-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F4RvtvwRm08iTrK0xg/lnOlMhMxHtxQ+r+m43/IosFQsNpEPbFQBnBhr1bU7KJDr 2YHXZ0O9x69mtyydoiCihA== 0000912057-97-008099.txt : 19970310 0000912057-97-008099.hdr.sgml : 19970310 ACCESSION NUMBER: 0000912057-97-008099 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970307 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CUTLER TRUST CENTRAL INDEX KEY: 0000892568 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07242 FILM NUMBER: 97552380 BUSINESS ADDRESS: STREET 1: TWO PORTLAND SQUARE STREET 2: C/O FORUM FINANCIAL SERVICES INC CITY: PORTLAND STATE: ME ZIP: 04101 BUSINESS PHONE: 2078791900 MAIL ADDRESS: STREET 1: TWO PORTLAND SQUARE CITY: PORTLAND STATE: ME ZIP: 04101 N-30D 1 N-30D SEMI-ANNUAL REPORT DECEMBER 31, 1996 CUTLER EQUITY INCOME FUND Cutler & Company LLC Forum Financial CUTLER APPROVED LIST EQUITY FUND 503 Airport Road Corp. Medford, Oregon 97504 Two Portland Square Portland, Maine 04101
To The Cutler Trust Shareholders: We are pleased to present this semi-annual report, and our thoughts on the performance of the portfolios of The Cutler Trust, for the six months ending December 31, 1996. Our Equity Income Fund had excellent results for the second half of 1996, outperforming the average of its mutual fund peer group as well as the general stock market. The Fund's total return of 12.31% was significantly better than the 10.35% total return of Lipper Equity Income Index of funds and the 11.68% achieved by S&P 500 index of common stocks. During the quarter ending June 30, 1996, we made shifts in the Equity Income portfolio holdings to recognize new dynamics in the marketplace. Our stringent quality, capitalization, and yield bias remain unchanged. In our view, the marketplace is rewarding large global players who are making efforts to enhance shareholder value (raising dividends, buying back stock, spinning off divisions and such). Accordingly, we now give somewhat more weight to total performance potential than we have in the past. At a time when the market is rewarding investors only slightly through dividend yield, we believe this will enhance returns over adherence to a strict yield component. Our Approved List Fund also showed good results for the period. Its total return of 8.89% lagged the 11.28% total return of the Lipper Growth & Income as well as the S&P 500. During the first quarter of 1997, we will review the investment strategy of this Fund as we did with the Equity Income portfolio to take better advantage of the changing dynamics in the economy and marketplace. The Government Securities Fund was closed at the end of the period. With the expansion of our Fixed Income Department in Indianapolis, Cutler & Company can now offer individual fixed income portfolio management. We remain optimistic on the economic front, with corporate earnings advancing and inflation in check. Should the outlook change, we will respond prudently. We appreciate your confidence in our management as evidenced by our increase in assets in the Funds. [KENNETH CUTLER SIGNATURE] [BROOKE ASHLAND SIGNATURE] Kenneth R. Cutler Brooke C. Ashland Chairman of the Board Chief Executive Officer The Cutler Trust Cutler & Company LLC 1 THE CUTLER TRUST CUTLER EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE COMMON STOCK (98.2%) BANKS (8.8%) 21,000 J.P. Morgan & Company, Inc. $2,050,125 46,700 KeyCorp 2,358,350 ---------- 4,408,475 ---------- CHEMICALS (8.7%) 21,100 Clorox Company 2,117,914 23,400 E.I. du Pont de Nemours & Company 2,208,376 ---------- 4,326,290 ---------- COMPUTER & OFFICE EQUIPMENT (3.9%) 35,500 Pitney Bowes, Inc. 1,934,750 ---------- DRUGS & PHARMACEUTICALS (9.1%) 20,800 Bristol-Myers Squibb Company 2,262,000 31,500 Eli Lilly & Company 2,299,500 ---------- 4,561,500 ---------- ELECTRIC, GAS, & UTILITY COMPANIES (3.4%) 36,200 Duke Power Company 1,674,250 ---------- ELECTRICAL MACHINERY (8.7%) 21,500 Emerson Electric Company 2,080,125 22,700 General Electric Company 2,244,444 ---------- 4,324,569 ---------- FINANCIAL SERVICES (3.9%) 18,600 Marsh & McLennan Companies, Inc. 1,934,400 ----------
2 THE CUTLER TRUST CUTLER EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE FOOD & SOFT DRINKS (6.5%) 16,000 Campbell Soup Company $1,284,000 55,100 H.J. Heinz Company 1,969,837 ---------- 3,253,837 ---------- FOREST PRODUCTS (3.4%) 36,300 Weyerhaeuser Company 1,719,713 ---------- GENERAL MERCHANDISE TRADE (6.2%) 33,400 J.C. Penney Company, Inc. 1,628,250 30,900 May Department Stores Company 1,444,575 ---------- 3,072,825 ---------- GLASS, OTHER BUILDING MATERIALS (3.9%) 35,000 PPG Industries, Inc. 1,964,375 ---------- LIFE INSURANCE (3.9%) 36,900 Lincoln National Corporation 1,937,250 ---------- PETROLEUM PRODUCTS (8.4%) 32,300 Chevron Corporation 2,099,500 21,200 Exxon Corporation 2,077,600 ---------- 4,177,100 ---------- PRINTING & PUBLISHING (4.1%) 27,300 Gannett Company, Inc. 2,044,088 ---------- SPECIALTY CHEMICAL PRODUCTS (4.6%) 27,700 Minnesota Mining & Manufacturing Company 2,295,639 ----------
3 THE CUTLER TRUST CUTLER EQUITY INCOME FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE TRANSPORTATION EQUIPMENT (6.8%) 19,400 Rockwell International Corporation $1,180,975 33,800 United Technologies Corporation 2,230,800 ---------- 3,411,775 ---------- VOICE & DATA TRANSMISSION (3.9%) 47,600 BellSouth Corporation 1,921,851 ---------- TOTAL COMMON STOCK (COST $37,050,467) 48,962,687 ---------- SHORT TERM HOLDINGS (1.8%) 524,807 Forum Daily Assets Treasury Fund 524,807 374,771 1784 U.S. Treasury Money Market Fund 374,771 ---------- TOTAL SHORT TERM HOLDINGS (COST $899,578) 899,578 ---------- TOTAL INVESTMENTS (100.0%) (COST $37,950,045) $49,862,265 ---------- ----------
4 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE COMMON STOCK (97.9%) ALCOHOLIC BEVERAGES (1.0%) 8,000 Anheuser-Busch Companies, Inc. $ 320,000 ---------- AMUSEMENT & RECREATION SERVICES (0.9%) 4,100 The Walt Disney Company 285,466 ---------- BANKS (8.7%) 7,535 Banc One Corporation 324,005 4,400 First Union Corporation 325,600 3,300 J.P. Morgan & Company, Inc. 322,166 7,500 KeyCorp 378,750 3,600 NationsBank Corporation 351,900 7,700 Norwest Corporation 334,950 9,000 PNC Bank Corporation 338,630 5,900 Wachovia Corporation 333,350 ---------- 2,709,351 ---------- BUSINESS SERVICES (0.9%) 6,600 Automatic Data Processing, Inc. 282,975 ---------- CHEMICALS (7.4%) 5,100 Air Products & Chemicals, Inc. 352,541 3,300 Clorox Company 331,238 2,600 Dow Chemical Company 203,775 3,800 E.I. du Pont de Nemours & Company 358,626 11,000 Monsanto Company 427,629 7,100 Morton International, Inc. 289,325 4,100 Rohm & Haas Company 334,666 ---------- 2,297,800 ----------
5 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE COMMUNICATIONS EQUIPMENT (1.3%) 2,393 Lucent Technologies, Inc. $ 110,677 4,800 Motorola, Inc. 294,602 ---------- 405,279 ---------- COMPUTER & OFFICE EQUIPMENT (1.9%) 5,800 Hewlett-Packard Company 291,450 5,600 Pitney Bowes, Inc. 305,200 ---------- 596,650 ---------- DRUGS & PHARMACEUTICALS (8.8%) 6,000 Abbott Laboratories 304,501 3,300 Bristol-Myers Squibb Company 358,875 5,000 Eli Lilly & Company 365,000 6,400 Johnson & Johnson 318,400 4,200 Merck & Company, Inc. 332,850 4,500 Pfizer, Inc. 372,938 4,800 Schering-Plough Corporation 310,800 5,200 Warner-Lambert Company 390,000 ---------- 2,753,364 ---------- DRUGSTORES (1.1%) 8,300 Walgreen Company 332,000 ---------- DURABLE GOODS-WHOLESALE (1.0%) 4,000 W.W. Grainger, Inc. 321,000 ----------
6 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE ELECTRIC, GAS, & UTILITY COMPANIES (5.0%) 9,500 Baltimore Gas and Electric Company $ 254,125 5,800 Consolidated Natural Gas Company 320,450 5,400 Duke Power Company 249,751 7,700 Florida Progress Corporation 248,326 5,300 Northern States Power Company 243,140 9,000 Wisconsin Energy Corporation 241,878 ---------- 1,557,670 ---------- ELECTRICAL MACHINERY (3.7%) 6,100 AMP, Inc. 234,089 3,400 Emerson Electric Company 328,951 3,600 General Electric Company 355,953 5,200 Raytheon Company 250,250 ---------- 1,169,243 ---------- FABRICATED METAL PRODUCTS (3.3%) 5,300 Gillette Company 412,075 4,100 Illinois Tool Works, Inc. 327,491 10,200 Stanley Works 275,400 ---------- 1,014,966 ---------- FINANCIAL SERVICES (1.0%) 3,000 Marsh & McLennan Companies, Inc. 312,000 ----------
7 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE FOOD & SOFT DRINKS (9.5%) 14,922 Archer Daniels Midland Company $ 328,284 3,600 CPC International Inc. 279,000 4,500 Campbell Soup Company 361,126 6,400 Coca-Cola Company 336,801 4,600 General Mills, Inc. 291,530 7,750 H.J. Heinz Company 277,066 7,600 Hershey Foods Corporation 332,500 3,300 Kellogg Company 216,565 8,800 PepsiCo, Inc. 257,400 8,000 Sara Lee Corporation 298,000 ---------- 2,978,272 ---------- FOREST PRODUCTS (2.8%) 3,400 Kimberly Clark Corporation 323,850 8,900 Westvaco Corporation 255,880 6,200 Weyerhaeuser Company 293,728 ---------- 873,458 ---------- GENERAL MERCHANDISE TRADE (2.6%) 5,700 J.C. Penney Company, Inc. 277,875 5,900 May Department Stores Company 275,825 11,500 Wal-Mart Stores, Inc. 263,064 ---------- 816,764 ---------- GLASS, OTHER BUILDING MATERIALS (2.2%) 8,000 Corning, Inc. 370,000 5,800 PPG Industries, Inc. 325,528 ---------- 695,528 ---------- GROCERY STORES (1.6%) 7,300 Albertson's, Inc. 260,065 7,800 Winn-Dixie Stores, Inc. 246,675 ---------- 506,740 ----------
8 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE INDUSTRIAL & COMMERCIAL MACHINERY (0.9%) 5,900 Dover Corporation $ 296,475 ---------- INSTRUMENTS & RELATED PRODUCTS (1.1%) 7,800 Becton, Dickinson & Company 338,326 ---------- LIFE INSURANCE (2.1%) 5,900 Aon Corporation 366,541 5,300 Lincoln National Corporation 278,250 ---------- 644,791 ---------- MANUFACTURING CONGLOMERATES (0.9%) 7,800 Hillenbrand Industries 282,750 ---------- PETROLEUM PRODUCTS (4.0%) 3,800 Amoco Corporation 305,900 5,100 Chevron Corporation 331,500 3,300 Exxon Corporation 323,400 2,400 Mobil Corporation 293,401 ---------- 1,254,201 ---------- PRINTING & PUBLISHING (4.6%) 4,200 Gannett Company, Inc. 314,476 7,800 Knight-Ridder, Inc. 298,350 6,000 McGraw-Hill Companies, Inc. 276,750 7,100 R.R. Donnelley & Sons Company 222,768 4,000 Tribune Company 315,503 ---------- 1,427,847 ----------
9 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE PROPERTY & CASUALTY INSURANCE (4.2%) 2,000 Allstate Corporation $ 115,750 2,950 American International Group, Inc. 319,339 5,800 Chubb Corporation 311,750 1,800 General Re Corporation 283,951 4,700 St. Paul Companies, Inc. 275,539 ---------- 1,306,329 ---------- RAILROADS (1.0%) 3,400 Norfolk Southern Corporation 297,500 ---------- SECURITIES, BROKERS, DEALERS, & ADVISORS (1.1%) 4,400 Merrill Lynch & Company, Inc. 358,600 ---------- SOAPS (2.1%) 3,400 Colgate-Palmolive Company 313,650 3,200 Procter & Gamble Company 344,000 ---------- 657,650 ---------- SPECIALTY CHEMICAL PRODUCTS (1.8%) 5,200 International Flavors & Fragrances, Inc. 234,000 4,000 Minnesota Mining & Manufacturing Company 331,395 ---------- 565,395 ---------- TRANSPORTATION EQUIPMENT (4.3%) 3,514 Boeing Company 373,804 3,700 Johnson Controls, Inc. 306,640 5,100 Rockwell International Corporation 310,463 5,400 United Technologies Corporation 356,400 ---------- 1,347,307 ----------
10 THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 1996 (Unaudited)
SHARES SECURITY DESCRIPTION VALUE VOICE & DATA TRANSMISSION (4.3%) 4,300 AT&T Corporation $ 187,050 4,600 Ameritech Corporation 278,878 4,400 Bell Atlantic Corporation 284,901 7,400 BellSouth Corporation 298,776 5,400 SBC Communications, Inc. 279,450 ---------- 1,329,055 ---------- WHOLESALE TRADE-NONDURABLE GOODS (0.8%) 7,700 Sysco Corporation 251,215 ---------- TOTAL COMMON STOCK (COST $20,379,376) 30,585,967 ---------- SHORT TERM HOLDINGS (2.1%) 649,821 Forum Daily Assets Treasury Fund 649,821 5,940 1784 U.S. Treasury Money Market Fund 5,940 ---------- TOTAL SHORT TERM HOLDINGS (COST $655,761) 655,761 ---------- TOTAL INVESTMENTS (100.0%) (COST $21,035,137) $31,241,728 ---------- ----------
11 THE CUTLER TRUST STATEMENTS OF ASSETS & LIABLILITIES DECEMBER 31, 1996 (Unaudited)
CUTLER EQUITY INCOME CUTLER APPROVED FUND LIST EQUITY FUND ---------------- ---------------- ASSETS: Investments, at value (a) (Note 1) $49,862,265 $31,241,728 Interest, dividends and other receivables 77,939 53,827 Receivable for securities sold -- 7,920 Receivable for Fund shares sold 59,255 2,576 ---------------- ---------------- Total Assets 49,999,459 31,306,051 ---------------- ---------------- LIABILITIES: Dividends payable 1,809 1,340 Accrued fees and other expenses 72,713 40,968 Payable for Fund shares redeemed 16,827 119,166 ---------------- ---------------- Total Liabilities 91,349 161,474 ---------------- ---------------- NET ASSETS $49,908,110 $31,144,577 ---------------- ---------------- ---------------- ---------------- COMPONENTS OF NET ASSETS: Paid in Capital $38,242,376 $21,191,498 Undistributed net investment income 3,102 2,117 Unrealized appreciation (depreciation) on investments 11,912,220 10,206,591 Accumulated net realized gain (loss) on investments (249,588) (255,629) ---------------- ---------------- NET ASSETS $49,908,110 $31,144,577 ---------------- ---------------- ---------------- ---------------- Shares of Beneficial Interest, No Par Value 3,783,009 2,037,342 ---------------- ---------------- ---------------- ---------------- NET ASSET VALUE, offering price and redemption price per share $13.19 $15.29 ---------------- ---------------- ---------------- ---------------- (a) Cost of Investments $37,950,045 $21,035,137
See Notes to Financial Statements. 12 THE CUTLER TRUST STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
CUTLER EQUITY INCOME CUTLER APPROVED FUND LIST EQUITY FUND ---------------- ---------------- INVESTMENT INCOME: Interest income $16,375 $12,946 Dividend income 741,202 370,340 ---------------- ---------------- Total investment income 757,577 383,286 ---------------- ---------------- EXPENSES: Advisory fees (Note 2) 178,658 112,989 Management fees (Note 2) 23,821 15,065 Transfer agent fees (Note 2) 7,319 6,889 Shareholder services fees (Note 2) 523 -- Custodian fees 5,413 3,500 Accounting fee (Note 2) 19,000 24,000 Legal fees (Note 2) 6,677 3,133 Audit fee 7,500 5,692 Trustees fee 7,145 4,558 Registration fees 6,573 3,801 Miscellaneous 23,315 14,516 ---------------- ---------------- Total expenses 285,944 194,143 Fees waived (Note 2) -- (6,000) ---------------- ---------------- Net expenses 285,944 188,143 ---------------- ---------------- NET INVESTMENT INCOME 471,633 195,143 ---------------- ---------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments sold 860,540 (236,791) Net change in unrealized appreciation (depreciation) on investments 4,138,142 2,554,286 ---------------- ---------------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 4,998,682 2,317,495 ---------------- ---------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,470,315 $2,512,638 ---------------- ---------------- ---------------- ----------------
See Notes to Financial Statements. 13 THE CUTLER TRUST STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
CUTLER CUTLER EQUITY APPROVED INCOME LIST EQUITY FUND FUND --------------------- --------------------- Amount Shares Amount Shares ---------- --------- ---------- --------- NET ASSETS -- 6/30/96 $46,285,366 $30,247,807 ---------- ---------- OPERATIONS: Net investment income 471,633 195,143 Net realized gain (loss) on investments sold 860,540 (236,791) Net change in unrealized appreciation (depreciation) on investments 4,138,142 2,554,286 ---------- ---------- 5,470,315 2,512,638 ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (489,285) (204,530) Net realized capital gain on investments (4,115,498) (94,208) ---------- ---------- (4,604,783) (298,738) ---------- ---------- CAPITAL SHARE TRANSACTIONS: Sale of shares 2,868,393 213,910 1,272,227 87,860 Reinvestment of dividends 4,551,373 348,315 294,637 19,724 Cost of repurchasing shares (4,662,554) (352,706) (2,883,994) (202,813) ---------- --------- ---------- --------- 2,757,212 209,519 (1,317,130) (95,229) ---------- --------- ---------- --------- ---------- --------- ---------- --------- NET ASSETS -- 12/31/96 (Including line A) $49,908,110 $31,144,577 ---------- ---------- ---------- ---------- (A) Accumulated undistributed net investment income $ 3,102 $ 2,117 ---------- ---------- ---------- ----------
See Notes to Financial Statements. 14 THE CUTLER TRUST STATEMENTS OF CHANGES IN NET ASSETS (continued) FOR THE YEAR ENDED JUNE 30, 1996
CUTLER CUTLER EQUITY APPROVED INCOME LIST EQUITY FUND FUND --------------------- --------------------- Amount Shares Amount Shares ---------- --------- ---------- --------- NET ASSETS -- 6/30/95 $41,469,577 $21,889,870 ---------- ---------- OPERATIONS: Net investment income 1,263,474 446,083 Net realized gain (loss) on investments sold 3,083,405 305,373 Net change in unrealized appreciation (depreciation) on investments 4,913,660 4,740,968 ---------- ---------- 9,260,539 5,492,424 ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net Investment income (1,277,607) (436,925) Net realized capital gain on investments (535,464) -- ---------- ---------- (1,813,071) (436,925) ---------- ---------- CAPITAL SHARE TRANSACTIONS: Sale of shares 5,500,429 453,150 5,890,195 467,208 Reinvestment of dividends 1,796,759 144,973 427,059 31,973 Cost of repurchasing shares (9,928,867) (809,714) (3,014,816) (235,675) ---------- --------- ---------- --------- (2,631,679) (211,591) 3,302,438 263,506 ---------- --------- ---------- --------- --------- --------- NET ASSETS -- 6/30/96 (Including line A) $46,285,366 $30,247,807 ---------- ---------- ---------- ---------- (A) Accumulated undistributed net investment income $ 20,754 $ 11,504 ---------- ---------- ---------- ----------
See Notes to Financial Statements. 15 THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (Unaudited) NOTE 1 SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The Cutler Trust (the "Trust") was organized on October 2, 1992, as an open-end, management investment company under the Investment Company Act of 1940. The Trust currently has two diversified investment portfolios (individually a "Fund" and collectively the "Funds"). The Cutler Equity Income Fund and Cutler Approved List Equity Fund each commenced operations on December 30, 1992. A third portfolio, the Cutler Government Securities Fund, ceased operations on December 27, 1996. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The Trust's financial statements are prepared in accordance with generally accepted accounting principles and based upon the following significant accounting policies. A. SECURITY VALUATION The Trust determines the net asset value per share of each Fund as of the close of regular trading on the New York Stock Exchange (normally 4:00 PM, Eastern time) on each Fund business day. Securities with a maturity of 60 days or less are valued at amortized cost. Other securities for which market quotations are readily available are valued using the last reported sales price provided by independent pricing services. If no sale is reported, the mean of the last bid and asked price is used. If no mean price is available, the last bid price is used. In the absence of readily available market quotations, securities are valued at fair value using procedures approved by the Trust's Board of Trustees. B. INTEREST AND DIVIDEND INCOME Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. C. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income, if any, are declared and paid quarterly on the Cutler Equity Income Fund and Cutler Approved List Equity Fund. Distributions of net realized capital gain, if any, are declared and paid annually. Distributions from net investment income and realized capital gain are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. D. FEDERAL INCOME TAX As 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 its taxable income to its shareholders, no Federal income tax provision is required. 16 THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS (continued) DECEMBER 31, 1996 (Unaudited) E. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gain and loss on investments are recorded on the basis of identified cost. NOTE 2 INVESTMENT ADVISORY, MANAGEMENT AND OTHER SERVICES The investment adviser to each Fund is Cutler & Company LLC (the "Adviser"). Pursuant to an Investment Advisory Agreement effective May 1, 1996, the Adviser receives an advisory fee from Cutler Equity Income Fund and Cutler Approved List Equity Fund at an annual rate of 0.75% of the average daily net assets of each Fund. Prior to May 1, 1996, the advisory fee for Cutler Equity Income Fund and Cutler Approved List Equity Fund was 0.50%. Effective September 11, 1996, the manager of the Trust is Forum Administrative Services, LLC (the "Manager"), and is compensated for its services at an annual rate of 0.10% of the average daily net assets of each Fund. In addition, certain legal expenses were charged to the Trust by the Manager in the amount of $1,396. Forum Financial Services, Inc. a registered broker-dealer ("FFSI") acts as the Trust's distributor pursuant to a separate Distribution Agreement for which it receives no compensation. Prior to September 11, 1996, FFSI acted as Manager of the Funds and was compensated for its services at an annual rate of 0.10% of the average daily net assets. Forum Financial Corp. ("FFC") serves as the Trust's transfer agent and dividend disbursing agent and is compensated for those services in the amount of $12,000 per year for each Fund, plus certain other fees. FFC also performs portfolio accounting for the Trust and is compensated for those services by each Fund in the amount of $36,000 per year for each Fund, plus certain amounts based upon the number and types of portfolio transactions. The Manager, FFSI and FFC are affiliated companies. The Adviser, Manager and FFC voluntarily agreed to waive a portion of their fees to the Trust for certain expenses so that total expenses of each of the Funds would not exceed certain annual expense limitations. For the six months ended December 31, 1996, FFC waived fees totaling $6,000 on behalf of the Culter Approved List Equity Fund. NOTE 3 TRANSACTIONS OF SECURITIES Cost of purchases and proceeds from sales (including maturities) of portfolio securities (excluding short-term investments) during the six months ended December 31, 1996 were as follows.
Proceeds from Cost of Purchases Sales ----------------- ------------------ Cutler Equity Income Fund $ 6,969,323 $8,730,168 Cutler Approved List Equity Fund 371,513 1,846,136
17 THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS (continued) DECEMBER 31, 1996 (Unaudited) The tax cost basis for Federal income tax purposes and unrealized appreciation and depreciation based upon identified tax cost as of December 31, 1996 were as follows:
Unrealized Unrealized Net Tax Cost Appreciation Depreciation Appreciation ----------- ------------ ------------ ------------ Cutler Equity Income Fund $37,950,045 $11,912,220 $ -- $11,912,220 Cutler Approved List Equity Fund 21,035,137 10,229,288 22,697 10,206,591
18 THE CUTLER TRUST FINANCIAL HIGHLIGHTS Selected per share data and ratios for a share outstanding throughout the period.
CUTLER EQUITY CUTLER APPROVED INCOME FUND LIST FUND ------------------------------------------------- ---------------------------------------------------- Six Months Six Months Ended Ended December December 31, Year Ended June 30, 31, Year Ended June 30, ---------- ------------------------------------ ---------- --------------------------------------- 1996(f) 1996 1995 1994 1993(a) 1996(f) 1996 1995 1994 1993(a) Beginning net asset value per share $ 12.95 $ 10.96 $ 9.56 $ 9.95 $10.00 $ 14.18 $ 11.71 $ 9.78 $ 10.09 $ 10.00 ---------- ------- ------- ------- ------- ---------- ------- ------- ------- ---------- Net investment income 0.13 0.35 0.36(b) 0.27 0.10 0.10 0.21 0.24(b) 0.21 0.08 Net realized and unrealized gain (loss) on investments 1.44 2.13 1.40 (0.40) (0.05 ) 1.16 2.47 1.92 (0.31) 0.09 Dividends from net investment income (0.14) (0.35) (0.34) (0.26) (0.10 ) (0.10) (0.21) (0.23) (0.21) (0.08) Distributions from net realized gain on investments (1.19) (0.14) (0.02) -- -- (0.05) -- -- -- -- ---------- ------- ------- ------- ------- ---------- ------- ------- ------- ---------- Ending net asset value per share $ 13.19 $ 12.95 $ 10.96 $ 9.56 $ 9.95 $ 15.29 $ 14.18 $ 11.71 $ 9.78 $ 10.09 ---------- ------- ------- ------- ------- ---------- ------- ------- ------- ---------- ---------- ------- ------- ------- ------- ---------- ------- ------- ------- ---------- Ratios to average net assets: Expenses (c) 1.21%(d) 0.98% 0.97% 1.00% 0.98% (d) 1.26%(d) 1.05% 1.00% 1.00% 0.98%(d) Net investment income 1.99%(d) 2.81% 3.49% 3.49% 2.23% (d) 1.30%(d) 1.65% 2.20% 2.43% 2.27%(d) Total return 12.31% 22.93% 18.63% (1.37%) 0.90% (d) 8.89% 23.01% 22.33% (1.07%) 3.31%(d) Portfolio turnover rate 15.86% 57.08% 43.37% 42.83% 32.04% 1.16% 8.97% 23.42% 22.27% 10.88% Average brokerage commission rate (e) $0.0524 $0.0525 N/A N/A N/A $0.0600 $0.0569 N/A N/A N/A Net assets at the end of year (000's omitted) $49,908 $46,285 $41,470 $19,706 $2,853 $31,145 $30,248 $21,890 $12,620 $3,618 (a) See Note 1 for applicable date of inception. (b) Calculated using the weighted average number of shares outstanding. (c) During the period, various fees and expenses were waived and reimbursed. Had such waiver and reimbursements not occured, the ratio of expenses to average net assets would have been: 1.21%(d) 0.98% 0.97% 1.45% 3.69% (d) 1.30%(d) 1.13% 1.23% 1.78% 4.53%(d) (d) Annualized. (e) Amount represents the average commission per share, paid to brokers, on the purchase and sale of portfolio securities. (f) Unaudited.
19 THE CUTLER TRUST TRUSTEES OF THE CUTLER TRUST DECEMBER 31, 1996 KENNETH R. CUTLER [PHOTO] Principal portfolio manager of the two equity mutual fund portfolios. Principal portfolio manager of institutional equity funds with objectives similar to the mutual funds, that are managed separately by Cutler & Company LLC. JOHN Y. KEFFER [PHOTO] Chairman, Forum Financial Corp., Transfer Agent, Forum Financial Services, Inc., Distributor and Forum Administrative Services, LLC, Manager for both funds. DR. HATTEN S. YODER, JR. [PHOTO] Chairman Emeritus, Geophysical Laboratory, Carnegie Institute of Washington, and consultant to the Los Alamos National Laboratory. A member of the National Academy of Sciences, and many national and international scientific bodies. BROOKE CUTLER ASHLAND [PHOTO] Chief Executive Officer, Cutler & Company LLC, Investment Adviser to the trust. ROBERT B. WATTS, JR. [PHOTO] Attorney in private practice. Formerly a senior level officer, counsel and corporate secretary with over 25 years of corporate, divisional and board level experience with two Fortune 100 companies.
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Page ----- Chairman's Letter to the Shareholders....... 1 Cutler Equity Income Fund Portfolio......... 2 Cutler Approved List Equity Fund Portfolio................................. 5 Statements of Assets and Liabilities........ 12 Statements of Operations.................... 13 Statements of Changes in Net Assets......... 14 Notes to Financial Statements............... 16 Financial Highlights (Per Share Data)....... 19 Trustees of the Cutler Trust................ 20
Distributor Forum Financial Services, Inc. CUTLER & COMPANY LLC INVESTMENT MANAGEMENT INVESTMENT ADVISER TO THE TRUST 503 Airport Road, Medford, OR 97504 (800) 228-8537 - (541) 770-9000 Fax: (541) 779-0006 info @ cutler.com - ------------------------------------------------ This report is submitted for the general information of the shareholders of the Fund. It is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus, which includes information regarding the Fund's objectives and policies, experience of its management, marketability of shares, and other information. - ------------------------------------------- CUTLER EQUITY INCOME FUND CUTLER APPROVED LIST EQUITY FUND SEMI-ANNUAL REPORT December 31, 1996 -----END PRIVACY-ENHANCED MESSAGE-----