N-Q 1 nq-0909.htm THE CUTLER TRUST - FORM N-Q nq-0909.htm
 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
 
 
Investment Company Act file number ___811-07242  ____________
 
The Cutler Trust
(Exact name of registrant as specified in charter)
 
525 Bigham Knoll                             Jacksonville, Oregon               97530
               (Address of principal executive offices)                          (Zip code)
 
Erich M. Patten
 
                                             Cutler Investment Counsel, LLC                       525 Bigham Knoll                    Jacksonville, Oregon    97530
(Name and address of agent for service)
 
Registrant's telephone number, including area code:  (541) 770-9000 
 
Date of fiscal year end:     June 30, 2010          
 
Date of reporting period:   September 30, 2009                
 
Form N-Q is to be used by management investment companies other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to Rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.
 
A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 
Item 1.  Schedule of Investments.
 
CUTLER EQUITY FUND
  
SCHEDULE OF INVESTMENTS
  
September 30, 2009 (Unaudited)
  
Shares
  
COMMON STOCKS — 98.8%
Value
       
   
Consumer Discretionary — 7.3%
  
   
Media — 1.8%
  
22,060  
McGraw-Hill Cos., Inc. (The)
 $ 554,588
         
   
Multi-Line Retail — 3.0%
    
30,530  
Nordstrom, Inc.
   932,386
         
   
Specialty Retail — 2.5%
    
29,280  
Home Depot, Inc. (The)
   780,019
         
   
Consumer Staples — 13.0%
    
   
Beverages — 3.4%
    
17,930  
PepsiCo, Inc.
   1,051,774
         
   
Food & Staples Retailing — 2.9%
    
36,520  
Sysco Corp.
   907,522
         
   
Food Products — 3.3%
    
34,960  
Archer-Daniels-Midland Co.
   1,021,531
         
   
Household Products — 3.4%
    
17,690  
Kimberly-Clark Corp.
   1,043,356
         
   
Energy — 13.0%
    
   
Energy Equipment & Services — 3.5%
    
40,570  
Halliburton Co.
   1,100,258
         
   
Oil, Gas & Consumable Fuels — 9.5%
    
16,540  
Chevron Corp.
   1,164,912
16,180  
ConocoPhillips
   730,689
15,565  
Exxon Mobil Corp.
   1,067,915
        2,963,516
   
Financials — 9.6%
    
   
Consumer Finance — 3.5%
    
32,465  
American Express Co.
   1,100,564
         
   
Insurance — 3.4%
    
21,090  
Chubb Corp. (The)
   1,063,147
         
   
Thrifts & Mortgage Finance — 2.7%
    
65,010  
Hudson City Bancorp, Inc.
   854,882
 
CUTLER EQUITY FUND
    
SCHEDULE OF INVESTMENTS (Continued)
    
Shares
  
COMMON STOCKS — 98.8% (Continued)
Value
         
   
Health Care — 8.7%
    
   
Health Care Equipment & Supplies — 2.5%
    
11,120  
Becton, Dickinson and Co.
 $ 775,620
         
   
Pharmaceuticals — 6.2%
    
39,590  
Bristol-Myers Squibb Co.
   891,567
17,200  
Johnson & Johnson
   1,047,308
        1,938,875
   
Industrials — 14.9%
    
   
Aerospace & Defense — 6.4%
    
21,500  
Honeywell International, Inc.
   798,725
19,800  
United Technologies Corp.
   1,206,414
        2,005,139
   
Electrical Equipment — 2.8%
    
21,800  
Emerson Electric Co.
   873,744
         
   
Machinery — 3.1%
    
18,890  
Caterpillar, Inc.
   969,624
         
   
Road & Rail — 2.6%
    
14,000  
Union Pacific Corp.
   816,900
         
   
Information Technology — 10.9%
    
   
Computers & Peripherals — 4.4%
    
11,500  
International Business Machines Corp.
   1,375,515
         
   
Semiconductors & Semiconductor Equipment — 6.5%
    
44,530  
Intel Corp.
   871,452
48,450  
Texas Instruments, Inc.
   1,147,780
        2,019,232
   
Materials — 8.5%
    
   
Chemicals — 5.4%
    
33,470  
E.I. du Pont de Nemours and Co.
   1,075,726
7,930  
Monsanto Co.
   613,782
        1,689,508
   
Metals & Mining — 3.1%
    
20,325  
Nucor Corp.
   955,478
         
   
Telecommunication Services — 5.3%
    
   
Diversified Telecommunication Services — 5.3%
    
32,770  
AT&T, Inc.
   885,118
25,450  
Verizon Communications, Inc.
   770,371
        1,655,489
 
CUTLER EQUITY FUND
    
SCHEDULE OF INVESTMENTS (Continued)
    
Shares
  
COMMON STOCKS — 98.8% (Continued)
Value
         
   
Utilities — 7.6%
    
   
Gas Utilities — 3.9%
    
26,290  
National Fuel Gas Co.
 $ 1,204,345
         
   
Multi-Utilities — 3.7%
    
28,000  
Consolidated Edison, Inc.
   1,146,320
         
   
Total Common Stocks (Cost $27,401,774)
 $ 30,799,332
         
         
Shares
  
MONEY MARKET FUNDS — 1.1%
Value
         
352,942  
Fidelity Institutional Money Market Portfolio - Select Class, 0.37% (a)
   
     (Cost $352,942)
 $ 352,942
         
   
Total Investments at Value — 99.9% (Cost $27,754,716)
 $ 31,152,274
         
   
Other Assets in Excess of Liabilities — 0.1%
   23,690
         
   
Net Assets — 100.0%
 $ 31,175,964
         
 
(a) Variable rate security. The rate shown is the 7-day effective yield as of September 30, 2009.
         
See accompanying notes to schedule of investments.
    
 
 
CUTLER EQUITY FUND
NOTES TO SCHEDULES OF INVESTMENTS
September 30, 2009 (Unaudited)

1.  Securities Valuation
 
The Cutler Equity Fund’s (the “Fund”) portfolio securities are valued as of the close of business of the regular session of the principal exchange where the security is traded. Exchange traded securities for which market quotations are readily available are valued using the last reported sales price provided by independent pricing services as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time), on each Fund business day.  In the absence of a sale, such securities are valued at the mean of the last bid and asked price.  Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price.  Non-exchange traded securities for which over-the-counter quotations are available are generally valued at the mean between the closing bid and asked prices.  Money market instruments that mature in sixty days or less may be valued at amortized cost unless the Fund’s investment adviser believes another valuation is more appropriate.
 
The Fund values securities at fair value pursuant to procedures adopted by the Board of Trustees if (1) market quotations are insufficient or not readily available or (2) the Fund’s investment adviser believes that the prices or values available are unreliable due to, among other things, the occurrence of events after the close of the securities markets on which the Fund’s securities primarily trade but before the time as of which the Fund calculates its net asset value.
 
The Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.  Various inputs are used in determining the value of the Fund’s investments.  These inputs are summarized in the three broad levels listed below:
 
·     Level 1 – quoted prices in active markets for identical securities
·     Level 2 – other significant observable inputs
·     Level 3 – significant unobservable inputs

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
In April 2009, FASB issued Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset of Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4” or the “Position”).  FSP 157-4 provides additional guidance for estimating fair value when the volume and level of activity have significantly decreased in relation to normal market activity for the asset or liability.  The Position also provides additional guidance on circumstances that may indicate that a transaction is not orderly and requires additional disclosures in annual and interim reporting periods.  FSP 157-4 is effective for all fiscal periods and interim periods ending after June 15, 2009.
 
As of September 30, 2009, all of the securities held by the Fund were valued using Level 1 inputs.  See the Fund’s Schedule of Investments for a summary of the securities valued using Level 1 inputs by security type and industry type as required by FSP 157-4.
 

2.   Investment Transactions
 
Investment transactions are accounted for on trade date.  Gains and losses on securities sold are determined on a specific identification basis.
 
 
CUTLER EQUITY FUND
NOTES TO SCHEDULES OF INVESTMENTS (Continued) 
 
3.  Federal Income Tax
 
The following information is computed on a tax basis for each item as of September 30, 2009:
 
Cost of portfolio investments
 $ 27,756,715  
       
Gross unrealized appreciation
 $  5,868,530  
Gross unrealized depreciation
   (2,472,971 )
       
Net unrealized depreciation $ (3,395,559 ) 
 
 
The difference between the federal income tax cost of portfolio investments and the schedule of investments cost is due to certain timing differences in the recognition of capital gains and losses under income tax regulations and accounting principles generally accepted in the United States of America.  These “book/tax” differences are temporary in nature and are due to losses deferred due to wash sales.
 
 
 
Item 2. Controls and Procedures.
 
(a)  Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that such information is recorded, processed, summarized, and reported on a timely basis.
 
 
(b)   There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
Item 3. Exhibits.
 
File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)):  Attached hereto
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
(Registrant)        The Cutler Trust                                              
 
By (Signature and Title)*
/s/ Erich M. Patten      
 
Erich M. Patten, President
 
Date  October 16, 2009   
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 
 
By (Signature and Title)*
/s/ Erich M. Patten      
 
Erich M. Patten, President
 
Date  October 16, 2009   

 
By (Signature and Title)*
/s/ Matthew C. Patten      
 
Matthew C. Patten, Treasurer
 
Date  October 16, 2009   
 
* Print the name and title of each signing officer under his or her signature.