-----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, KZFf1+MYlJ+qEK2oNDXM1811CS5nDIGy9PPWST2SQkfA/pEKEaZOQAMncP8I10rg DAv8oBry7xxVM/V+xvOaww== 0001047469-99-008610.txt : 19990308 0001047469-99-008610.hdr.sgml : 19990308 ACCESSION NUMBER: 0001047469-99-008610 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990305 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: 99557691 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, 1998 - ------------------------------------------------------------------------ CUTLER EQUITY INCOME FUND Cutler & Company, LLC Forum Shareholder CUTLER APPROVED LIST EQUITY FUND 503 Airport Road Services, LLC 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 Cutler Trust, for the six months ending December 31, 1998. During the September quarter the general markets declined very sharply and in the December quarter gained it all back. For the whole period the Equity Income Fund gained 8.69% and the Approved List Equity Fund gained 4.47%. Our strong performance in the Equity Income Fund came from our concentration in sectors, which generally outperformed the market as a whole.* The dynamic markets we are witnessing are creating several profound changes in the investment landscape. The many European markets now are consolidated into a single Euro currency denomination. A wave of substantial mergers internationally is altering both trade and financial structures in major ways. Technology is accelerating in myriad and pervasive ways, some glaringly public and others hidden from view. Last June we told you that Robert Lamberti, CFA, Senior Portfolio Manager in our Pennsylvania office, would co-manage the "Approved List Equity Fund". During the December quarter he took over as principal manager. Mr. Lamberti specializes in Value analysis -- seeking those companies that represent the best current buys available in the markets. Today, searching for undervalued companies requires the use of technology and skilled technical analysis. To that end, we are pleased to announce the addition of Michael Kijesky, Senior Investment Analyst. Mike brings a strong academic background and great analytical muscle to the portfolio team. We are excited about these additions and look forward to seeking continued outstanding performance of your Funds. On behalf of everyone at The Cutler Trust, we wish to thank you for your continued loyalty and 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. 1 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER EQUITY INCOME FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE COMMON STOCK (78.5%) BUSINESS SERVICES (4.6%) 34,000 Automatic Data Processing, Inc. $ 2,726,375 20,000 Electronic Data Systems Corp. 1,005,000 ------------ 3,731,375 ------------ CHEMICALS (2.3%) 16,000 Clorox Co. 1,869,000 ------------ COMMUNICATIONS EQUIPMENT (5.2%) 30,000 Lucent Technologies, Inc. 3,300,000 15,000 Motorola, Inc. 915,937 ------------ 4,215,937 ------------ COMPUTER & OFFICE EQUIPMENT (1.2%) 15,000 Pitney Bowes, Inc. 990,937 ------------ DRUGS & PHARMACEUTICALS (13.4%) 17,000 Bristol-Myers Squibb Co. 2,274,812 26,000 Pfizer, Inc. 3,261,375 66,000 Schering-Plough Corp. 3,646,500 23,000 Warner-Lambert Co. 1,729,312 ------------ 10,911,999 ------------ DRUGSTORES (4.8%) 67,000 Walgreen Co. 3,923,688 ------------
See Notes to Financial Statements. 2 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER EQUITY INCOME FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE ELECTRIC MACHINERY (4.5%) 15,000 General Electric Co. $ 1,530,938 25,000 Texas Instruments, Inc. 2,139,063 ------------ 3,670,001 ------------ GENERAL MERCHANDISE TRADE (5.0%) 50,000 Wal-Mart Stores, Inc. 4,071,875 ------------ GLASS, OTHER BUILDING MATERIALS (1.9%) 35,000 Corning, Inc. 1,575,000 ------------ GROCERY STORES (3.1%) 40,000 Albertson's, Inc. 2,547,500 ------------ INSTRUMENTS & RELATED PRODUCTS (8.4%) 80,000 Becton, Dickinson & Co. 3,415,000 15,000 Eastman Kodak Co. 1,080,000 20,000 Xerox Corp. 2,360,000 ------------ 6,855,000 ------------ PETROLEUM PRODUCTS (1.4%) 15,000 Exxon Corp. 1,096,875 ------------ PROPERTY & CASUALTY INSURANCE (1.8%) 15,000 American International Group, Inc. 1,449,375 ------------ RESTAURANTS (3.3%) 35,000 McDonald's Corp. 2,681,875 ------------
See Notes to Financial Statements. 3 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER EQUITY INCOME FUND SCHEDULE OF INVESTMENTS (concluded) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE SECURITIES, BROKERS, DEALERS & ADVISORS (1.2%) 15,000 Merrill Lynch & Co., Inc. $ 1,001,250 ------------ SOAPS (3.2%) 28,000 Colgate-Palmolive Co. 2,600,500 ------------ TRANSPORTATION EQUIPMENT (1.5%) 11,000 United Technologies Corp. 1,196,250 ------------ VOICE & DATA TRANSMISSION (11.7%) 30,000 AT&T Corp. 2,257,500 84,000 BellSouth Corp. 4,189,500 57,800 SBC Communications, Inc. 3,099,525 ------------ 9,546,525 ------------ TOTAL COMMON STOCK (COST $45,891,950) 63,934,962 ------------ U.S. GOVERNMENT OBLIGATIONS (14.7%) 12,000,000 U.S. Treasury Bill, 4.42% yield, 1/21/99 (cost $11,970,284) 11,970,284 ------------ SHORT TERM HOLDINGS (6.8%) 2,700,203 Dreyfus Government Cash Management Fund 2,700,203 1,817,670 Forum Daily Assets Cash Institutional Fund 1,817,670 1,062,510 Forum Daily Assets Government Fund 1,062,510 ------------ TOTAL SHORT TERM HOLDINGS (COST $5,580,383) 5,580,383 ------------ TOTAL INVESTMENTS (100.0%) (COST $63,442,617) $ 81,485,629 ------------ ------------
See Notes to Financial Statements. 4 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE COMMON STOCK (93.4%) BANKS (9.9%) 5,000 Banc One Corp. $ 255,312 29,400 BankAmerica Corp. 1,767,675 4,000 First Union Corp. 243,250 1,700 J.P. Morgan & Co., Inc. 178,606 3,100 State Street Corp. 215,644 5,500 Wachovia Corp. 480,906 22,500 Wells Fargo Co. 898,594 ----------- 4,039,987 ----------- BUSINESS SERVICES (2.2%) 9,000 Automatic Data Processing, Inc. 721,687 4,000 Electronic Data Systems Corp. 201,000 ----------- 922,687 ----------- CHEMICALS (6.6%) 5,500 Clorox Co. 642,469 3,000 Dow Chemical Co. 272,813 29,800 E.I. du Pont de Nemours & Co. 1,581,262 7,000 Rohm & Haas Co. 210,875 ----------- 2,707,419 ----------- COMMUNICATIONS EQUIPMENT (4.2%) 12,000 Lucent Technologies, Inc. 1,320,000 6,500 Motorola, Inc. 396,906 ----------- 1,716,906 ----------- COMPUTER & OFFICE EQUIPMENT (5.6%) 23,700 Hewlett-Packard Co. 1,619,006 10,000 Pitney Bowes, Inc. 660,625 ----------- 2,279,631 -----------
See Notes to Financial Statements. 5 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE DRUGS & PHARMACEUTICALS (5.8%) 1,000 Abbott Laboratories $ 49,000 20,500 American Home Products Corp. 1,154,406 500 Bristol-Myers Squibb Co. 66,906 500 Eli Lilly & Co. 44,438 500 Johnson & Johnson 41,938 500 Merck & Co., Inc. 73,844 500 Pfizer, Inc. 62,719 1,000 Schering-Plough Corp. 55,250 11,000 Warner-Lambert Co. 827,062 ----------- 2,375,563 ----------- DRUGSTORES (2.3%) 16,500 Walgreen Co. 966,281 ----------- DURABLE GOODS-WHOLESALE (0.3%) 3,000 W.W. Grainger, Inc. 124,875 ----------- ELECTRIC, GAS & UTILITY COMPANIES (2.1%) 6,500 Consolidated Natural Gas Co. 351,000 8,000 Duke Energy Corp. 512,500 ----------- 863,500 ----------- ELECTRIC MACHINERY (4.4%) 12,300 Emerson Electric Co. 769,519 500 General Electric Co. 51,031 4,000 Rockwell International Corp. 194,250 9,000 Texas Instruments, Inc. 770,062 ----------- 1,784,862 ----------- FABRICATED METAL PRODUCTS (1.3%) 5,000 Gillette Co. 241,562 5,000 Illinois Tool Works, Inc. 290,000 ----------- 531,562 -----------
See Notes to Financial Statements. 6 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE FOOD & SOFT DRINKS (7.1%) 9,000 Archer Daniels Midland Co. $ 154,687 6,000 Bestfoods, Inc. 319,500 4,000 Campbell Soup Co. 220,000 4,000 Coca-Cola Co. 267,500 4,000 General Mills, Inc. 311,000 7,000 H.J. Heinz Co. 396,375 5,000 Hershey Foods Corp. 310,938 5,000 Kellogg Co. 170,625 8,000 PepsiCo, Inc. 327,500 14,600 Sara Lee Corp. 411,537 ----------- 2,889,662 ----------- FOREST PRODUCTS (0.7%) 5,000 Kimberly-Clark Corp. 272,500 ----------- GENERAL MERCHANDISE TRADE (0.8%) 2,000 J.C. Penney Co., Inc. 93,750 3,000 May Department Stores Co. 181,125 500 Wal-Mart Stores, Inc. 40,719 ----------- 315,594 ----------- GLASS, OTHER BUILDING MATERIALS (2.0%) 15,000 Corning, Inc. 675,000 2,500 PPG Industries, Inc. 145,625 ----------- 820,625 ----------- GROCERY STORES (1.7%) 11,000 Albertson's, Inc. 700,563 ----------- HOLDING & OTHER INVESTMENTS (0.5%) 84 Berkshire Hathaway, Inc. - Class B(a) 197,400 ----------- INDUSTRIAL & COMMERCIAL MACHINERY (0.6%) 7,000 Dover Corp. 256,375 -----------
See Notes to Financial Statements. 7 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE INSTRUMENTS & RELATED PRODUCTS (5.3%) 20,000 Becton, Dickinson & Co. $ 853,750 7,000 Eastman Kodak Co. 504,000 2,000 Honeywell, Inc. 150,625 5,500 Xerox Corp. 649,000 ----------- 2,157,375 ----------- INSURANCE AGENTS, BROKERS & SERVICES (0.4%) 3,000 Marsh & McLennan Cos., Inc 175,313 ----------- LIFE INSURANCE (0.3%) 2,000 Aon Corp. 110,750 ----------- NONDEPOSITORY CREDIT INSTITUTIONS (0.4%) 4,000 Household International, Inc. 158,500 ----------- OIL & GAS EXTRACTION (4.1%) 25,600 Atlantic Richfield Co. 1,670,400 ----------- PETROLEUM PRODUCTS (4.5%) 21,200 Chevron Corp. 1,758,275 500 Exxon Corp. 36,563 500 Mobil Corp. 43,562 ----------- 1,838,400 ----------- PRINTING & PUBLISHING (3.5%) 2,000 Dow Jones & Co., Inc. 96,250 3,000 Gannett Co., Inc. 198,563 3,000 Knight-Ridder, Inc. 153,375 5,500 McGraw-Hill Cos., Inc. 560,312 5,000 R.R. Donnelley & Sons Co. 219,063 3,000 Tribune Co. 198,000 ----------- 1,425,563 -----------
See Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND SCHEDULE OF INVESTMENTS (continued) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE PROPERTY & CASUALTY INSURANCE (2.8%) 20,300 Allstate Corp. $ 784,087 500 American International Group, Inc. 48,313 2,000 Chubb Corp. 129,750 6,000 St. Paul Cos., Inc. 208,500 ----------- 1,170,650 ----------- RESTAURANTS (1.7%) 9,000 McDonald's Corp. 689,625 ----------- SECURITIES, BROKERS, DEALERS & ADVISORS (1.0%) 6,000 Merrill Lynch & Co., Inc. 400,500 ----------- SOAPS (1.8%) 5,000 Colgate-Palmolive Co. 464,375 3,000 Procter & Gamble Co. 273,938 ----------- 738,313 ----------- SPECIALTY CHEMICAL PRODUCTS (0.4%) 2,500 Minnesota Mining & Manufacturing Co. 177,813 ----------- TRANSPORTATION EQUIPMENT (0.4%) 4,000 Boeing Co. 130,500 500 United Technologies Corp. 54,375 ----------- 184,875 -----------
See Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- THE CUTLER TRUST CUTLER APPROVED LIST EQUITY FUND SCHEDULE OF INVESTMENTS (concluded) DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE VOICE & DATA TRANSMISSION (7.5%) 10,500 AT&T Corp. $ 790,125 12,600 Ameritech Corp. 798,525 1,000 Bell Atlantic Corp. 56,813 1,000 BellSouth Corp. 49,875 9,000 GTE Corp. 606,937 14,000 SBC Communications, Inc. 750,750 ----------- 3,053,025 ----------- WHOLESALE TRADE-NONDURABLE GOODS (1.2%) 17,500 Sysco Corp. 480,156 ----------- TOTAL COMMON STOCK (COST $29,814,223) 38,197,250 ----------- SHORT TERM HOLDINGS (6.6%) 1,728,226 Forum Daily Assets Cash Institutional Fund 1,728,226 965,510 Forum Daily Assets Government Obligations Fund 965,510 ----------- TOTAL SHORT TERM HOLDINGS (COST $2,693,736) 2,693,736 ----------- TOTAL INVESTMENTS (100.0%) (COST $32,507,959) $40,890,986 ----------- -----------
- ------------------------ (a) Non-income producing security. See Notes to Financial Statements. 10 - -------------------------------------------------------------------------------- THE CUTLER TRUST STATEMENTS OF ASSETS & LIABILITIES DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
CUTLER CUTLER EQUITY APPROVED INCOME LIST EQUITY FUND FUND ---------------- ---------------- ASSETS: Investments (Note 2) Investments at cost $63,442,617 $32,507,959 Net unrealized appreciation 18,043,012 8,383,027 ---------------- ---------------- Total investments at value 81,485,629 40,890,986 Interest, dividends and other receivables 73,889 55,216 Receivable for Fund shares sold 2,437 7,870 ---------------- ---------------- Total Assets 81,561,955 40,954,072 ---------------- ---------------- LIABILITIES: Payable to administrator 6,615 3,393 Payable for Fund shares redeemed 1,039 2,827 Payable to investment adviser 49,612 25,451 Payable to other related parties 636 123 Accrued expenses and other liabilities 41,507 28,121 ---------------- ---------------- Total Liabilities 99,409 59,915 ---------------- ---------------- NET ASSETS $81,462,546 $40,894,157 ---------------- ---------------- ---------------- ---------------- COMPONENTS OF NET ASSETS: Paid-in capital $62,334,732 $27,327,081 Undistributed net investment income 14,245 3,652 Net unrealized appreciation on investments 18,043,012 8,383,027 Accumulated net realized gain on investments 1,070,557 5,180,397 ---------------- ---------------- NET ASSETS $81,462,546 $40,894,157 ---------------- ---------------- ---------------- ---------------- Shares of Beneficial Interest, No Par Value 5,487,856 2,429,212 NET ASSET VALUE, offering price and redemption price per share $14.84 $16.83
See Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- THE CUTLER TRUST STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 (unaudited) - --------------------------------------------------------------------------------
CUTLER CUTLER EQUITY APPROVED INCOME LIST EQUITY FUND FUND ---------------- ---------------- INVESTMENT INCOME: Dividend income $347,331 $304,075 Interest income 363,005 50,981 ---------------- ---------------- Total Investment Income 710,336 355,056 ---------------- ---------------- EXPENSES: Advisory fees (Note 3) 282,040 145,844 Management fees (Note 3) 37,605 19,446 Transfer agent fees (Note 3) 8,669 7,696 Shareholder services fees (Note 3) 2,487 394 Custodian fees 9,355 8,592 Accounting fee (Note 3) 20,000 19,000 Legal fees (Note 3) 3,090 1,585 Audit fee 8,796 8,304 Trustees fee 9,652 4,989 Miscellaneous 12,486 20,844 ---------------- ---------------- Total Expenses 394,180 236,694 ---------------- ---------------- NET INVESTMENT INCOME 316,156 118,362 ---------------- ---------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments sold 2,140,561 7,506,222 Net change in unrealized appreciation (depreciation) on investments 3,977,887 (5,937,533) ---------------- ---------------- NET GAIN ON INVESTMENTS 6,118,448 1,568,689 ---------------- ---------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,434,604 $1,687,051 ---------------- ---------------- ---------------- ----------------
See Notes to Financial Statements. 12 - -------------------------------------------------------------------------------- THE CUTLER TRUST STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
CUTLER CUTLER EQUITY APPROVED INCOME LIST EQUITY FUND FUND --------------------------------- --------------------------------- Six Months Year Six Months Year Ended (unaudited) Ended Ended (unaudited) Ended December 31, 1998 June 30, 1998 December 31, 1998 June 30, 1998 ----------------- ------------- ----------------- ------------- NET ASSETS -- BEGINNING OF PERIOD $ 77,482,327 $ 62,522,934 $41,085,239 $35,277,381 ----------------- ------------- ----------------- ------------- OPERATIONS: Net investment income 316,156 788,340 118,362 244,029 Net realized gain on investments sold 2,140,561 19,653,954 7,506,222 8,668,411 Net change in unrealized appreciation (depreciation) on investments 3,977,887 (6,744,979) (5,937,533) (674,549) ----------------- ------------- ----------------- ------------- Net increase in net assets resulting from operations 6,434,604 13,697,315 1,687,051 8,237,891 ----------------- ------------- ----------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (302,642) (802,587) (115,357) (246,131) Net realized capital gain on investments (16,779,472) (5,707,467) (9,097,766) (2,695,053) ----------------- ------------- ----------------- ------------- Total distributions to shareholders (17,082,114) (6,510,054) (9,213,123) (2,941,184) ----------------- ------------- ----------------- ------------- CAPITAL SHARE TRANSACTIONS: Sale of shares 4,635,895 14,469,495 2,091,270 3,823,631 Reinvestment of distributions 16,440,935 6,390,831 8,582,500 2,857,295 Redemption of shares (6,449,101) (13,088,194) (3,338,780) (6,169,775) ----------------- ------------- ----------------- ------------- Net increase from capital share transactions 14,627,729 7,772,132 7,334,990 511,151 ----------------- ------------- ----------------- ------------- Net increase (decrease) in net assets 3,980,219 14,959,393 (191,082) 5,807,858 ----------------- ------------- ----------------- ------------- NET ASSETS -- END OF PERIOD (Including line (A)) $ 81,462,546 $ 77,482,327 $40,894,157 $41,085,239 ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- ------------- (A) Accumulated undistributed net investment income $ 14,245 $ 731 $ 3,652 $ 647 ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- ------------- SHARE ACTIVITY Sale of shares 287,065 882,203 114,016 193,037 Reinvestment of distributions 1,179,601 406,537 534,771 155,031 Redemption of shares (380,174) (781,239) (173,934) (318,283) ----------------- ------------- ----------------- ------------- Net increase in shares 1,086,492 507,501 474,853 29,785 ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
See Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 (unaudited) - -------------------------------------------------------------------------------- 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 (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. 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. 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. INVESTMENT INCOME -- Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned. 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. 14 - -------------------------------------------------------------------------------- THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS (continued) DECEMBER 31, 1998 (unaudited) - -------------------------------------------------------------------------------- FEDERAL TAXES -- The Funds intend to qualify, and continue 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 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. REALIZED GAIN AND LOSS -- Security transactions are recorded on a trade date basis. Realized gain and loss on investments sold is recorded on the basis of identified cost. NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES INVESTMENT ADVISER -- 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 Equity Income Fund and Cutler Approved List Equity Fund at an annual rate of 0.75% of each Fund's average daily net assets. MANAGER -- 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. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT -- Forum Shareholder Services, LLC ("FSS") provides services as the Funds' transfer agent and dividend disbursing agent pursuant to a separate agreement. For these services, FSS receives a fee of $1,000 per month, per Fund, plus certain other fees and expenses. Prior to September 28, 1998, Forum Financial Corp. served as the Funds' transfer agent and dividend disbursing agent for which it received the same compensation as FSS. OTHER SERVICE PROVIDERS -- Forum Accounting Services, LLC ("FAcS"), an affiliate of FAdS, serves as the fund accountant for the Trust. FAcS is paid a fee for its portfolio accounting services of $36,000 per year for each Fund, subject to adjustments for the number and type of portfolio transactions. Forum Financial Services, Inc., a registered broker-dealer, acts as the Trust's distributor pursuant to a separate Distribution Agreement with the Trust for which it receives no compensation. 15 - -------------------------------------------------------------------------------- THE CUTLER TRUST NOTES TO FINANCIAL STATEMENTS (concluded) DECEMBER 31, 1998 (unaudited) - -------------------------------------------------------------------------------- NOTE 4. TRANSACTIONS OF SECURITIES The cost of securities purchased and the proceeds from sales of securities (excluding short term securities) for the six months ended December 31, 1998, were as follows:
Cost of Purchases Proceeds from Sales ------------------ ------------------- Cutler Equity Income Fund $21,297,330 $30,814,481 Cutler Approved List Equity Fund 15,980,912 18,805,564
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, 1998, were as follows:
Unrealized Unrealized Net Tax Cost Appreciation Depreciation Appreciation ----------- ------------ ------------ ------------ Cutler Equity Income Fund $63,442,617 $18,429,866 $ 386,854 $18,043,012 Cutler Approved List Equity Fund 32,507,959 9,419,179 1,036,152 8,383,027
16 - -------------------------------------------------------------------------------- THE CUTLER TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected per share data and ratios for a share outstanding throughout each period.
CUTLER EQUITY INCOME FUND ----------------------------------------------------------------- Six Months Ended December 31, (unaudited) Year Ended June 30, ------------ ---------------------------------------------- 1998 1998 1997 1996 1995 1994 Net Asset Value, Beginning of Period $17.60 $16.06 $12.95 $10.96 $ 9.56 $ 9.95 ------------ ------- ------- ------- ------- ------- Investment Operations Net Investment Income 0.07 0.19 0.24 0.35 0.36(a) 0.27 Net Realized and Unrealized Gain (Loss) on Investments 1.18 3.05 4.30 2.13 1.40 (0.40) ------------ ------- ------- ------- ------- ------- Total from Investment Operations 1.25 3.24 4.54 2.48 1.76 (0.13) ------------ ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.06) (0.19) (0.24) (0.35) (0.34) (0.26) Net Realized Gain on Investments (3.95) (1.51) (1.19) (0.14) (0.02) -- ------------ ------- ------- ------- ------- ------- Total Distributions (4.01) (1.70) (1.43) (0.49) (0.36) (0.26) ------------ ------- ------- ------- ------- ------- Net Asset Value, End of Period $14.84 $17.60 $16.06 $12.95 $10.96 $ 9.56 ------------ ------- ------- ------- ------- ------- ------------ ------- ------- ------- ------- ------- Total Return 8.69% 21.60% 37.65% 22.93% 18.63% (1.37%) Ratio/Supplementary Data Net assets at the end of period (in thousands) $81,463 $77,482 $62,523 $46,285 $41,470 $19,706 Ratios to Average Net Assets: Expenses including reimbursement/waiver of fees 1.05%(b) 1.10% 1.17% 0.98% 0.97% 1.00% Expenses excluding reimbursement/waiver of fees 1.05%(b) 1.10% 1.17% 0.98% 0.97% 1.45% Net investment income 0.84%(b) 1.14% 1.67% 2.81% 3.49% 3.49% Portfolio Turnover Rate 34.94% 118.59% 23.22% 57.08% 43.37% 42.83%
(a) Calculated using the weighted average number of shares outstanding. (b) Annualized. 17 - -------------------------------------------------------------------------------- THE CUTLER TRUST FINANCIAL HIGHLIGHTS (concluded) - -------------------------------------------------------------------------------- Selected per share data and ratios for a share outstanding throughout each period.
CUTLER APPROVED LIST FUND ----------------------------------------------------------------- Six Months Ended December 31, (unaudited) Year Ended June 30, ------------ ---------------------------------------------- 1998 1998 1997 1996 1995 1994 Net Asset Value, Beginning of Period $21.02 $18.33 $14.18 $11.71 $ 9.78 $10.09 ------------ ------- ------- ------- ------- ------- Investment Operations Net Investment Income 0.06 0.13 0.18 0.21 0.24(a) 0.21 Net Realized and Unrealized Gain (Loss) on Investments 0.62 4.19 4.20 2.47 1.92 (0.31) ------------ ------- ------- ------- ------- ------- Total from Investment Operations 0.68 4.32 4.38 2.68 2.16 (0.10) ------------ ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.05) (0.13) (0.18) (0.21) (0.23) (0.21) Net Realized Gain on Investments (4.82) (1.50) (0.05) -- -- -- ------------ ------- ------- ------- ------- ------- Total Distributions (4.87) (1.63) (0.23) (0.21) (0.23) (0.21) ------------ ------- ------- ------- ------- ------- Net Asset Value, End of Period $16.83 $21.02 $18.33 $14.18 $11.71 $ 9.78 ------------ ------- ------- ------- ------- ------- ------------ ------- ------- ------- ------- ------- Total Return 4.47% 24.90% 31.18% 23.01% 22.33% (1.07%) Ratio/Supplementary Data Net assets at the end of period (in thousands) $40,894 $41,085 $35,277 $30,248 $21,890 $12,620 Ratios to Average Net Assets: Expenses including reimbursement/waiver of fees 1.22%(b) 1.24% 1.25% 1.05% 1.00% 1.00% Expenses excluding reimbursement/waiver of fees 1.22%(b) 1.24% 1.25% 1.13% 1.23% 1.78% Net investment income 0.61%(b) 0.65% 1.15% 1.65% 2.20% 2.43% Portfolio Turnover Rate 43.99% 49.61% 3.86% 8.97% 23.42% 22.27%
(a) Calculated using the weighted average number of shares outstanding. (b) Annualized. 18 - -------------------------------------------------------------------------------- THE CUTLER TRUST TRUSTEES OF THE CUTLER TRUST DECEMBER 31, 1998 - -------------------------------------------------------------------------------- KENNETH R. CUTLER [PHOTO] Principal portfolio manager of the Equity Income Fund and of institutional equity portfolios managed separately by Cutler & Company, LLC with objectives similar to the Funds. JOHN Y. KEFFER [PHOTO] Sole shareholder and director of Forum Financial Group, LLC which owns Forum Shareholder Services, LLC, Transfer Agent, Forum Financial Services, Inc., Distributor and Forum Administrative Services, LLC, Manager for both Funds. BROOKE R. ASHLAND [PHOTO] Chief Executive Officer, Cutler & Company, LLC, Investment Adviser to the Trust. 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.
19 THE CUTLER TRUST - ------------------------------------------------------------------------ TABLE OF CONTENTS DECEMBER 31, 1998 - --------------------------------------------------------------------------------
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........ 11 Statements of Operations.................... 12 Statements of Changes in Net Assets......... 13 Notes to Financial Statements............... 14 Financial Highlights (Per Share Data)....... 17 Trustees of the Cutler Trust................ 19
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 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, experience of its management, marketability of shares, and other information. - ------------------------------------------- CUTLER EQUITY INCOME FUND CUTLER APPROVED LIST EQUITY FUND SEMI-ANNUAL REPORT --------------- December 31, 1998 -----END PRIVACY-ENHANCED MESSAGE-----