803 -
---------- -----------
11,325.987 112,471
---------- -----------
Shares sold during 1998 73,972.543 $ 832,796
Shares redeemed during 1998 (17,275.449) (202,999)
Shares issued in 6/30/98 stock dividend 297.096 -
---------- -----------
56,994.190 629,797
---------- -----------
68,320.177 742,268
========== ===========
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/
SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING
FOR THE YEAR ENDED JUNE 30, 1998 AND FOR THE PERIOD
FROM INCEPTION (FEBRUARY 1, 1997) TO JUNE 30, 1997
1998 1997
NET ASSET VALUE, beginning of period $ 10.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income - .03
Net gain on securities both realized and unrealized .30 .78
-------------------
.30 .81
-------------------
STOCK DIVIDEND (.05) (.07)
-------------------
NET ASSET VALUE, end of period $ 10.99 $ 10.74
===================
NET ASSETS, end of period $ 750,819 $ 121,600
===================
Actual Actual *
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.0% 1.1% *
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 0.6% .3% *
PORTFOLIO TURNOVER RATE - 6.9% *
* The ratios presented were calculated using operating data for the five
month period from inception (February 1, 1997) to June 30, 1997.
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
WESTERN NEW YORK SERIES
(A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF
JUNE 30, 1998
TOGETHER WITH
INDEPENDENT AUDITORS' REPORT
BONADIO & CO, LLP
Certified Public Accountants
1850 South Winton Road
Rochester, NY 14628
716-244-2000
Fax 716-244-5611
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Bullfinch Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of the
Western New York Series (a series within Bullfinch Fund, Inc.), including the
schedule of investments in securities, as of June 30, 1998, and the
related statements of operations, changes in net assets and the financial
highlights and related ratios/supplemental data for a share outstanding for the
period from inception (September 29, 1997)to June 30, 1998. These financial
statements and financial highlights and
related ratios/supplemental data for a share outstanding are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
statements and the financial highlights and related ratios/supplemental data for
a share outstanding based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial highlights
and related ratios/supplemental data 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, 1998, by correspondence with custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reason-
able basis for our opinion.
In our opinion, the financial statements, the financial highlights and related
ratios/supplemental data for a share outstanding referred to above present
fairly, in all material respects, the financial position of the Western New
York Series (a series within Bullfinch Fund, Inc.) as of June 30, 1998, and
the results of its operations, the change in its assets and the financial
highlights and related ratios/supplemental data for a share outstanding for the
period from inception (September 29, 1997) to June 30, 1998, in conformity with
generally accepted accounting principles.
BONADIO & CO., LLP
Rochester, New York
August 27, 1998
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
ASSETS
1998
Investments in securities, at fair value,
identified cost $136,357 $ 139,428
Cash 36,013
Accrued interest and dividends 172
Prepaid expenses 1,070
Due from Investment Adviser 3,016
Organization expenses, net of accumulated
amortization of $324 3,015
---------------------
Total assets 182,714
---------------------
LIABILITIES
Accounts payable 4,452
Due to Unrestricted Series 2,032
---------------------
6,484
NET ASSETS
Net assets (equivalent to $10.45 per share
based on 16,868.067 shares outstanding) $ 176,230
======================
COMPOSITION OF NET ASSETS
Shares of common stock $ 173,149
Accumulated net investment income 10
Net unrealized appreciation on investments 3,071
----------------------
Net assets at June 30, 1998 $ 176,230
======================
The accompanying notes are an integral part of these statements.
-10-
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1998
Historical
Common Stocks - 100% Shares Cost Value
Electrical Equipment - 12.2%
ACME Electric Corporation 1,750 $ 9,171 $ 8,422
PSC, Inc. 950 9,437 8,609
--------- --------
18,608 17,031
Industrial Materials - 10.5%
American Precision Industries 550 9,776 8,388
Servotronics, Inc. 600 5,624 6,300
--------- --------
15,400 14,688
Industrial Services - 8.9%
American Locker Group, Inc. 400 2,544 12,000
Medical Services - 6.1%
Rural/Metro Corporation 650 11,157 8,450
Machinery - 5.9%
Columbus McKinnon Corporation 100 2,344 2,600
Gleason Corporation 200 5,373 5,625
--------- --------
7,717 8,225
Furniture - 5.5%
Bush Industries, Inc. 350 9,107 7,613
Electronic Components - 5.4%
Astronics Corporation 550 5,021 7,563
Apparel - 5.2%
Hartmarx Corporation 950 7,484 7,184
Real Estate and Related - 5.1%
Sovran Self Storage 250 6,892 7,062
Computer Services - 4.8%
Computer Task Group, Inc. 200 6,681 6,700
Computer Hardware - 4.8%
Performance Technologies, Inc. 600 8,232 6,750
Manufacturing - 4.7%
Mark IV Industries, Inc. 300 6,462 6,487
Computer Software - 4.5%
Comptek Research, Inc. 700 4,971 6,213
Office Equipment - 4.2%
Danka Business Systems, ADR 500 7,834 5,906
Steel - 3.7%
Gibraltar Steel Corporation 250 4,820 5,125
Medical Products and Supplies - 3.5%
Bausch & Lomb, Inc. 100 3,944 5,012
Commercial Services - 2.9%
Paychex, Inc. 100 4,412 4,069
Environment Services - 2.4%
Sevenson Environmental Srvs, Inc 400 5,071 3,350
--------- ---------
TOTAL COMMON STOCK $ 136,357 $ 139,428
========= =========
The accompanying notes are an integral part of these statements.
-11-
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 29, 1997)
TO JUNE 30, 1998
INVESTMENT INCOME:
Dividends $ 1,705
Interest 1,121
---------
2,826
---------
EXPENSES:
Management Fees 1,214
Reimbursement of Management Fees (3,016)
Legal and Professional 3,000
Director's Fee 300
Amortization 324
Fidelity Bond 230
Taxes 238
Registration Fees 341
--------------------
2,631
--------------------
Investment income - net 195
--------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Unrealized appreciation during the period 3,071
--------------------
Net gain on investments 3,071
--------------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,266
====================
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 29, 1997)
TO JUNE 30, 1998
DECREASE IN NET ASSETS FROM OPERATIONS:
Investment income - net $ 195
Net change in unrealized appreciation of investments 3,071
-------------------
Increase in net assets from operations 3,266
CAPITAL SHARE TRANSACTIONS (16,850.33 shares) 172,964
-------------------
Increase in net assets 176,230
NET ASSETS:
Beginning of period -
-------------------
End of period $ 176,230
===================
The accompanying notes are an integral part of these statements.
-13-
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(1) The Organization
The Western New York Series (the "Series") is a series of the Bullfinch
Fund, Inc. (the "Fund") was organized as a corporation in Mary-
land on January 29, 1997 as an open-end, non-diversified management
investment company under the Investment Company Act of
1940, and its registration of securities under the Securities Act of
1933. On September 29, 1997, the Fund sold 10,500 shares of the
Series to its initial investor for $105,000.
The investment objective of the Series is to seek capital appreciation
through the investment in common stock of companies with in 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 Fund 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 sec-
urities are valued at amortized cost which approximates market value.
Federal Income Taxes -
For federal income tax purposes, the Fund is expected to qualify as a
regulated investment company under the provisions of the Internal Revenue
Code by distributing substantially all of its taxable net income (both
ordinary and capital gain) to its shareholders and complying with other
requirements for regulated investment companies. Therefore, no provision
for income taxes is required.
-14-
<PAGE>
Organization Expenses -
Organization expenses are being amortized over a 60-month period.
The Series' initial shareholders have agreed that if any of the initial
shares are redeemed during the first 60 months of the Series' operations
by any holder thereof, the proceeds of the redemption will be reduced by
the pro rata share of the unamortized organization expenses as of the date
of the redemption. The pro rata share by which the redemption proceeds
shall be reduced shall be derived by dividing the number of original
shares redeemed by the total number of original shares outstanding at the
time of the redemption.
Distributions to Shareholders -
The Fund has distributed its net investment income and net realized
capital gains to its shareholders on June 30, 1998 in the form of stock
dividends equal to 17.737 shares of stock.
Other -
The Series follows industry practice and records security transactions on
the trade date. The specific identification method is used for determin-
ing 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
accompanying notes. Actual results could differ from those estimates.
(3) Investments
For the period ended June 30, 1998, the Series purchased $98,879 of U.S.
Government obligations and $136,357 of common stock.
At June 30, 1998, the gross unrealized appreciation for all securities
totaled $16,011 and the gross unrealized depreciation for all securities
totaled $12,940, or a net unrealized appreciation of $3,071. The aggre-
gate cost of securities for federal income tax purposes at June 30,
1998 was $136,357.
(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 include selecting the investments and handling its business affairs.
-15-
<PAGE>
As compensation for its services to the Fund, the investment advisor re-
ceives 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.
(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 liquid-
ation rights. Transactions in capital stock were as follows:
Shares Amount
Shares sold during 1998 16,850.330 $ 172,964
Shares issued in 6/30/98 stock dividend 17.737 -
---------- -----------
16,868.067 172,964
========== ===========
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 INCEPTION (SEPTEMBER 29, 1997)
TO JUNE 30, 1998
NET ASSET VALUE, beginning of period $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .02
Net gain on securities both realized and unrealized .44
-------------------
.46
-------------------
STOCK DIVIDEND (.01)
-------------------
NET ASSET VALUE, end of period $ 10.45
===================
NET ASSETS, end of period $ 176,230
===================
Actual*
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.0%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 0.2%*
PORTFOLIO TURNOVER RATE -
* The ratios presented were calculated using operating data for the five
month period from inception (September 29, 1997) to June 30, 1998.
The accompanying notes are an integral part of these statements.
-16-
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