-----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, LPsrpijTEDdJDuM3J8G0LS0eZgbeI5OBpRJHA6EaeoghSYWmO7G8n8xm/hhkP5BA uIBNJd9s2ByTnhApW/i8lw== 0000912057-00-008366.txt : 20000228 0000912057-00-008366.hdr.sgml : 20000228 ACCESSION NUMBER: 0000912057-00-008366 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000225 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: SEC FILE NUMBER: 811-07242 FILM NUMBER: 552848 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, 1999 - -------------------------------------------------------------------------------- CUTLER CORE FUND Cutler & Company, LLC Forum Shareholder Services, LLC CUTLER VALUE FUND 503 Airport Road Two Portland Square Medford, Oregon 97504 Portland, Maine 04101
- -------------------------------------------------------------------------------- To The Cutler Trust Shareholders: We are pleased to present this semi-annual report and our thoughts on the recent changes that have taken place during the six months ending December 31, 1999. THE CUTLER CORE FUND (formerly the Cutler Equity Income Fund) During this period, we completed the restructuring of the criteria and changed the name of the Fund to more closely reflect market definitions for performance measurement purposes. Lipper (a national rating service) will no longer offer an "Equity Income" category for comparison. We will now be measured against a "Core" benchmark. We maintain an income oriented investment approach, and will continue to select a majority of dividend paying issues from both the growth and value segments of the market. Performance for the period was 8.42%, and the Fund ended its five calendar year performance with double-digit percentage gains.* THE CUTLER VALUE FUND During this period, the Fund underwent substantial restructuring to more closely align the holdings with a pure "value" strategy. Performance was -8.64% for the period, lagging the general stock market, which performed with a strong growth basis. We believe this underperformance will prove to be short term, as value stocks have outperformed growth stocks in longer-term performance measurement periods. It is important to note that asset classes do not move up and down together. In any given year, one segment might achieve a return far in excess of the long-term expectation while another might deliver a very disappointing return. This has been the case the past few years with value stocks. However, in a powerful force in investing known as "reversion to the mean," those asset classes which have underperformed for a given period of time have a much higher potential to outperform in the future. In periods of economic uncertainty, value investors are often rewarded when a "flight to quality" returns to the market. As the millennium closed, the fears of Y2K meltdown faded and worldwide markets and economics were rebounding. Our greatest concerns lay in the areas of the market experiencing unprecedented, often exuberant attention. We look forward to another successful year, and hope that the changes we have made during this period will add thrust to our performance in the years ahead. On behalf of everyone at The Cutler Trust, we thank you for your continued support. /s/ Kenneth R. Cutler /s/ Brooke R. Ashland Kenneth R. Cutler Brooke R. Ashland Chairman of the Board Chief Executive Officer The Cutler Trust Cutler & Company, LLC
* Past performance is no guarantee of future results. The Fund's 1-year, 5-year and since inception (December 30, 1992) average annual total returns for the period ending December 31, 1999 were 15.19%, 24.30% and 17.14%, respectively. Returns assume reinvestment of all dividend and capital gain distributions. Investment return and principal value will fluctuate so that, when redeemed, an investor's shares may be worth more or less than their original cost. For the period reported, some of the Fund's fees were waived or expenses reimbursed, otherwise total return would have been lower. 1 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER CORE FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE COMMON STOCK (93.8%) BANKS (2.9%) 24,300 Bank of America Corp. $ 1,219,556 7,200 J.P. Morgan & Co., Inc. 911,700 ----------- 2,131,256 ----------- BUSINESS SERVICES (5.2%) 35,000 Automatic Data Processing, Inc. 1,885,625 30,000 Electronic Data Systems Corp. 2,008,125 ----------- 3,893,750 ----------- CHEMICALS (2.4%) 13,500 Dow Chemical Co. 1,803,938 ----------- COMMUNICATIONS EQUIPMENT (11.7%) 40,300 Lucent Technologies, Inc. 3,014,944 28,700 Motorola, Inc. 4,226,075 23,500 Tellabs, Inc.* 1,508,406 ----------- 8,749,425 ----------- COMPUTER & OFFICE EQUIPMENT (5.7%) 31,100 Hewlett-Packard Co. 3,543,456 15,000 Pitney Bowes, Inc. 724,688 ----------- 4,268,144 ----------- DRUGS & PHARMACEUTICALS (7.2%) 27,400 Abbott Laboratories 994,962 34,000 Bristol-Myers Squibb Co. 2,182,375 28,300 Eli Lilly & Co. 1,881,950 5,000 Merck & Co., Inc. 335,313 ----------- 5,394,600 ----------- DRUGSTORES (1.0%) 24,400 Walgreen Co. 713,700 -----------
See Notes to Financial Statements. 2 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER CORE FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE ELECTRIC MACHINERY (10.0%) 22,300 Emerson Electric Co. $ 1,279,462 9,500 General Electric Co. 1,470,125 26,500 Rockwell International Corp. 1,268,687 36,000 Texas Instruments, Inc. 3,487,500 ----------- 7,505,774 ----------- ELECTRIC, GAS & UTILITY COMPANIES (0.9%) 32,800 Northern States Power Co. 639,600 ----------- FABRICATED METAL PRODUCTS (1.4%) 15,000 Illinois Tool Works, Inc. 1,013,438 ----------- FOREST PRODUCTS (3.9%) 20,000 Kimberly-Clark Corp. 1,305,000 22,900 Weyerhaeuser Co. 1,644,506 ----------- 2,949,506 ----------- GENERAL MERCHANDISE TRADE (6.3%) 67,800 Wal-Mart Stores, Inc. 4,686,675 ----------- GLASS, & OTHER BUILDING MATERIALS (4.9%) 28,600 Corning, Inc. 3,687,613 ----------- INSTRUMENTS & RELATED PRODUCTS (2.4%) 30,937 Honeywell, Inc. 1,784,678 ----------- INSURANCE CARRIERS (1.9%) 15,000 Marsh & McLennan Cos., Inc. 1,435,313 ----------- NONDEPOSITORY CREDIT INSTITUTIONS (1.2%) 25,000 Household International, Inc. 931,250 ----------- PETROLEUM PRODUCTS (1.0%) 8,300 Atlantic Richfield Co. 717,950 -----------
See Notes to Financial Statements. 3 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER CORE FUND SCHEDULE OF INVESTMENTS (concluded) DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE PRINTING & PUBLISHING (1.5%) 20,000 Tribune Co. $ 1,101,250 ----------- PROPERTY & CASUALTY INSURANCE (3.2%) 15,200 Allstate Corp. 364,800 18,750 American International Group, Inc. 2,027,343 ----------- 2,392,143 ----------- RESTAURANTS (3.8%) 70,000 McDonald's Corp. 2,821,875 ----------- SECURITIES, BROKERS, DEALERS & ADVISORS (2.2%) 20,000 Merrill Lynch & Co., Inc. 1,670,000 ----------- TRANSPORTATION EQUIPMENT (1.9%) 22,000 United Technologies Corp. 1,430,000 ----------- VOICE & DATA TRANSMISSION (11.2%) 45,000 AT&T Corp. 2,283,750 70,000 BellSouth Corp. 3,276,875 57,800 SBC Communications, Inc. 2,817,750 ----------- 8,378,375 ----------- TOTAL COMMON STOCK (COST $48,864,254) 70,100,253 ----------- SHORT-TERM HOLDINGS (6.2%) 3,010,679 Daily Assets Cash Fund 3,010,679 1,589,015 Daily Assets Government Obligations Fund 1,589,015 ----------- TOTAL SHORT-TERM HOLDINGS (COST $4,599,694) 4,599,694 ----------- TOTAL INVESTMENTS (100.0%) (COST $53,463,948) $74,699,947 ===========
- ------------------------ * Non-income producing security. See Notes to Financial Statements. 4 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER VALUE FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE COMMON STOCK (99.9%) BANKS (15.0%) 22,300 Bank of America Corp. $ 1,119,181 24,950 Bank One Corp. 799,959 5,900 Chase Manhattan Corp. 458,356 11,800 First Union Corp. 387,188 7,600 Suntrust Banks, Inc. 522,975 31,100 Wells Fargo Co. 1,257,605 ----------- 4,545,264 ----------- CHEMICALS (4.0%) 5,300 E.I. Du Pont de Nemours & Co. 349,137 21,400 Rohm & Haas Co. 870,712 ----------- 1,219,849 ----------- COMPUTER & OFFICE EQUIPMENT (9.3%) 13,600 Apple Computer, Inc.* 1,398,250 12,500 Hewlett-Packard Co. 1,424,219 ----------- 2,822,469 ----------- DRUGS & PHARMACEUTICALS (3.0%) 25,900 ALZA Corp.* 896,788 ----------- ELECTRIC MACHINERY (2.5%) 10,600 Emerson Electric Co. 608,175 3,500 Rockwell International Corp. 167,563 ----------- 775,738 -----------
See Notes to Financial Statements. 5 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER VALUE FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE ELECTRIC, GAS & UTILITY COMPANIES (5.7%) 7,700 CMS Energy Corp. $ 240,144 42,700 Peco Energy Co. 1,483,825 ----------- 1,723,969 ----------- FABRICATED METAL PRODUCTS (1.7%) 7,500 Illinois Tool Works, Inc. 506,719 ----------- FOOD & SOFT DRINKS (17.0%) 12,500 Bestfoods, Inc. 657,031 58,200 ConAgra, Inc. 1,313,138 33,800 General Mills, Inc. 1,208,350 13,200 H. J. Heinz Co. 525,525 4,500 Hershey Foods Corp. 213,750 56,100 Sara Lee Corp. 1,237,706 ----------- 5,155,500 ----------- FOREST PRODUCTS (2.3%) 9,900 Weyerhaeuser Co. 710,944 ----------- GAMES & TOYS (4.2%) 96,600 Mattel, Inc. 1,267,875 ----------- GROCERY STORES (2.7%) 43,300 Kroger Co.* 817,288 ----------- INDUSTRIAL & COMMERICAL MACHINERY (0.9%) 6,200 Dover Corp. 281,325 ----------- INSTRUMENTS & RELATED PRODUCTS (3.2%) 16,800 Honeywell, Inc. 969,150 -----------
See Notes to Financial Statements. 6 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER VALUE FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE INSURANCE AGENTS, BROKERS & SERVICES (0.8%) 2,600 Marsh & McLennan Cos., Inc. $ 248,788 ----------- PETROLEUM PRODUCTS (6.3%) 7,800 Atlantic Richfield Co. 674,700 7,250 Chevron Corp. 628,031 11,201 Conoco, Inc. -- Class B 278,625 9,700 Unocal Corp. 325,556 ----------- 1,906,912 ----------- PRINTING & PUBLISHING (4.0%) 1,800 Dow Jones & Co., Inc. 122,400 2,600 Gannett Co., Inc. 212,063 14,700 Knight-Ridder, Inc. 874,650 ----------- 1,209,113 ----------- PROPERTY & CASUALTY INSURANCE (3.1%) 19,000 Ace Ltd. 317,063 12,200 Allstate Corp. 292,800 13,000 Safeco Corp. 323,375 ----------- 933,238 ----------- SECURITIES, BROKERS, DEALERS & ADVISORS (1.4%) 5,300 Merrill Lynch & Co., Inc. 442,550 ----------- TRANSPORTATION (1.1%) 8,000 Union Pacific Corp. 349,000 ----------- TRANSPORTATION EQUIPMENT (0.5%) 3,500 Boeing Co. 145,469 -----------
See Notes to Financial Statements. 7 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER VALUE FUND SCHEDULE OF INVESTMENTS (concluded) DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE VOICE & DATA TRANSMISSION (11.2%) 8,400 AT&T Corp. $ 426,300 22,300 GTE Corp. 1,573,544 10,700 SBC Communications, Inc. 521,625 6,900 Telecomunicacoes Brasileiras S.A., ADR 886,650 ----------- 3,408,119 ----------- TOTAL COMMON STOCK (COST $29,526,745) 30,336,067 ----------- SHORT-TERM HOLDINGS (0.1%) 18,644 Daily Assets Cash Fund (cost $18,644) 18,644 ----------- TOTAL INVESTMENTS (100.0%) (COST $29,545,389) $30,354,711 ===========
- ------------------------ * Non-income producing security. ADR--American Depository Receipt See Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- THE CUTLER TRUST STATEMENTS OF ASSETS & LIABILITIES DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
CUTLER CUTLER CORE VALUE FUND FUND -------------------- -------------------- ASSETS Investments (Note 2) Investments at cost $53,463,948 $29,545,389 Net unrealized appreciation 21,235,999 809,322 -------------------- -------------------- Total investments at value 74,699,947 30,354,711 Interest, dividends and other receivables 103,391 67,892 Receivable for securities sold 868,543 702,564 Receivable for Fund shares sold 6,158 967,347 Prepaid expenses 6,503 3,377 -------------------- -------------------- Total Assets 75,684,542 32,095,891 -------------------- -------------------- LIABILITIES Payable for Fund shares redeemed 3,423 14,803 Payable to administrator (Note 3) 6,405 2,756 Payable to investment adviser (Note 3) 48,040 20,666 Payable to custodian 1,008 755 Payable to other related parties (Note 3) 511 76 Accrued expenses and other liabilities 58,106 29,360 -------------------- -------------------- Total Liabilities 117,493 68,416 -------------------- -------------------- NET ASSETS $75,567,049 $32,027,475 ==================== ==================== COMPONENTS OF NET ASSETS Paid-in capital $50,899,552 $31,502,423 Undistributed net investment income 3,850 540 Net unrealized appreciation on investments 21,235,999 809,322 Accumulated net realized gain (loss) on investments 3,427,648 (284,810) -------------------- -------------------- NET ASSETS $75,567,049 $32,027,475 ==================== ==================== Shares of Beneficial Interest, No Par Value 4,722,955 3,234,655 NET ASSET VALUE, offering price and redemption price per share $16.00 $9.90
See Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- THE CUTLER TRUST STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (unaudited) - --------------------------------------------------------------------------------
CUTLER CUTLER CORE VALUE FUND FUND -------------------- -------------------- INVESTMENT INCOME Dividend income $373,264 $376,263 Interest income 242,808 16,225 -------------------- -------------------- Total Investment Income 616,072 392,488 -------------------- -------------------- EXPENSES Investment advisory (Note 3) 276,007 134,616 Management (Note 3) 36,801 17,949 Transfer agent (Note 3) 8,497 7,687 Shareholder services 3,132 529 Custodian 5,953 4,706 Accounting (Note 3) 18,000 18,000 Legal 12,703 4,645 Audit 9,447 8,953 Trustees 7,575 3,890 Miscellaneous 31,953 21,165 -------------------- -------------------- Total Expenses 410,068 222,140 -------------------- -------------------- NET INVESTMENT INCOME 206,004 170,348 -------------------- -------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain from investments 3,550,019 654,034 Net change in unrealized appreciation (depreciation) of investments 2,257,964 (4,080,909) -------------------- -------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 5,807,983 (3,426,875) -------------------- -------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,013,987 $(3,256,527) ==================== ====================
See Notes to Financial Statements. 10 - -------------------------------------------------------------------------------- THE CUTLER TRUST STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
CUTLER CORE CUTLER VALUE FUND FUND ----------------------------------- ----------------------------------- Six Months Year Six Months Year Ended (unaudited) Ended Ended (unaudited) Ended December 31, 1999 June 30, 1999 December 31, 1999 June 30, 1999 ------------------ -------------- ------------------ -------------- NET ASSETS -- BEGINNING OF PERIOD $74,499,099 $ 77,482,327 $ 40,124,966 $41,085,239 ----------- ------------ ------------ ----------- OPERATIONS Net investment income 206,004 571,785 170,348 304,518 Net realized gain from investments 3,550,019 5,346,419 654,034 15,455,769 Net change in unrealized appreciation (depreciation) of investments 2,257,964 4,912,910 (4,080,909) (9,430,329) ----------- ------------ ------------ ----------- Net increase (decrease) in net assets resulting from operations 6,013,987 10,831,114 (3,256,527) 6,329,958 ----------- ------------ ------------ ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (202,401) (572,269) (168,759) (305,165) In excess of net investment income -- -- -- (1,049) Net realized capital gain from investments (4,398,786) (16,779,472) (14,068,788) (9,097,766) ----------- ------------ ------------ ----------- Total distributions to shareholders (4,601,187) (17,351,741) (14,237,547) (9,403,980) ----------- ------------ ------------ ----------- CAPITAL SHARE TRANSACTIONS Sale of shares 2,507,558 9,146,759 3,563,993 5,658,822 Reinvestment of distributions 4,547,636 16,703,765 13,247,841 8,745,547 Redemption of shares (7,400,044) (22,313,125) (7,415,251) (12,290,620) ----------- ------------ ------------ ----------- Net increase (decrease) from capital share transactions (344,850) 3,537,399 9,396,583 2,113,749 ----------- ------------ ------------ ----------- Net increase (decrease) in net assets 1,067,950 (2,983,228) (8,097,491) (960,273) ----------- ------------ ------------ ----------- NET ASSETS -- END OF PERIOD (Including line (A)) $75,567,049 $ 74,499,099 $ 32,027,475 $40,124,966 =========== ============ ============ =========== (A) Accumulated undistributed (distributions in excess of) net investment income $ 3,850 $ 247 $ 540 $ (1,049) =========== ============ ============ =========== SHARE ACTIVITY Sale of shares 164,744 587,072 267,444 313,236 Reinvestment of distributions 283,695 1,196,788 1,358,053 544,005 Redemption of shares (469,137) (1,441,571) (510,312) (692,130) ----------- ------------ ------------ ----------- Net increase (decrease) in shares (20,698) 342,289 1,115,185 165,111 =========== ============ ============ ===========
See Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- THE CUTLER TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected per share data and ratios for a share outstanding throughout each period.
CUTLER CORE FUND --------------------------------------------------------------- Six Months Ended December 31, (unaudited) Years Ended June 30, ------------- ----------------------------------------------- 1999 1999 1998 1997 1996 1995 Net Asset Value, Beginning of Period $ 15.71 $17.60 $16.06 $12.95 $10.96 $ 9.56 ------- ------- ------- ------- ------- ------- Investment Operations Net investment income 0.04 0.12 0.19 0.24 0.35 0.36(a) Net realized and unrealized gain on investments 1.25 2.06 3.05 4.30 2.13 1.40 ------- ------- ------- ------- ------- ------- Total from Investment Operations 1.29 2.18 3.24 4.54 2.48 1.76 ------- ------- ------- ------- ------- ------- Distributions From Net investment income (0.04) (0.12) (0.19) (0.24) (0.35) (0.34) Net realized gain on investments (0.96) (3.95) (1.51) (1.19) (0.14) (0.02) ------- ------- ------- ------- ------- ------- Total Distributions (1.00) (4.07) (1.70) (1.43) (0.49) (0.36) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $ 16.00 $15.71 $17.60 $16.06 $12.95 $ 10.96 ======= ======= ======= ======= ======= ======= Total Return 8.42% 15.48% 21.60% 37.65% 22.93% 18.63% Ratio/Supplementary Data Net assets at the end of period (in thousands) $75,567 $74,499 $77,482 $62,523 $46,285 $41,470 Ratios to Average Net Assets Expenses including reimbursement/waiver of fees 1.11%(b) 1.07% 1.10% 1.17% 0.98% 0.97% Expenses excluding reimbursement/waiver of fees 1.11%(b) 1.07% 1.10% 1.17% 0.98% 0.97% Net investment income 0.56%(b) 0.76% 1.14% 1.67% 2.81% 3.49% Portfolio Turnover Rate 17% 59% 119% 23% 57% 43%
- ------------------------------ (a) Calculated using the weighted average number of shares outstanding. (b) Annualized. 12 - -------------------------------------------------------------------------------- THE CUTLER TRUST FINANCIAL HIGHLIGHTS (concluded) - -------------------------------------------------------------------------------- Selected per share data and ratios for a share outstanding throughout each period.
CUTLER VALUE FUND --------------------------------------------------------------- Six Months Ended December 31, (unaudited) Years Ended June 30, ------------- ----------------------------------------------- 1999 1999 1998 1997 1996 1995 Net Asset Value, Beginning of Period $ 18.93 $21.02 $18.33 $14.18 $11.71 $ 9.78 ------- ------- ------- ------- ------- ------- Investment Operations Net investment income 0.07 0.14 0.13 0.18 0.21 0.24(a) Net realized and unrealized gain (loss) on investments (1.85) 2.73 4.19 4.20 2.47 1.92 ------- ------- ------- ------- ------- ------- Total from Investment Operations (1.78) 2.87 4.32 4.38 2.68 2.16 ------- ------- ------- ------- ------- ------- Distributions From Net investment income (0.07) (0.14) (0.13) (0.18) (0.21) (0.23) In excess of net investment income -- * -- -- -- -- Net realized gain on investments (7.18) (4.82) (1.50) (0.05) -- -- ------- ------- ------- ------- ------- ------- Total Distributions (7.25) (4.96) (1.63) (0.23) (0.21) (0.23) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $ 9.90 $18.93 $21.02 $18.33 $14.18 $ 11.71 ======= ======= ======= ======= ======= ======= Total Return (8.64%) 18.10% 24.90% 31.18% 23.01% 22.33% Ratio/Supplementary Data Net assets at the end of period (in thousands) $32,027 $40,125 $41,085 $35,277 $30,248 $21,890 Ratios to Average Net Assets Expenses including reimbursement/waiver of fees 1.24%(b) 1.20% 1.24% 1.25% 1.05% 1.00% Expenses excluding reimbursement/waiver of fees 1.24%(b) 1.20% 1.24% 1.25% 1.13% 1.23% Net investment income 0.95%(b) 0.80% 0.65% 1.15% 1.65% 2.20% Portfolio Turnover Rate 29% 110% 50% 4% 9% 23%
- ------------------------------ (a) Calculated using the weighted average number of shares outstanding. (b) Annualized. * Per share data was less than $0.01. 13 - -------------------------------------------------------------------------------- THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. ORGANIZATION 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: Cutler Core Fund and Cutler Value Fund (individually, a "Fund" and, collectively, the "Funds"). The Funds commenced operations on December 30, 1992. On April 26, 1999, Cutler Approved List Equity Fund was renamed Cutler Value Fund. On December 20, 1999, Cutler Equity Income Fund was renamed Cutler Core Fund. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES These financial statements are prepared in accordance with generally accepted accounting principles, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of increase and decrease in net assets from operations during the fiscal period. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds: 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 (currently 4:00 P.M., Eastern time) on each Fund Business Day, as defined in the Funds' prospectus. Securities with a maturity of 60 days or less are valued at amortized cost. 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 ask 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. SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned. Security transactions are recorded on a trade date basis. Realized gain and loss on investments sold is recorded on the basis of identified cost. DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income, if any, are declared and paid quarterly on the Funds. Capital gain distributions, if any, are distributed to shareholders at least annually. Distributions are based on amounts calculated in accordance with applicable federal income tax regulations, which may differ from generally accepted accounting principles. These differences are due primarily to differing treatments of income and gain on various investment securities held by the Fund, timing differences and differing characterizations of distributions made by the Fund. FEDERAL TAXES -- The Funds intend to qualify each year as regulated investment companies and distribute all their taxable income. In addition, by distributing in each calendar year substantially all their net investment 14 - -------------------------------------------------------------------------------- THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- income, capital gain and certain other amounts, if any, the Funds will not be subject to a federal excise tax. Therefore, no federal income or excise tax provision is required. EXPENSE ALLOCATION -- The Trust accounts separately for the assets and liabilities and operations of each Fund. Expenses that are directly attributable to more than one Fund are allocated among the respective Funds. NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES The investment adviser to the Funds is Cutler & Company, LLC ("Adviser"). Pursuant to an Investment Advisory Agreement, the Adviser receives an advisory fee from Cutler Core Fund and Cutler Value Fund at an annual rate of 0.75% of each Fund's average daily net assets. On behalf of each Fund, the Trust has entered into a Management Agreement with Forum Administrative Services, LLC ("FAdS"). For its services, FAdS is entitled to receive compensation at an annual rate of 0.10% of each Fund's average daily net assets. Forum Shareholder Services, LLC ("FSS"), an affiliate of FAdS, serves as each Fund's transfer agent and dividend disbursing agent, for which it receives a fee of $12,000 per year, per Fund, plus certain other fees and expenses. Forum Accounting Services, LLC ("FAcS"), an affiliate of FAdS, serves as the fund accountant for each Fund, for which it receives a fee of $36,000 per year, per Fund, subject to adjustments for the number and type of portfolio transactions. Forum Fund Services, LLC, a registered broker-dealer, acts as the distributor for each Fund for which it receives no compensation. Prior to October 31, 1999, Forum Financial Services, Inc. served as each Fund's distributor. NOTE 4. SECURITIES TRANSACTIONS The cost of securities purchased and the proceeds from sales of securities (excluding short-term securities) for the six months ended December 31, 1999, were as follows:
Cost of Purchases Proceeds from Sales ----------------- ------------------- Cutler Core Fund $13,819,148 $10,757,000 Cutler Value Fund 10,228,350 15,636,718
15 - -------------------------------------------------------------------------------- THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS (concluded) - -------------------------------------------------------------------------------- For federal income tax purposes, the tax basis of investment securities owned, the aggregate gross unrealized appreciation and the aggregate gross unrealized depreciation as of December 31, 1999, were as follows:
Unrealized Unrealized Net Tax Cost Appreciation Depreciation Appreciation ----------- ------------ ------------ ------------ Cutler Core Fund $53,463,948 $22,480,983 $1,244,984 $21,235,999 Cutler Value Fund 29,545,389 3,884,194 3,074,872 809,322
NOTE 5. MISCELLANEOUS Prior to December 20, 1999, Cutler Core Fund was called "Cutler Equity Income Fund" (the "Fund"). On December 20, 1999, a special meeting of the shareholders of the Fund was held to vote on a proposal to amend the Fund's investment objective (and corresponding investment policies) from to "seek current income and long-term capital appreciation" by investing within the Adviser's "Approved List" to "seek current income and long-term capital appreciation by investing in stocks that it considers undervalued with respect to their growth prospects relative to the general market." Only shareholders of record on November 19, 1999, were entitled to vote. The proposal was approved by 92.62% of the shareholders present at the meeting. Correspondingly, the Fund's name was changed to Cutler Core Fund. 16 - -------------------------------------------------------------------------------- THE CUTLER TRUST TRUSTEES OF THE CUTLER TRUST DECEMBER 31, 1999 - -------------------------------------------------------------------------------- KENNETH R. CUTLER [PHOTO] Chairman of The Cutler Trust and member of Investment Committee of Cutler & Company, LLC, Investment Adviser to both Funds. JOHN Y. KEFFER [PHOTO] Sole shareholder and director of Forum Financial Group, LLC, which owns Forum Shareholder Services, LLC, Transfer Agent, Forum Fund Services, LLC, Distributor and Forum Administrative Services, LLC, Manager for both Funds. BROOKE R. ASHLAND [PHOTO] Chief Executive Officer, Cutler & Company, LLC, Investment Adviser to 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. 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.
17 THE CUTLER TRUST - -------------------------------------------------------------------------------- TABLE OF CONTENTS DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Page ---- Chairman's Letter to the Shareholders....... 1 Cutler Core Fund Portfolio.................. 2 Cutler Value Fund Portfolio................. 5 Statements of Assets and Liabilities........ 9 Statements of Operations.................... 10 Statements of Changes in Net Assets......... 11 Financial Highlights (Per Share Data)....... 12 Notes to Financial Statements............... 14 Trustees of The Cutler Trust................ 17
Distributor Forum Fund Services, LLC 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 Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus, which includes information regarding the Funds' objectives and policies, management experience, and other information. - ------------------------------------------- CUTLER CORE FUND CUTLER VALUE FUND SEMI-ANNUAL REPORT --------------- December 31, 1999 -----END PRIVACY-ENHANCED MESSAGE-----