UNITED STATES
Securities and Exchange Commission
Washington, DC. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Post-Effective Amendment No. 10 X
and
THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 10 X
Bullfinch Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
2 Lantern Lane, Honeoye Falls, NY 14472
(Address of Principal Executive Offices)
716-624-1758
(Registrant's Telephone Number)
Christopher Carosa 2 Lantern Lane Honeoye Falls, NY 14472
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration.
- -------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box)
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of rule 485
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Cross Reference Sheet
INFORMATION REQUIRED LOCATIONS IN PROSECTUS
Part A: IN A PROSPECTUS
Item 1. Cover Page and Back Cover Page and Back Page
Item 2. Risk/Return Summary: THE FUND AND ITS INVESTMENT
Investments, Risks and Performance OBJECTIVE
Item 3. Risk/Return Summary: Fees Table FUND EXPENSES
Item 4. Investment Objectives, Principal ADDITIONAL INFORMATION ABOUT
Investment Strategies, and Related Risks INVESTMENT STRATEGIES
Item 5. Management Discussion of the Fund's SEE PART B
Performance
Item 6. Management, Organization, and MANAGEMENT
Capital Structure
Item 7. Shareholder Information PRICING OF SHARES
Item 8. Distribution Arrangements NOT APPLICABLE
Item 9. Financial Highlights Information FINANCIAL HIGHLIGHTS
Part B: STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page and Table of Contents
Item 11. Fund History
Item 12. Description of the Fund and its Investments and Its Risks
Item 13. Management of the Fund
Item 14. Control Persons and Principal Holders of Securities
Item 15. Investment Advisory and Other Services
Item 16. Brokerage Allocation and Other Practices
Item 17. Capital Stock & Other Securities
Item 18. Purchase, Redemption & Pricing of Shares
Item 19. Taxation of the Fund
Item 20. Underwriters Not Applicable
Item 21. Calculation of Performance Data
Item 22. Financial Statements
Part C: OTHER INFORMATION
Item 23. Exhibits
Item 24. Persons Controlled by/or Under Common Control with the Fund
Item 25. Indemnification
Item 26. Business & Other Connections of the Investment Adviser
Item 27. Principal Underwriters
Item 28. Location of Accounts & Records
Item 29. Management Services Not Applicable
Item 30. Undertakings Not Applicable
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BULLFINCH FUND, INC.
2 LANTERN LANE, HONOEYE FALLS, NY 14472
1-888-BULLFINCH (1-888-285-5346) 716-624-1758
PROSPECTUS October 15, 1999
The Bullfinch Family of Mutual Funds
The Bullfinch Fund, Inc. (the "Fund") is an open-end non-diversified manage-
ment investment company that offers separate series - the Unrestricted Series
and the Western New York Series - (individually and collectively known as the
"Series"), each a separate investment portfolio having its own investment
objective and policies.
Unrestricted Series
The Unrestricted Series seeks conservative long-term growth in capital through
a mix of investments consisting primarily of exchange listed and over-the-
counter common stocks as well as U.S. government securities maturing within
five years.
Western New York Series
The Western New York Series seeks capital appreciation through a mix of
investments consisting primarily of exchange-listed and over-the-counter common
stocks of companies with an important economic presence in the Greater Western
New York Region as well as U.S. government securities maturing within five
years.
It is important to note that the Fund's shares are not guaranteed or insured by
the FDIC or any other agency of the U.S. government. As with any investment in
common stocks, which are subject to wide fluctuations in market value, you
could lose money by investing in the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE
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THE FUND AND ITS INVESTMENT OBJECTIVE
UNRESTRICTED SERIES -
The Unrestricted Series seeks conservative long-term growth in capital through
a mix of investments consisting primarily of exchange listed and over-the-
counter common stocks as well as U.S. government securities maturing within
five years.
WESTERN NEW YORK SERIES
The Western New York Series seeks capital appreciation through a mix of
investments consisting primarily of exchange-listed and over-the-counter common
stocks of companies with an important economic presence in the Greater Western
New York Region as well as U.S. government securities maturing within five
years.
THE FUND'S INVESTMENT STRATEGY
Each Series uses a Value approach in its securities selection
process. The Adviser emphasizes fundamental corporate considerations related
to the prospects of the issuer and its industry. Depending on its view of their
relative attractiveness in light of market and economic conditions, the Adviser
will vary the proportions invested among common stocks and U.S. government
securities maturing within five years. Assets in the Unrestricted Series may be
invested in money market funds for temporary investment.
Each Series is willing to invest in the securities of companies
with small, medium and large capitalization. The Adviser classifies and
compares potential investments using the following criteria:
Balance Sheet (emphasizing low debt and sufficient working capital)
Income Statement Data (emphasizing at least modest earnings growth)
The Company's Current Dividend Policy (emphasizing growth)
Stock Price (looking for historically low valuations)
The Adviser believes each Series will make the most money by investing in
companies with strong financials whose stocks sell at historically low prices.
The Adviser uses the above criteria in order to, over long periods of time,
increase potential returns and reduce the risk of price declines of the
investments of each Series. The Adviser may purchase a particular company's
stock with up to 25% of each Series' assets. Each Series' willingness to place
a large percentage of its assets in a single stock does distinguish it from
most other funds.
Each Series' investment objective is not fundamental and may be
changed by the Board of Directors without shareholder approval; however, it is
the Board of Directors' policy to notify shareholders prior to any material
change in any Series' objective.
SPECIAL NOTE FOR INVESTORS IN THE WESTERN NEW YORK SERIES: Under normal
conditions, the Adviser invests at least 65% of the Fund's total assets in
securities of companies with an important economic presence in the
Greater Western New York Region of New York. In addition to the equity
selection criteria described above, the Adviser may also consider industry
diversification, liquidity, and market capitalization. To be eligible for
inclusion in the Western New York Series' portfolio, a stock currently must
meet the following criteria:
The stock must be issued either by a company that employs at least fifty
persons in the Greater Western New York Region; or
The stock must be issued by a Company that has a capital investment
(including annual payroll) in the Greater Western New York Region of
greater than $1,000,000; or,
The stock must be of a Company that maintains its corporate headquarters
in the Greater Western New York Region.
The Greater Western New York Region includes the following New York State
Counties: Erie, Niagara, Chautauqua, Cattaraugus, Orleans, Genesee, Wyoming,
Allegany, Monroe, Livingston, Steuben, Wayne, Ontario, Yates
RISKS OF THE FUND
Each Series' return, as stock prices generally, may fluctuate within a wide
range, so that an investor could lose money. Because each Series invests a
higher percentage of assets in fewer holdings than the average stock fund does,
each Series is subject to the risk of a price decline or loss due to a change
in value of one, or a few of its stockholdings. An additional risk will be
from each Series' investments in small and medium capitalization (cap) stocks.
Generally, these stocks have higher risks of business failure, lesser liquidity
and greater volatility in market price. Due to these factors small and medium
cap stocks have greater possibility of price decline or loss as compared to
large cap stocks. Since the Fund may hold small, medium and large cap stocks
it is riskier than a fund which holds only large cap stocks.
SPECIAL NOTE FOR INVESTORS IN THE WESTERN NEW YORK SERIES: Changes and
developments in the economic environment of Western New York State may have a
disproportionate effect on the Western New York Series' portfolio.
WHO SHOULD INVEST? Investors who are seeking potential long-term appreciation
and are willing to own stocks, in a portfolio, selected and managed by the
Fund's investment adviser. Long-term, as determined by management and the
investment adviser, is at least five years.
WHO SHOULD NOT INVEST? Investors not willing to accept the risks of owning
stocks in a managed portfolio. The Series are not for investors seeking to
trade the stock market for short-term fluctuations.
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the risks of
investing in the Unrestricted Series of the Western New York Series by showing
changes in each Series' performance from year to year over a 3-year period and
by showing how each Series' average annual returns for one and three years
compare to those of a broad-based securities market index. How each Series has
performed in the past is not necessarily an indication of how each Series will
perform in the future.
8%
10% XX
5% XX
0% XX
- - 5% XX
- -10% XX
-10%
1998 1998
Unrestricted Series Western New York Series
For the first three quarters of the year 1999 (ending September 30, 1999), the
year-to-date return of the Unrestricted Series was -1.40% and for the Western
New York Series was -0.55%. For the Unrestricted Series since inception, the
highest return for a quarter was 22.50% while the worst return for a quarter
was -14.74%. These returns occurred in quarters ending December 31, 1998 and
September 30, 1998, respectively. For the Western New York Series since
inception the highest return for a quarter was 12.26% while the worst return
for a quarter was -15.98%. These returns occurred in quarters ending June 30,
1999 and September 30, 1998, respectively.
Average Annual Total Returns for Year Ending December 31, 1998
Since Inception
One Year (July 24, 1997) (December 30, 1997)
Unrestricted Series 8.25% 3.31%
Western New York Series (10.33%) (5.96%)
Value Line Index* 5.82% 8.65% 6.13%
*The Value Line Index is an unmanaged index of 1,617 common stock prices.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Unrestricted Western New York
Series Series
Maximum Sales Charge (Load) imposed
on Purchases None None
Maximum Deferred Sales Charge (Load) None None
Maximum Sales Charge (Load) imposed
on Reinvested Dividends None None
Redemption Fee (as a percentage of
amount redeemed, if applicable) None None
Exchange Fee None None
IRA Trustee Fees** None None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Unrestricted Western New York
Series Series
Management Fees (before fee waiver)* 1.25% 1.25%
Distribution [and/or Service](12b-1) Fees None None
Other Expenses* 1.05% 4.15%
Total Annual Fund Operating Expenses
(before fee waiver)* 2.30% 5.40%
* The actual expense ratio for each Series was 2.00%. To cap the ratio of each
Series at 2.00%, the Manager, per its contract, reimbursed the Unrestricted
Series a total of $1,479 and the Western New York Series a total of $5,924.
** Each IRA with account value of $10,000 or more will not be charged IRA
Trustee Fees. IRA's with less than $10,000 may be charged $45 annually for
IRA Trustee Fees on the discretion of the Fund's Management or Directors.
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in each Series for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assures you that your investment has a 5% return each year and
that Each Series' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
Unrestricted Series
1 year*** 3 years*** 5 years*** 10 years***
$ 230 $ 725 $1,271 $2,893
Western New York Series
1 year*** 3 years*** 5 years*** 10 years***
$ 540 $1,702 $2,984 $6,792
*** Because the Adviser is contractually obligated to reimburse each Series so
to cap the expense ratio at 2%, the actual total cost for 1 year would be $200;
for 3 years the cost would be $631; for 5 years the cost would be $1,105; and
for 10 years the cost would be $2,516
ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES
AND RISK CONSIDERATIONS
There is no guarantee that the adviser's valuations are accurate. Even when a
stock is purchased below its perceived fair value, there may be unforeseen
changes in the business which may lead to a decline in value for the stock.
Portfolio Turnover Policy: Neither Series purchases securities for short term
trading in the ordinary course of operations. Accordingly, it is expected that
the annual turnover rate for each individual Series will not exceed 50%,
wherein turnover is computed by dividing the lesser of each individual Series'
total purchases or sales of securities within the period by the average monthly
portfolio value of each individual Series during such period. There may be
times when management deems it advisable to substantially alter the composition
of the portfolio, in which event, the portfolio turnover rate might substant-
ially exceed 50%; this would only result from special circumstances and not
from the normal operations of either Series.
Non-diversification Policy: Each Series is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets in
the securities of a limited number of issuers. Each Series, therefore, may be
more susceptible than a diversified fund to any single economic, political, or
regulatory occurrence. The policy of each Series, in the intention of achieving
their objective, is, therefore, one of selective investments rather than
diversification. Each Series seeks only the required diversification necessary
to maintain its federal non-taxable status under Sub-Chapter M of the Internal
Revenue Code (see the Tax Status Section of this prospectus).
UNRESTRICTED SERIES
Objective & Policies: The investment objective of the Unrestricted Series is
to seek conservative long term growth in capital. The Unrestricted Series in-
vests primarily in exchange listed and over-the-counter common stocks, and U.S.
government obligations maturing within five years. As such, the Unrestricted
Series has no current intention to invest in illiquid securities. To the extent
feasible, the Adviser will endeavor to emphasize fundamental corporate con-
siderations related to the prospects of the issuer and its industry. Depending
on its view of their relative attractiveness in light of market and economic
conditions, the Adviser will vary the proportions invested among common stocks
(see Equity Selection Criteria below) and U.S. government securities maturing
within five years. Assets in the Unrestricted Series may be invested in money
market funds for temporary investment.
Risk Factors: Risks associated with the Unrestricted Series' performance will
be those due to broad market declines and the decline in the price of partic-
ular companies held in the Unrestricted Series' portfolio. Because the Unre-
stricted Series' investments fluctuate in value, the Unrestricted Series'
shares will fluctuate in value. The Adviser seeks to reduce the risk of nega-
tive returns while seeking to obtain long term capital growth when it believes
valuations and market conditions are favorable. It must be realized, as is true
of almost all securities, there can be no assurance that the Unrestricted
Series will attain its objective.
The Unrestricted Series' investment objective is not fundamental and may be
changed by the Board of Directors without shareholder approval; however, it is
the Board of Directors' policy to notify shareholders prior to any material
change in the Unrestricted Series' objective.
Equity Selection Criteria: Criteria used by the Adviser to classify equities
includes balance sheet and income statement data, historical pricing valuations
and the stock's current dividend policy.
WESTERN NEW YORK SERIES
Objective & Policies: The investment objective of the Western New York Series
is to seek capital appreciation through investment in the common stock of
companies with an important economic presence in the Greater Western New York
Region of New York State. Under normal conditions, the Adviser invests at least
65% of the Fund's total assets in securities of companies with an important
economic presence in the Greater Western New York Region of New York (see
Equity Selection Criteria below). The Western New York Series invests primarily
in exchange listed and over-the-counter common stocks, and U.S. government
obligations maturing within five years. These U.S. government obligations will
typically be U.S. Treasury Bills and U.S. Treasury Notes which are supported by
the full faith and credit of the United States. As such, the Western New York
Series has no current intention to invest in illiquid securities. To the extent
feasible, the Adviser will endeavor to emphasize fundamental corporate
considerations related to the prospects of the issuer and its industry.
Depending on its view of their relative attractiveness in light of market and
economic conditions, the Adviser will vary the proportions invested among
common stocks (see Equity Selection Criteria below) and U.S. government
securities maturing within five years. Assets in the Western New York Series
may be invested in money market funds for temporary investment.
Risk Factors: Risks associated with the Western New York Series' performance
will be those due to broad market declines and the decline in the price of
particular companies held in the Western New York Series' portfolio. Changes
and developments in the economic environment of Western New York State may
have a disproportionate effect on the Western New York Series' portfolio.
Because the Western New York Series' investments fluctuate in value, the
Western New York Series' shares will fluctuate in value. The Adviser seeks to
reduce the risk of negative returns while seeking to obtain capital apprecia-
tion when it believes valuations and market conditions are favorable. It
must be realized, as is true of almost all securities, there can be no assur-
ance that the Western New York Series will attain its objective.
The Western New York Series' investment objective is not fundamental and may be
changed by the Board of Directors without shareholder approval; however, it is
the Board of Directors' policy to notify shareholders prior to any material
change in the Western New York Series' objective.
Equity Selection Criteria: Criteria used by the Adviser to classify equities
includes balance sheet and income statement data, historical pricing valuations
and the stock's current dividend policy. The Adviser may also consider industry
diversification, liquidity, and market capitalization. To be eligible for inclu-
sion in the Western New York Series' portfolio, a stock currently must meet the
following criteria: the stock must be issued either by a company that employs at
least fifty persons in the Greater Western New York Region, or issued by a Comp-
any which has a capital investment (including annual payroll) in the Greater
Western New York Region of greater than $1,000,000, or by a Company that main-
tains its corporate headquarters in the Greater Western New York Region. The
Greater Western New York Region includes the following New York State Counties:
Erie, Niagara, Chautauqua, Cattaraugus, Orleans, Genesee, Wyoming, Allegany,
Monroe, Livingston, Steuben, Wayne, Ontario, Yates.
ADDITIONAL INVESTMENT RESTRICTIONS
By-laws of the Fund provide the following fundamental investment restrictions;
The Fund may not, except by the approval of a majority of the outstanding
shares; i.e. a) 67% or more of the voting securities present at a duly called
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or b) of more than 50% of the outstanding
voting securities, whichever is less:
(a) Act as underwriter for securities of other issuers except insofar as the
Fund may be deemed an underwriter in selling its own portfolio securities.
(b) Borrow money or purchase securities on margin, but may obtain such short
term credit as may be necessary for clearance of purchases and sales of se-
curities for temporary or emergency purposes in an amount not exceeding 5%
of the value of its total assets.
(c) Sell securities short.
(d) Invest in securities of other investment companies (other than money market
funds for temporary investment) except as part of a merger, consolidation,
or purchase of assets approved by the Fund's shareholders or by purchases
with no more than 10% of the Fund's assets in the open market involving
only customary brokers commissions.
(e) Invest 25% or more of its total assets at the time of purchase in any one
industry (other than U.S. Government Securities).
(f) Make investments in commodities, commodity contracts or real estate although
the Fund may purchase and sell securities of companies which deal in real
estate or interests therein.
(g) Make loans. The purchase of a portion of a readily marketable issue of pub-
licly distributed bonds, debentures or other debt securities will not be
considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another issuer,
(other than securities issued or guaranteed by the United States Govern-
ment, its agencies or its instrumentalities) treating all preferred secur-
ities of an issuer as a single class and all debt securities as a single
class, or acquire more than 10% of the voting securities of another issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) The Fund may not purchase or retain securities of any issuer if those offi-
cers and directors of the Fund or its Investment Adviser owning individual-
ly more than 1/2 of 1% of any class of security or collectively own more
than 5% of such class of securities of such issuer.
(k) Pledge, mortgage or hypothecate any of its assets.
(l) Invest in securities which may be subject to registration under the Securi-
ties Act of 1933 prior to sale to the public or which are not at the time of
purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market value at the
time of purchase, in securities of companies with less than three years'
continuous operation, including the operations of any predecessor.
(n) Issue senior securities.
INVESTMENT ADVISER
The overall business and affairs of the Fund is managed by the Fund's Board of
Directors. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to the Fund, including the Fund's
agreements with its Investment Adviser and Custodian. The day-to-day operations
of the Fund are delegated to the Fund's officers and to Carosa, Stanton &
DePaolo Asset Management, LLC (the "Adviser"), 8 East Street Suite 200, Honeoye
Falls, New York 14472. Christopher Carosa, President of the Fund and President
of the Fund's Investment Adviser, will be primarily responsible for the day-to-
day management of the Series' portfolios.
The Board meets regularly four times a year to review Fund progress and status.
The Board may convene a special meeting under certain circumstances. In addi-
tion, the Board may ask a non-interested Director to perform an independent
audit as requested by the Board.
Carosa, Stanton & DePaolo Asset Management, LLC is a New York Limited Liability
Company that acts as an Investment Adviser to the Fund. Carosa, Stanton &
DePaolo Asset Management, LLC, began accepting private portfolio management
clients in February of 1997 and currently manages ten portfolios and has more
than four million dollars under management as of October 1999. Christopher
Carosa and Gordon R. Stanton established the firm in late 1996 as the
principal members & officers and are, respectively, are the President and Vice-
President of the Fund. Anthony R. DePaolo joined the firm in September 1997 as
a principal member and officer. Mr. DePaolo is a Vice-President of the Fund.
In July 1998, Bradford L. McAdam joined the firm and is a Vice-President of
the Fund.
Mr. Carosa has direct responsibility for day to day management of the Series'
portfolios. He has a B.S. (Intensive) in Physics and Astronomy from Yale Uni-
versity and an MBA in Finance and Marketing from the University of Rochester's
William E. Simon Graduate School of Business. He began his career in 1982 with
Manning & Napier Advisors, Inc. When he left Manning & Napier in the summer of
1996 to begin writing finance books, he was a Managing Director and member of
the Funds Group as well as Executive Vice President and Senior Trust Officer
for Exeter Trust Company, an affiliate of Manning & Napier. At the time of his
departure, Mr. Carosa was responsible for custody and trust operations for more
than 700 accounts with assets approaching $1 billion and he was a member of the
Trust and Investment Committee.
Mr. Stanton has a B.A. in Architecture from Yale University and an MBA in
Finance, Economics and Management for the Stern School of Business. Mr.
Stanton's most recent experience has been as owner of a company which produced
laser light shows. He also has extensive experience working for non-profit
organizations. Mr. Carosa & Mr. Stanton had been the members of the management
committee of a private investment partnership formed in July of 1987. In order
to permit other investors to participate in the investment objective of this
partnership, in early 1997 the partners voted to convert that partnership into
a public no-load mutual fund and formalize Mr. Carosa's and Mr. Stanton's duties
by selecting their firm to be investment adviser.
Mr. DePaolo has a B.S. in Political Science from the State University of New
York and a AAS in Sociology from Erie Community College. Mr. DePaolo's most
recent experience has been as General Manager and Director of Client Services
at Howe & Rusling, a registered investment adviser. Previously, Mr. DePaolo
served as Director of Business Development at the Burke Group, a employee
benefits/pension consultant and as Senior Vice President of IMPCO, a direct
marketing firm.
Mr. McAdam holds an MBA in Public Accounting and Management Systemns as well
as a B.A. in Economics from Cornell University. He is also a Certified Public
Accountant and a Chartered Financial Analyst. Mr. McAdams most recent exper-
Ience has been as Director of Research for Steven Charles, a registered invest-
Ment adviser. Before that, he served as a Senior Securities Analyst for Manning
& Napier Advisors, Inc.
The Board of Directors include former partners of the private investment part-
nership. The Partnership and the Unrestricted Series have a substantially
similar or the same investment objective. On September 24, 1997 the Board of
Directors of Fund reviewed an Investment Management Agreement with Carosa,
Stanton & DePaolo Asset Management, LLC, which was unanimously approved by the
Board of Directors. This Agreement will continue on a year to year basis, as
amended, provided that approval is voted at least annually by specific approval
of the Board of Directors of the Fund or by vote of the holders of a majority
of the outstanding voting securities of the Series, but, in either event, it
must also be approved by a majority of the directors of the Fund who are
neither parties to the agreement nor interested persons as defined in the
Investment Company Act of 1940 at a meeting called for the purpose of voting
on such approval. Under the Agreement, Carosa, Stanton & DePaolo Asset Manage-
ment, LLC will furnish investment advice to the Fund on the basis of a
continuous review of the portfolio and recommend when and to what extent
securities should be purchased or disposed. The Agreement may be terminated at
any time, without the payment of any penalty, by the Board of Directors or by
vote of a majority of the outstanding voting securities of the Series on at
least 60 days' written notice to Carosa, Stanton & DePaolo Asset Management,
LLC. In the event of its assignment, the Agreement will terminate automatically.
Ultimate decisions as to the investment objective and policies are made by the
Fund's directors. For these services the Fund has agreed to pay to the Adviser
a fee of 1.25% per year on the first million dollars of net assets of each Ser-
ies and 1.0% per year on the remaining portion of net assets of each Series.
All fees are computed on the average daily closing net asset value of each Ser-
ies and are payable monthly in arrears. The Adviser will forgo sufficient fees
to hold the total expenses of each Series to less than 2.0% of the first $10
million in assets and 1.5% of the next $20 million.
For the fiscal year ending June 30, 1999, the Unrestricted Series paid the
Adviser a fee of $8,102 and the Adviser reimbursed the Series $1,479 for a
total aggregate fee of $6,623 or 0.89% of the average net assets of the Series.
For the fiscal year ending June 30, 1999, the Western New York Series paid the
Adviser a fee of $2,042 and the Adviser reimbursed the Series $5,924 for a
total aggregate fee of ($3,882) or (2.2)% of the average net assets of the
Series.
Pursuant to its contract with the Fund, the Investment Adviser is required to
render research, statistical, and Advisory services to the Fund; to make specif-
ic recommendations based on each Series' investment requirements; and to pay the
salaries of those of the Fund's employees who may be officers or directors or
employees of the Investment Adviser. The Fund is responsible for the operat-
ing expenses of each Series, including:
- interest and taxes;
- brokerage commissions;
- insurance premiums
- compensation and expenses of its Directors other than those affiliated
with the Adviser;
- legal and audit expenses;
- fees and expenses of each Series' Custodian, and Accounting Services
Agent, if obtained for any Series from an entity other than the
Adviser;
- expenses incidental to the issuance of its shares, including issuance
on the payment of, or reinvestment of, dividends and capital gain
distributions;
- fees and expenses incidental to the registration under federal or
state securities laws of the Fund and each Series or its shares;
- expenses of preparing, printing and mailing reports and notices and
proxy material to shareholders of any Series;
- all other expenses incidental to holding meetings of the shareholders;
- dues or assessments of or contributions to the Investment Company
Institute or any successor; and
- such non-recurring expenses as may arise, including litigation
affecting the Fund and the legal obligations with respect to which
the Fund may have to indemnify its Officers and Directors.
The Investment Management Agreement states that in connection with its duties
to arrange for the purchase and the sale of securities held in the portfolio of
each Series by placing purchase and sale orders for each Series, the Adviser
shall select such broker-dealers ("brokers") as shall, in the Adviser's
judgment, implement the policy of each Series to achieve "best execution",
i.e., prompt and efficient execution at the most favorable securities price. In
making such selection, the Adviser is authorized in the Agreement to consider
the reliability, integrity and financial condition of the broker, the size and
difficulty in executing the order and the value of the expected contribution of
the broker to the investment performance of each Series on a continuing basis.
The Adviser is also authorized to consider whether a broker provides brokerage
and/or research services to each Series and/or other accounts of the Adviser.
Information or services may include economic studies, industry studies, stat-
istical analyses, corporate reports, or other forms of assistance to each
Series or its Adviser. No effort will be made to determine the value of these
services or the amount they may reduce expenses of the Adviser or each Series.
The Board of Directors will evaluate and review the reasonableness of
brokerage commissions paid on a monthly basis initially and after the first
year of operation at least semiannually.
The Adviser may use its own resources to engage in activities that promote
the sale of the Series, including payments to third-parties who provide share-
holder support servicing and distribution assistance. Investors may be charged
a fee if they effect transactions through a broker or agent.
LEGAL PROCEEDINGS
As of the date of this prospectus, there was no pending or threatened litigation
involving the Fund in any capacity whatsoever.
CAPITALIZATION
Description of Common Stock: The authorized capitalization of the Fund consists
of 10,000,000 shares of common stock of $0.01 par value per share. Each share
has equal dividend, distribution and liquidation rights. There are no conver-
sion or pre-emptive rights applicable to any shares of the Fund. All shares
issued are fully paid and non-accessible.
Voting Rights: Each holder of common stock has one vote for each share held
and fractional shares will have an equivalent fractional vote. Voting rights
are non-cumulative.
PRICING OF SHARES
The net asset value of the Series' shares is determined as of the close of busi-
ness of the New York Stock Exchange (the "Exchange") on each business day of
which that Exchange is open. The Exchange annually announces the days on which
it will not be open for trading; the most recent announcement indicates that
it will not be open on: New Year's Day, Martin Luther King's Birthday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The price is determined by dividing the val-
ue of its securities, plus any cash and other assets less all liabilities, ex-
cluding capital surplus, by the number of shares outstanding.
Securities traded on national securities exchanges or the NASDAQ National Market
System are valued at the closing prices of the securities on these exchanges and
securities traded on over-the-counter markets are valued daily at the closing
bid prices.
Short term paper (debt obligations that mature in less than 60 days) is valued
at amortized cost which approximates market value. Other assets are valued at
fair value as determined in good faith by the Board of Directors.
PURCHASE OF SHARES AND REINVESTMENTS
The offering price of the shares offered by the Fund for any Series is at the
net asset value per share next determined after receipt of the purchase order
by the Fund and is computed in the manner described under the caption "PRICING
OF SHARES" in this Prospectus. The Series reserves the right at its sole dis-
cretion to terminate the offering of its shares made by this Prospectus at any
time and to reject purchase applications when, in the judgment of management
such termination or rejection is in the best interests of the Fund.
Payment may be made by wire. A purchase order will be effective as of the day
the check is received by the Fund if the Fund receives the check before the
close of regular trading on the New York Stock Exchange, normally 4:00 p.m.,
Eastern time. If payment is made by wire, the purchase order will be effective
the day payment is received by the Series' custodian. The purchase price of
shares of any Series is the net asset value determined on the day the purchase
order is effective.
The shares of any Series may be purchased in exchange for securities to
be included in that Series, subject to the Adviser's determination that these
securities are acceptable. Securities accepted in an exchange will be valued
using the same valuation method the Series uses to value portfolio securities.
All accrued interest and purchase or other rights which are reflected in the
market price of accepted securities at the time of valuation become the prop-
erty of the Series and must be delivered by the shareholder to the Series upon
receipt from the issuer. Shares issued in exchanged for securities will be
priced at the net asset value calculated on the day of exchange.
The day of exchange will be the day the securities are received by the Fund if
the Fund receives the securities before the close of regular trading on the New
York Stock Exchange, normally 4:00 p.m., Eastern time. If the transfer is made
by electronic delivery, the day of exchange will be the day the securities are
received by the Series' custodian.
The Adviser will not accept securities in exchange for shares of the Series
unless (1) such securities would normally qualify for purchase by the Series
at the time of the exchange; (2) the shareholder represents and agrees that
all securities offered to the Series are not subject to any restrictions upon
their sale by the Series under the Securities Act of 1933, or otherwise; and
(3) the Series is able to value the securities in a manner consistent with the
valuation method the Series uses to value portfolio securities.
Initial Investments: Initial purchase of shares of the Series may be made on-
ly by application submitted to the Fund. For the convenience of investors, a
Share Purchase Application form is provided with this Prospectus. The minimum
initial purchase of shares is $2,500 ($500 for IRAs). Less may be accepted
under special circumstances.
Subsequent Purchases: Subsequent purchases may be made by check or readily
available funds and may be made in writing (including an electronic trans-
mission) or by telephone. Shareholders wishing to make subsequent purchases
by telephone must first elect the privilege by writing to the Fund. The
minimum subsequent purchase is $250 ($50 for IRAs), but less may be accepted
under special circumstances.
Exchanges Between Series: To purchase shares by exchanging from another Series,
please call the Bullfinch Fund shareholder services at 1-888-BULLFINCH (1-888-
285-5346) for instructions. Your exchange will be based on the closing net
asset value per share next determined after your purchase order is effective.
There is no charge for exchanges between Series. Generally, an exchange between
Series is a taxable event. State securities laws may restrict your ability to
make exchanges. The Fund reserves the right to temporarily or permanently term-
inate the exchange privilege for any shareholder who makes an excessive number
of exchanges between Series. Anything greater than 3 exchanges within six months
will be considered excessive. You will receive advance written notice that the
Fund intends to limit your use of the exchange privilege. The Fund also re-
serves the right to terminate or modify the exchange privilege at any time upon
30 days advance written notice or to refuse any exchange request.
Re-Investments: The Fund will automatically retain and reinvest dividends
and capital gains distributions in fractional shares and use same for the pur-
chase of additional shares for the shareholder at net asset value as of the
close of business on the distribution date. A shareholder may at any time by
letter or forms supplied by the Fund direct the Fund to pay dividend and/
or capital gains distributions, if any, to such shareholder in cash.
Fractional Shares: Fractional shares may be purchased. The Fund will
maintain an account for each shareholder of shares for which no certificates
have been issued.
INDIVIDUAL RETIREMENT ACCOUNTS
You may purchase shares for an individual retirement accounts ("IRA") including
Roth IRA's, SEP's, and Simple IRA's. IRA investments are available for the
following:
- Regular contributions
- Rollover of certain employer sponsored pension and profit-sharing plan
distributions.
- Transfers from other IRA's
All assets are automatically invested in Fund shares, including all dividends
and distributions paid on Fund shares within an IRA. There is an annual fee of
$45.00 charged by the IRA Trustee, Delaware Charter Guarantee and Trust Co.
The Fund will pay the annual fee for accounts with a value of at least $10,000.
Accounts below $5,000 in market value may be charged the $45.00 fee. This
will be decided on an annual basis by the Fund's President or Directors. When
the Fund pays the annual fees it will be part of the IRA expenses for the Fund.
If the fees are charged to the IRA owners then the owner will have the option
Of paying the fee directly or have the fee charged to their IRA.
PENSION, PROFIT SHARING AND 401-K PLANS
Purchases of Fund shares through a business' retirement plans are available to
the owners, officers and employees who participate in the retirement plans.
The accounts will be registered under the name and tax identification of the
pension, profit sharing and/or 401K plans.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder who
sends a letter requesting redemption to the Fund at its address as it
appears on this Prospectus (if certificates have not been issued) or certifi-
cates with respect to shares for which certificates have been issued. In either
case, proper endorsements guaranteed either by a national bank or a member firm
of the New York Stock Exchange will be required. The Fund will waive the sig-
nature guarantee requirement should the shareholder personally deliver the
letter requesting redemption to the Fund at its address as it appears on this
Prospectus and provides two valid forms of identification including a valid
driver's license or a major credit card. The redemption price is the net asset
value per share next determined after the order is received by the Fund for
redemption of shares. The proceeds received by the shareholder may be more or
less than his cost of such shares, depending upon the net asset value per
share at the time of redemption and the difference should be treated by the
shareholder as a capital gain or loss for federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days after
tender of a valid redemption request. The Fund may suspend the right of
redemption or postpone the date of payment for more than seven days if:
- The New York Stock Exchange is closed for other than customary weekend
or holiday closings,
- Trading on the New York Stock Exchange is restricted as determined by
the Securities and Exchange Commission
- The Securities and Exchange Commission has determined that an emergency
exists, making disposal of fund securities or valuation of net
assets not reasonably practicable.
- Other extraordinary events which may restrict the Fund from selling its
securities or distributing its liquid assets.
The Fund intends to make payments in cash, however, the Fund reserves the right
to make payments in kind.
TAX STATUS
Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as amend-
ed, the Fund, by paying out substantially all of its investment income and rea-
lized capital gains, and by satisfying certain other requirements, will be
relieved of federal income tax on the amounts distributed to shareholders.
Distribution of any net long-term capital gains realized by the Series in 1997
will be taxable to the shareholder as long term capital gains, regardless of the
length of time Series shares have been held by the investor. All income realized
by the Series, including short term capital gains, will be taxable to the share-
holder as ordinary income. Dividends from net income will be made annually or
more frequently at the discretion of the Fund's Board of Directors. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the per share net asset value of his shares by the amount of such divi-
dends or distributions and, although in effect a return of capital, are subject
to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by
the Fund that your Social Security or Taxpayer Identification Number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.
Portfolio Turnover Policy: Neither Series purchases securities for short term
trading in the ordinary course of operations. Accordingly, it is expected that
the annual turnover rate for each individual Series will not exceed 50%,
wherein turnover is computed by dividing the lesser of each individual Series'
total purchases or sales of securities within the period by the average monthly
portfolio value of each individual Series during such period. There may be
times when management deems it advisable to substantially alter the composition
of the portfolio, in which event, the portfolio turnover rate might substant-
ially exceed 50%; this would only result from special circumstances and not
from the normal operations of either Series.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Series'
financial performance for the past 2 years (including that portion of the year
ending June 30, 1998 when each Series was in operation). Certain information
results for a single Series share. The total returns in the table represent
the rate that an investor would have earned [or lost] on an investment in each
Series (assuming reinvestment of all dividends & distributions). This
information has been audited by Bonadio & Co., LLP, whose report, along
with the Fund's financial statements, are included in the SAI or annual
report, which is available upon request.
Unrestricted Western New York
Series Series
For the years ending: 6/30/99 6/30/98* 6/30/99 6/30/98*
Net asset value, beginning of period* $ 10.99 11.00 $ 10.45 10.12
Income from investment operations
Net investment income (loss) $ (0.01) 0.00 $ (0.05) 0.02
Net gains or (losses) on securities
both realized and unrealized $ 0.40 0.04 $ (1.15) 0.32
--------------- ----------------
Total from investment operations $ 11.38 11.04 $ 9.25 10.46
Less distributions
Dividends (from net investment income) $ (0.00) (0.05) $ (0.00) (0.01)
Distributions (from capital gains) $ (0.03) (0.00) $ (0.00) (0.00)
---------------- ----------------
Net asset value, end of period $ 11.35 10.99 $ 9.25 10.45
================ ================
Total return 3.53% 0.39%** (11.48)% 6.74%**
Net assets, end of period $914,048 750,819 $242,204 176,230
Ratio of expenses to average net assets 2.00% 2.00% 2.00% 2.00%
Ratio of net income to average assets (0.20)% 0.00%** (0.40)% 0.04%**
Portfolio turnover rate 40.7% 0.0% 13.9% 0.0%
Average commission per share $ 0.04 0.57 $ 0.09 0.20
* The Inception Date for the Unrestricted Series was July 24,1997 and the
Inception Date for the Western New York Series was December 30, 1997.
** Annualized From Inception for each Series.
THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
ANNUAL AND SPECIAL MEETINGS
The Fund does not expect to hold annual meetings of shareholders but special
meetings of shareholders may be held under certain circumstances. Shareholders
of the Fund retain the right, under certain circumstances, to request that a
meeting of shareholders be held for the purpose of considering the removal of a
Director from office, and if such a request is made, the Fund will assist with
shareholder communications in connection with the meeting.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing audited financial
statements and other periodic reports, at least semiannually, containing unau-
dited financial statements. The Fund will also send account statements to each
shareholder at least quarterly.
TRANSFER AGENT
The Fund acts as its own transfer agent.
CUSTODIAN
Charles Schwab & Co., Inc.
The Schwab Building
101 Montgomery Building,
San Francisco, CA 94104
IRA TRUSTEE
Delaware Charter Guarantee & Trust Co.
P.O. Box 8963
Wilmington, DE 19899
INDEPENDENT AUDITORS
Bonadio & Co., LLP,
Certified Public Accountants
171 Sully's Trail
Pittsford, NY 14534
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<PAGE>
BULLFINCH FUND SHARE PURCHASE APPLICATION
A) Please fill out one of the following four types of accounts:
1) Individual Accounts ****
______________________ __ ____________________ ______________________
First Name MI Last Name Social Security Number
2) Joint Accounts ****
______________________ __ ____________________ ______________________
First Name MI Last Name Social Security Number
______________________ __ _____________________ _______________________
First Name MI Last Name Social Security Number
3) Custodial Accounts ****
______________________ __ ____________________
Custodian's First Name MI Custodian's Last Name
______________________ __ ____________________ ______________________
Minor's First Name MI Minor's Last Name Minor's
Social Security Number
4) All Other Accounts ****
___________________________________________ __________________________
Name of account. Tax Identification Number
___________________________________________
(Use this second line if you need it)
B) Biographical and other information about the new account:
Full Address:
Number & Street __________________________________________________
City__________________________ St____ Zip_______________________
Citizen of____________________ Home Phone_____________ Bus Phone_____________
Dividend Direction (check one): Reinvest all distributions____ Pay in Cash____
Signature of Owner, Trustee or Custodian: __________________________________
Signature of Joint Owner (if joint account): __________________________________
Please make check payable to: BULLFINCH FUND, INC.
2 Lantern Lane, Honeoye Falls, NY 14472
Amount of Investment Attached:
Unrestricted Series $______________ (Minimum initial purchase $2,500)
Western New York Series $______________ (Minimum initial purchase $2,500)
All applications are accepted in New York and under New York laws.
-15-
<PAGE>
FORM W-9
(March 1994)
Department of Treasury
Internal Revenue Service
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER
Name as shown on account (if joint account, give name corresponding to TIN)
_________________________________________________
Street Address
_________________________________________________
City, State & Zip Code
_________________________________________________
Part 1.- Taxpayer Identification Number Part 2. - Backup Withholding
Social Security Number ______________________ Check if you are NOT subject
to backup withholding under
or the provisions of section
3406(a) (1) (C) of the In-
Employer ID Number ______________________ ternal Revenue Code ________
Certification - Under the penalty of perjury, I certify that the information
provided on this form is true, correct and complete.
Signature ___________________________________ Date _______________________
-16-
<PAGE>
PROSPECTUS
BULLFINCH FUND, INC.
2 Lantern Lane
Honeoye Falls, NY 14472
1-888-BULLFINCH
(1-888-285-5346)
October 15, 1999
Unrestricted Series
Western New York Series
TABLE OF CONTENTS PAGE
The Fund and its investment objective 2
The Fund's investment strategy 2
Risks of the Fund 2
Who should invest? 3
Who should not invest? 3
Yearly returns 3
Fees and Fund expenses 3
Additional information about investment strategies
and risk considerations 3
Non-diversification policy 4
Additional investment restrictions 5
Management 6
Investment adviser 6
Officers and directors of the Fund 7
Legal proceedings 7
Capitalization 8
Voting rights 8
Pricing of shares 8
Purchase of shares and reinvestment 8
Initial investment 8
Subsequent purchase 8
Reinvestment 8
Fractional shares 9
Individual Retirement Accounts IRA's 9
Pension, Profit-Sharing, 401-k plans 9
Redemption of shares 9
Tax status 10
Portfolio turnover policy 10
Financial highlights 10
Annual and special meetings 11
Reports to shareholders 11
Transfer Agent 11
Custodian 11
IRA trustee 11
Independent auditors 11
Application 11
Form W-9 12
PROSPECTUS
BULLFINCH FUND, INC.
2 Lantern Lane
Honeoye Falls, NY 14472
1-888-BULLFINCH
(1-888-285-5346)
October 15, 1999
Why You Should Read This Prospectus and How to Obtain Additional Information?
This Prospectus should be held for future reference. It is provided in order
to help you decide if the Fund is the proper investment for you. The risks,
objectives and strategies of each Series of the Bullfinch Fund are explained
within this prospectus. Additional information about the Fund (including the
Statement of Additional Information) can be reviewed and copied at the
Commission's Public Reference Room in Washington, D.C. Information on the
operation of the public reference room may be obtained by calling the
Commission at 1-800-SEC-6009. Reports and other information about the Fund are
available on the Commission's Internet site at http://www.sec.gov and copies of
this information may be obtained, upon payment of a duplicating fee, by writing
the Public Reference Section of the Commission, Washington D.C. 20549-6009.
You may also obtain additional information about the Fund by calling or writing
the Fund at the address or phone numbers provided at the top of this page.
INVESTMENT ADVISER
CAROSA, STANTON & DEPAOLO ASSET MANAGEMENT, LLC
8 East Street, Suite 200
Honeoye Falls, NY 14472
716-234-2080
SEC File Number For the Bullfinch Fund is 811-08191.
-17-
<PAGE>
BULLFINCH FUND, INC.
2 Lantern Lane
Honeoye Falls, NY 14472
716-624-1758
Part B
STATEMENT OF ADDITIONAL INFORMATION
October 15, 1999
This Statement of Additional Information is not a prospectus, but should be
read in conjunction with the Fund's current prospectus dated October 15, 1998.
To obtain the Prospectus, please write the Fund or call the either of the
telephone number that are shown above and on the prior page.
TABLE OF CONTENTS
TABLE OF CONTENTS
Fund History.........................................................2
How It All Began....................................................2
How We Got Our Name.................................................2
The Story of the Western New York Series............................2
Description of the Fund and Its Investments and Risks................2
Objective...........................................................2
Security Selection Criteria.........................................2
More on Risks of Specific Strategies of the Fund.....................2
(a)U.S. Government and Agency Bonds.................................2
(b)Special Situations...............................................3
(c)Foreign Securities...............................................3
General Risks of the Fund............................................3
Portfolio Turnover Policy...........................................4
Non-diversification Policy..........................................4
Additional Fund Policies.............................................4
Management of the Fund...............................................5
Compensation of Directors and Officers..............................5
Principal Holders of Shares..........................................6
Major Shareholders..................................................6
Management Ownership................................................6
Investment Adviser...................................................6
Advisory Fees.......................................................7
Brokerage............................................................7
Capitalization.......................................................8
Voting Rights.......................................................8
Purchase of Shares and Reinvestment..................................8
Initial Investment..................................................8
Subsequent Purchases................................................9
Reinvestment........................................................9
Fractional Shares...................................................9
Pricing of Shares....................................................9
Tax Status...........................................................9
IRA................................................................10
SEP IRA............................................................10
Roth IRA...........................................................10
Calculation of Performance Data.....................................10
Financial Statements................................................11
Objective, Policies & Risk Factors
Objective and Policies ..............2
Trading Costs .........................2
Tax Status ............................2
Officers and Directors of the Fund ....4
Calculation of Performance Data .......5
Auditor's Report ......................5
Financial Reports .....................6
-1-
<PAGE>
FUND HISTORY
The Bullfinch Fund (also referred to as the "Fund") was incorporated under
the laws of the State of Maryland on January 29, 1997. The Fund offers
separate series of units of beneficial interest ("shares"). This Pros-
pectus relates to the Unrestricted Series and the Western New York Series.
The Fund's business office is in Honeoye Falls, NY: mail may be addressed
to 2 Lantern Lane, Honeoye Falls, NY 14472.
HOW IT ALL BEGAN
In the placid summer of 1987, during their annual 4th of July party, several
Yale classmates agreed to begin an investment partnership. Over the course of
ten years, the partners were pleased with their investment results, but unable
to determine how to become comfortable allowing new partners in. After the two
managing partners (Christopher Carosa and Gordon Stanton) established their
investment advisory firm in 1996, the remaining partners agreed to dissolve the
partnership and provide the seed money for what would become the Unrestricted
Series of the Bullfinch Family of No-Load Mutual Funds. The seed money was
collected in February 1997 and the Fund became effective on July 24, 1997.
HOW WE GOT OUR NAME
The most common question we get is "How did we get our name?" When we initially
filed our application with the SEC, we used the working name "Bulldog Fund."
While this allowed us to state our investment style as being "Bullish on Dog
stocks," the name can be more accurately attributed to Yale's mascot. It was a
good working name but too sophomoric for our tastes (although we did like its
contrarian connotations.) Sticking with the key phrase "Bull," the directors hit
the dictionary and eventually came upon the word "Bullfinch." The word is the
name of a type of bird common in Europe but also in North America. It had the
right air about it and we decided to use it. Months later, when searching the
internet for references to the word, we discovered there Tokyo had an annual
Bullfinch Festival. According to Japanese legend, the bullfinch was a
mythological creature that turned bad things into good. A bit more convoluted
than saying "We're bullish on dog stocks," but it retains the same idea.
THE STORY OF THE WESTERN NEW YORK SERIES
Mr. Carosa is a native of Buffalo, NY, a fact his classmates thought somehow
could be used to make fun of him (usually by referring to the play of the
city's professional football team). It also irked him that the national media
continually refers to his hometown as part of the rust belt. (Ironically, when
the New York Times wrote a story about the Western New York Series shortly
after its inception, it couldn't help but mention rusting steel mill,
dilapidated grain elevators and chicken wings. Oh yea, it ended the piece -
which was in the Sunday Business Section - with the tongue-in-cheek "Go Bills."
Mr. Carosa long felt the best way to silence these critics was to create a
mutual fund that would shed a more positive light on the region. Originally,
Fund management wished to get the Unrestricted Series up and running first and
then provide seed capital for a new Western New York Series. As fate would have
it, Anthony DePaolo, whom Mr. Carosa had met through his previous employer, had
collected what would become the seed capital for the Western New York Series.
The Western New York Series became effective on December 30, 1997.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
Objective: The Bullfinch Fund, Inc. (the "Fund") is an open-end non-diversified
management investment company that offers separate series - the Unrestricted
Series and the Western New York Series - (individually and collectively known
as the "Series"), each a separate investment portfolio having its own
investment objective and policies.
Unrestricted Series
The Unrestricted Series seeks conservative long-term growth in capital through
a mix of investments consisting primarily of exchange listed and over-the-
counter common stocks as well as U.S. government securities maturing within
five years.
Western New York Series
The Western New York Series seeks capital appreciation through a mix of
investments consisting primarily of exchange-listed and over-the-counter common
stocks of companies with an important economic presence in the Greater Western
New York Region as well as U.S. government securities maturing within five
years.
Equity Selection Criteria: Criteria used by the Adviser to classify equities
includes balance sheet and income statement data, historical pricing valuations
and the stock's current dividend policy. The Adviser may also consider industry
diversification, liquidity, and market capitalization. To be eligible for inclu-
sion in the Western New York Series' portfolio, a stock currently must meet the
following criteria: the stock must be issued either by a company that employs at
least fifty persons in the Greater Western New York Region, or issued by a Comp-
any which has a capital investment (including annual payroll) in the Greater
Western New York Region of greater than $1,000,000, or by a Company that main-
tains its corporate headquarters in the Greater Western New York Region. The
Greater Western New York Region includes the following New York State Counties:
Erie, Niagara, Chautauqua, Cattaraugus, Orleans, Genesee, Wyoming, Allegany,
Monroe, Livingston, Steuben, Wayne, Ontario, Yates.
MORE ON RISKS OF SPECIFIC STRATEGIES OF THE FUND:
Objective & Policies: From time to time any Series may hold warrants, preferred
stock or convertible debt it may have received as a result of a corporate action
related to one of its then current holdings. No Series has any intention of
exceeding 5% in any of these types of securities.
TRADING COSTS
Carosa, Stanton & DePaolo seeks brokers from which it feels it can achieve the
best price and execution for each individual transaction for all its clients.
Should more than one broker be capable of providing best price and execution,
other factors may be considered in the selection of the broker. These factors
can include commission, research and operational expediency. There may be an
increased cost on OTC trades if the adviser chooses to execute such trades on
any agency basis (i.e., not to trade through a market-maker in any particular
security). These costs include the mark-ups by the market-maker on the OTC
securities, which are in addition to the commissions paid to the agent broker-
dealer. A market-maker may mark-up (down) a security for which it makes a
market, which is a cost that will be incurred in addition to the agency
commissions assessed by the executing broker.
GENERAL RISKS OF THE FUND:
Each Series' return, as stock prices generally, may fluctuate within a wide
range, so that an investor could lose money over a period of time. Since each
Series invests a higher percentage of assets in fewer holdings than the average
stock fund does, each Series is subject to the risk of underperformance, due to
weakness in one or a few of its stocks.
Risks associated with each Series' performance will be those due to broad market
declines and business risks from difficulties which occur to particular
companies while in each Series' portfolio. It must be realized, as is true of
almost all securities, there can be no assurance that either Series will obtain
its ongoing objective of capital appreciation.
Portfolio Turnover Policy: Neither Series purchases securities for short term
trading in the ordinary course of operations. Accordingly, it is expected that
the annual turnover rate for each individual Series will not exceed 50%,
wherein turnover is computed by dividing the lesser of each individual Series'
total purchases or sales of securities within the period by the average monthly
portfolio value of each individual Series during such period. There may be
times when management deems it advisable to substantially alter the composition
of the portfolio, in which event, the portfolio turnover rate might substant-
ially exceed 50%; this would only result from special circumstances and not
from the normal operations of either Series.
Non-diversification Policy: Each Series is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets in
the securities of a limited number of issuers. Each Series, therefore, may be
more susceptible than a diversified fund to any single economic, political, or
regulatory occurrence. The policy of each Series, in the intention of achieving
their objective, is, therefore, one of selective investments rather than
diversification. Each Series seeks only the required diversification necessary
to maintain its federal non-taxable status under Sub-Chapter M of the Internal
Revenue Code (see the Tax Status Section of this prospectus).
ADDITIONAL FUND POLICIES
By-laws of the Fund provide the following fundamental investment restrictions;
The Fund may not, except by the approval of a majority of the outstanding
shares; i.e. a) 67% or more of the voting securities present at a duly called
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or b) of more than 50% of the outstanding
voting securities, whichever is less:
(a) Act as underwriter for securities of other issuers except insofar as the
Fund may be deemed an underwriter in selling its own portfolio securities.
(b) Borrow money or purchase securities on margin, but may obtain such short
term credit as may be necessary for clearance of purchases and sales of se-
curities for temporary or emergency purposes in an amount not exceeding 5%
of the value of its total assets.
(c) Sell securities short.
(d) Invest in securities of other investment companies (other than money market
funds for temporary investment) except as part of a merger, consolidation,
or purchase of assets approved by the Fund's shareholders or by purchases
with no more than 10% of the Fund's assets in the open market involving
only customary brokers commissions.
(e) Invest 25% or more of its total assets at the time of purchase in any one
industry (other than U.S. Government Securities).
(f) Make investments in commodities, commodity contracts or real estate although
the Fund may purchase and sell securities of companies which deal in real
estate or interests therein.
(g) Make loans. The purchase of a portion of a readily marketable issue of pub-
licly distributed bonds, debentures or other debt securities will not be
considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another issuer,
(other than securities issued or guaranteed by the United States Govern-
ment, its agencies or its instrumentalities) treating all preferred secur-
ities of an issuer as a single class and all debt securities as a single
class, or acquire more than 10% of the voting securities of another issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) The Fund may not purchase or retain securities of any issuer if those offi-
cers and directors of the Fund or its Investment Adviser owning individual-
ly more than 1/2 of 1% of any class of security or collectively own more
than 5% of such class of securities of such issuer.
(k) Pledge, mortgage or hypothecate any of its assets.
(l) Invest in securities which may be subject to registration under the Securi-
ties Act of 1933 prior to sale to the public or which are not at the time of
purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market value at the
time of purchase, in securities of companies with less than three years'
continuous operation, including the operations of any predecessor.
(n) Issue senior securities.
MANAGEMENT OF THE FUND
Officers and Directors of the Fund: The following list shows the officers and
directors with their ages, addresses, positions at the Fund, principal
occupations during the past five years, and their compensation from the Fund:
OFFICERS AND DIRECTORS OF THE FUND
Officers and Directors of the Fund, together with their addresses, principal
occupations during the past five years are:
Principal Occupation Compensation &
Name Age Past Five Years Director's Fees
Christopher Carosa* 39 President, Treasurer, Bullfinch Fund $ 0.00
(Chairman of the Board) President, Carosa, Stanton & DePaolo
(Director) Honeoye Falls, NY
Gordon Stanton* 40 Vice-President, Bullfinch Fund $ 0.00
(Director) Vice-President, Carosa, Stanton & DePaolo
New York, NY
Sales Rep, Brown Harris Stevens Residential
New York, NY
William E.J. Martin 39 Construction Project Mgr/Estimator $ 400.00
(Director) ECI General Contractors, Inc.
Seattle, WA
Thomas Midney 39 Dir. of Operations, Electrocal $ 400.00
(Director) South Windsor, CT
Michael J. Morris 39 Dir. of Pricing, United HealthCare $ 400.00
(Director) Hartford, CT
Anthony R. DePaolo 50 Vice-President, Bullfinch Fund $ 0.00
Vice-President and Managing Director
Carosa, Stanton & DePaolo
Clarence, NY
Account Representative, Cathedral Corporation
Orchard Park, NY
Bradford L. McAdam 42 Vice-President, Bullfinch Fund $ 0.00
Vice-President, Director of Research
Carosa, Stanton & DePaolo
Honeoye Falls, NY
Betsy K. Carosa* 39 Secretary, Bullfinch Fund, Inc. $ 0.00
Honeoye Falls, NY
COMPENSATION TABLE
Aggregate Pension or Estimated Total
Name, Position Compens Retirement Annual Compensation
ation From Benefits Benefits Upon From Registrant
Registrant Accrued As Retirement And Fund Complex
Part of Fund Paid to
Expenses Directors
Christopher $ 0 N/A N/A $ 0
Carosa*, Director
Gordon R. $ 0 N/A N/A $ 0
Stanton*, Director
William E.J. $ 400 N/A N/A $ 400
Martin, Director
Thomas $ 400 N/A N/A $ 400
Midney, Director
Michael J. $ 400 N/A N/A $ 400
Morris, Director
* Director of the Fund who would be considered "interested persons" as defined
by the Investment Company Act of 1940.
COMPENSATION OF DIRECTORS AND OFFICERS
Each unaffiliated director was paid $400 in shares of the Bullfinch Fund
Unrestricted Series in 1999. The Fund intends to pay at least $400 to the
directors in shares of the Unrestricted Series in 2000. The exact amount will
be determined later. A total of $0 has been paid in 1999 to officers and
directors of the Fund to compensate for travel expenses associated with their
Fund duties. The Fund does not compensate its officers and directors that are
affiliated with the Investment Adviser except as they may benefit through
payment of the Advisory fee.
PRINCIPAL HOLDERS OF SECURITIES
Major Shareholders: As of October 15, 1999, shareholders on record who own 5%
or more of the outstanding shares of the Fund are as follows:
Unrestricted Series
Name Address Percentage ownership
C. Carosa Honeoye Falls, New York 7.55%
G. Stanton New York City, New York 8.77%
Ceiling Pro of WNY Hamburg, New York 15.32%
L. Pusateri P/S East Amherst, New York 7.41%
I. Burke Rochester, New York 19.21%
B. McAdam Churchville, New York 6.47%
J. Hartney Clarence, New York 5.40%
Western New York Series
Name Address Percentage ownership
J. Hartney Clarence, New York 57.10%
A. DePaolo Clarence, New York 8.26%
L. Pusateri P/S East Amherst, New York 14.09%
Management Ownership: Officers and directors of the Fund and their ownership of
the Fund, as of October 15, 1999, are as follows:
Unrestricted Series Western New York Series
Name Shares Percentage Shares Percentage
Christopher Carosa* 7,419.407** 9.34% 484.068** 1.87%
(Chairman, Director)
Gordon Stanton* 6,964.134 8.77% 0.000 0.00%
(Director)
William E.J. Martin 544.666 0.69% 0.000 0.00%
(Director)
Thomas Midney 798.303 1.01% 0.000 0.00%
(Director)
Michael J. Morris 2,255.138 2.84% 0.000 0.00%
(Director)
Anthony R. DePaolo* 0.000 0.00% 2,142.706 8.26%
(Vice-President)
Bradford L. McAdam* 5,139.122 6.47% 0.000 0.00%
(Vice-President)
Betsy K. Carosa* 7,419.407** 9.34% 484.068** 1.87%
(Secretary)
* Director of the Fund who would be considered "interested persons" as defined
by the Investment Company Act of 1940.
** Christopher and Betsy Carosa own 5,995.592 shares jointly in the Unrestrict-
ed Series, 484.068 jointly in the Western New York Series, and 1,423.815 in the
Unrestricted Series in Betsy's IRA.
INVESTMENT ADVISER
Carosa, Stanton & DePaolo Asset Management, LLC
8 East Street, Suite 200
Honeoye Falls, NY 14472
Carosa, Stanton & DePaolo Asset Management, LLC is a New York Limited Liability
Company that acts as an Investment Adviser to the Fund. Carosa, Stanton &
DePaolo Asset Management, LLC, began accepting private portfolio management
clients in February of 1997 and currently manages ten portfolios and has more
than four million dollars under management as of October 1999. Christopher
Carosa and Gordon R. Stanton established the firm in late 1996 as the
principal members & officers and are, respectively, are the President and Vice-
President of the Fund. Anthony R. DePaolo joined the firm in September 1997 as
a principal member and officer. Mr. DePaolo is a Vice-President of the Fund.
In July 1998, Bradford L. McAdam joined the firm and is a Vice-President of
the Fund.
On September 24, 1997 the Board of
Directors of Fund reviewed an Investment Management Agreement with Carosa,
Stanton & DePaolo Asset Management, LLC, which was unanimously approved by the
Board of Directors. This Agreement will continue on a year to year basis, as
amended, provided that approval is voted at least annually by specific approval
of the Board of Directors of the Fund or by vote of the holders of a majority
of the outstanding voting securities of the Series, but, in either event, it
must also be approved by a majority of the directors of the Fund who are
neither parties to the agreement nor interested persons as defined in the
Investment Company Act of 1940 at a meeting called for the purpose of voting
on such approval. Under the Agreement, Carosa, Stanton & DePaolo Asset Manage-
ment, LLC will furnish investment advice to the Fund on the basis of a
continuous review of the portfolio and recommend when and to what extent
securities should be purchased or disposed. The Agreement may be terminated at
any time, without the payment of any penalty, by the Board of Directors or by
vote of a majority of the outstanding voting securities of the Series on at
least 60 days' written notice to Carosa, Stanton & DePaolo Asset Management,
LLC. In the event of its assignment, the Agreement will terminate automatically.
Ultimate decisions as to the investment objective and policies are made by the
Fund's directors. For these services the Fund has agreed to pay to the Adviser
a fee of 1.25% per year on the first million dollars of net assets of each Ser-
ies and 1.0% per year on the remaining portion of net assets of each Series.
All fees are computed on the average daily closing net asset value of each Ser-
ies and are payable monthly in arrears. The Adviser will forgo sufficient fees
to hold the total expenses of each Series to less than 2.0% of the first $10
million in assets and 1.5% of the next $20 million.
Pursuant to its contract with the Fund, the Investment Adviser is required to
render research, statistical, and Advisory services to the Fund; to make specif-
ic recommendations based on each Series' investment requirements; and to pay the
salaries of those of the Fund's employees who may be officers or directors or
employees of the Investment Adviser. The Fund is responsible for the operat-
ing expenses of each Series, including:
- interest and taxes;
- brokerage commissions;
- insurance premiums
- compensation and expenses of its Directors other than those affiliated
with the Adviser;
- legal and audit expenses;
- fees and expenses of each Series' Custodian, and Accounting Services
Agent, if obtained for any Series from an entity other than the
Adviser;
- expenses incidental to the issuance of its shares, including issuance
on the payment of, or reinvestment of, dividends and capital gain
distributions;
- fees and expenses incidental to the registration under federal or
state securities laws of the Fund and each Series or its shares;
- expenses of preparing, printing and mailing reports and notices and
proxy material to shareholders of any Series;
- all other expenses incidental to holding meetings of the shareholders;
- dues or assessments of or contributions to the Investment Company
Institute or any successor; and
- such non-recurring expenses as may arise, including litigation
affecting the Fund and the legal obligations with respect to which
the Fund may have to indemnify its Officers and Directors.
Advisory Fees: The advisory fees to the current adviser, for the last two
years, are as follows:
UNRESTRICTED SERIES Western New York Series
ADVISORY AMOUNT NET ADVISORY AMOUNT NET
YEAR FEE WAIVED ADVISORY FEE FEE WAIVED ADVISORY FEE
1998 $ 6,599 $ 3,303 $ 3,296 $ 1,214 $ 3,016 ($ 1,802)
1999 $ 8,102 $ 1,479 $ 6,623 $ 2,042 $ 5,924 ($ 3,882)
BROKERAGE
The Investment Management Agreement states that in connection with its duties
to arrange for the purchase and the sale of securities held in the portfolio of
each Series by placing purchase and sale orders for each Series, the Adviser
shall select such broker-dealers ("brokers") as shall, in the Adviser's
judgment, implement the policy of each Series to achieve "best execution",
i.e., prompt and efficient execution at the most favorable securities price. In
making such selection, the Adviser is authorized in the Agreement to consider
the reliability, integrity and financial condition of the broker, the size and
difficulty in executing the order and the value of the expected contribution of
the broker to the investment performance of each Series on a continuing basis.
The Adviser is also authorized to consider whether a broker provides brokerage
and/or research services to each Series and/or other accounts of the Adviser.
Information or services may include economic studies, industry studies, stat-
istical analyses, corporate reports, or other forms of assistance to each
Series or its Adviser. No effort will be made to determine the value of these
services or the amount they may reduce expenses of the Adviser or each Series.
The Board of Directors will evaluate and review the reasonableness of
brokerage commissions paid on a monthly basis initially and after the first
year of operation at least semiannually.
CAPITALIZATION
Description of Common Stock: The authorized capitalization of the Fund consists
of 10,000,000 shares of common stock of $0.01 par value per share. Each share
has equal dividend, distribution and liquidation rights. There are no conver-
sion or pre-emptive rights applicable to any shares of the Fund. All shares
issued are fully paid and non-accessible.
Voting Rights: Each holder of common stock has one vote for each share held
and fractional shares will have an equivalent fractional vote. Voting rights
are non-cumulative.
PURCHASE OF SHARES AND REINVESTMENTS
The offering price of the shares offered by the Fund for any Series is at the
net asset value per share next determined after receipt of the purchase order
by the Fund and is computed in the manner described under the caption "PRICING
OF SHARES" in this Prospectus. The Series reserves the right at its sole dis-
cretion to terminate the offering of its shares made by this Prospectus at any
time and to reject purchase applications when, in the judgment of management
such termination or rejection is in the best interests of the Fund.
Payment may be made by wire. A purchase order will be effective as of the day
the check is received by the Fund if the Fund receives the check before the
close of regular trading on the New York Stock Exchange, normally 4:00 p.m.,
Eastern time. If payment is made by wire, the purchase order will be effective
the day payment is received by the Series' custodian. The purchase price of
shares of any Series is the net asset value determined on the day the purchase
order is effective.
The shares of any Series may be purchased in exchange for securities to
be included in that Series, subject to the Adviser's determination that these
securities are acceptable. Securities accepted in an exchange will be valued
using the same valuation method the Series uses to value portfolio securities.
All accrued interest and purchase or other rights which are reflected in the
market price of accepted securities at the time of valuation become the prop-
erty of the Series and must be delivered by the shareholder to the Series upon
receipt from the issuer. Shares issued in exchanged for securities will be
priced at the net asset value calculated on the day of exchange.
The day of exchange will be the day the securities are received by the Fund if
the Fund receives the securities before the close of regular trading on the New
York Stock Exchange, normally 4:00 p.m., Eastern time. If the transfer is made
by electronic delivery, the day of exchange will be the day the securities are
received by the Series' custodian.
The Adviser will not accept securities in exchange for shares of the Series
unless (1) such securities would normally qualify for purchase by the Series
at the time of the exchange; (2) the shareholder represents and agrees that
all securities offered to the Series are not subject to any restrictions upon
their sale by the Series under the Securities Act of 1933, or otherwise; and
(3) the Series is able to value the securities in a manner consistent with the
valuation method the Series uses to value portfolio securities.
Initial Investments: Initial purchase of shares of the Series may be made on-
ly by application submitted to the Fund. For the convenience of investors, a
Share Purchase Application form is provided with this Prospectus. The minimum
initial purchase of shares is $2,500 ($500 for IRAs). Less may be accepted
under special circumstances.
Subsequent Purchases: Subsequent purchases may be made by check or readily
available funds and may be made in writing (including an electronic trans-
mission) or by telephone. Shareholders wishing to make subsequent purchases
by telephone must first elect the privilege by writing to the Fund. The
minimum subsequent purchase is $250 ($50 for IRAs), but less may be accepted
under special circumstances.
Exchanges Between Series: To purchase shares by exchanging from another Series,
please call the Bullfinch Fund shareholder services at 1-888-BULLFINCH (1-888-
285-5346) for instructions. Your exchange will be based on the closing net
asset value per share next determined after your purchase order is effective.
There is no charge for exchanges between Series. Generally, an exchange between
Series is a taxable event. State securities laws may restrict your ability to
make exchanges. The Fund reserves the right to temporarily or permanently term-
inate the exchange privilege for any shareholder who makes an excessive number
of exchanges between Series. Anything greater than 3 exchanges within six months
will be considered excessive. You will receive advance written notice that the
Fund intends to limit your use of the exchange privilege. The Fund also re-
serves the right to terminate or modify the exchange privilege at any time upon
30 days advance written notice or to refuse any exchange request.
Re-Investments: The Fund will automatically retain and reinvest dividends
and capital gains distributions in fractional shares and use same for the pur-
chase of additional shares for the shareholder at net asset value as of the
close of business on the distribution date. A shareholder may at any time by
letter or forms supplied by the Fund direct the Fund to pay dividend and/
or capital gains distributions, if any, to such shareholder in cash.
Fractional Shares: Fractional shares may be purchased. The Fund will
maintain an account for each shareholder of shares for which no certificates
have been issued.
PRICING OF SHARES
The net asset value of the Series' shares is determined as of the close of busi-
ness of the New York Stock Exchange (the "Exchange") on each business day of
which that Exchange is open. The Exchange annually announces the days on which
it will not be open for trading; the most recent announcement indicates that
it will not be open on: New Year's Day, Martin Luther King's Birthday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The price is determined by dividing the val-
ue of its securities, plus any cash and other assets less all liabilities, ex-
cluding capital surplus, by the number of shares outstanding.
Securities traded on national securities exchanges or the NASDAQ National Market
System are valued at the closing prices of the securities on these exchanges and
securities traded on over-the-counter markets are valued daily at the closing
bid prices.
Short term paper (debt obligations that mature in less than 60 days) is valued
at amortized cost which approximates market value. Other assets are valued at
fair value as determined in good faith by the Board of Directors.
TAX STATUS
Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as amend-
ed, the Series, by paying out substantially all of its investment income and
realized capital gains, and by satisfying certain other requirements has been
and intends to continue to be relieved of federal income tax on the amounts di-
stributed to shareholders.
Distribution of any net long term capital gains realized by the Series in 1997
will be taxable to the shareholder as long term capital gains, regardless of the
length of time Series shares have been held by the investor. All income realized
by the Series, including short term capital gains, will be taxable to the share-
holder as ordinary income. Dividends from net income will be made annually or
more frequently at the discretion of the Fund's Board of Directors. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the per share net asset value of his shares by the amount of such divi-
dends or distributions and, although in effect a return of capital, are subject
to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by
the Fund that your Social Security or Taxpayer Identification Number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.
Federal Tax Treatment of Dividends and Distributions
The following is only a summary of certain additional tax considerations
generally affecting the Series and its shareholders that are not described in
the Series' Prospectus. No attempt is made to present a detailed explanation
of the tax treatment of the Series or its shareholders, and the discussion here
and in the Series' Prospectus is not intended as a substitute for careful tax
planning.
The following discussion of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.
Qualification as Regulated Investment Company
As a regulated investment company ("RIC") under Subchapter M of the Code,
the Series is exempt from federal income tax on its net investment income and
capital gains which it distributes to shareholders, provided that it
distributes at least 90% of its investment company taxable income (generally,
net investment income and the excess of net short-term capital gain over net
long-term capital loss) for the year (the "Distribution Requirement") and
satisfies certain other requirements of the Code that are described below.
Distributions of investment company taxable income made during the taxable
year will satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement each Series
must derive at least 90% of its gross income from dividends, interest, certain
payments with respect to securities loans and gains from the sale or other
disposition of stocks, securities or foreign currencies, or from other income
(including but not limited to gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies ("Qualifying Income") and derive less than 30% of its
gross income from the sale or other disposition of stocks, securities and
certain other investments held for less than three months including foreign
currencies (or options, futures or forward contracts on foreign currencies)
but only if such currencies (or options, futures or forward contracts) are not
directly related to the Series' principal business of investing in stock or
securities or options and futures with respect to stocks or securities (the
so-called "Short-Short Gain Rule"). Moreover, at the close of each quarter
of its taxable year, at least 50% of the value of the Series' assets must
consist of cash and cash items, Government securities, securities of other
RICs, and securities of other issuers (as to which the Series has not
invested more than 5% of the value of its total assets in any one issuer and
as to which the Series does not hold more than 10% of the outstanding voting
securities of any one issuer), and no more than 25% of the value of its total
assets may be invested in the securities of any one issuer (other than
Government securities and securities of other RICs), or in two or more issuers
which the Series controls and which are engaged in the same, similar or related
trades or businesses (the "Asset Diversification Test").
Individual Retirement Account: Persons who earn compensation and are not active
participants (and who do not have a spouse who is an active participant) in an
employer maintained retirement plan may establish Individual Retirement Accounts
(IRA) using Fund shares. Annual contributions, limited to the lesser of $2,000
or 100% of compensation, are tax deductible from gross income. This IRA
deduction is also retained for individual taxpayers and married couples with
adjusted gross incomes within certain specified limits. All individuals may
make nondeductible IRA contributions to separate accounts to the extent that
they are not eligible for a deductible contribution.
Earnings within the IRA are reinvested and are tax-deferred until withdrawals
begin. The maximum annual contribution may be increased to $4,000 if you have
a spouse who earns no compensation during the taxable year. A separate and
independent Spousal IRA must be maintained. You may begin to make non-penalty
withdrawals as early as age 59 1/2 or as late as age 70 1/2. In the event of
death or disability, withdrawals may be made before age 59 1/2 without penalty.
Simplified Employee Pension: Employers may use the Fund to establish Simplified
Employee Pension (SEP) IRA's for each qualifying employee. Deductible
contributions may be made by the employer through a SEP IRA, which meets the
requirements of section 408(k) of the code. An employer may contribute up to
the lesser of 15% of your calendar year compensation or $22,500.
Roth IRA: Individuals may use the Fund for contributions to a Roth IRA.
Contributions to a Roth IRA are not deductible and are limited to the same
amounts allowable for regular IRA's. In addition there are income limitations
that must be met in order to contribute to a Roth IRA. However, all withdrawals
from a Roth IRA are not included in income if it is a "qualified distribution".
Qualified distributions are to be made no sooner than the fifth tax year after
the year the Roth IRA contribution is made, and the individual must be age 59.5,
or for the events of death, disability or first home purchase (maximum $10,000).
U.S. Treasury Regulations require a Disclosure Statement. This Statement
describes the general provisions of the IRA and is forwarded to all prospective
IRA's. The Fund will pay the setup fees charged by the trustee. There is an
annual fee of $45.00 charged by the IRA Trustee, Delaware Charter Guarantee and
Trust Co. The Fund will pay the annual fee for accounts with a value of at
least $10,000. Accounts below $10,000 in market value may be charged the $45.00
fee. This will be decided on an annual basis by the Fund's President or
Directors. When the Fund pays the annual fees it will be part of the IRA
expenses for the Fund. If the fees are charged to the IRA owners then the owner
will have the option of paying the fee directly or have the fee charged to their
IRA. All IRA's may be revoked within seven days of their establishment with no
penalty.
CALCULATION OF PERFORMANCE DATA
The Fund's average annual total returns are calculated using the following
formula: n
P(1+T) =ERV
WHERE:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1-, 5-, or
10-year periods at the end of the 1-, 5-, or 10-
year periods (or fractional portion).
BONADIO & CO, LLP
Certified Public Accountants
171 Sully's Trail
Pittsford, NY 14534
716-381-1000
Fax 716-381-3131
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, 1999, and the
related statements of operations, changes in net assets and the financial
highlights and related ratios/supplemental data for the
years ended June 30, 1999 and 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 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 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, 1999, by correspondence
with the 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 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, 1999, and
the results of its operations, the change in its net assets and the financial
highlights and related ratios/supplemental data for the
years ended June 30, 1999 and 1998 and for the period from inception
(February 1, 1997) to June 30, 1997, in conformity with generally accepted
accounting principles.
BONADIO & CO., LLP
Pittsford, New York
August 4, 1999
-6-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS
1999
Investments in securities, at fair value,
identified cost $640,542 $ 693,219
Cash 82,986
Receivable for Capital Stock 138,088
Accrued interest and dividends 790
Prepaid expenses 1,256
Due from Investment Adviser 1,479
Organization expenses, net of accumulated
amortization of $1,838 1,500
--------
Total assets $ 919,318
========
LIABILITIES
Accounts payable 5,270
--------
NET ASSETS
Net assets (equivalent to $11.35
based on 80,537.371 shares of stock outstanding) $ 914,048
=========
COMPOSITION OF NET ASSETS
Shares of common stock $ 886,159
Accumulated net investment loss (24,788)
Net unrealized appreciation on investments 52,677
---------
Net assets at June 30, 1999 $ 914,048
==========
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1999
Historical
Common Stocks - 100% Shares Cost Value
Computer software - 19.2%
Oracle Corporation 3,000 $ 46,411 $ 111,375
Network Associates, Inc. 1,500 46,921 22,031
--------- --------
93,332 133,406
Utilities - 8.3%
Empire District Electric Co. 1,250 21,665 32,578
Hawaiian Electric 700 24,648 24,850
--------- --------
46,313 57,428
Medical Products and Supplies - 7.5%
Dentsply Intl, Inc. 1,350 30,400 38,981
Mentor Corporation 700 17,963 13,038
--------- --------
48,363 52,019
Retail - 6.5%
Dollar General Corporation 1,562 26,308 45,298
Cosmetics - 5.8%
Helen of Troy, Ltd. 2,250 34,440 40,359
Electrical Equipment - 5.3%
Baldor Electric Company 1,850 36,962 36,769
Shoes and Leather - 5.3%
Wolverine World Wide 2,600 44,582 36,400
Banking and Finance - 5.1%
Fiserv, Inc. 1,125 22,369 35,226
Mining - 4.7%
Brush Wellman, Inc. 1,800 41,478 32,625
Steel - 4.7%
A.M. Castle & Co. 1,900 36,530 32,300
Tobacco Products - 4.6%
Phillip Morris 800 28,043 32,150
Instruments - 4.6%
Coherent, Inc. 1,700 34,250 31,663
Leisure and Recreational - 4.3%
International Game Technology 1,600 29,749 29,600
Computers - Hardware - 3.9%
3Com Corp. 1,000 22,900 26,687
Electronics Components - 3.3%
Park Electrochemical Corp. 800 20,771 23,000
Real Estate and Related - 3.2%
First American Financial 1,250 21,869 22,344
Industrial Services - 2.4%
Olsten Corporation 2,650 44,142 16,728
Foods and Beverages - 1.1%
Pepsico Incorporated 200 6,975 7,738
Entertainment - 0.2%
Walt Disney Holding Co. 48 1,166 1,479
--------- ---------
TOTAL COMMON STOCKS $ 640,542 $ 693,219
--------- ---------
$ 640,542 $ 693,219
========= =========
The accompanying notes are an integral part of these statements.
-8-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 1, 1997) TO JUNE 30, 1997
1999 1998 1997
INVESTMENT INCOME:
Dividends $ 10,720 $ 8,559 $ 1,634
Interest 2,990 5,301 -
-------- --------- ---------
13,710 13,860 1,634
EXPENSES:
Management Fees 8,102 6,599 589
Reimbursement of Management Fees (1,479) (3,303) -
Custody Fee - - 35
Legal and Professional 3,750 3,000 -
Directors' Fee 600 900 -
Amortization 581 814 444
Fidelity Bond 520 689 -
Taxes 502 637 -
Registration Fees 1,246 676 -
Bank Service Charges 917 404 -
Dues and Subscriptions 144 110 228
--------------------------------
14,883 10,526 1,296
--------------------------------
Investment income(loss) - net (1,173) 3,334 338
--------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) from
securities transactions (21,740) 18 514
Unrealized appreciation (depreciation)
during the period 48,330 (3,930) 8,277
--------------------------------
Net gain (loss) on investments 26,590 (3,912) 8,791
--------------------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 25,417 $ (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 YEARS ENDED JUNE 30, 1999 AND 1998
AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 1, 1997) TO JUNE 30, 1997
1999 1998 1997
INCREASE IN NET ASSETS FROM OPERATIONS:
Investment income (loss) - net $(1,173) $ 3,334 $ 338
Net realized gains (loss) from
securities transactions (21,740) 18 514
Net change in unrealized
appreciation of investments 48,330 (3,930) 8,277
-------------------------------
Increase (decrease) in net assets
from operations 25,417 (578) 9,129
CAPITAL SHARE TRANSACTIONS
Sales (33,858.650, 73,972.543
and 11,247.184 shares) 363,607 832,796 112,471
Redemptions (21,814.254
and 17,275.449 shares) (225,795) (202,999) -
-------------------------------
Total capital share transactions 137,812 629,797 112,471
-------------------------------
Increase in net assets 163,229 629,219 121,600
NET ASSETS:
Beginning of period 750,819 121,600 -
-------------------------------
End of period $ 914,048 $ 750,819 $ 121,600
===============================
The accompanying notes are an integral part of these statements.
-9-
<PAGE>
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(1) The Organization
The Unrestricted Series (the "Series") is a series of the Bullfinch
Fund, Inc. (the "Fund"), which 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 Series 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 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 sec-
urities are valued at amortized cost which approximates market value.
Federal Income Taxes -
For federal income tax purposes, the Series expects to continue 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 gains) to its shareholders and
complying with other requirements for regulated investment companies.
Therefore, no provision for income taxes is required.
-10-
<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 Series has distributed its net investment income and net
realized capital gains to its shareholders on December 29, 1998,
June 30, 1998 and June 30, 1997 in the form of stock dividends equal
to 172.798, 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
and accompanying notes. Actual results could differ from those estimates.
(3) Investments
For the year ended June 30, 1999, the Series purchased $317,227 of
common stock. During the same period, the Series sold $100,392 of
U.S. Government obligations and $195,720 of common stock.
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, 1999, the gross unrealized appreciation for all securities
totaled $134,100 and the gross unrealized depreciation for all securities
totaled $81,423, or a net unrealized appreciation of $52,677. The aggre-
gate cost of securities for federal income tax purposes at June 30,
1999 was $640,542.
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.
-11-
<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 of the Series 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
---------- -----------
Shares sold during 1999 33,858.650 363,607
Shares redeemed during 1999 (21,814.254) (225,795)
Shares issued in 12/29/98 stock dividend 172.798 -
---------- -----------
12,217.194 137,812
---------- -----------
80,537.371 $ 880,080
========== ===========
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/
SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
AND FOR THE PERIOD FROM INCEPTION (FEBRUARY 1, 1997) TO JUNE 30, 1997
1999 1998 1997
NET ASSET VALUE, beginning of period $ 10.99 $ 10.74 $ 10.00
------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (0.01) - .03
Net gain on securities both realized
and unrealized .40 .30 .78
------------------------------
.39 .30 .81
------------------------------
STOCK DIVIDEND (.03) (.05) (.07)
------------------------------
NET ASSET VALUE, end of period $ 11.35 $ 10.99 $ 10.74
==============================
NET ASSETS, end of period $ 914,048 $ 750,819 $ 121,600
==============================
Actual Actual Actual *
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.0% 2.0% 1.1% *
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS (0.2%) 0.6% .3% *
PORTFOLIO TURNOVER RATE 40.7% - 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.
-12-
<PAGE>
BONADIO & CO, LLP
Certified Public Accountants
171 Sully's Trail
Pittsford, NY 14534
716-381-1000
Fax 716-381-3131
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, 1999, and the
related statements of operations, changes in net assets and the financial
highlights and related ratios/supplemental data for the year
ended June 30, 1999 and for the period from inception (September 29, 1997) to
June 30, 1998. These financial statements and financial highlights and related
ratios/supplemental data 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
based on our audits.
We conducted our audits 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, 1999, by
correspondence with the 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, the financial highlights and related
ratios/supplemental data 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, 1999, and
the results of its operations, the change in its net assets and the financial
highlights and related ratios/supplemental data for the
year ended June 30, 1999 and for the period from inception (September 29, 1997)
to June 30, 1998, in conformity with generally accepted accounting principles.
BONADIO & CO., LLP
Pittsford, New York
August 4, 1999
-13-
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS
1999
Investments in securities, at fair value,
identified cost $186,431 $ 171,006
Cash 67,547
Accrued interest and dividends 154
Prepaid expenses 757
Due from Investment Adviser 5,924
Organization expenses, net of accumulated
amortization of $1,100 2,239
--------
Total assets 247,627
--------
LIABILITIES
Accounts payable 5,423
--------
NET ASSETS
Net assets (equivalent to $9.25 per share
based on 26,186.386 shares of stock outstanding) $ 242,204
=========
COMPOSITION OF NET ASSETS
Shares of common stock $ 261,074
Accumulated net investment loss (3,445)
Net unrealized depreciation on investments (15,425)
----------
Net assets at June 30, 1999 $ 242,204
==========
The accompanying notes are an integral part of these statements.
-14-
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1999
Historical
Common Stocks - 100% Shares Cost Value
Electrical Equipment - 16.8%
PSC, Inc. 1,950 $ 18,587 $ 19,134
ACME Electric Corporation 1,750 9,171 9,516
--------- --------
27,758 28,650
Computer Hardware - 10.2%
Performance Technologies, Inc. 600 8,232 12,075
3Com Corp 200 4,600 5,338
--------- --------
12,832 17,413
Steel - 8.1%
Bethlehem Steel Corporation 1,000 7,894 7,687
Gibraltar Steel Corporation 250 4,820 6,187
--------- --------
12,714 13,874
Real Estate and Related - 7.2%
Sovran Self Storage 250 6,891 6,734
Home Properties of New York 200 5,623 5,525
--------- --------
12,514 12,259
Electronic Components - 6.1%
Astronics Corporation 605 5,021 6,050
Paxar Corporation 500 4,192 4,438
--------- --------
9,213 10,488
Computer Software - 5.0%
Comptek Research, Inc. 700 4,971 5,643
Network Associates, Inc. 200 5,800 2,938
--------- --------
10,771 8,581
Industrial Materials - 5.0%
American Precision Industries 550 9,776 5,913
Servotronics, Inc. 600 5,624 2,550
--------- --------
15,400 8,463
Railroads - 4.8%
Genessee & Wyoming, Inc. 800 9,941 8,250
Tobacco Products - 4.7%
Phillip Morris, Inc. 200 7,004 8,038
Metal Fabrication and Hardware - 4.3%
Graham Corp. 800 6,076 7,400
Computer Services - 4.0%
Computer Task Group, Inc. 400 10,608 6,800
Manufacturing - 3.7%
Mark IV Industries, Inc. 300 6,462 6,338
Medical Services - 3.7%
Rural/Metro Corporation 650 11,157 6,256
Computer Distributors - 3.0%
Ingram Micro, Inc. 200 6,681 5,150
Commercial Services - 2.8%
Paychex, Inc. 150 4,413 4,781
Environment Services - 2.7%
Sevenson Environmental Srvs, Inc 400 5,071 4,650
Furniture - 2.4%
Bush Industries, Inc. 250 6,263 4,156
Apparel - 2.1%
Hartmarx Corporation 850 6,665 3,559
Industrial Services - 2.0%
American Locker Group, Inc. 400 2,544 3,500
Machinery - 1.4%
Columbus McKinnon Corporation 100 2,344 2,400
--------- ---------
TOTAL COMMON STOCK $ 186,431 $ 171,006
========= =========
-15-
<PAGE>
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999 AND
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 29, 1997)
TO JUNE 30, 1998
1999 1998
INVESTMENT INCOME:
Dividends $ 2,904 $ 1,705
Interest - 1,121
--------------------
2,904 2,826
--------------------
EXPENSES:
Management Fees 2,042 1,214
Reimbursement of Management Fees (5,924) (3,016)
Legal and Professional 3,750 3,000
Directors' Fee 600 300
Amortization 776 324
Fidelity Bond 458 230
Taxes 382 238
Registration Fees 607 341
Bank Service Charges 767 -
Dues and Subscriptions 71 -
--------------------
3,529 2,631
--------------------
Investment income (loss) - net (625) 195
--------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) from
securities transactions (2,829) -
Unrealized appreciation (depreciation)
during the period (18,496) 3,071
--------------------
Net gain (loss) on investments (21,325) 3,071
--------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(21,950) $ 3,266
====================
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 29, 1997)
TO JUNE 30, 1998
1999 1998
DECREASE IN NET ASSETS FROM OPERATIONS:
Investment income (loss) - net $ (625) $ 195
Net realized gain (loss) from
securities transactions (2,829) -
Net change in unrealized
appreciation (depreciation) of investments (18,496) 3,071
--------------------
Increase (decrease) in net assets from operations (21,950) 3,266
CAPITAL SHARE TRANSACTIONS
Sales (11,777.098 and 16,850.33 shares) 108,178 172,964
Redemptions (2,458.779 and 0 shares) (20,254) -
--------------------
Total capital share transactions 87,924 172,964
--------------------
Increase in net assets 65,974 176,230
NET ASSETS:
Beginning of period 176,230 -
--------------------
End of period $242,204 $176,230
====================
The accompanying notes are an integral part of these statements.
-16-
<PAGE>
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(1) The Organization
The Western New York Series (the "Series") is a series of the Bullfinch
Fund, Inc. (the "Fund") which 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. 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 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 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 Series expects to continue 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 gains) to its shareholders and
complying with other requirements for regulated investment companies.
Therefore, no provision for income taxes is required.
-17-
<PAGE>
Organization Expenses -
Organization expenses are being amortized over a 60-month period.
The Series' initial shareholder has 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 Series has distributed its net investment income and net realized
capital gains to its shareholders on June 30, 1998 in the form of a stock
dividend 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
and accompanying notes. Actual results could differ from those estimates.
(3) Investments
For the period ended June 30, 1999, the Series purchased $77,365 of
common stock. During the same period, the Series sold $24,463 of
common stock.
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, 1999, the gross unrealized appreciation for all securities
totaled $12,525 and the gross unrealized depreciation for all securities
totaled $27,950, or a net unrealized depreciation of $15,425. The aggre-
gate cost of securities for federal income tax purposes at June 30,
1999 was $186,431.
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 investments and handling its business affairs.
-18-
<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 of the Series 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
---------- -----------
Shares sold during 1999 11,777.098 108,178
Shares redeemed during 1999 (2,458.779) (20,254)
---------- -----------
9,318.319 87,924
---------- -----------
26,186.386 $ 260,888
========== ===========
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/
SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING
FOR THE YEAR ENDED JUNE 30, 1999 AND
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 29, 1997)
TO JUNE 30, 1998
1999 1998
NET ASSET VALUE, beginning of period $ 10.45 $ 10.00
--------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.05) .02
Net gain (loss) on securities both
realized and unrealized (1.15) .44
--------------------
(1.20) .46
--------------------
STOCK DIVIDEND - (.01)
--------------------
NET ASSET VALUE, end of period $ 9.25 $ 10.45
====================
NET ASSETS, end of period $ 242,204 $ 176,230
====================
Actual Actual*
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.0% 2.0%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS (0.4%) 0.2%*
PORTFOLIO TURNOVER RATE 13.9% -
* The ratios presented were calculated using operating data for the nine
month period from inception (September 29, 1997) to June 30, 1998.
The accompanying notes are an integral part of these statements.
-19-
<PAGE>
FORM N-1A
PART C - OTHER INFORMATION
Contents Page #
Item 23. Financial Statements & Exhibits 1
Item 24. Persons Controlled by or Under Common Control 9
Item 25. Indemnification 9
Item 26. Business and Other Connections of Investment Adviser 9
Item 27. Principal Underwriters 9
Item 28. Location of Accounts & Records 9
Item 29. Management Services 10
Item 30. Undertakings 10
Signatures 11
Exhibits 12
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Item 23. Financial Statements and Exhibits
(a) (1) Articles of Incorporation
(2) Articles of Amendment
(b) By-laws
(c) Instruments Defining Rights of Security Holders - None
(d) Investment Advisory Contracts
(e) Underwriting Contracts - None
(f) Bonus or Profit Sharing Contracts - None
(g) Custodian Contracts
(h) Other Material Contracts - None
(i) Legal Opiniion
(j) Other Opinions
(k) Omitted Financial Statements - None
(l) Initial Capital Agreements - None
(m) Rule 12b-1 Plan - None
(n)(i) Financial Data Schedule - Unrestricted Series
Item Number Item Description
6-03- Investments - costs $ 640,542
6-04-4 Investments $ 693,219
6-04-6 Receivables $ 138,088
6-04-8 Other assets $ 88,011
** Balancing amt. to total assets
6-04-9 Total assets $ 919,318
6-04- Accounts payable $ 0
6-04-13 Senior L/T debt
** Balancing amt. to tot. liab.
6-04-14 Total liabilities $ 5,270
6-04-16 Senior equity securities $ 0
6-04-16 Paid-in-capital common $ 886,159
6-04-16 No. of shares - current 80,537
6-04-16 No. of shares - prior 56,994
6-04-17(a) Accumulated undistributed net ($ 24,788)
** investment income(current)
** over distribution of net
** investment income 0.00%
6-04-17(b) Accumulated undistributed net $ 0
** realized gains (losses)
** over distribution of net
** realized gains 0.00%
6-04-17(c) Accumulated net unrealized $ 52,677
** appreciation (depreciation)
6-04-19 Net assets $ 914,048
6-07-1(a) Dividend income $ 10,720
6-07-1(b) Interest income $ 2,990
6-07-1(c) Other income
6-07-02 Expenses - net $ 14,883
6-07-06 Net investment income(loss) ($ 1,173)
6-07-7(a) Realized gains(losses) on ($ 21,470)
** investments
6-07-7(b) Net increase(decrease) in $ 48,330
** appreciation(depreciation)
6-07-09 Net increase(decrease) in $ 25,417
** net assets resulting from
** operations
6-09-2 Net equalization charges
** and credits
6-09-3(a) Distributions from net $ 0
** investment income
6-09-3(b) Distributions from $ 0
** realized gains
6-09-3(c) Distributions from
** other sources
6-09-4(b) Number of shares sold 363,607
6-09-4(b) Number of shares redeemed 225,795
6-09-4(b) Number of shares issued - 0
** reinvestment
6-09-5 Total increase(decrease) 137,812
6-09-7 Accumulated undistributed
** net investment income(prior)
6-09-7(b) Accumulated undistributed
** net realized gains(prior)
** Overdistribution of net
** investment income(prior)
** Overdistribution of net
** realized gains(prior)
Form N-1A
3(a) NAV/share - beginning $ 10.99
3(a) Net investment income/share (0.01)
3(a) Net realized & unrealized 0.40
** gain(loss)/share
3(a) Dividends/share - investment income (0.03)
3(a) Distributions/share - realized gains 0.00
3(a) Per share returns of capital
** and other distributions
3(a) NAV/share - ending 11.35
3(a) Ratio of expenses to 2.00%
** average net assets
3(b) Average debt outstanding 0
3(b) Average debt outstanding/share 0%
(n)(ii) Financial Data Schedule - Western New York Series
Item Number Item Description
6-03- Investments - costs $ 186,431
6-04-4 Investments $ 171,006
6-04-6 Receivables $ 6,087
6-04-8 Other assets $ 70,543
** Balancing amt. to total assets
6-04-9 Total assets $ 247,627
6-04- Accounts payable $ 0
6-04-13 Senior L/T debt
** Balancing amt. to tot. liab.
6-04-14 Total liabilities $ 5,423
6-04-16 Senior equity securities $ 0
6-04-16 Paid-in-capital common $ 261,074
6-04-16 No. of shares - current 26,186
6-04-16 No. of shares - prior 16,868
6-04-17(a) Accumulated undistributed net ($ 3,445)
** investment income(current)
** over distribution of net
** investment income 0.00%
6-04-17(b) Accumulated undistributed net $ 0
** realized gains (losses)
** over distribution of net
** realized gains 0.00%
6-04-17(c) Accumulated net unrealized ($ 15,524)
** appreciation (depreciation)
6-04-19 Net assets $ 242,204
6-07-1(a) Dividend income $ 2,904
6-07-1(b) Interest income $ 0
6-07-1(c) Other income
6-07-02 Expenses - net $ 3,529
6-07-06 Net investment income(loss) ($ 625)
6-07-7(a) Realized gains(losses) on ($ 2,829)
** investments
6-07-7(b) Net increase(decrease) in ($ 18,496)
** appreciation(depreciation)
6-07-09 Net increase(decrease) in ($ 21,950)
** net assets resulting from
** operations
6-09-2 Net equalization charges
** and credits
6-09-3(a) Distributions from net $ 0
** investment income
6-09-3(b) Distributions from $ 0
** realized gains
6-09-3(c) Distributions from
** other sources
6-09-4(b) Number of shares sold 11,777
6-09-4(b) Number of shares redeemed 2,459
6-09-4(b) Number of shares issued - 0
** reinvestment
6-09-5 Total increase(decrease) 9,318
6-09-7 Accumulated undistributed
** net investment income(prior)
6-09-7(b) Accumulated undistributed
** net realized gains(prior)
** Overdistribution of net
** investment income(prior)
** Overdistribution of net
** realized gains(prior)
Form N-1A
3(a) NAV/share - beginning $ 10.45
3(a) Net investment income/share (0.05)
3(a) Net realized & unrealized (1.15)
** gain(loss)/share
3(a) Dividends/share - investment income 0.00
3(a) Distributions/share - realized gains 0.00
3(a) Per share returns of capital
** and other distributions
3(a) NAV/share - ending 9.25
3(a) Ratio of expenses to 2.00%
** average net assets
3(b) Average debt outstanding 0
3(b) Average debt outstanding/share 0%
(o) Rule 18f-3 Plan - None
All exhibits believed to be applicable to the Fund are incorporated by reference
to post-effective Amendment No. 6 or one of the post-effective amendments of the
Registration Statement Under The Securities Act of 1933 and the Registration
Statement Under The Investment Company Act of 1940.
Item 24. Persons Controlled by or Under Common Control - See Major
Shareholders Part B.
Item 25. Indemnification - Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant, the registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being regist-
ered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be gov-
erned by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser - the activity
of Carosa, Stanton & DePaolo Asset Management, LLC at the present
time is performance under the terms of the Investment Management
Agreement currently effective between Carosa, Stanton & DePaolo
Asset Management, LLC and the BULLFINCH FUND, Inc. Mr. Christopher
Carosa, Mr. Gordon R. Stanton, Mr. Anthony R. DePaolo and
Mr. Bradford L. McAdam are the sole members of the Investment
Adviser. Mr. Carosa is also Executive Director of CTO Research
Associates, a research and consulting firm. Mr. Stanton is also a
sales rep with Brown Harris Stevens Residential. Mr. DePaolo is
also President of Ardman Regional Ltd., a research and consulting
firm, and an account rep with Cathedral Corp.
Item 27. Principal Underwriters - the Fund acts as its own underwriter.
Item 28. Location of Accounts & Records - all Fund records, including all
accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder,
are held in corporate headquarters - 2 Lantern Lane, Honeoye Falls,
New York 14472. All assets and securities of the Series are in
account at Charles Schwab & Co. Inc, The Schwab Building, 101
Montgomery Building, San Francisco, CA 94104.
Item 29. Management Services - Not applicable
Item 30. Undertakings - Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Invest-
ment Company Act of 1940, the BULLFINCH FUND, Inc. has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Mendon and State of New York,
on the 15th day of October 1999.
BULLFINCH FUND, INC.
Christopher Carosa,
President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following person in the capacities and
on the date indicated.
Christopher Carosa President, Treasurer and Director 12-31-99
Gordon R. Stanton Vice President and Director 12-31-99
William E. J. Martin Director 12-31-99
Thomas Midney Director 12-31-99
Michael J. Morris Director 12-31-99
Betsy K. Carosa Secretary 12-31-99
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