PATHFINDER FUND
* * * *
Annual Report
November 1, 1996 - October 31, 1997
A NOTE FROM YOUR FUND'S PRESIDENT
This fiscal year ended with your Fund gaining more than 30%* as
micro-caps continued their roller coaster advance.
Along with many "gurus," we continue to believe micro-caps
present greater value than blue chips. However, we must be
prepared for a high degree of volatility.
According to a recent Lipper analysis, the mean market cap of our
Fund's holdings is about $35 million. We believe we are well
positioned to participate in a micro-cap advance.
/s/ Ed Bernstein
P. S. We are pleased to announce that our IRA accounts are now
no-fee. Call us at (800) 444-4778 for IRA information,
especially the exciting new Roth IRA.
* The Fund's average total returns for the one-, five- and
ten-year periods ended October 31, 1997 were 30.26%, 17.19%, and
7.18%, respectively, as computed according to the SEC's rules,
which assume reinvestment of distributions. Past performance is
not predictive of future results. Investment return and
principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
PATHFINDER FUND
Schedule of Investments
October 31, 1997
Shares Market Value
COMMON STOCKS (128.21%)
BIO-TECH (2.80%)
14,000 Synbiotics Corporation $ 49,000
9,000 Synthetech, Inc. 57,938
--------
Total . . . . . . . . . . . . . 106,938
--------
COMMUNICATIONS (6.88%)
3,000 Alpine Group (The), Inc. 44,063
5,000 Applied Signal Technology, Inc. 60,312
4,000 CTC Communications Corp. 39,000
4,000 EIS International, Inc. 31,500
9,000 Intelect Comm. Systems 87,750
--------
Total . . . . . . . . . . . . . 262,625
--------
COMPUTER SYSTEMS/PERIPHERALS (5.43%)
46,600 AW Computer Systems, Inc. 59,706
14,000 Miltope Group, Inc. 51,625
21,000 Mitek Systems, Inc. 31,500
10,000 ZOOM Telephonics, Inc. 64,375
--------
Total . . . . . . . . . . . . . 207,206
--------
DATA PROCESSING SYSTEMS/TRAINING (5.72%)
35,000 Canterbury Information Tech. 43,750
7,000 Computer Outsourcing Services 63,437
3,000 FDP Financial Data Planning* 31,500
8,000 4Front Software International 79,500
--------
Total . . . . . . . . . . . . . 218,187
--------
DIVERSIFIED OPERATIONS (9.31%)
3,000 Astronics Corporation 28,875
3,000 Baker (Michael) Corp. 32,812
11,000 Electronic Designs, Inc. 39,875
3,000 SL Industries, Inc.* 36,750
4,000 Summa Industries 36,000
14,100 Team, Inc. 52,875
5,000 Waters Instruments, Inc.* 34,688
22,300 Weston (Roy F.), Inc. 93,381
--------
Total . . . . . . . . . . . . . 355,256
--------
ELECTRONICS (9.02%)
32,000 All American Semiconductor 67,000
1,300 Deswell Industries, Inc.* 26,000
9,000 Pacific Aerospace & Electronics 54,000
3,500 Reliability, Inc. 61,250
11,000 Symetrics Industries, Inc. 77,000
5,000 Titan Corporation (The) 34,375
11,000 Tseng Labs, Inc. 24,750
--------
Total . . . . . . . . . . . . . 344,375
--------
FOOD/RESTAURANT (5.62%)
6,000 Au Bon Pain Co., Inc. 57,000
14,000 Fresh Juice Co. (The), Inc. 40,250
11,000 Main St. and Main, Inc. 37,125
7,000 Rally's Hamburgers 28,438
10,000 Vermont Pure Holdings, Ltd. 41,250
2,000 Willi-Food (G.) Int'l. 10,500
--------
Total . . . . . . . . . . . . . 214,563
--------
FURNITURE (4.52%)
38,000 DMi Furniture, Inc. 111,625
5,000 Kewaunee Scientific Corp.* 61,250
--------
Total . . . . . . . . . . . . . 172,875
--------
HEALTH/BEAUTY (3.19%)
9,000 Bradley Pharmaceuticals 21,656
24,000 CCA Industries, Inc. 67,500
3,000 Natural Alternatives Int'l. 23,625
600 Styling Technology Corp. 8,925
--------
Total . . . . . . . . . . . . . 121,706
--------
INSTRUMENTATION/MEASURING/CONTROL (4.40%)
12,000 Bowmar Instrument Corp. 30,000
2,000 GenRad, Inc. 59,000
3,000 Plasma-Therm, Inc. 26,719
9,000 Spectrum Contol, Inc. 51,750
--------
Total . . . . . . . . . . . . . 167,469
--------
MANUFACTURING (15.38%)
34,000 Allied Devices Corporation 89,250
6,600 Arrow-Magnolia International 48,675
2,000 Atchison Casting 41,125
2,000 Aztec Manufacturing, Inc.* 36,125
18,000 Devlieg-Bullard, Inc. 77,625
3,000 Genlyte Group 56,625
4,000 K-Tron International, Inc. 71,500
3,500 Newcor, Inc.* 30,844
8,000 Nortech Systems, Inc. 40,000
6,000 PVC Container 25,500
13,600 Sun Coast Industries 69,700
--------
Total . . . . . . . . . . . . . 586,969
--------
MEDICAL PRODUCTS/SERVICES (20.07%)
6,000 American Dental Tech., Inc. 42,000
11,800 Arrhythmia Research Tech., Inc. 29,500
35,000 Biomerica, Inc. 76,562
16,400 Colorado MEDtech, Inc. 99,425
6,000 Del Global Technololgies Corp. 60,750
1,000 Hanger Orthopedic Group 13,000
20,000 Hycor Biomedical Inc. 45,000
7,000 Laboratory Sepcialists, Inc. 35,000
8,000 Lukens Medical Corporation 31,000
9,500 Medical Action Industries, Inc. 37,406
19,300 Mesa Laboratories, Inc. 127,862
1,000 OEC Medical Systems, Inc. 18,250
14,000 Palomar Medical Technologies 24,938
8,000 Rehabilicare, Inc. 32,000
12,000 Star Multi Care Services, Inc. 65,250
10,000 Transderm Laboratories Corp. 2,656
10,000 Trimedyne Incorporated 25,625
--------
Total . . . . . . . . . . . . . 766,224
--------
POWER/POWER CONVERSION SYSTEMS (3.17%)
3,500 American Superconductor Corp. 38,500
4,000 Ault Incorporated 29,500
3,000 Corcom, Inc. 28,500
900 Powell Industries, Inc. 13,275
2,700 RF Power Products, Inc. 11,138
--------
Total . . . . . . . . . . . . . 120,913
--------
RECREATION/ENTERTAINMENT (4.97%)
9,000 ARC International Corp. 49,500
4,000 Ballantyne of Omaha, Inc. 67,000
8,000 PTI Holding, Inc. 73,000
--------
Total . . . . . . . . . . . . . 189,500
--------
RETAIL APPAREL/CONSUMER GOODS (10.39%)
8,011 Cache, Inc. 30,542
5,000 Catherines Stores Corp. 28,750
1,500 S & K Famous Brands, Inc. 20,625
7,000 Serengeti Eyewear 19,250
8,100 Shoe Carnival, Inc. 63,787
7,000 Shop At Home, Inc. 31,500
10,000 Strouds, Inc. 21,875
26,000 U.S. Home & Garden, Inc. 123,500
14,179 Ultimate Electronics, Inc. 56,716
--------
Total . . . . . . . . . . . . . . 396,545
--------
TRANSPORTATION (3.08%)
4,500 CHC Helicopter* 44,438
12,500 OTR Express, Inc. 73,437
--------
Total . . . . . . . . . . . . . 117,875
--------
OTHER (14.26%)
9,300 ACR Group, Inc. 23,250
9,000 Advanced Deposition Technologies, Inc. 36,563
8,000 Atlantic American Corporation 34,000
12,800 Disc Graphics, Inc. 55,200
3,200 Forensic Technologies Int'l. 38,000
16,000 Hitox Corporation of America 39,000
10,500 International Business Schools 39,375
4,000 Magal Security Systems, Ltd. 15,750
6,000 Quixote Corporation 54,750
16,000 Recycling Industries, Inc. 96,000
5,000 Solomon-Page Grp. Ltd. (The) 15,938
6,000 Speizman Industries, Inc. 42,000
9,400 Wells-Gardner Electronics Corp. 54,050
--------
Total . . . . . . . . . . . . . 543,876
--------
Total Investments in Securities
(Cost $4,248,155)** 128.21 % $ 4,893,102
------ ---------
Liabilities in Excess of
of Other Assets (28.21)% (1,076,710)
------ ---------
Total Net Assets 100.00 % $ 3,816,392
====== =========
* Income-producing security
** Cost for federal income tax purposes is $4,261,543,
and net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 917,470
Gross Unrealized Depreciation (285,911)
-------
Net Unrealized Appreciation $ 631,559
=======
See Notes to Financial Statements
PATHFINDER FUND
Statement of Assets and Liabilities
October 31, 1997
ASSETS:
Investments in securities, at value
(identified cost $4,248,155)
(Notes 2A and 3). . . . . . . . . . . . . $ 4,893,102
Receivables:
Dividends . . . . . . . . . . . . . . . . 370
Capital Shares Sold . . . . . . . . . . . 10,741
Investment securities sold. . . . . . . . 572,541
Prepaid expenses and other . . . . . . . . . . 4,335
----------
Total Assets. . . . . . . . . . . . . . . 5,481,089
----------
LIABILITIES:
Cash overdraft. . . . . . . . . . . . . . . . . 1,096,304
Payables:
Capital shares redeemed . . . . . . . . . 540,997
Accrued expenses . . . . . . . . . . . . . . . 27,396
----------
Total Liabilities . . . . . . . . . . . . 1,664,697
----------
NET ASSETS . . . . . . . . . . . . . . . . . . $ 3,816,392
==========
Net asset value, offering and redemption
price per share
($3,816,392 / 377,150 shares). . . . . . . $ 10.12
=====
At October 31, 1997 the components of
net assets were as follows:
Paid-in capital . . . . . . . . . . . . . $ 3,048,492
Accumulated net realized gains
on investments. . . . . . . . . . . . . 122,953
Net unrealized appreciation
of investments. . . . . . . . . . . . . 644,947
----------
Net Assets . . . . . . . . . . . . . $ 3,816,392
==========
See Notes to Financial Statements
PATHFINDER FUND
Statement of Operations
for the Year Ended October 31, 1997
INVESTMENT INCOME:
Income:
Dividends . . . . . . . . . . . . . . . $ 3,964
Interest . . . . . . . . . . . . . . . . 2,620
------
Total income. . . . . . . . . . . . 6,584
------
Expenses:
Investment Advisory Fee (Note 4) . . . . 29,317
Transfer Agent . . . . . . . . . . . . . 27,084
Custody. . . . . . . . . . . . . . . . . 14,690
Professional Fees. . . . . . . . . . . . 14,700
Insurance. . . . . . . . . . . . . . . . 6,122
Accounting and Pricing . . . . . . . . . 21,947
Printing . . . . . . . . . . . . . . . . 2,078
Trustee Fees . . . . . . . . . . . . . . 6,163
Registration Fees. . . . . . . . . . . . 16,767
-------
Total expenses. . . . . . . . . . . 138,868
Reimbursement of expenses (Note 4). . . . . . ( 93,917)
Fee reduction (Note 5). . . . . . . . . . . . ( 1,946)
-------
Net expenses. . . . . . . . . . . . 43,005
-------
Net investment loss. . . . . . ( 36,421)
------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investment securities. . . . . . . . . . . . 122,953
Net increase in unrealized
appreciation of investment securities. . . . 746,365
-------
Net gain on investments . . . . . . 869,318
-------
Net increase in net assets
resulting from operations . . . . $ 832,897
=======
See Notes to Financial Statements
PATHFINDER FUND
Statement of Changes in Net Assets
For the Year Ended October 31,
1997 1996
------------- -------------
Operations:
Net investment loss. . . . . $ ( 36,421) $ ( 22,317)
Net realized gain on
investment securities. . . 122,953 402,712
Net change in unrealized
appreciation (depreciation)
of investment securities. . . 746,365 (437,841)
------- -------
Net increase (decrease)
in net assets resulting
from operations. . . . . . 832,897 (57,446)
------- ------
Distributions from
net realized gains
($1.18 and $0.62,
respectively). . . . . . . (393,026) (157,391)
--------- -------
Capital Share transactions:
Shares sold. . . . . . . . 5,456,390 7,507,422
Shares reinvested. . . . . 344,646 143,904
Shares redeemed. . . . . . (5,664,594) (6,379,070)
--------- ---------
Net increase
from capital share
transactions (a) . . . . . 136,442 1,272,256
------- ---------
Total increase
in net assets. . . . . . 576,313 1,057,419
Net assets at the beginning
of the year. . . . . . . . 3,240,079 2,182,660
--------- ---------
Net assets at the end
of the year. . . . . . . . $ 3,816,392 $ 3,240,079
========= =========
(a) A summary of capital
share transactions
(number of shares) is
as follows:
Shares sold. . . . . . . 563,800 710,337
Shares reinvested. . . . 46,637 18,332
Shares redeemed. . . . . (593,061) (628,412)
------- --------
Net increase . . . . . . . 17,376 100,257
======= ========
See Notes to Financial Statements
PATHFINDER FUND
FINANCIAL HIGHLIGHTS
_________________________________________________________________
Year Ended
October 31, 1997
PER SHARE DATA
Net asset value at beginning of year. . . . . $ 9.01
-----
Income from investment operations
Net investment income (loss). . . . . . . . . (.10)
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . 2.39
-----
Total from investment operations. . . . . 2.29
-----
Less distributions
Distributions from realized gains . . . . . . (1.18)
Distributions from paid-in capital. . . . . . --
-----
Total dividends and distributions. . . . . (1.18)
-----
Net asset value at end of year. . . . . . . . $ 10.12
=====
TOTAL RETURN 30.26 %
RATIOS / SUPPLEMENTAL DATA
Net assets at end of year
(000's omitted) . . . . . . . . . . . . . . 3,816
Ratio of expenses to average
net assets (a). . . . . . . . . . . . . . . 1.28 %
Ratio of net investment income
(loss) to average net assets (b) . . . . . . (1.08)%
Portfolio turnover rate . . . . . . . . . . . 130.56 %
Average commission rate per share . . . . . . $ .0327
Borrowings for the period:
Amount of debt outstanding
at the end of period (c). . . . . . . . . --
Average amount of debt
outstanding during the period (c) . . . . --
Average number of shares
outstanding during the period
(000's omitted) (c) . . . . . . . . . . . 387
Average amount of debt per
share during the period (c) . . . . . . . --
Year ended
October 31, 1996
PER SHARE DATA
Net asset value at beginning of year. . . . . $ 8.41
----
Income from investment operations
Net investment income (loss). . . . . . . . . (.07)
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . 1.29
----
Total from investment operations. . . . . 1.22
----
Less distributions
Distributions from realized gains . . . . . . (.62)
Distributions from paid-in capital. . . . . . --
----
Total dividends and distributions. . . . . (.62)
---
Net asset value at end of period. . . . . . . $ 9.01
====
TOTAL RETURN 15.60 %
RATIOS / SUPPLEMENTAL DATA
Net assets at end of year
(000's omitted) . . . . . . . . . . . . . . 3,240
Ratio of expenses to average
net assets (a). . . . . . . . . . . . . . . .99 %
Ratio of net investment income
(loss) to average net assets (b) . . . . . . (0.74)%
Portfolio turnover rate . . . . . . . . . . . 118.55 %
Average commission rate per share . . . . . . $ .0297
Borrowings for the period:
Amount of debt outstanding
at the end of period (c). . . . . . . . . --
Average amount of debt
outstanding during the period (c) . . . . --
Average number of shares
outstanding during the period
(000's omitted) (c) . . . . . . . . . . . 317
Average amount of debt per
share during the period (c) . . . . . . . --
Year ended
October 31, 1995
PER SHARE DATA
Net asset value at beginning of year. . . . . $ 6.87
----
Income from investment operations
Net investment income (loss). . . . . . . . . (.05)
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . 1.59
----
Total from investment operations. . . . . 1.54
----
Less distributions
Distributions from realized gains . . . . . . --
Distributions from paid-in capital. . . . . . --
----
Total dividends and distributions. . . . . --
----
Net asset value at end of year. . . . . . . . $ 8.41
====
TOTAL RETURN 22.42 %
RATIOS / SUPPLEMENTAL DATA
Net assets at end of year
(000's omitted) . . . . . . . . . . . . . . 2,183
Ratio of expenses to average
net assets (a). . . . . . . . . . . . . . . 1.19 %
Ratio of net investment income
(loss) to average net assets (b) . . . . . . (0.72)%
Portfolio turnover rate . . . . . . . . . . . 59.89 %
Average commission rate per share . . . . . . --
Borrowings for the period:
Amount of debt outstanding
at the end of period (c). . . . . . . . . --
Average amount of debt
outstanding during the period (c) . . . . --
Average number of shares
outstanding during the period
(000's omitted) (c) . . . . . . . . . . . 327
Average amount of debt per
share during the period (c) . . . . . . . --
Year ended
October 31, 1994
PER SHARE DATA
Net asset value at beginning of year. . . . . $ 7.34
----
Income from investment operations
Net investment income (loss). . . . . . . . . (.39)
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . .27
---
Total from investment operations. . . . . (.12)
---
Less distributions
Distributions from realized gains . . . . . . --
Distributions from paid-in capital. . . . . . (.35)
-----
Total dividends and distributions. . . . . (.35)
-----
Net asset value at end of period. . . . . . . $ 6.87
====
TOTAL RETURN (1.57)%
RATIOS / SUPPLEMENTAL DATA
Net assets at end of year
(000's omitted) . . . . . . . . . . . . . . 2,632
Ratio of expenses to average
net assets (a). . . . . . . . . . . . . . . 6.19 %
Ratio of net investment income
(loss) to average net assets (b) . . . . . . (5.56)%
Portfolio turnover rate . . . . . . . . . . . 89.62 %
Average commission rate per share . . . . . . --
Borrowings for the period:
Amount of debt outstanding
at the end of period (c). . . . . . . . . --
Average amount of debt
outstanding during the period (c) . . . . --
Average number of shares
outstanding during the period
(000's omitted) (c) . . . . . . . . . . . 456
Average amount of debt per
share during the period (c) . . . . . . . --
Year ended
October 31, 1993
PER SHARE DATA
Net asset value at beginning of year. . . . . $ 6.29
----
Income from investment operations
Net investment income (loss). . . . . . . . . (.29)
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . 1.65
----
Total from investment operations. . . . . 1.36
----
Less distributions
Distributions from realized gains . . . . . . --
Distributions from paid-in capital. . . . . . (.31)
-----
Total dividends and distributions. . . . . (.31)
-----
Net asset value at end of year. . . . . . . . $ 7.34
====
TOTAL RETURN 21.80 %
RATIOS / SUPPLEMENTAL DATA
Net assets at end of year
(000's omitted) . . . . . . . . . . . . . . 4,002
Ratio of expenses to average
net assets (a). . . . . . . . . . . . . . . 4.41 %
Ratio of net investment income
(loss) to average net assets (b) . . . . . . (4.15)%
Portfolio turnover rate . . . . . . . . . . . 71.02 %
Average commission rate per share . . . . . . --
Borrowings for the period:
Amount of debt outstanding
at the end of period (c). . . . . . . . . --
Average amount of debt
outstanding during the period (c) . . . . 449,873
Average number of shares
outstanding during the period
(000's omitted) (c) . . . . . . . . . . . 945
Average amount of debt per
share during the period (c) . . . . . . . $ 0.48
(a) Ratio of expenses to average net assets prior to fee waiver
and expense reimbursement by the Adviser was 4.14%, 3.62%, 3.29%,
7.06%, and 4.42%, respectively.
(b) Ratio of net investment income (loss) to average net assets
prior to fee waiver and expense reimbursement by the Adviser was
(3.94)%, (3.37)%, (2.83)%, (6.44)%, and (4.16)%, respectively.
(c) Averages computed on a daily basis.
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS October 31, 1997
_________________________________________________________________
Note 1 -- Organization
PATHFINDER FUND (the "Fund") is a series of shares of Pathfinder
Trust (the "Trust") which is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end
management investment company. The Trust was organized on
January 21, 1987, as a Massachusetts business trust and may issue
an unlimited number of shares of beneficial interest without par
value in separate classes or "funds." Currently, the Trust
offers shares in one fund, PATHFINDER FUND.
Note 2 -- Significant Accounting Policies
The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of
its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. SECURITY VALUATION. Portfolio securities of the Fund,
which are traded both on an exchange and in the over-the-counter
market, are valued according to the broadest and most
representative market. When portfolio securities are traded, the
valuation is the last reported sale price on the day of
valuation. If there is no such reported sale or the valuation is
based on the over-the-counter market, the securities are valued
at the mean between the bid and asked prices. Securities for
which reliable quotations are not readily available and
restricted securities are valued at their respective fair market
values as determined in good faith by the Board of Trustees of
the Trust. Short-term investments are stated at cost, which,
when combined with accrued interest, approximates market value.
B. FEDERAL INCOME TAXES. It is the Fund's policy to comply
with the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no federal income
tax provision is required for the Fund.
C. OTHER. As is common in the industry, security transactions
are accounted for on the date the securities are purchased or
sold. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
D. USE OF ESTIMATES IN FINANCIAL STATEMENTS. In preparing
financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements, as well as the reported amounts
of income and expenses during the period. Actual results may
differ from these estimates.
Note 3 -- Investments
For the year ended October 31, 1997, the cost of purchases and
the proceeds from the sale of securities, excluding short-term
notes, for the Fund aggregated $5,090,659 and $4,339,582,
respectively.
Note 4 -- Investment Management and Distribution Agreements
The Fund has entered into an Investment Management Agreement
with the Manager under which the Fund pays a fee, computed daily
and payable quarterly, at an annual rate of .875% of the Fund's
average daily net assets. The Manager is responsible for
supervising the performance of all administrative services in
connection with the management of the Fund.
The Manager has agreed that, in any fiscal year, if the
operating expenses of the Fund (including the fees payable to the
Manager but excluding taxes, interest, distribution fees,
brokerage and extraordinary expenses) exceed the expense
limitations applicable to the Fund imposed by state securities
laws or any regulations thereunder, the Manager will reduce its
fees by the extent of such excess (unless the Manager obtains a
waiver of or variance from such limitations by the appropriate
state securities authorities) and, if required pursuant to any
such laws or regulations, will reimburse the Fund in the amount
of such excess. The Manager also currently intends to limit the
total operating expenses of the Fund to 1.50% of average daily
net assets. Accordingly, the Manager waived its investment
advisory fee of $29,317 and reimbursed $64,600 in other expenses
for the year ended October 31, 1997.
The Trust has adopted a Plan pursuant to the rule 12b-1 under
the Investment Company Act of 1940 (the "Plan") on behalf of the
Fund, whereby it may pay up to a maximum annual rate of .25% of
its average daily net assets to the Manager for expenses incurred
in the distribution of the Fund's shares. Pursuant to this Plan
the Manager is entitled to reimbursement at the end of each month
for its actual expenses incurred in the distribution and
promotion of the Fund's shares, including the printing of
prospectuses and reports used for sales purposes, expenses of
preparation and printing of sales literature and other such
distribution-related expenses, a prorated portion of the
Manager's overhead expenses attributable to the distribution of
the Fund's shares (including leases, communications, salaries,
training, supplies, photocopying, interest on overhead, and any
other category of the Manager's expenses attributable to the
distribution of the Fund's shares) and fees paid to dealers,
banks or others as a distribution service fee for servicing
shareholders of the Fund. The Plan permits the Manager to carry
forward for a maximum of three years distribution expenses
covered by the Plan for which the Manager has not yet received
reimbursement. The Manager has waived reimbursement for all
distribution expenses under the Plan, including any accrued carry
forwards, for fiscal year 1997.
Certain officers and Trustees of the Fund (the "Trust") are
also officers and/or Directors of the Manager. During the year
ended October 31, 1997 the Fund did not pay any compensation to
its officers.
Note 5 -- Custody of Securities
Under an agreement with the Custodian Bank, custody fees are
reduced by credits for cash balances. Such reductions totalled
$1,946 for the Trust during the year ended October 31, 1997. The
Fund's cash balances at the Custodian Bank, which earned credits
against custody fees, could have been invested in short-term
instruments at times when the cash balances rose to minimum
investable levels and at times when cash was not needed for
redemptions or securities purchased. Such short term investments
would produce additional investment income to the Fund.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of PATHFINDER FUND and
the Board of Trustees of Pathfinder Trust
We have audited the accompanying statement of assets and
liabilities of PATHFINDER FUND, a series of shares of beneficial
interest of Pathfinder Trust (formerly known as The Prudent
Speculator Fund), including the schedule of investments, as of
October 31, 1997, and the related statements of operations for
the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our 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 financial highlights are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1997, by correspondence
with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of PATHFINDER FUND as of October
31, 1997, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
December 11, 1997
PATHFINDER FUND
P.O. Box 75231
Los Angeles, CA 90075-0231
(800) 444-4778
* * * *
OFFICERS AND TRUSTEES
Edwin R. Bernstein, President,
Chief Financial Officer, Trustee
H. Randolph Moore, Jr., Trustee
Patricia C. Nagle, Trustee
Werner Lange, Trustee
Patricia L. Stephan, Vice President,
Secretary, Trustee
* * * *
Manager
Pathfinder Advisers
Shareholder Servicing Agent
Unified Advisers, Inc.
Custodian
The Fifth Third Bank
Legal Counsel
Baker & Daniels
Independent Auditors
Tait, Weller & Baker
This report is intended for
distribution to shareholders
of the Fund. It may also be
given to prospective investors
if preceded or accompanied by
the Fund's current Prospectus
which contains information
regarding fees, charges and
investment objectives and
policies.
