REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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[X]
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||
Pre-Effective Amendment No.
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[ ]
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||
Post-Effective Amendment No.
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[ 29 ]
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||
and/or | |||
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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[X]
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||
Amendment No.
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[ 30 ]
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/ X /
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immediately upon filing pursuant to paragraph (b)
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/ /
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on (date) pursuant to paragraph (b)
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/ /
|
60 days after filing pursuant to paragraph (a)(1)
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/ /
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on (date) pursuant to paragraph (a)(1)
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/ /
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75 days after filing pursuant to paragraph (a)(2)
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/ /
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on (date) pursuant to paragraph (a)(2) of Rule 485
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/ /
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This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
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Risk/Return Summary
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3
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Investment Objective
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3
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Fees and Expenses
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3
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Principal Investment Strategies of the Fund
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4
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Principal Risks of Investing in the Fund
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6
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Performance Summary
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9
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Management of the Fund
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11
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Purchase and Sale of Fund Shares
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11
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Tax Information
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11
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Payments to Broker-Dealers and Other Financial Intermediaries
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11
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Investment Objective, Principal Investment Strategies and Principal Risks of the Fund
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12
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Management
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17
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The Adviser
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17
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Portfolio Managers
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18
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Other Service Providers
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18
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Shareholder Services Plan
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19
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Your Account
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19
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How to Contact the Fund
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19
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General Information
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19
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Buying Shares
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21
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Exchanging Shares
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23
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Investment Procedures
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24
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Selling Shares
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25
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Frequent Purchases and Redemptions of Fund Shares
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29
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Other Information
|
30
|
Distributions
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30
|
Federal Taxes
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30
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Organization
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32
|
Financial Highlights
|
33
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Privacy Notice
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34
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For More Information
|
back cover
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Shareholder Fees
(fees paid directly from your investment)
|
|
Sales Charge (Load) Imposed on Purchases
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None
|
Redemption Fee
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None
|
Exchange Fee
|
None
|
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
|
|
Management Fees
|
0.50%
|
Service Fees
|
0.00%
|
Other Expenses*
|
0.75%
|
Total Annual Fund Operating Expenses
|
1.25%
|
*
|
Other Expenses are based on estimated amounts for the Fund’s current fiscal year.
|
1 Year
|
3 Years
|
$ 127
|
$ 397
|
|
•
|
United States Treasury obligations, including T-bills, notes, bonds, inflation-indexed bonds and other debt obligations issued by the U.S. Treasury, and obligations of U.S. Government Agencies that are backed by the full faith and credit of the U.S. Government. Such U.S. Government Agencies include the Private Export Funding Corporation, Overseas Private Investment Corporation, Small Business Administration, Government National Mortgage Association (GNMA), Department of Housing and Urban Development and U.S. Maritime Administration.
|
|
•
|
Securities issued or guaranteed by agencies and instrumentalities of the U.S. Government, but not explicitly backed by the full faith and credit of the U.S. Government. These include the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Federal Farm Credit Banks, Tennessee Valley Authority, and Federal Home Loan Bank.
|
|
•
|
Mortgage-Backed and Other Asset-Backed Securities. Mortgage-backed securities are obligations representing an undivided interest in, or collateralized by, pools of mortgages. These obligations, in effect, “pass-through” the monthly interest and principal payments (including prepayments) made by the individual borrowers on the pooled mortgage loans to the holders of the securities. U.S. Government agency mortgage-
|
|
backed issues include securities issued by GNMA, Fannie Mae and Freddie Mac. GNMA securities are guaranteed as to payment of principal and interest (but not as to price and yield) by the U.S. Government, while Fannie Mae and Freddie Mac securities are guaranteed only by the issuing agency. The Fund may also invest in corporate mortgage-backed securities or other asset-backed securities that have an investment grade rating. Asset-backed securities represent a group of assets that are combined or pooled for sale to investors and may be backed by receivables such as credit card, auto and student loans.
|
|
•
|
U.S. corporate debt securities (obligations of a corporation to pay interest and repay principal). They include commercial paper, notes, bonds and debentures.
|
|
•
|
Interest Rate Risk. When interest rates rise, bond prices generally fall and when interest rates fall, bond prices generally rise. In an environment of relatively low interest rates, the risk that fixed income prices may fall is potentially greater. Interest rate risk increases as average maturity increases. Interest rate increases can cause the price of a debt security to decline, resulting in a price decline for the Fund. Thus, when the Fund emphasizes securities with longer maturities, you are exposed to greater interest rate risk. All income-oriented securities, even those of highest quality, are subject to some degree of interest rate risk.
|
|
•
|
Credit Risk. Credit risk is associated with a borrower’s ability to pay interest and principal when due. A borrower’s inability to make its payment obligations could result in a significant loss of income, causing the Fund’s price to decline. Credit risk increases as overall portfolio quality decreases. Thus, when the Fund invests in lower-quality securities, you are exposed to increased credit risk.
|
|
•
|
Call Risk. Call risk for corporate bonds is the possibility that borrowers will prepay their debt prior to the scheduled maturity date, resulting in the necessity to reinvest the proceeds at lower interest rates. If interest rates decline when the Fund is emphasizing longer maturing securities, you are exposed to greater call risk because issuers of callable bonds are more likely to pay off their bonds before the maturity date. This may cause a reduction of income to the Fund.
|
|
•
|
Liquidity Risk. Liquidity risk is the risk that a bond could not be sold at an advantageous time or price due to limited market demand. If a bond is downgraded or drops in price, or if adverse conditions exist within the bond market, the demand for a bond may be limited, making that bond difficult to sell.
|
|
•
|
U.S. Government Obligations. Some U.S. Government obligations, such as U.S. Government agency bonds, are neither issued nor guaranteed by the U.S. Government. They may be supported by the right of the issuer to borrow from the U.S. Government or only by the credit of the agency issuing the obligation. If the Fund invests in a U.S. Government obligation that is not backed by the U.S. Government, there is no assurance that the U.S. Government would provide support and the Fund’s performance could be adversely impacted. All U.S. Government obligations are subject to interest rate risk and, therefore, market price fluctuations.
|
|
•
|
Mortgage-Backed and Other Asset-Backed Securities. Mortgage-backed securities are subject to greater call/prepayment risk than many debt securities, especially when interest rates decline. These securities are also subject to extension risk, or the risk of a security lengthening in duration due to the deceleration of prepayments. Extension risk is mainly the result of rising interest rates. As interest rates rise, the likelihood of prepayment decreases and if this occurs, the Fund may be unable to capitalize on other investments that have higher interest rates. Mortgage-backed securities may be subject to risks unique to the housing industry, including mortgage lending practices, defaults and foreclosures, changes in real estate values and housing inventories, mortgage securitization practices and rating assignments by credit rating agencies. The value of other asset-backed securities may be affected by factors concerning the interests in and structure of the issuer or the originator of the receivables, the creditworthiness of the entities that provide any supporting letters of credit, surety bonds or other credit enhancements, or the market’s assessment of the quality of the underlying assets.
|
|
•
|
Corporate Debt Securities. Investment grade U.S. corporate debt securities are generally considered to carry greater credit and call risk than U.S. Government obligations. The credit risk of corporate debt obligations varies widely among issuers and may be affected by factors such as adverse economic changes and changes in interest rates. The Adviser relies, in part, on the quality ratings assigned by S&P, Moody’s, Fitch and other rating services. There is risk associated with such reliance.
|
|
Rating agencies evaluate the credit risk—the safety of principal and interest payments—but not market value, which is affected by interest rate trends, economic conditions and other factors, including those unique to an issuer or industry. Rating agencies may fail to move quickly enough to change ratings in response to changing circumstances and a rating may not reflect the fine shadings of risks within a given quality grade. For example, two bonds with the same rating are not likely to be precisely the same in quality. The Adviser performs independent analyses in an attempt to identify issuers within a given quality grade that, because of improving fundamentals or other factors, are likely to result in improving quality, greater market value and lower risk.
|
|
•
|
Preferred Stocks. Preferred stock has a preference over common stock in liquidation (and generally dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.
|
|
•
|
Convertible Securities Risk. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula. Convertible securities consequently often involve attributes of both debt and equity instruments, and investment
|
|
in such securities require analysis of both credit and stock market risks. Convertible securities rank senior to common stock in a corporations’ capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument and in some instances may be subject to conversion into or an exchange for another security at the option of the issuer.
|
|
•
|
Interest rates rise
|
|
•
|
A borrower is unable to pay interest or principal when due
|
|
•
|
The fixed income market becomes illiquid
|
|
•
|
The stock market goes down
|
|
•
|
The Adviser’s judgment as to the direction of interest rates or the attributes of the Fund’s securities proves to be mistaken
|
1 Year
|
5 Years
|
10 Years
|
|
Cutler Income Fund
|
|||
Return Before Taxes
|
4.84%
|
6.14%
|
4.93%
|
Return After Taxes on Distributions
|
3.02%
|
4.48%
|
3.23%
|
Return After Taxes on Distributions and Sale of Fund Shares
|
3.42%
|
4.32%
|
3.23%
|
Barclays U.S. Government Intermediate Bond Index
(reflects no deduction for fees, expenses or taxes)
|
5.80%
|
5.88%
|
5.20%
|
Barclays U.S. Aggregate Bond Index
(reflects no deduction for taxes)
|
7.84%
|
6.50%
|
6.37%
|
|
•
|
United States Treasury obligations, including T-bills, notes, bonds, inflation-indexed bonds and other debt obligations issued by the U.S. Treasury, and obligations of U.S. Government Agencies that are backed by the full faith and credit of the U.S. Government. Such U.S. Government Agencies include the Private Export Funding Corporation, Overseas Private Investment Corporation, Small Business Administration, Government National Mortgage Association (GNMA), Department of Housing and Urban Development and U.S. Maritime Administration.
|
|
•
|
Securities issued or guaranteed by agencies and instrumentalities of the U.S. Government, but not explicitly backed by the full faith and credit of the U.S. Government. These include the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Federal Farm Credit Banks, Tennessee Valley Authority, and Federal Home Loan Bank.
|
|
•
|
Mortgage-Backed and Other Asset-Backed Securities. Mortgage-backed securities are obligations representing an undivided interest in, or collateralized by, pools of mortgages. These obligations, in effect, “pass-through” the monthly interest and principal payments (including prepayments) made by the individual borrowers on the pooled mortgage loans to the holders of the securities. U.S. Government agency mortgage-backed issues include securities issued by GNMA, Fannie Mae and Freddie Mac. GNMA securities are guaranteed as to payment of principal
|
|
and interest (but not as to price and yield) by the U.S. Government, while Fannie Mae and Freddie Mac securities are guaranteed only by the issuing agency. The Fund may also invest in corporate mortgage-backed securities or other asset-backed securities that have an investment grade rating. Asset-backed securities represent a group of assets that are combined or pooled for sale to investors and may be backed by receivables such as credit card, auto and student loans.
|
|
•
|
U.S. corporate debt securities (obligations of a corporation to pay interest and repay principal). They include commercial paper, notes, bonds and debentures.
|
|
•
|
Interest Rate Risk. When interest rates rise, bond prices generally fall and when interest rates fall, bond prices generally rise. In an environment of relatively low interest rates, the risk that fixed income prices may fall is potentially greater. Interest rate risk increases as average maturity increases. Interest rate increases can cause the price of a debt security to decline, resulting in a price decline for the Fund. Thus, when the Fund emphasizes securities with longer maturities, you are exposed to greater interest rate risk. All income-oriented securities, even those of highest quality, are subject to some degree of interest rate risk.
|
|
•
|
Credit Risk. Credit risk is associated with a borrower’s ability to pay interest and principal when due. A borrower’s inability to make its payment obligations could result in a significant loss of income, causing the Fund’s price to decline. Credit risk increases as overall portfolio quality decreases. Thus, when the Fund invests in lower-quality securities, you are exposed to increased credit risk.
|
|
•
|
Call Risk. Call risk for corporate bonds is the possibility that borrowers will prepay their debt prior to the scheduled maturity date, resulting in the necessity to reinvest the proceeds at lower interest rates. If interest rates decline when the Fund is emphasizing longer maturing securities, you are exposed to greater call risk because issuers of callable bonds are more likely to pay off their bonds before the maturity date. This may cause a reduction of income to the Fund.
|
|
•
|
Liquidity Risk. Liquidity risk is the risk that a bond could not be sold at an advantageous time or price due to limited market demand. If a bond is downgraded or drops in price, or if adverse conditions exist within the bond market, the demand for a bond may be limited, making that bond difficult to sell.
|
|
•
|
U.S. Government Obligations. Some U.S. Government obligations, such as U.S. Government agency bonds, are neither issued nor guaranteed by the U.S. Government. They may be supported by the right of the issuer to borrow from the U.S. Government or only by the credit of the agency issuing the obligation. If the Fund invests in a U.S. Government obligation that is not backed by the U.S. Government, there is no assurance that the U.S. Government would provide support and the Fund’s performance could be adversely impacted. All U.S. Government obligations are subject to interest rate risk and, therefore, market price fluctuations.
|
|
•
|
Mortgage-Backed and Other Asset-Backed Securities. Mortgage-backed securities are subject to greater call/prepayment risk than many debt securities, especially when interest rates decline. These securities are also subject to extension risk, or the risk of a security lengthening in duration due to the deceleration of prepayments. Extension risk is mainly the result of rising interest rates. As interest rates rise, the likelihood of prepayment decreases and if this occurs, the Fund may be unable to capitalize on other investments that have higher interest rates. Mortgage-backed securities may be subject to risks unique to the housing industry, including mortgage lending practices, defaults and foreclosures, changes in real estate values and housing inventories, mortgage securitization practices and rating assignments by credit rating agencies. The value of other asset-backed securities may be affected by factors concerning the interests in and structure of the issuer or the originator of the receivables, the creditworthiness of the entities that provide any supporting letters of credit, surety bonds or other credit enhancements, or the market’s assessment of the quality of the underlying assets.
|
|
•
|
Corporate Debt Securities. Investment grade U.S. corporate debt securities are generally considered to carry greater credit and call risk than U.S. Government obligations. The credit risk of corporate debt obligations varies widely among issuers and may be affected by factors such as adverse economic changes and changes in interest rates. The Adviser relies, in part, on the quality ratings assigned by S&P, Moody’s, Fitch and other rating services. There is risk associated with such reliance. Rating agencies evaluate the credit risk—the safety of principal and interest payments—but not market value, which is affected by interest rate trends, economic conditions and other factors, including those unique to an issuer or industry. Rating agencies may fail to move quickly enough to change ratings in response to changing circumstances and a rating may not reflect the fine shadings of risks within a given quality grade. For example, two bonds with the same rating are not likely to be precisely the same in quality. The Adviser performs independent analyses in an attempt to identify issuers within a given quality grade that, because of improving fundamentals or other factors, are likely to result in improving quality, greater market value and lower risk.
|
|
•
|
Preferred Stocks. Preferred stock has a preference over common stock in liquidation (and generally dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.
|
|
•
|
Convertible Securities Risk. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula. Convertible securities consequently often involve attributes of both debt and equity instruments, and investment in such securities require analysis of both credit and stock market risks. Convertible securities rank senior to common stock in a corporations’ capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument and in some instances may be subject to conversion into or an exchange for another security at the option of the issuer.
|
|
•
|
Interest rates rise
|
|
•
|
A borrower is unable to pay interest or principal when due
|
|
•
|
The fixed income market becomes illiquid
|
|
•
|
The stock market goes down
|
|
•
|
The Adviser’s judgment as to the direction of interest rates or the attributes of the fund’s securities proves to be mistaken
|
|
Minimum Initial
Investment
|
Minimum Additional
Investment
|
Standard Account
|
$2,500
|
None
|
Traditional and Roth IRA Accounts
|
$2,000
|
None
|
Accounts with Systematic Investment Plans
|
$2,500
|
$100
|
Type of Account
|
Requirements
|
Individual, Sole Proprietorship and Joint Accounts
Individual accounts are owned by one person, as are sole proprietorship accounts. Joint accounts have two or more owners (tenants).
|
• Instructions must be signed by all persons exactly as their names appear on the account
|
Gifts or Transfers to a Minor (UGMA,UTMA)
These custodial accounts provide a way to give money to a child and obtain tax benefits.
|
• Depending on state laws, you can set up a custodial account under the UGMA or the UTMA
• The custodian must sign instructions in a manner indicating custodial capacity
|
Business Entities
|
• Submit a secretary’s (or similar) certificate covering incumbency and authority
|
Trusts
|
• The trust must be established before an account can be opened
• Provide the first and signature pages from the trust document and the pages identifying the trustees
|
|
•
|
Your name and telephone number
|
|
•
|
The exact name of your account and your account number
|
|
•
|
Taxpayer identification number (usually your Social Security number)
|
|
•
|
Dollar value or number of shares to be exchanged
|
|
•
|
The name of the Fund from which the exchange is to be made
|
|
•
|
The name of the Fund into which the exchange is being made
|
How to Open an Account
|
How to Add to Your Account
|
By Check
• Call or write us for an account application
• Complete the application (and other required documents)
• Mail us your application (and other required documents) and a check
|
By Check
• Fill out an investment slip from a confirmation or write us a letter
• Write your account number on your check
• Mail us the slip (or your letter) and a check
|
By Bank Wire
• Call or write us for an account application
• Complete the application (and other required documents)
• Call us to fax the completed application (and other required documents) and we will assign you an account number
• Mail us your application (and other required documents)
• Instruct your financial institution to wire your money to us
|
By Bank Wire
• Call to notify us of your incoming wire
• Instruct your financial institution to wire your money to us
|
By Systematic Investment
• Complete the Systematic Investment section of the application
• Attach a voided check to your application
• Mail us the completed application and the voided check
• We will electronically debit the purchase amount from the financial institution account identified in your account application
|
By Mail
• Prepare a written request including:
• Your name(s) and signature(s)
• Your account number
• The Fund name
• The dollar amount or number of shares you want to sell
• How and where to send your proceeds
• Obtain a signature guarantee (if required)
• Obtain other documentation (if required)
• Mail us your request and documentation
|
By Telephone
• Call us with your request (unless you declined telephone authorization privileges on your account application)
• Provide the following information:
• Your account number
• Exact name(s) in which the account is registered
• Additional forms of identification
• Redemption proceeds will be:
• Mailed to you or
• Wired to you (unless you declined wire redemption privileges on your account application)
|
By Bank Wire
• Wire redemptions are only available if your redemption is for $10,000 or more and you did not decline wire redemption privileges on your account application
• Call us with your request (unless you declined telephone redemption privileges on your account application) or
• Mail us your request
|
Through Broker or Financial Institutions
• Contact your broker or financial institution
• Request must be in proper form
• Third party may charge you additional transaction/redemption fees
|
Systematically
• Complete the systematic withdrawal section of the application
• Attach a voided check to your application
• Mail us your completed application
• Redemption proceeds will be electronically credited to your account at the financial institution identified on your account application
|
|
•
|
If the shares redeemed have a value greater than $50,000
|
|
•
|
If you are changing a shareholder’s name of record
|
|
•
|
If the payment of the proceeds of a redemption of any amount are to be sent to any person, address or bank account not on record
|
|
•
|
If the redemption of any amount is to occur where the name(s) or the address on your account has changed within the previous 15 days
|
|
•
|
If you are transferring redemption proceeds to another account with a different registration (name/ownership) from yours
|
Year Ended September 30,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
Net asset value, beginning of year
|
$ | 10.79 | $ | 10.33 | $ | 9.20 | $ | 9.73 | $ | 9.77 | ||||||||||
Income (loss) from investment operations
|
||||||||||||||||||||
Net investment income
|
0.28 | 0.33 | 0.39 | 0.42 | 0.43 | |||||||||||||||
Net gain/(loss) on securities
(both realized and unrealized)
|
(0.09 | ) | 0.55 | 1.09 | (0.50 | ) | (0.00 | )** | ||||||||||||
Total from investment operations
|
0.19 | 0.88 | 1.48 | (0.08 | ) | 0.43 | ||||||||||||||
Less Distributions
|
||||||||||||||||||||
Dividends from net investment income
|
(0.46 | ) | (0.38 | ) | (0.35 | ) | (0.45 | ) | (0.47 | ) | ||||||||||
Distributions from net realized gains
|
(0.25 | ) | (0.04 | ) | — | — | — | |||||||||||||
Total distributions
|
(0.71 | ) | (0.42 | ) | (0.35 | ) | (0.45 | ) | (0.47 | ) | ||||||||||
Net asset value, end of year
|
$ | 10.27 | $ | 10.79 | $ | 10.33 | $ | 9.20 | $ | 9.73 | ||||||||||
Total Return
|
1.87% | 8.74% | 16.53% | (0.90% | ) | 4.48% | ||||||||||||||
Ratios/Supplemental Data
|
||||||||||||||||||||
Net asset value, end of year (in 000's)
|
$ | 21,242 | $ | 21,320 | $ | 17,199% | $ | 15,211 | $ | 18,000 | ||||||||||
Ratio of expenses to average net assets
|
1.28% | 1.33% | 1.56% | * | 1.24% | * | 1.31% | * | ||||||||||||
Ratio of net investment income
to average net assets
|
2.51% | 3.20% | 4.11% | 4.30% | 4.44% | |||||||||||||||
Portfolio Turnover
|
82.99% | 75.49% | 100.35% | 105.66% | 117.52% |
*
|
Ratio reflects expenses prior to reimbursement from the manager. Expense ratios after reimbursement were 1.48%, 1.05% and 1.20% for 2009, 2008 and 2007, respectively.
|
**
|
Less than $0.01 per share
|
PRIVACY NOTICE
|
|||
FACTS
|
WHAT DOES THE CUTLER TRUST DO WITH YOUR PERSONAL INFORMATION?
|
||
Why?
|
Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
|
||
What?
|
The types of personal information we collect and share depend on the product or service you have with us. This information can include:
§ Social Security number
§ Assets
§ Retirement Assets
§ Transaction History
§ Checking Account Information
§ Purchase History
§ Account Balances
§ Account Transactions
§ Wire Transfer Instructions
When you are no longer our customer, we continue to share your information as described in this notice.
|
||
How?
|
All financial companies need to share your personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons The Cutler Trust chooses to share; and whether you can limit this sharing.
|
||
Reasons we can share your personal information
|
Does The Cutler
Trust share?
|
Can you limit
this sharing?
|
|
For our everyday business purposes –
Such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
|
Yes
|
No
|
|
For our marketing purposes –
to offer our products and services to you
|
No
|
We don’t share
|
|
For joint marketing with other financial companies
|
No
|
We don’t share
|
|
For our affiliates’ everyday business purposes –
information about your transactions and experiences
|
No
|
We don’t share
|
|
For our affiliates’ everyday business purposes –
information about your creditworthiness
|
No
|
We don’t share
|
|
For nonaffiliates to market to you
|
No
|
We don’t share
|
|
Questions?
|
Call 1-888-288-5374
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Who we are
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Who is providing this notice?
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The Cutler Trust
Ultimus Fund Distributors, LLC (Distributor)
Ultimus Fund Solutions, LLC (Administrator)
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What we do
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How does The Cutler Trust protect my personal information?
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To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.
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How does The Cutler Trust collect my personal information?
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We collect your personal information, for example, when you
§ Open an account
§ Provide account information
§ Give us your contact information
§ Make deposits or withdrawals from your account
§ Make a wire transfer
§ Tell us where to send the money
§ Tell us who receives the money
§ Show your government-issued ID
§ Show your driver’s license
We also collect your personal information from other companies.
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Why can’t I limit all sharing?
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Federal law gives you the right to limit only
§ Sharing for affiliates’ everyday business purposes – information about your creditworthiness
§ Affiliates from using your information to market to you
§ Sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing.
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Definitions
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Affiliates
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Companies related by common ownership or control. They can be financial and nonfinancial companies.
§ Cutler Investment Counsel, LLC, the investment adviser to The Cutler Trust, could be deemed to be an affiliate.
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Nonaffiliates
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Companies not related by common ownership or control. They can be financial and nonfinancial companies
§ The Cutler Trust does not share with nonaffiliates so they can market to you.
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Joint marketing
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A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
§ The Cutler Trust does not jointly market.
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![]() |
Statement of Additional Information
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September 28 , 2012
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Fund Information:
The Cutler Trust
c/o Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
(888) CUTLER4
http://www.cutler.com
Investment Adviser:
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Cutler Income Fund
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Cutler Investment Counsel, LLC
525 Bigham Knoll
Jacksonville, Oregon 97530
(541) 770-9000
(800) 228-8537
Account Information
and Shareholder Services:
The Cutler Trust
c/o Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
Toll free (888) CUTLER4
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Table of Contents
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Glossary
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2
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Investment Policies and Risks
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3
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Investment Limitations
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9
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Management
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10
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Portfolio Transactions
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17
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Policy Regarding Selective Disclosure of Portfolio Holdings
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19
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Additional Purchase and Redemption Information
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20
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Taxation
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22
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Calculation of Performance Data
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25
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Other Matters
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27
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Appendix A: Description of Securities Ratings
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A-1
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Appendix B: Proxy Voting Policies and Procedures
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B-1
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Glossary
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Investment Policies and Risks
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®
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limited liquidity and secondary market support;
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®
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significant volatility in market price when prevailing interest rates or investor perceptions change;
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®
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lower credit quality and greater potential for insolvency during periods of rising interest rates and economic downturn;
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®
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call/redemption and sinking fund provisions which may be exercised during periods of declining interest rates, which could cause the Fund to have to reinvest the proceeds in lower yielding securities;
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®
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possible subordination to senior claims of banks or other creditors; and
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®
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the potential that the earnings or cash flow of the issuer may be inadequate to meet the required payment obligations on its debt issues.
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Investment Limitations
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·
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Concentration
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·
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Underwriting Activities
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·
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Purchases and Sales of Real Estate
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·
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Borrowing; Margin Purchases and Short Sales
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·
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Purchase Commodities
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·
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Issuance of Senior Securities
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·
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Making Loans
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Management
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Name,
Date of Birth and
Address
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Position
with the
Trust
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Length of
Time
Served(1)
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Principal Occupation(s)
During the Past Five Years
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Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
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Other
Directorships
of Public
Companies
Held by
Trustee
During the
Past Five
Years
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Interested Trustee:
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|||||
Matthew C. Patten (2)(3)
Born: December 1975
525 Bigham Knoll
Jacksonville, OR 97530
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Chairman/
Trustee/
Treasurer
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Treasurer
Since
March
2004
Trustee
Since
September
2006
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President since 2004 and Investment Committee Member and Portfolio Manager of Cutler Investment Counsel, LLC since 2003
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2
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None
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Independent Trustees:
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|||||
Dr. Mario J. Campagna
Born: April 1927
1701 Lake Village Dr.
Medford, OR 97504
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Trustee
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Since
April
2007
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Retired
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2
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None
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John P. Cooney
Born: January 1932
100 Greenway Circle
Medford, OR 97504
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Lead
Independent
Trustee
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Since
April
2007
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Retired; U.S. Magistrate Judge until March 2007
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2
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None
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Robert F. Turner
Born: June 1946
525 Bigham Knoll
Jacksonville, OR 97530
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Trustee
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Since
September
2012
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Retired; Chairman from 2010 to 2012 and Executive Vice President and Chief Operating Officer from 1999 to 2010 of Jeld Wen (a manufacturing company) |
2
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None |
Name,
Date of Birth
and Address
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Position
with the
Trust
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Length of
Time
Served(1)
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Principal Occupation(s)
During the Past Five Years
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Executive Officers
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|||
Erich M. Patten (3)
Born: October 1977
525 Bigham Knoll
Jacksonville, OR 97530
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President
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Since
March
2004
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Investment Committee Member, Portfolio Manager and Chief Investment Officer of Cutler Investment Counsel, LLC since 2011; prior to 2011, Investment Committee Member, Portfolio Manager and Corporate Secretary of Cutler Investment Counsel, LLC
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Brooke C. Ashland (3)
Born: December 1951
525 Bigham Knoll
Jacksonville, OR 97530
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Vice President and
Chief Compliance
Officer
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Since
June
2002
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Investment Committee Member and Chief Executive Officer of Cutler Investment Counsel, LLC since 2003; Chief Executive Officer and President of Trustee Investment Services, Inc. (a Trustee education firm) since 1991; President of Big Bear Timber, LLC (farming) since 1989
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Carol S. Fischer
Born: December 1955
525 Bigham Knoll
Jacksonville, OR 97530
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Vice President/
Assistant Secretary/
Assistant Treasurer
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Since
March
1996
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Member and Director of Client Relations of Cutler Investment Counsel, LLC since 2011; prior to 2011, Member and Chief Operating Officer of Cutler Investment Counsel, LLC
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Tina H. Bloom
Born: August 1968
225 Pictoria Drive
Cincinnati, Ohio 45246
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Secretary
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Since
April
2011
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Director of Fund Administration of Ultimus Fund Solutions, LLC and Ultimus Fund Distributors, LLC
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Robert G. Dorsey
Born: April 1957
225 Pictoria Drive
Cincinnati, Ohio 45246
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Vice President
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Since
March
2005
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Managing Director of Ultimus Fund Solutions, LLC and Ultimus Fund Distributors, LLC
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(1)
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Each Trustee holds office until he resigns or is removed. Officers are elected annually.
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(2)
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Matthew C. Patten is an Interested Trustee because of the positions he holds with the Adviser and its affiliates.
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(3)
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Matthew C. Patten and Erich M. Patten are brothers and the sons of Brooke C. Ashland.
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Trustee
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Dollar Range of Beneficial
Ownership in the Fund
as of December 31, 2011
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Aggregate Dollar Range of
Ownership as of December 31,
2011 in all Funds Overseen by
Trustee in the Same Family of
Investment Companies
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Interested Trustee
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||
Matthew C. Patten
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None
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$10,001 – $50,000
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Independent Trustees
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Mario J. Campagna
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None
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$10,001 – $50,000
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John P. Cooney
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None
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$10,001 -- $50,000
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Robert F. Turner
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None | None |
Trustee
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Aggregate
Compensation
from Trust
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Pension or
Retirement
Benefits Accrued
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Estimated Annual
Benefits upon
Retirement
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Total Compensation
from Trust and
Fund Complex
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Matthew C. Patten(1)
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$ 0
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$ 0
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$ 0
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$ 0
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Robert E. Clarke(2)
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$ 10,000
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$ 0
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$ 0
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$ 10,000
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Mario J. Campagna
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$ 10,000
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$ 0
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$ 0
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$ 10,000
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John P. Cooney
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$ 10,000
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$ 0
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$ 0
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$ 10,000
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Robert F. Turner(3)
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$ 0
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$ 0
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$ 0
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$ 0
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(1)
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Mr. Patten is an Interested Trustee because of the positions he holds with the Adviser and its affiliates.
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(2)
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Mr. Clarke retired from the Board on June 30, 2012.
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(3)
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Mr. Turner did not begin to serve on the Board until September 2012.
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Name of
Portfolio Manager
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Type of Accounts
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Total
Number
of
Other Accounts
Managed
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Total
Assets of
Other
Accounts
Managed
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Number of
Accounts
Managed with
Advisory Fee
Based on
Performance
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Total Assets
of Accounts
with
Advisory
Fee Based on
Performance
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Xavier J. Urpi
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Registered Investment Companies:
Other Pooled Investment Vehicles:
Other Accounts:
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0
0
3
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0
0
$792 million
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0
0
0
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0
0
0
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Name of
Portfolio Manager
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Dollar Value of Fund Shares
Beneficially Owned
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Xavier J. Urpi
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0
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Portfolio Transactions
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Policy Regarding Selective Disclosure of Portfolio Holdings
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·
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Public disclosure regarding the portfolio securities held by the Fund is made quarterly in the Annual Report and Semi-Annual Report to shareholders and in quarterly holdings reports on Form N-Q (“Official Reports”). Except for such Official Reports and as otherwise expressly permitted herein, shareholders and other persons may not be provided with information regarding portfolio securities held, purchased or sold by the Fund.
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·
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Information regarding portfolio securities, and other information regarding the investment activities of the Fund, may be disclosed to rating and ranking organizations for use in connection with their rating or ranking of the Fund, but only if such disclosure has been approved by the Chief Compliance Officer of the Trust.
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·
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This policy relating to disclosure of the Fund’s holdings of portfolio securities does not prohibit: (i) disclosure of information to the Fund’s investment adviser or to other service providers, including but not limited to, the Trust’s administrator, distributor, custodian, legal counsel and auditors, or to brokers and dealers through whom the Fund purchases and sells portfolio securities; and (ii) disclosure of holdings of, or transactions in, portfolio securities by the Fund that is made on the same basis to all shareholders of the Fund.
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·
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The Chief Compliance Officer may approve other arrangements, not described herein, under which information relating to portfolio securities held by the Fund, or purchased or sold by the Fund (other than information contained in Official Reports), is disclosed to any shareholder or other person. The Chief Compliance Officer shall approve such an arrangement only if she concludes (based on a consideration of the information to be disclosed, the timing of the disclosure, the intended use of the information and other relevant factors) that the arrangement is reasonably necessary to aid in conducting the ongoing business of the Fund and is unlikely to affect adversely the Fund or any shareholder of the Fund. The Chief Compliance Officer shall inform the Board of any such arrangements that are approved, and the rationale supporting approval, at the next regular quarterly meeting of the Board following such approval. The Chief Compliance Officer shall also inform the Board at least quarterly of any violations of this policy.
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·
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Neither the Adviser nor the Trust (nor any affiliated person, employee, officer, trustee or director of the Adviser or the Trust) may receive any direct or indirect compensation in consideration of the disclosure of information relating to portfolio securities held, purchased or sold by the Fund.
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Type of Service Provider
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Frequency of Access to
Portfolio Information
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Restrictions on Use
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Lag Time
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Adviser
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Daily
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Contractual and Ethical
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None
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Administrator and Distributor
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Daily
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Contractual and Ethical
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None
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Custodian
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Daily
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Contractual and Ethical
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None
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Auditor
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During annual audit, or as needed
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Ethical
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None
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Legal counsel
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Regulatory filings, board meetings, and if a legal issue regarding the portfolio requires counsel’s review
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Ethical
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None
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Printers/Typesetters
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Twice a year – printing of semi-annual and annual reports
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No formal restrictions in place
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None
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Broker/dealers through which Fund purchases and sells portfolio securities
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Daily access to the relevant purchase and/or sale – no broker/dealer has access to the Fund’s entire portfolio
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Contractual and Ethical
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None
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Independent Rating or Ranking Agencies:
Morningstar Inc., Lipper, Bloomberg L.P. and Standard & Poor’s, Inc.
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Monthly
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No formal restrictions
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At least 30 days
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Additional Purchase and Redemption Information
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Taxation
|
|
·
|
The Fund must distribute at least 90% of its investment company taxable income for the tax year. (Certain distributions made by the Fund after the close of its tax year are considered distributions attributable to the previous tax year for purposes of satisfying this requirement.)
|
|
·
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The Fund must derive at least 90% of its gross income each year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities, or other income (including gains from options and futures contracts) derived from its business of investing in securities.
|
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·
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The Fund must satisfy the following asset diversification test at the close of each quarter of the Fund’s tax year: (1) at least 50% of the value of the Fund’s total assets must consist of cash and cash items, U.S. government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund’s total assets in securities of the issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer); and (2) no more than 25% of the value of the Fund’s total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
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Calculation of Performance Data
|
•
|
Lipper ranks funds in various fund categories by making comparative calculations using total return. Total return assumes the reinvestment of all capital gains distributions and income dividends and takes into account any change in net asset value over a specific period of time.
|
•
|
Morningstar, Inc. rates mutual funds of all types, according to their risk-adjusted returns. The maximum rating is five stars, and ratings are effective for one month.
|
Other Matters
|
Appendix A: Description of Securities Ratings
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Aaa
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Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edged.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
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Aa
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Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present that make the long-term risk appear somewhat larger than the Aaa securities.
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A
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Bonds that are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.
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Baa
|
Bonds that are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
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Ba
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Bonds that are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
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B
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Bonds that are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
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Caa
|
Bonds that are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
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Ca
|
Ca Bonds that are rated Ca represent obligations that are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
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C
|
Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
|
Note
|
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
|
AAA
|
An obligation rated AAA has the highest rating assigned by S&P. The obligor's capacity to meet its financial commitment on the obligation is extremely strong.
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AA
|
An obligation rated AA differs from the highest-rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong.
|
A
|
An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong.
|
BBB
|
An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
|
Note
|
Obligations rated BB, B, CCC, CC, and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, large uncertainties or major exposures to adverse conditions may outweigh these.
|
BB
|
An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.
|
B
|
An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.
|
CCC
|
An obligation rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
|
CC
|
An obligation rated CC is currently highly vulnerable to nonpayment.
|
C
|
The C rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued.
|
D
|
An obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
|
Note
|
Plus (+) or minus (-). The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
|
The ‘r’ symbol is attached to the ratings of instruments with significant noncredit risks. It highlights risks to principal or volatility of expected returns that are not addressed in the credit rating. Examples include: obligations linked or indexed to equities, currencies, or commodities; obligations exposed to severe prepayment risk-such as interest-only or principal-only mortgage securities; and obligations with unusually risky interest terms, such as inverse floaters.
|
AAA
|
Highest credit quality. ‘AAA’ ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
|
AA
|
Very high credit quality. ‘AA’ ratings denote a very low expectation of credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
|
A
|
High credit quality. ‘A’ ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.
|
BBB
|
Good credit quality. ‘BBB’ ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment-grade category.
|
BB
|
Speculative. ‘BB’ ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.
|
B
|
Highly speculative. ‘B’ ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
|
CCC,
CC, C
|
High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A ‘CC’ rating indicates that default of some kind appears probable. ‘C’ ratings signal imminent default.
|
DDD,
DD, D
|
Default. Securities are not meeting current obligations and are extremely speculative. ‘DDD’ designates the highest potential for recovery of amounts outstanding on any securities involved. For U.S. corporates, for example, ‘DD’ indicates expected recovery of 50% – 90% of such outstanding amounts and ‘D’ the lowest recovery potential, i.e. below 50%.
|
aaa
|
An issue that is rated “aaa” is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.
|
aa
|
An issue that is rated “aa” is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well maintained in the foreseeable future.
|
a
|
An issue which is rated “a” is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater then in the “aaa” and “aa” classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.
|
b
|
An issue that is rated “b” generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.
|
caa
|
An issue that is rated “caa” is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.
|
ca
|
An issue that is rated “ca” is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.
|
c
|
This is the lowest rated class of preferred or preference stock. Issues so rated can thus be regarded as having extremely poor prospects of ever attaining any real investment standing.
|
Note
|
Moody's applies numerical modifiers 1, 2, and 3 in each rating classification: the modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
|
AAA
|
This is the highest rating that may be assigned by S&P to a preferred stock issue and indicates an extremely strong capacity to pay the preferred stock obligations.
|
AA
|
A preferred stock issue rated AA also qualifies as a high-quality, fixed-income security. The capacity to pay preferred stock obligations is very strong, although not as overwhelming as for issues rated AAA.
|
A
|
An issue rated A is backed by a sound capacity to pay the preferred stock obligations, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.
|
BBB
|
An issue rated BBB is regarded as backed by an adequate capacity to pay the preferred stock obligations. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make payments for a preferred stock in this category than for issues in the A category.
|
BB, B,
CCC
|
Preferred stock rated BB, B, and CCC is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay preferred stock obligations. BB indicates the lowest degree of speculation and CCC the highest. While such issues will likely have some quality and protective characteristics, large uncertainties or major risk exposures to adverse conditions outweigh these.
|
CC
|
The rating CC is reserved for a preferred stock issue that is in arrears on dividends or sinking fund payments, but that is currently paying.
|
C
|
A preferred stock rated C is a nonpaying issue.
|
D
|
A preferred stock rated D is a nonpaying issue with the issuer in default on debt instruments.
|
N.R.
|
This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.
|
Note
|
Plus (+) or minus (-). To provide more detailed indications of preferred stock quality, ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
|
Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:
|
|
Prime-1
|
Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics:
|
· Leading market positions in well-established industries.
|
|
· High rates of return on funds employed.
|
|
· Conservative capitalization structure with moderate reliance on debt and ample asset protection.
|
|
· Broad margins in earnings coverage of fixed financial charges and high internal cash generation.
|
|
· Well-established access to a range of financial markets and assured sources of alternate liquidity.
|
|
Prime-2
|
Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
|
Prime-3
|
Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained.
|
Not Prime
|
Issuers rated Not Prime do not fall within any of the Prime rating categories.
|
A-1
|
A short-term obligation rated A-1 is rated in the highest category by S&P. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong.
|
A-2
|
A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory.
|
A-3
|
A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
|
B
|
A short-term obligation rated B is regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.
|
C
|
A short-term obligation rated C is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.
|
D
|
A short-term obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
|
F1
|
Obligations assigned this rating have the highest capacity for timely repayment under Fitch’s national rating scale for that country, relative to other obligations in the same country. This rating is automatically assigned to all obligations issued or guaranteed by the sovereign state. Where issues possess a particularly strong credit feature, a “+” is added to the assigned rating.
|
F2
|
Obligations supported by a strong capacity for timely repayment relative to other obligors in the same country. However, the relative degree of risk is slightly higher than for issues classified as ‘F1’ and capacity for timely repayment may be susceptible to adverse change sin business, economic, or financial conditions.
|
F3
|
Obligations supported by an adequate capacity for timely repayment relative to other obligors in the same country. Such capacity is more susceptible to adverse changes in business, economic, or financial conditions than for obligations in higher categories.
|
B
|
Obligations for which the capacity for timely repayment is uncertain relative to other obligors in the same country. The capacity for timely repayment is susceptible to adverse changes in business, economic, or financial conditions.
|
C
|
Obligations for which there is a high risk of default to other obligors in the same country or which are in default.
|
Appendix B: Proxy Voting Policies and Procedures
|
|
a)
|
Routine Matters
|
|
(ii)
|
Appointment of Auditors. Management recommendations will generally be supported.
|
|
b)
|
Non-routine Matters
|
·
|
Copy of proxy voting policies and procedures
|
·
|
A copy of each proxy voting statement received regarding client securities.
|
·
|
A record of each vote cast on behalf of a client
|
·
|
A copy of any document created by Cutler that was material to making a decision how to vote proxies for a client or that memorializes the basis for that decision
|
·
|
A copy of each written client request for voting information and a copy of any written response to a client request.
|
PART C.
|
OTHER INFORMATION
|
Item 28.
|
Exhibits
|
|
(a)
|
Trust Instrument of Registrant dated October 2, 1992 (Exhibit incorporated herein by reference to Post-Effective Amendment No. 4 filed via EDGAR on March 8, 1996, accession number 0000912057-96-004156)
|
|
(b)
|
By-Laws of Registrant dated October 2, 1992, as amended March 12, 2004 (Exhibit incorporated herein by reference to Post-Effective Amendment No. 18 filed via EDGAR on October 29, 2004, accession number 0001275125-04-000366)
|
|
(c)
|
Incorporated herein by reference to Trust Instrument of Registrant (in Post-Effective Amendment No. 4 filed via EDGAR on March 8, 1996, accession number 0000912057-96-004156)
|
|
(d)
|
(1)
|
Investment Advisory Agreement between Registrant and Cutler Investment Counsel, LLC, on behalf of the Cutler Equity Fund (Exhibit incorporated by reference as filed in Post-Effective Amendment No. 22 via EDGAR on October 29, 2007, accession number 0001144204-07-056648)
|
|
|
(2)
|
Form of Schedule A to the Investment Advisory Agreement between Registrant and Cutler Investment Counsel, LLC, on behalf of the Cutler Income Fund – Filed herewith
|
|
(e)
|
Distribution Agreement between Registrant and Ultimus Fund Distributors, LLC – Filed herewith
|
|
(f)
|
Not applicable
|
|
(g)
|
(1)
|
Custody Agreement between Registrant and US Bank, N.A. (Exhibit incorporated by reference as filed in Post-Effective Amendment No. 19 via EDGAR on September 2, 2005, accession number 0001111830-05-000438)
|
|
(2)
|
First Amendment to the Custody Agreement between Registrant and US Bank, N.A. – Filed herewith
|
|
(h)
|
(1)
|
Mutual Fund Services Agreement between Registrant and Ultimus Fund Solutions, LLC (Exhibit incorporated by reference as filed in Post-Effective Amendment No. 19 via EDGAR on September 2, 2005, accession number 0001111830-05-000438)
|
|
(2)
|
Shareholder Service Plan adopted by Registrant (Exhibit incorporated by reference to Post-Effective Amendment No. 20 filed via EDGAR on October 27, 2006, accession number 0001111830-06-000782)
|
|
(3)
|
Form of Shareholder Service Agreement (Exhibit incorporated herein by reference to Post-Effective Amendment No. 18 filed via EDGAR on October 29, 2004, accession number 0001275125-04-000366)
|
|
(4)
|
Form of Expense Limitation Agreement between the Registrant and Cutler Investment Counsel, LLC (Exhibit incorporated herein by reference to Post-Effective Amendment No. 24 filed via EDGAR on August 27, 2010, accession number 0001111830-10-000835).
|
|
(i)
|
(1)
|
Opinion of Counsel with respect to the Cutler Equity Fund (formerly the Cutler Value Fund) (Exhibit incorporated herein by reference to Post-Effective Amendment No. 18 filed via EDGAR on October 29, 2004, accession number 0001275235-04-000366).
|
|
(2)
|
Opinion of Counsel with respect to the Cutler Income Fund – Filed herewith
|
|
(3)
|
Opinion of Counsel with respect to Federal Income Tax Consequences of the Reorganization of The Elite Income Fund into the Cutler Income Fund – Filed herewith
|
|
(4)
|
Opinion of Counsel with respect to Federal Income Tax Consequences of the Reorganization of The Elite Growth & Income Fund into the Cutler Equity Fund – Filed herewith
|
|
(j)
|
Consent of Independent Registered Public Accounting Firm – Filed herewith
|
|
(k)
|
Not applicable
|
|
(l)
|
Investment Representation letter (Exhibit incorporated by reference to Post-Effective Amendment No. 4 filed via EDGAR on March 8, 1996, accession number 0000912057-96-004156)
|
|
(m)
|
Not applicable
|
|
(n)
|
Not applicable
|
|
(o)
|
Reserved
|
|
(p)
|
(1)
|
Code of Ethics of Registrant – (Exhibit incorporated herein by reference to Post-Effective Amendment No. 28 filed via EDGAR on July 13, 2012, accession number 0001111830-12-000423)
|
|
(2)
|
Code of Ethics of Cutler Investment Counsel, LLC – (Exhibit incorporated herein by reference to Post-Effective Amendment No. 28 filed via EDGAR on July 13, 2012, accession number 0001111830-12-000423)
|
|
(3)
|
Code of Ethics of Ultimus Fund Distributors, LLC – (Exhibit incorporated herein by reference to Post-Effective Amendment No. 28 filed via EDGAR on July 13, 2012, accession number 0001111830-12-000423)
|
|
(Other Exhibits)
|
Item 29.
|
Persons Controlled by or Under Common Control with Registrant.
|
Item 30.
|
Indemnification
|
Item 31.
|
Business and Other Connections of Investment Adviser
|
Name
|
Title
|
Other Business Connections
|
|
Brooke Cutler Ashland
|
Member, Chief
|
Chief Executive Officer and President
|
|
Executive Officer,
|
of Trustee Investment Services, Inc.
|
||
Chief Compliance
|
(a trustee education firm); President of
|
||
Officer, Investment
|
Bear Big Timber, LLC (farming);
|
||
Committee Member
|
Chief Executive Officer of Kids of the
|
||
Kingdom, LLC (early age education)
|
|||
Carol S. Fischer
|
Member and Director of
|
None
|
|
Client Relations
|
|||
Erich M. Patten
|
Member, Chief
|
None
|
|
Investment Officer,
|
|||
Investment Committee Member
|
|||
and Portfolio Manager
|
|||
Matthew C. Patten
|
Member, President,
|
None
|
|
Investment Committee
|
|||
Member and Portfolio
|
|||
Manager
|
Item 32.
|
Principal Underwriters
|
(a)
|
Ultimus Fund Distributors, LLC (the “Distributor”), 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246, also acts as the principal underwriter for the following registered investment companies:
|
||
Williamsburg Investment Trust
|
The Investment House Funds
|
||
The Berwyn Funds
|
Hussman Investment Trust
|
||
TFS Capital Investment Trust
|
Schwartz Investment Trust
|
||
Papp Investment Trust
|
Profit Funds Investment Trust
|
||
AlphaMark Investment Trust
|
Stralem Fund
|
||
Piedmont Investment Trust
|
Stadion Investment Trust
|
||
Gardner Lewis Investment Trust
|
CM Advisors Family of Funds
|
||
The First Western Funds Trust
|
Ultimus Managers Trust
|
||
(b)
|
The following list sets forth the directors and executive officers of the Distributor. The address of the persons named below is 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246.
|
Position with
|
Position with
|
|||
Name
|
Distributor
|
Registrant
|
||
Robert G. Dorsey
|
President/Managing
|
Vice President
|
||
Director
|
||||
Mark J. Seger
|
Treasurer/Managing
|
Assistant Treasurer
|
||
Director
|
||||
Theresa M. Bridge
|
Vice President
|
Assistant Treasurer
|
||
Wade R. Bridge
|
Vice President
|
Assistant Secretary
|
||
Tina H. Bloom
|
Vice President
|
Secretary
|
||
Steven F. Nienhaus
|
Vice President
|
None
|
||
Jeffrey D. Moeller
|
Vice President
|
None
|
||
Craig J. Hunt
|
Vice President
|
None
|
||
Stephen L. Preston
|
Chief Compliance
|
Assistant Vice President/
|
||
Officer
|
AML Compliance Officer
|
|||
Julie M. Schmuelling
|
Vice President
|
None
|
||
Kristine M. Limbert
|
Vice President
|
None
|
||
Frank L. Newbauer
|
Assistant Vice President
|
Assistant Secretary
|
||
(c)
|
Inapplicable
|
Item 33.
|
Location of Accounts and Records
|
Item 34.
|
Management Services Not Discussed in Parts A or B
|
Item 35.
|
Undertakings
|
THE CUTLER TRUST
|
||
By: /s/ Erich M. Patten
|
||
Erich M. Patten, President
|
Signature
|
Title
|
Date
|
||
/s/ Erich M. Patten
|
President
|
September 27, 2012
|
||
Erich M. Patten
|
(Chief Executive Officer)
|
|||
/s/ Matthew C. Patten
|
Treasurer (Chief Financial
|
September 27, 2012
|
||
Matthew C. Patten
|
Officer) and Trustee
|
|||
Trustee
|
/s/ Tina H. Bloom
|
|||
Mario J. Campagna*
|
Tina H. Bloom
|
|||
Attorney-in-fact*
|
||||
Trustee
|
September 27, 2012
|
|||
John P. Cooney*
|
Exhibit No.
|
Description
|
28(d)(2)
|
Form of Schedule A to the Investment Advisory Agreement between Registrant and Cutler Investment Counsel, LLC, on behalf of the Cutler Income Fund
|
28(e)
|
Distribution Agreement between Registrant and Ultimus Fund Distributors, LLC
|
28(g)(2)
|
First Amendment to the Custody Agreement between Registrant and US Bank, N.A.
|
28(i)(2)
|
Opinion of Counsel with respect to the Cutler Income Fund
|
28(i)(3)
|
Opinion of Counsel with respect to Federal Income Tax Consequences of the Reorganization of The Elite Income Fund into the Cutler Income Fund
|
28(i)(4)
|
Opinion of Counsel with respect to Federal Income Tax Consequences of the Reorganization of The Elite Growth & Income Fund into the Cutler Equity Fund
|
28(j)
|
Consent of Independent Registered Public Accounting Firm
|
Fee as a % of the
|
|
Annual Average Daily
|
|
Fund
|
Net Assets of the Fund
|
Cutler Equity Fund
|
0.75%
|
Cutler Income Fund
|
0.50%
|
By:
|
||
Erich M. Patten
|
||
President
|
||
CUTLER INVESTMENT COUNSEL, LLC
|
||
By:
|
||
Matthew C. Patten
|
||
President
|
1.
|
Appointment.
|
2.
|
Sale and Repurchase of Shares.
|
|
(a)
|
Distributor will have the right, as agent for the Trust, to enter into dealer agreements with responsible investment dealers, and to sell Shares to such investment dealers against orders therefor at the public offering price (as defined in subparagraph 2(d) hereof) stated in the Trust's effective Registration Statement on Form N-1A under the Act and the Securities Act of 1933, as amended, including the then current prospectus and statement of additional information (the "Registration Statement"). Upon receipt of an order to purchase Shares from a dealer with whom Distributor has a dealer agreement, Distributor will promptly cause such order to be filled by the Trust. All dealer agreements shall be in such form as has been approved by the Trust.
|
|
(b)
|
Distributor will also have the right, as agent for the Trust, to sell such Shares to the public against orders therefor at the public offering price.
|
|
(c)
|
Distributor will also have the right to take, as agent for the Trust, all actions which, in Distributor's reasonable judgment, are necessary to carry into effect the distribution of the Shares.
|
|
(d)
|
The public offering price for the Shares of each Series shall be the respective net asset value of the Shares of that Series then in effect, plus any applicable sales charge determined in the manner set forth in the Registration Statement or as permitted by the Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder. In no event shall any applicable sales charge exceed the maximum sales charge permitted by the Rules of FINRA.
|
|
(e)
|
The net asset value of the Shares of each Series shall be determined in the manner provided in the Registration Statement, and when determined shall be applicable to transactions as provided for in the Registration Statement. The net asset value of the Shares of each Series shall be calculated by the Trust or by another entity on behalf of the Trust. Distributor shall have no duty to inquire into or liability for the accuracy of the net asset value per Share as calculated.
|
|
(f)
|
On every sale, the Trust shall receive the applicable net asset value of the Shares promptly, but in no event later than the third business day following the date on which Distributor shall have received an order for the purchase of the Shares.
|
|
(g)
|
Upon receipt of purchase instructions, Distributor will transmit such instructions to the Trust or its transfer agent for the issuance and registration of the Shares purchased.
|
|
(h)
|
Nothing in this Agreement shall prevent Distributor or any affiliated person (as defined in the Act) of Distributor from acting as distributor for any other person, firm or corporation (including other investment companies) or in any way limit or restrict Distributor or any such affiliated person from buying, selling or trading any securities for its or their own account or for the accounts of others from whom it or they may be acting; provided, however, that Distributor expressly represents that it will undertake no activities which, in its reasonable judgment, will adversely affect the performance of its obligations to the Trust under this Agreement.
|
|
(i)
|
Distributor, as agent of and for the account of the Trust, may repurchase the Shares at such prices and upon such terms and conditions as shall be specified in the Registration Statement.
|
3.
|
Sale of Shares by the Trust.
|
4.
|
Basis of Sale of Shares.
|
5.
|
Rules of FINRA, etc.
|
|
(a)
|
In providing services hereunder, Distributor will comply with the Rules of FINRA, the federal securities laws and the rules thereunder and the securities laws and regulations of each state and other jurisdiction in which it sells, directly or indirectly, any Shares.
|
|
(b)
|
Distributor will require each dealer with whom Distributor has a dealer agreement to conform to the applicable provisions hereof and the Registration Statement with respect to the public offering price of the Shares, and neither Distributor nor any such dealers shall withhold the placing of purchase orders so as to make a profit thereby.
|
|
(c)
|
Distributor agrees to furnish to the Trust sufficient copies of any agreements, plans or other materials it intends to use in connection with any sales of Shares in reasonably adequate time for the Trust to file and clear them with the proper authorities before they are put in use, and
|
|
|
not to use them until so filed and cleared. At the request of the Trust, Distributor will assume responsibility for the review and clearance of all advertisements and sales literature
|
|
(d)
|
Distributor, at its own expense, will qualify as dealer or broker, or otherwise, under all applicable state or federal laws required in order that Shares may be sold in such States as may be mutually agreed upon by the parties.
|
|
(e)
|
Distributor shall not make, or permit any representative, broker or dealer to make, in connection with any sale or solicitation of a sale of the Shares, any representations concerning the Shares except those contained in the then current prospectus and statement of additional information covering the Shares and in printed information approved by the Trust as information supplemental to such prospectus and statement of additional information. Copies of the then effective prospectus and statement of additional information and any such printed supplemental information will be supplied by the Trust to Distributor in reasonable quantities upon request.
|
6.
|
Records to be Supplied by Trust.
|
7.
|
Fees and Expenses.
|
8.
|
Indemnification of Trust.
|
9.
|
Indemnification of Distributor.
|
10.
|
Representations of the Parties.
|
|
(a)
|
The Trust certifies to Distributor that: (1) as of the date of the execution of this Agreement, each Series that is in existence as of such date has an unlimited number of authorized shares, and (2) this Agreement has been duly authorized by the Trust and, when executed and delivered by the Trust, will constitute a legal, valid and binding obligation of the Trust, enforceable against the Trust in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties.
|
|
(b)
|
Distributor represents and warrants that: (1) the various procedures and systems which Distributor has implemented with regard to safeguarding from loss or damage attributable to fire, theft, or any other cause the records and other data of the Trust and Distributor's records, data, equipment facilities and other property used in the performance of its obligations hereunder are adequate and that it will make such changes therein from time to time as are required for the secure performance of its obligations hereunder, and (2) this Agreement has been duly authorized by Distributor and, when executed and delivered by Distributor, will constitute a legal, valid and binding obligation of Distributor, enforceable against Distributor in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties.
|
11.
|
Termination and Amendment of this Agreement.
|
12.
|
Effective Period of this Agreement.
|
|
This Agreement shall take effect upon its execution and shall remain in full force and effect for an initial term of two (2) years from the date of its execution (unless terminated as set forth in Section 11), and shall continue in effect from year to year thereafter, subject to annual approval of such continuance by the Board of Trustees of the Trust, including the approval of majority of the Trustees of the Trust who are not interested persons of the Trust or of Distributor by vote cast in person at a meeting called for the purpose of voting on such approval.
|
13.
|
Successor Investment Company.
|
|
Unless this Agreement has been terminated in accordance with Paragraph 11, the terms and provisions of this Agreement shall become automatically applicable to any investment company which is a successor to the Trust as a result of reorganization, recapitalization or change of domicile.
|
14.
|
Limitation of Liability.
|
|
It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust, personally, but
|
|
bind only the trust property of the Trust. The execution and delivery of this Agreement have been authorized by the Trustees of the Trust and signed by an officer of the Trust, acting as such, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Trust. If a matter relates only to a particular series of the Trust, that series shall be solely responsible for all liabilities in connection with such matter, and the Distributor agrees that resort shall be had solely to the assets of such series for the payment or performance thereof.
|
15.
|
Severability.
|
|
In the event any provision of this Agreement is determined to be void or unenforceable, such determination shall not affect the remainder of this Agreement, which shall continue to be in force.
|
16.
|
Questions of Interpretation.
|
|
(a)
|
This Agreement shall be governed by the laws of the State of Ohio.
|
|
(b)
|
Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the Act shall be resolved by reference to such term or provision of the Act and to interpretation thereof, if any, by the United States courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission issued pursuant to said Act. In addition, where the effect of a requirement of the Act, reflected in any provision of this Agreement is revised by rule, regulation or order of the Securities and Exchange Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
|
17.
|
Notices.
|
18.
|
Execution
|
CUTLER TRUST
|
||
By:
|
/s/ Matthew C. Patten
|
|
Name: Matthew C. Patten
|
||
Its: Chairman
|
||
ULTIMUS FUND DISTRIBUTORS, LLC
|
||
By:
|
/s/ Robert G. Dorsey
|
|
Name: Robert G. Dorsey
|
||
Its: President
|
||
CUTLER INVESTMENT COUNSEL, LLC
|
||
By:
|
/s/ Erich M. Patten
|
|
Name: Erich M. Patten
|
||
Its: President
|
THE CUTLER TRUST
|
U.S. BANK, N.A.
|
|||
By:
|
/s/ Erich M. Patten
|
By:
|
/s/ Michael R. McVoy
|
|
Printed Name:
|
Erich M. Patten
|
Printed Name:
|
Michael R. McVoy
|
|
Title:
|
President
|
Title:
|
Senior Vice President
|
9/2012 | 1 |
|
1.
|
The Trust is a statutory trust duly organized, validly existing and in good standing under the laws of the State of Delaware.
|
|
2.
|
The Trust is authorized to issue an unlimited number of shares of beneficial interest; the Shares have been duly and validly authorized by all requisite action of the Trustees of the Trust, and no action by the shareholders of the Trust is required in such connection.
|
The Trustees of
The Cutler Trust
|
-2- |
September 26, 2012
|
|
3.
|
The Shares, when duly sold, issued and paid for as contemplated by the Registration Statement, will be validly and legally issued and purchasers of the Shares will have no obligation to make payments to the Trust, Cutler Income Fund or their creditors (other than the purchase price for the Shares) or contributions to the Trust, Cutler Income Fund or their creditors solely by reason of the purchasers’ ownership of the Shares.
|
|
Re:
|
Reorganization of The Elite Income Fund into Cutler Income Fund
|
Re:
|
Reorganization of The Elite Growth and Income Fund into Cutler Equity Fund
|
![]() |
|||
BBD, LLP
|
|||
Philadelphia, Pennsylvania
|
|||
September 25, 2012
|
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