THE CUTLER TRUST
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
(800) 228-8537
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 20, 1996
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To the Shareholders of
The Cutler Trust:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of The Cutler Trust (the "Trust"), will be held at the offices of the
Trust, Two Portland Square, Portland, Maine 04101, on March 20, 1996 at 10:00
a.m., for the following purposes, all of which are more fully described in the
accompanying Proxy Statement dated March 4, 1996:
1. To elect five Trustees of the Trust, each to serve for an indefinite
period of time and until his or her successor is duly elected and qualified;
2. To ratify or reject the selection of Deloitte & Touche LLP as
independent certified public accountants of the Trust for its fiscal year ending
June 30, 1996;
3. To approve or disapprove a proposed amendment to the Investment
Advisory Agreement between the Trust and Cutler & Company, LLC to provide for an
increase in the advisory fees payable by Cutler Equity Income Fund and Cutler
Approved List Equity Fund;
4. To approve or disapprove the proposal to eliminate the fundamental
investment policy of the Trust prohibiting "paying up" in connection with the
Trust's portfolio transactions; and
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Trustees have fixed the close of business on February 14, 1996 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting or any adjournment thereof. The enclosed proxy is being
solicited on behalf of the Trustees.
By order of the Board of Trustees,
MAX BERUEFFY
Secretary
Portland, Maine
March 4, 1996
===============================================================================
YOUR VOTE IS IMPORTANT
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY
CARD, SIGN AND DATE IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO SAVE THE
FUND ANY ADDITIONAL EXPENSE OF FURTHER SOLICITATION, PLEASE MAIL YOUR
PROXY PROMPTLY.
===============================================================================
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
Page
Introduction.................................................................1
Proposal One: Election of Trustees..........................................3
Proposal Two: Ratification or Rejection of
Selection of Independent Certified Public
Accountants............................................................... 5
Proposal Three: Approval or Disapproval of the Proposed
Amendment to the Advisory Agreement Providing for
an Increase in Advisory Fees Payable by Cutler Equity
Income Fund and Cutler Approved List Equity Fund.......................... 6
Proposal Four: Approval or Disapproval of the Proposal
to Eliminate the Fundamental Investment Policy of the
Trust Prohibiting "Paying Up" in Connection with
PortfolioTransactions..................................................... 9
Certain Information Regarding the Adviser
and the Investment Advisory Agreement.................................... 10
Certain Information Regarding the Distributor
and the Administrator.................................................... 12
Officers of the Trust...................................................... 12
Principal Shareholders..................................................... 13
Other Matters.............................................................. 14
- ii -
<PAGE>
The Cutler Trust
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
(800) 228-8537
------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 20, 1996
------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Trustees of The Cutler Trust, a Delaware
business trust (the "Trust"), to be voted at the Special Meeting of Shareholders
of the Trust, to be held at the offices of the Trust, Two Portland Square,
Portland, Maine 04101, on March 20, 1996 at 10:00 a.m., and at any adjournments
thereof (the "Meeting"). Such solicitation will be by mail and the cost
(including printing and mailing this Proxy Statement, meeting notice and form of
proxy, as well as any necessary supplementary solicitation) will be borne by the
Trust. The Notice of Meeting, Proxy Statement and Proxy are being mailed to
shareholders on or about March 4, 1996.
The presence in person or by proxy of the holders of record of one-third
of the shares of all classes of the Trust entitled to vote thereat shall
constitute a quorum at the Meeting. If, however, such quorum shall not be
present or represented at the Meeting or if fewer shares are present in person
or by proxy than is the minimum required to take action with respect to any
proposal presented at the Meeting, the holders of a majority of the shares of
the Trust present in person or by proxy shall have the power to adjourn the
Meeting from time to time, without notice other than announcement at the
Meeting, until the requisite amount of shares entitled to vote at the Meeting
shall be present. At any such adjourned Meeting, if the relevant quorum is
subsequently constituted, any business may be transacted which might have been
transacted at the Meeting as originally called. For purposes of determining the
presence of a quorum for transacting business at the Meeting, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. For this reason, abstentions and
broker non-votes will have the effect of a "no" vote for purposes of obtaining
the requisite approval of each proposal.
The Board of Trustees has fixed the close of business on February 14, 1996
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournments thereof. The Trust currently
consists of three separate investment portfolios, each issuing a separate class
of shares, which are hereinafter referred to individually as a "Fund" and
collectively as the "Funds." The outstanding voting shares of each class as of
February 14, 1996 are indicated in the following table with each share of each
class being entitled to one vote:
Cutler Equity Income Fund 3,609,017
Cutler Approved List Equity Fund 2,115,629
Cutler Government Securities Fund 650,964
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or as
otherwise provided therein. Accordingly, unless
<PAGE>
instructions to the contrary are marked, proxies will be voted FOR the matters
specified on the proxy card. Any shareholder may revoke his proxy at any time
prior to exercise thereof by giving written notice to the Secretary of the Trust
at its offices at Two Portland Square, Portland, Maine 04101, or by signing
another proxy of a later date or by personally casting his vote at the Meeting.
The most recent annual and semi-annual reports of the Funds, including
financial statements, have been previously mailed to shareholders. If you have
not received these reports or would like to receive additional copies free of
charge, please contact the Trust at Two Portland Square, Portland, Maine 04101,
(800) 228-8537 and they will be sent promptly by first-class mail.
VOTES REQUIRED.
The election of Trustees (Proposal One) will require, with respect to each
nominee, a vote of the holders of a plurality of the Trust's shares present at
the Meeting. Ratification of the selection of the independent certified public
accountants (Proposal Two) will require a vote of the holders of a majority of
the Trust's shares present at the Meeting. Approval of the proposed amendment to
the investment advisory agreement (the "Advisory Agreement") between the Trust
and Cutler & Company, LLC (the "Adviser") (Proposal Three) will require a
majority vote of the outstanding voting securities, as defined in the Investment
Company Act of 1940 (the "1940 Act"), of Cutler Equity Income Fund and Cutler
Approved List Equity Fund (together, the "Equity Funds"), voting separately by
class. The proposal to eliminate the fundamental investment policy of the Funds
(Proposal Four) will require a majority vote of the outstanding voting
securities, as defined in the 1940 Act, of the Funds, voting separately by
class. Under the 1940 Act, a "majority vote of the outstanding voting
securities" means the affirmative vote of the lesser of (a) 67% or more of the
shares present at the Meeting or represented by proxy if more than 50% of the
outstanding shares are present at the Meeting or represented by proxy; or (b)
more than 50% of the outstanding shares, and is hereinafter referred to as a
"Majority Vote."
===============================================================================
SHAREHOLDERS ENTITLED
PROPOSALS TO VOTE
- -------------------------------------------------------------------------------
Proposal One - ELECTION OF TRUSTEES All Funds
- -------------------------------------------------------------------------------
Proposal Two - RATIFICATION OR REJECTION OF All Funds
SELECTION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
Proposal Three - APPROVAL OR DISAPPROVAL OF THE Cutler Equity Income Fund
PROPOSED AMENDMENT TO THE
ADVISORY AGREEMENT PROVIDING Cutler Approved List
FOR AN INCREASE IN THE ADVISORY Equity Fund
FEES PAYABLE BY THE EQUITY FUNDS
- -------------------------------------------------------------------------------
Proposal Four - APPROVAL OR DISAPPROVAL OF THE All Funds
PROPOSAL TO ELIMINATE THE
FUNDAMENTAL INVESTMENT POLICY
OF THE FUNDS PROHIBITING "PAYING
UP" IN CONNECTION WITH PORTFOLIO
TRANSACTIONS
===============================================================================
- 2 -
<PAGE>
PROPOSAL ONE
ELECTION OF TRUSTEES
At the Meeting, five Trustees will be elected, each to serve for an
indefinite term and until his or her successor is duly elected and qualified or
until his or her earlier resignation or removal. The nominees are Kenneth R.
Cutler, John Y. Keffer, Dr. Hatten S. Yoder, Jr., Brooke Cutler Ashland and
Robert B. Watts, Jr. It is the intention of the persons named in the enclosed
proxy to nominate and vote in favor of the nominees.
Each of the nominees has consented to serve as a Trustee. All the nominees
are currently Trustees of the Trust except for Robert B. Watts, Jr. The Board of
Trustees knows of no reason why any of the nominees would be unable to serve,
but in the event of such unavailability, the proxies received will be voted for
such substitute nominees as the Board of Trustees may recommend.
Certain information concerning the Trustees is set forth as follows:
<TABLE>
<CAPTION>
==============================================================================================
Approximate
Number
of Shares
Beneficially
Owned
Year Directly or
Name, Positions and Offices with the Trust, First Year Term Indirectly as of
Age, Principal Occupations During Became a as Trustee January 31,
the Past Five Years and Other Directorships Trustee Will Expire 1996
==============================================================================================
<S> <C> <C> <C>
Kenneth R. Cutler, Trustee, Chairman and Vice 1992 Indefinite 2755 shares -
President** .............................. Equity
Former Chairman, Cutler & Company, Inc. (the Income Fund
predecessor of the Adviser) (registered investment 9327 shares -
adviser), currently Principal Portfolio Manager for Approved List
the Equity Funds. His address is 503 Airport Road, Equity Fund
Medford, Oregon 97504. Mr. Cutler is 75 years old. 3121 shares -
Government
Securities
Fund
==============================================================================================
John Y. Keffer, Trustee and President** .............. 1992 Indefinite 0
President, Director and stockholder, Forum
Financial Services, Inc. (registered broker-dealer),
Forum Financial Corp. (registered transfer agent)
and Forum Advisors, Inc. (registered investment
adviser). Manager, Forum Administrative Services
LLC (administrative services company). Mr. Keffer
is also a director of the following registered
investment companies: Forum Funds, Inc.; Monarch
Funds; Norwest Advantage Funds; and Stone
Bridge Funds, Inc. His address is Two Portland
Square, Portland, Maine 04101. Mr. Keffer is 52
years old.
- 3 -
<PAGE>
==============================================================================================
Dr. Hatten S. Yoder, Jr., Trustee*................... 1992 Indefinite 0
Director Emeritus, Geophysical Laboratory,
Carnegie Institute of Washington and consultant to
the Los Alamos National Laboratory. Dr. Yoder
has been a director of the Geophysical Laboratory
and consultant to the Los Alamos National
Laboratory since 1971. His address is 6709 Melody
Lane, Bethesda, Maryland 20817. Dr. Yoder is 74
years old.
==============================================================================================
Brooke Cutler Ashland Trustee**.................... 1996 Indefinite 0
Chief Executive Officer and Manager, Cutler &
Company, LLC. Former President, Trustee
Investment Services, Inc. (1990-1994) (financial
services marketing firm). Kenneth R. Cutler's
daughter. Her address is 503 Airport Road,
Medford, Oregon 97504. Ms. Ashland is 44 years
old.
==============================================================================================
Robert B. Watts, Jr., Nominee for Trustee*.......... 1996+ Indefinite+ 0
Attorney in private practice. His address is 2230
Brownsboro Highway, Eagle Point, Oregon 97524.
Mr. Watts is 65 years old.
==============================================================================================
<FN>
- ------------------
* Member of the Audit Committee.
** "Interested person," as defined in the Investment Company Act of 1940, of
the Funds because of affiliation with Cutler & Company, LLC, the Funds'
investment adviser, in the case of Mr. Cutler and Ms. Ashland, and
affiliation with Forum Financial Services Inc., the Funds' distributor and
administrator, in the case of Mr. Keffer.
+ If elected at the Meeting.
</FN>
</TABLE>
During the Fund's fiscal year ended June 30, 1995, the Board of Trustees
met four times. All of the Trustees attended all of the meetings of the Board of
Trustees. The Trust maintains an Audit Committee of the Board of Trustees, which
is composed of the Trustees who are not "interested persons" of the Fund within
the meaning of the 1940 Act. The Audit Committee met once during the fiscal year
ended June 30, 1995 for the purposes described below in Proposal Two. Trustees
of the Trust who are not interested persons of the Trust are paid an annual
retainer of $10,000 and are reimbursed for the expenses of attendance at
meetings of the Board of Trustees. For the fiscal year ended June 30, 1995, such
fees and expenses paid by the Trust totaled $8,720.
As of February 14, 1996 the Trustees and officers of the Trust as a group
owned less than 1% of the shares of each Fund.
- 4 -
<PAGE>
COMPENSATION OF TRUSTEES.
The following table sets forth information regarding compensation of
Trustees by the Trust for the fiscal year ended June 30, 1995. Officers of the
Trust and Trustees who are interested persons of the Trust do not receive any
compensation from the Trust.
<TABLE>
<CAPTION>
Compensation Table
Fiscal Year Ended June 30, 1995
===================================================================================================
Pension or
Retirement Total
Benefits Estimated Compensation
Aggregate Accrued Annual From
Compensation As Part of Benefits Registrant
from Fund Upon Paid
Name of Person, Position with the Trust Registrant Expenses Retirement to Trustees
- ---------------------------------------------------------------------------------------------------
Kenneth R. Cutler, Trustee, Chairman and
<S> <C> <C> <C> <C>
Vice President............................... $0 N/A N/A $0
- ---------------------------------------------------------------------------------------------------
John Y. Keffer, Trustee and President........ $0 N/A N/A $0
- ---------------------------------------------------------------------------------------------------
Dr. Hatten S. Yoder, Jr., Trustee............ $7,500 N/A N/A $7,500
===================================================================================================
</TABLE>
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE TRUST VOTE
FOR THE ELECTION OF THE NOMINEES TO SERVE AS TRUSTEES OF THE TRUST.
PROPOSAL TWO
RATIFICATION OR REJECTION OF SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Trustees recommends that the shareholders of the Trust ratify
the selection of Deloitte & Touche LLP, independent certified public
accountants, to audit the accounts of the Trust for the fiscal year ending June
30, 1996. Their selection was approved by the unanimous vote, cast in person, of
the Trustees of the Trust, including the sole Trustee who is not an "interested
person" of the Trust within the meaning of the 1940 Act, at a meeting held on
September 12, 1995. Deloitte & Touche LLP has audited the accounts of the Trust
since prior to the Trust's commencement of business on October 2, 1992 and does
not have any direct financial interest or any material indirect financial
interest in the Trust. A representative of Deloitte & Touche LLP is expected to
attend the Meeting and to have the opportunity to make a statement and respond
to appropriate questions from the shareholders. The Audit Committee of the Board
of Trustees meets once each year with representatives of Deloitte & Touche LLP
to discuss the scope of their engagement and review the financial statements of
the Trust and the results of their examination thereof.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE TRUST VOTE
FOR THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS OF THE FUND.
- 5 -
<PAGE>
PROPOSAL THREE
APPROVAL OR DISAPPROVAL OF THE PROPOSED AMENDMENT TO THE
ADVISORY AGREEMENT TO PROVIDE FOR AN INCREASE
IN THE ADVISORY FEES PAYABLE BY THE EQUITY FUNDS
BACKGROUND.
As disclosed in the Trust's current prospectus, the Funds' shares are
offered and sold exclusively to persons who have previously entered into an
investment advisory agreement with the Adviser. Persons who are not advisory
clients of the Adviser are therefore not currently eligible to purchase shares
of the Funds. The Adviser's clients pay investment advisory fees directly to the
Adviser in accordance with the terms of their respective investment advisory
agreements. Each investment advisory agreement, however, provides that, with
respect to clients whose assets are invested in the shares of the Funds, the fee
payable under their investment advisory agreement is reduced so that they do not
pay the Adviser under the agreement for advisory services provided to the Funds
that are attributable to such assets. Thus, only the Fund pays the Adviser for
advisory services the Adviser provides to the Fund.
At the January 3, 1996 meeting of the Board of Trustees, the Adviser and
the Trust's distributor presented to the Trustees for their approval a proposal
that the Trust offer shares of the Funds to the public generally (i.e., to
persons who have no direct advisory relationship with the Adviser). Based upon
information and statistics furnished by the Adviser and the Trust's distributor,
the Trustees adopted such proposal. The Trustees agreed with the Adviser's and
the distributor's determinations that increased growth in the assets of the
Funds would be in the best interests of the Trust and the shareholders of each
Fund and authorized the Trust's distributor to take the necessary steps (which
do not require shareholder approval) to make the Funds' shares available to the
general public, subject to shareholder approval of this proposal.
In presenting this proposal to the Trustees, the Adviser stated, however,
that it would not be willing to continue to serve as investment adviser to the
Trust should shares of the Funds become available to the general public unless
the investment advisory fees payable by the Equity Funds were increased from .50
of 1% per annum of each Equity Fund's average daily net assets to .75 of 1% per
annum of such assets. (The Adviser's fees are accrued daily and paid monthly.)
The Adviser indicated that the current lower fee rate was appropriate in the
context of a broader investment counsel relationship with the shareholder, where
the Adviser would receive separate compensation from the shareholder for
services unrelated to the management of the Funds' investment portfolio, but
that in the absence of such a relationship the Adviser believed the higher fee
rate to be appropriate and commensurate with the services rendered to the Funds.
The Adviser pointed out that the higher rate of fee was within the range of
investment advisory fees paid by funds having investment objectives and policies
comparable to those of the Equity Funds.
- 6 -
<PAGE>
THE PROPOSED FEE INCREASES.
The following table sets forth the aggregate amount of investment advisory
fees accrued during the fiscal year ended June 30, 1995 by each of the Equity
Funds, the pro forma amount that would have been accrued had the proposed fee
schedule been in effect the entire year, and the percentage increase that such
fee represents.
Approved List
Equity Income Fund Equity Fund
------------------ -----------
1995 Actual Fee $163,051 $68,145*
1995 Pro forma $244,577 $68,145*
% Increase 50% 0%*
- --------
* The Adviser waived $15,411 in investment advisory fees during the fiscal year
ended June 30, 1995. In the absence of such waiver, the Approved List Equity
Fund would have accrued $83,556 in investment advisory fees, the pro forma
amount that would have been accrued had the proposed new fee schedule been in
effect would have been $125,335 and the percentage increase would have been 50%.
- 7 -
<PAGE>
EXPENSE INFORMATION.
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in an Equity Fund will bear directly or
indirectly under the current Advisory Agreement and under the Advisory Agreement
as proposed to be amended. There are no transaction charges associated with
purchases or redemptions of Fund shares.
<TABLE>
<CAPTION>
Equity Approved
Income List Equity
Fund Fund
---- ----
Proposed Proposed
Current (pro forma) Current (pro forma)
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Annual Maximum Investment Counsel Fees 0.25% 0.00% 0.25% 0.00%
(as a percentage of average net assets)
Annual Fund Operating Expenses (1)
(as a percentage of average net assets
after expenses reimbursements and fee
waivers)
Investment Advisory Fee 0.50% 0.75% 0.41% 0.66%
Other Expenses 0.47% 0.47% 0.59% 0.59%
----- ----- ----- -----
Total Fund Operating Expenses 0.97% 1.22% 1.00% 1.25%
<FN>
(1) The table reflects actual expenses incurred by the Equity Funds during the
fiscal year ended June 30, 1995. Absent expense reimbursements and fee
waivers, the expenses of the Equity Income Fund and Approved List Equity
Fund would have been: Investment Advisory Fees, 0.50% and 0.50%,
respectively; Other Expenses, 0.47% and 0.73%, respectively; and Total
Fund Operating Expenses, 0.97% and 1.23%, respectively.
</FN>
</TABLE>
In the event this Proposal is approved, the Adviser will, until June 30, 1997,
waive its fees or reimburse each Equity Fund to the extent such Fund's total
operating expenses exceed 1.25%.
Example
A shareholder would pay the following expenses on a $1,000 investment in a Fund,
assuming a 5% annual return and redemption at the end of each period:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Proposed Proposed Proposed Proposed
Current (pro forma) Current (pro forma) Current (pro forma) Current (pro forma)
------- ----------- ------- ----------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Income Fund $ 12 $12 $ 39 $39 $ 67 $67 $148 $148
Approved List
Equity Fund $ 13 $13 $ 40 $40 $ 69 $69 $151 $151
</TABLE>
The example is based on the expenses listed in the table above, including the
maximum investment counsel fee, and assumes the reinvestment of all dividends.
The 5% annual return is not a prediction of and does not represent the Funds'
projected returns; rather, the assumed 5% annual return is required by
government regulation. The example should not be considered a representation of
past or future expenses or return. Actual expenses and return may be greater or
less than indicated.
- 8 -
<PAGE>
BOARD CONSIDERATION.
At its meeting on January 3, 1996, the Board of Trustees unanimously
approved, and recommended to the shareholders of the Equity Funds for their
approval, the proposed amendment to the Advisory Agreement to provide for an
increase in the fees payable by the Equity Funds thereunder. In reaching its
determination, the Trustees considered (i) the Adviser's presentation and its
rationale for the fee increase, as described above, (ii) fee and expense
information of mutual funds deemed comparable to the respective Equity Funds,
and (iii) the nature and quality of the services rendered by the Adviser to the
Trust. The Board determined that the proposed fee increase was fair and
reasonable under the circumstances and that its adoption would be in the best
interests of the Trust and the shareholders of the Equity Funds.
THE BOARD OF TRUSTEES, INCLUDING THE SOLE INDEPENDENT TRUSTEE,
RECOMMENDS THAT THE SHAREHOLDERS OF THE EQUITY FUNDS VOTE FOR APPROVAL OF
THE PROPOSED AMENDMENT TO THE ADVISORY AGREEMENT.
A copy of the Advisory Agreement, as proposed to be amended, is attached
as Exhibit A hereto. If approved by a Majority Vote of the outstanding shares of
the Equity Funds voting by class, the amended Advisory Agreement will become
effective shortly following the Meeting and will continue in effect from year to
year thereafter, subject to approval annually by the Board of Trustees or by a
Majority Vote of the outstanding shares of each Fund, and, in either event,
approval by a majority of those Trustees who are not parties to the Advisory
Agreement or interested persons of any such party at a meeting called for the
purpose of voting on such approval. If the shareholders of an Equity Fund should
fail to approve the proposed amendment, the Adviser may continue to serve as
investment adviser under the Advisory Agreement at the current rate of fee with
respect to such Fund and may serve as investment adviser under the amended
Advisory Agreement with respect to a Fund whose shareholders approve the
proposed amendment.
PROPOSAL FOUR
APPROVAL OR DISAPPROVAL OF A PROPOSAL TO ELIMINATE
THE FUNDAMENTAL INVESTMENT POLICY OF THE FUNDS PROHIBITING
"PAYING UP" IN CONNECTION WITH PORTFOLIO TRANSACTIONS
Currently, the Trust's fundamental investment policies provide that the
Funds may not "pay up" in connection with the Funds' portfolio transactions.
"Paying up" may occur when an investment adviser places a securities transaction
with a broker who charges a commission for executing the transaction that is
greater than that which another broker would charge for executing the same
transaction. "Paying up" may occur in recognition of the brokerage or investment
research services provided to the investment adviser by the broker (or, in some
cases, by a third party).
Historically, the Adviser's approach to stock selection, which principally
involves an analysis of financial statement information published by
publicly-traded companies, has not relied to a significant extent on investment
analyses prepared by other firms. In recent years, however, the amount of assets
managed by the Adviser has increased significantly and the Adviser has expanded
its staff of investment professionals. Management of the Adviser has concluded
that access to a wider range of investment research services would enhance its
ability to achieve the investment objectives of its clients. Accordingly, at the
January 3, 1996 meeting of the Trust's Board of Trustees, the Adviser
recommended that the fundamental investment policy of the Trust prohibiting
"paying up" be eliminated. In making its recommendation to the Trustees, the
Adviser noted that, in its experience, a substantial majority of equity mutual
funds permitted their investment advisers to "pay up" for research services.
- 9 -
<PAGE>
If this proposal is approved, allocations of transactions to brokers and
the frequency of transactions will continue to be determined by the Adviser in
its best judgment and in a manner deemed to be in the best interest of
shareholders of each Fund rather than by any formula. The primary consideration
will be prompt execution of orders in an effective manner and at the most
favorable price available to a Fund. If the proposal is approved, the Funds may
not always pay the lowest commission available. Rather, in determining the
amount of commission paid in connection with Fund transactions, the Adviser will
take into account such factors as size of the order, difficulty of execution,
efficiency of the executing broker's facilities (including services available)
and any risk assumed by the executing broker. The Adviser may also take into
account research and brokerage services, as well as payments made by brokers
effecting transactions for a Fund (i) to that Fund or (ii) to other persons on
behalf of that Fund for services provided to it for which it would be obligated
to pay. Research and analysis provided by a broker may be used by the Adviser in
connection with services to clients other than a Fund, and the Adviser's fee is
not reduced by reason of the Adviser's receipt of research services.
Purchases and sales of portfolio securities for Cutler Government
Securities Fund are usually principal transactions. These purchases are made
directly from the issuer or from a market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Purchases from
dealers serving as market makers include the spread between the bid and asked
prices. Adoption of the proposal is expected to have no significant effect on
Cutler Government Securities Fund's portfolio transactions.
The Board of Trustees believes that the proposed modification to the
Trust's fundamental investment policies is in the best interests of each Fund
and its shareholders, and recommends that shareholders vote for the proposal. If
the proposal is not approved by a Fund, that Fund's fundamental investment
policies will continue to prohibit "paying up" in connection with portfolio
transactions.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE FUNDS VOTE
FOR THE ELIMINATION OF THIS FUNDAMENTAL INVESTMENT POLICY.
CERTAIN INFORMATION REGARDING
THE ADVISER AND THE ADVISORY AGREEMENT
Under the Advisory Agreement, which is dated December 31, 1992, the Trust
has retained Cutler & Company, LLC, a limited liability company with offices at
503 Airport Road, Medford, Oregon 97504 to serve as its investment adviser.
Brooke Cutler Ashland is a controlling person of the Adviser on the basis of her
ownership of a majority of the Adviser's stock. Geoffrey W. Cutler (Kenneth R.
Cutler's son) may be deemed to be a "controlling person" of the Adviser on the
basis of his ownership of more than 10% of the Adviser's stock. The Adviser is a
registered investment adviser and provides investment management services to
various individual and institutional clients, including financial institutions,
public and private pension funds, profit-sharing plans, charitable corporations
and private trust funds. As of January 31, 1996, the Adviser provided investment
management services with respect to assets of approximately $722 million,
including the Funds.
Under the terms of the Advisory Agreement the Adviser manages the
investments of each Fund and the composition of each Fund's portfolio of
securities and investments in accordance with each Fund's investment objectives.
The Adviser pays all salaries, fees, and expenses of any officer or Trustee of
the Trust who is an officer, member or employee of the Adviser.
MANAGEMENT OF THE ADVISER.
Ms. Brooke Cutler Ashland, Chief Executive Officer and Manager of the
Adviser.
Mr. Stephen F. Brennan, Director of Marketing and Manager of the Adviser.
- 10-
<PAGE>
Mr. Geoffrey W. Cutler, President, Senior Portfolio Manager, Investment
Committee Member and Manager of the Adviser.
Mr. Kenneth R. Cutler, Principal Portfolio Manager of the Equity Funds and
Investment Committee Member.
Mr. Michael Dieschbourg, CIMA, Managing Director, Investment Committee
Member and Manager of the Adviser.
Ms. Carol S. Fischer, Chief Operating Officer and Manager of the Adviser.
Mr. William Gossard, Director of Fixed Income, Investment Committee Member
and Manager of the Adviser.
Mr. John F. Ray, Senior Portfolio Manager, Investment Committee Member and
Manager of the Adviser.
The address of each of the foregoing persons is 503 Airport Road, Medford,
Oregon 97504.
CERTAIN RECENT TRANSACTIONS IN THE SECURITIES OF THE ADVISER.
Prior to December 1994, Kenneth Cutler owned 50% of the outstanding voting
shares and 22.31% of the outstanding non-voting shares of Cutler & Company,
Inc., the predecessor of the Adviser ("Cutler & Co.") and Brooke Cutler Ashland
owned 3.57% of such voting shares and 5.27% of such non-voting shares. Mr.
Kenneth Cutler's share ownership represented 22.56% of the total outstanding
common shares of Cutler & Co. and Ms. Ashland's share ownership represented
5.29% of such shares. In December 1994, Cutler & Co. redeemed non-voting shares
from certain holders, including 10,360 non-voting shares from Mr. Kenneth Cutler
(16.56% of such shares outstanding prior to redemption) for a total
consideration of $354,649. Also in December 1994, Mr. Kenneth Cutler made the
following gifts of shares of Cutler & Co. stock: a gift of 80 voting shares,
representing 14.29% of the outstanding voting shares, to Ms. Ashland; a gift of
80 voting shares (14.29%) to Geoffrey W. Cutler; a gift of 40 voting shares
(7.15%) to Stephen F. Brennan; and a gift of 1,200 non-voting shares each to Ms.
Ashland, Geoffrey W. Cutler and Craig Cutler (1.92% each). Craig Cutler's shares
subsequently were redeemed by Cutler & Co. Also during December 1994, Ms.
Ashland purchased 40 voting shares from Charlotte T. DeMotte, Trustee of the
Demotte Family Trust for a total consideration of $1,251.50 and received as a
gift 40 voting shares from Lewis J. Whitney, Jr., Trustee of the L. J. Whitney
Trust. Following these transactions, Mr. Kenneth Cutler owned 15.38% of the
outstanding voting and none of the outstanding non-voting shares of Cutler &
Co., representing 0.57% of the common stock of Cutler & Co. outstanding. Ms.
Ashland owned 38.46% of such voting and 27.08% of such non-voting shares,
representing 27.42% of the common stock of Cutler & Co. outstanding.
On January 1, 1995, Ms. Ashland purchased from Cutler & Co. an additional
115,060 shares of newly-issued non-voting stock and 40 shares of newly-issued
voting stock for a total consideration of $717,460.80. As a result of that
purchase, Ms. Ashland owned 42.86% of the outstanding voting shares and 67.71%
of the outstanding non-voting shares of Cutler & Co. and her total share
ownership represented 67.65% of the outstanding shares of common stock of Cutler
& Co. During 1995, Cutler & Co. issued additional non-voting shares to key
employees diluting Mr. Kenneth Cutler's and Ms. Ashland's equity interests. In
December 1995, Mr. Kenneth Cutler gave as a gift 10 shares of voting stock to an
officer of Cutler & Co., and he gave as a gift his remaining 70 voting shares,
representing 12.50% of the outstanding voting shares, to Ms. Ashland. As a
result, Mr. Kenneth Cutler no longer had any equity interest in Cutler & Co. and
Ms. Ashland owned 59.22% of the outstanding common stock of Cutler & Co.,
including 55.36% of its voting stock. Effective December 31, 1995, Cutler & Co.
reorganized as a limited liability company via a statutory merger into the
Adviser, in which all shareholders of Cutler & Co. received one limited
liability unit for each share of voting or non-voting stock held by such
shareholder.
- 11 -
<PAGE>
Under the 1940 Act, a transfer of a controlling block of the outstanding
voting securities of an investment adviser is deemed to be an assignment of the
investment advisory agreement to which that investment adviser is a party. As
required by the 1940 Act, the Advisory Agreement provides that it shall
automatically terminate in the event of an assignment (in which event
shareholder approval would be required to enter into a new investment advisory
agreement). The Adviser believes that none of the foregoing transactions, either
singly or in the aggregate, constituted such an assignment of the Advisory
Agreement and therefore did not cause the Advisory Agreement to terminate. In
the Adviser's view, the provisions of the 1940 Act governing the assignment of
investment advisory agreements do not, either by their terms or in spirit,
include transactions of this type.
ADVISORY AGREEMENT.
The Advisory Agreement was originally approved by the Board of Trustees,
including a majority of the Trustees who are not parties to the Advisory
Agreement, or interested persons of such parties, at its meeting held on
December 28, 1992, and by the written consent of the sole initial shareholder of
the Trust dated December 30, 1992. The Advisory Agreement was last renewed by
the Board of Trustees, including a majority of the Trustees who are not parties
to the Advisory Agreement or interested persons of such parties, at a meeting
held on September 12, 1995.
Pursuant to the Advisory Agreement, the Adviser shall not be liable for
any error of judgment or mistake of law or for any act or omission in the
performance of its duties to the Funds, except by reason of willful misfeasance,
bad faith, or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreement will terminate automatically in the event of its
assignment. In addition, the Advisory Agreement may be terminated by the Trust
at any time for any reason by vote of a majority of the entire Board of Trustees
of the Trust or by a Majority Vote of outstanding voting shares of the Trust, or
with respect to a Fund, by a Majority Vote of the outstanding voting shares of
such Fund, on 60 days' written notice to the Adviser. The Adviser may terminate
the Advisory Agreement at any time on 60 days' written notice to the Trust.
CERTAIN INFORMATION REGARDING
THE DISTRIBUTOR AND ADMINISTRATOR
Pursuant to a management agreement with the Adviser and the Trust, Forum
Financial Services, Inc. ("Forum") supervises the overall management of the
Trust, including overseeing the Trust's receipt of services, advising the Trust
and the Trustees on matters concerning the Trust and its affairs, and, at the
Board's request, providing the Trust with general office facilities and certain
persons to serve as officers. Forum is also the Trust's distributor and acts as
the agent of the Trust in connection with the offering of shares of the Funds
pursuant to a separate distribution agreement. Forum is controlled by John Y.
Keffer, a Trustee and the President of the Trust. Forum's address is Two
Portland Square, Portland, Maine 04101.
OFFICERS OF THE TRUST
The principal officers of the Trust and their principal occupations during
the past five years are set forth below.
Kenneth R. Cutler, Chairman and Vice President (see Proposal One,
"Election of Trustees," at page 3 for biographical information).
John Y. Keffer, President (see Proposal One, "Election of Trustees," at
page 3 for biographical information).
- 12 -
<PAGE>
Geoffrey W. Cutler, Vice President, Assistant Secretary and Assistant
Treasurer. President and Manager of Cutler & Company, LLC. His address is 503
Airport Road, Medford, Oregon 97504.
Max Berueffy, Vice President and Secretary. Counsel, Forum Financial
Services, Inc. with which he has been associated since May 1994. Prior to that,
Mr. Berueffy was a member of the staff of the U.S. Securities and Exchange
Commission. Mr. Berueffy is also an officer of various registered investment
companies for which Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. His address is Two Portland Square, Portland,
Maine 04101.
David I. Goldstein, Assistant Secretary. Counsel, Forum Financial Services,
Inc. with which he has been associated since 1991. Prior thereto, Mr. Goldstein
was associated with the law firm of Kirkpatrick & Lockhart. Mr. Goldstein is
also an officer of various registered investment companies for which Forum
Financial Services, Inc. serves as manager, administrator and/or distributor.
His address is Two Portland Square, Portland, Maine 04101.
Michael D. Martins, Treasurer. Director of Operations, Forum Financial
Corp., with which he has been associated since May 1995. Prior to that, Mr.
Martins was a Manager of Deloitte & Touche LLP. Mr. Martins is also an officer
of various registered investment companies for which Forum Financial Corp.
serves as fund accountant and/or transfer agent. His address is Two Portland
Square, Portland, Maine 04101.
Lynn Y. Kelley, Assistant Treasurer. Fund Accounting Manager, Forum
Financial Corp., with which she has been associated since December 1993. Prior
to that, Ms. Kelley was Senior-in-Charge in Fund Accounting with Investors Bank
and Trust Company. Her address is Two Portland Square, Portland, Maine 04101.
PRINCIPAL SHAREHOLDERS
Also as of February 14, 1996, the following persons owned of record 5% or
more of the outstanding shares of the Funds as indicated:
<TABLE>
<CAPTION>
=====================================================================================
Amount and Nature
Name and Address of Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
- -------------------------------------------------------------------------------------
<S> <C> <C>
Cutler Equity Income The Karl Kirchgessner Foundation 291,264 shares 8.1%
Fund 1278 Glenneyre, Suite 149
Laguna Beach, CA 92651
Comerica Bank TTEE for Big Creek 338,450 shares 9.4%
Lumber Profit Sharing Trust
3654 Highway 1
Davenport, CA 95014
- -------------------------------------------------------------------------------------
Cutler Approved List The Karl Kirchgessner Foundation 337,069 shares 15.9%
Equity Fund 1278 Glenneyre, Suite 149
Laguna Beach, CA 92651
Harold E. Gray - IRA Account 110,417 shares 5.2%
810 Whitney
Visalia, CA 93277
- 13 -
<PAGE>
- -------------------------------------------------------------------------------------
Cutler Government The Karl Kirchgessner Foundation 76,768 shares 11.8%
Securities Fund 1278 Glenneyre, Suite 149
Laguna Beach, CA 92651
Micheletti, Inc. 103,968 shares 16.0%
MPP & P/S Plan
P.O. Box 26620
San Jose, CA 95159
Steel Structures, Inc. 69,592 shares 10.7%
MPP & P/S Plan
P.O. Box 1170
Madera, CA 93659
=====================================================================================
</TABLE>
OTHER MATTERS
Management does not know of any matters to be presented at the Meeting
other than those mentioned in this Proxy Statement. If any of the persons listed
above is unavailable for election as a Trustee, an event not now anticipated, or
if any other matters properly come before the Meeting, the shares represented by
proxies will be voted with respect thereto in accordance with the best judgment
of the person or persons voting the proxies.
By order of the Board of Trustees,
MAX BERUEFFY
Secretary
March 4, 1996
Portland, Maine
- 14 -
<PAGE>
EXHIBIT A
THE CUTLER TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of December, 1992, and restated , 1996,
between The Cutler Trust (the "Trust"), a business trust organized under the
laws of the State of Delaware with its principal place of business at Two
Portland, Square, Portland, Maine 04101, and Cutler & Company, LLC (the
"Adviser"), a corporation organized under the laws of State of California with
its principal place of business at 503 Airport Road, Medford, Oregon 97504.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and is
authorized to issue its shares in separate series and classes; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each separate investment portfolio of the Trust listed in Schedule
A hereto as it may be amended from time to time (each a "Fund" and,
collectively, the "Funds"), and the Adviser is willing to provide those services
on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Adviser, and the Adviser hereby agrees, to
act as investment adviser to each Fund for the period and on the terms set forth
in this Agreement. In connection therewith, (i) the Trust has delivered to the
Adviser copies of its Trust Instrument and Bylaws, the Trust's Registration
Statement and all amendments thereto filed pursuant to the Act or the Securities
Act of 1933, as amended, with the Securities and Exchange Commission (the
"Registration Statement") and the current Prospectus and Statement of Additional
Information of the Funds (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and, shall promptly furnish the Adviser with all
amendments of or supplements to the foregoing and (ii) the Adviser has delivered
to the Trust's secretary copies of its entire Form ADV and all amendments
thereto as amended to date and will from time to time furnish the Trust's
secretary with all amendments of or supplements to the Adviser's Form ADV.
SECTION 2. INVESTMENT ADVISORY DUTIES
Subject to the direction and control of the Trust's Board of Trustees (the
"Board"), the Adviser shall manage the investment and reinvestment of the assets
of the Funds, and, without limiting the generality of the foregoing, shall
provide the management and other services specified below, all in such manner
and to such extent as may be authorized by the Board.
<PAGE>
(a) The Adviser shall make decisions with respect to all purchases, sales
and other transactions of securities and other investment assets of the Funds,
including the selection of brokers, dealers and other persons to introduce or
execute those transactions. To carry out such decisions, the Adviser is
authorized, as agent and attorney-in-fact for the Trust, for the account of, at
the risk of and in the name of the Trust, to place orders and issue instructions
with respect to those transactions of the Funds. In all purchases, sales and
other transactions in securities or other investment assets for the Funds, the
Adviser is authorized to exercise full discretion and act for the Trust in the
same manner and with the same force and effect as the Trust might or could do
with respect to such purchases, sales or other transactions, as well as with
respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions, subject to paragraph (b)
below.
(b) In making decisions with respect to all purchases, sales and other
transactions of securities and other investment assets of the Funds the Adviser
shall follow and comply with the investment objectives of the Funds, the
policies set forth from time to time by the Board (to the extent communicated to
the Adviser in writing or at a Board meeting attended by a representative of the
Adviser), the limitations imposed by the Trust's Trust Instrument and Bylaws,
the Trust's Registration Statement and the Funds' Prospectuses (in each case, to
the extent copies thereof are furnished to the Adviser as provided for in
Section 1(i) above), the limitations set forth in the Act, and the requirements
of subchapter M of the Internal Revenue Code of 1986, as amended, in respect of
investment companies.
(c) The Adviser shall monitor the performance of brokers, dealers and
other persons who introduce or execute purchases, sales and other transactions
of securities and other investment assets of the Funds.
(d) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act, including those required by paragraphs
(b)(5), (6) and (9) of Rule 31a-1 promulgated under the Act. The Adviser shall
prepare and maintain, or cause to be prepared and maintained, in such form, for
such periods and in such locations as may be required by applicable law, all
documents and records relating to the services provided by the Adviser pursuant
to this Agreement required to be prepared and maintained by the Trust pursuant
to the rules and regulations of any national, state, or local government entity
with jurisdiction over the Trust, including the Securities and Exchange
Commission and the Internal Revenue Service. The books and records pertaining to
the Trust that are in possession of the Adviser shall be the property of the
Trust. The Trust, or the Trust's authorized representatives, shall have access
to such books and records at all times during the Adviser's normal business
hours. Upon the reasonable request of the Trust, copies of any such books and
records shall be provided promptly by the Adviser to the Trust or the Trust's
authorized representatives.
(e) The Adviser shall determine in its sole discretion the propriety of
(i) honoring requests for orders to purchase Fund shares "in kind" for
consideration consisting of securities determined to be suitable to purchase,
(ii) honoring requests by
- 2 -
<PAGE>
shareholders for proceeds upon redemption of Fund shares to be paid "in kind" by
delivery of portfolio securities, and (iii) paying redemption proceeds "in kind"
even though not requested by a Fund shareholder.
(f) The Adviser shall provide to the Board at each regularly scheduled
meeting thereof (or such other meetings as may be requested by the Trust) a
report containing an appropriate summary of all changes in the Funds' investment
portfolios since the prior report, will inform the Board of important
developments affecting the Funds, and on its own initiative will furnish the
Board from time to time with such information as it believes appropriate for
this purpose, whether concerning the individual issuers whose securities are
included in the Funds' investment portfolios, the industries in which these
issuers engage, or the economic, social or political conditions prevailing in
each country in which the Funds' maintain investments. The Adviser also shall
provide the Board with such statistical and analytical information with respect
to securities in the Funds' investment portfolios as the Adviser believes
appropriate or as the Board reasonably may request. The Adviser shall provide
other persons, in such forms and at such times as the Trust's authorized
representatives shall reasonably request, information about portfolio
transactions and prices or yield quotations of portfolio securities.
(g) The Adviser shall from time to time employ or associate with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement, the cost of performance of such duties to be
borne and paid by the Adviser. No obligation may be incurred on behalf of the
Trust in any such respect.
SECTION 3. EXPENSES
(a) The Adviser shall be responsible for the portion of the net expenses
of each Fund (except interest, taxes, brokerage fees, distribution fees and
organization and extraordinary expenses, all to the extent such exclusions are
permitted by applicable state law) during any fiscal year (or portion thereof)
in which this Agreement is in effect which, as to a Fund, in any such year
exceeds the limits applicable to the Fund under the laws of any state in which
the Fund's shares are qualified for sale (reduced pro rata for any portion less
than a year). The Adviser is not, however, required to bear expenses of the
Trust or any Fund to an extent that would result in a Fund not qualifying under
provisions of the Internal Revenue Code of 1986, as amended, as a regulated
investment company.
(b) Subject to the above and to any other agreement by the Adviser or
other person to reimburse any expenses of the Trust that relate to the Funds,
the Trust shall be responsible for and assumes the obligation for payment of all
of its other expenses, including: (i) the fee payable under Section 5 hereof;
(ii) the fees payable to Forum Financial Services, Inc. ("Forum") under an
agreement between Forum and the Trust; (iii) expenses of issue, repurchase and
redemption of Shares; (iv) interest charges, taxes and brokerage fees and
commissions; (v) premiums of insurance for the Trust, its trustees and officers
and fidelity bond premiums; (vi) fees, interest charges and expenses of third
parties, including the Trust's custodian, transfer agent, dividend disbursing
agent and fund accountant; (vii) fees of pricing, interest, dividend, credit and
other reporting
- 3 -
<PAGE>
services; (viii) costs of membership in trade associations; (ix)
telecommunications expenses; (x) funds transmission expenses; (xi) auditing,
legal and compliance expenses; (xii) costs of maintaining the Trust's existence;
(xiii) costs of preparing and printing the Fund's Prospectuses, subscription
application forms and shareholder reports and delivering them to existing
shareholders; (xiv) expenses of meetings of shareholders and proxy solicitations
therefor; (xv) costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts, of calculating the net
asset value of shares of the Trust and of preparing tax returns; (xvi) costs of
reproduction, stationery and supplies; (xvii) fees and expenses of the Trust's
trustees; (xviii) compensation of the Trust's officers and employees who are not
officers of the Adviser or Forum or their respective affiliated persons; (xix)
costs of other personnel who may be employees of the Adviser, Forum or their
respective affiliated persons performing services for the Trust; (xx) costs of
Trustee meetings; (xxi) Securities and Exchange Commission registration fees and
related expenses; and (xxii) state or foreign securities laws registration fees
and related expenses.
SECTION 4. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and shall not be liable for error
of judgment or mistake of law, for any loss arising out of any investment, or in
any event whatsoever, provided that nothing herein shall be deemed to protect,
or purport to protect, the Adviser against any liability to the Trust or to the
security holders of the Trust to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of reckless disregard of its obligations and
duties hereunder.
(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss is not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and shall
be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 5. COMPENSATION
(a) For the services provided by the Adviser pursuant to this Agreement,
the Trust shall pay the Adviser, with respect to each of the Funds, a fee at an
annual rate equal to the amount set forth in Schedule A hereto. Such fees shall
be accrued by the Trust daily and shall be payable monthly in arrears on the
first day of each calendar month for services performed under this Agreement
during the prior calendar month. Upon the termination of this Agreement, the
Trust shall pay to the Adviser such compensation as shall be payable prior to
the effective date of such termination.
(b) Notwithstanding anything in this Agreement to the contrary, the Adviser
- 4 -
<PAGE>
and its affiliated persons, if any, may receive compensation or reimbursement
from the Trust with respect to (i) the provision of shareholder support or other
services or (ii) service as a Trustee or officer of the Trust.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
latter of the date on which the Trust's Registration Statement relating to the
shares of the Fund becomes effective and date of its approval by a vote of a
majority of the outstanding voting securities of the Fund. Upon the
effectiveness of this Agreement, it shall supersede all previous agreements
between the Trust and the Adviser covering the subject matter hereof.
(b) This Agreement shall continue in effect with respect to a Fund for
twelve months and, thereafter, shall continue in effect for successive
twelve-month periods, provided that such continuance is specifically approved at
least annually (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Fund and (ii) by a vote of a majority of Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval. If the continuation of this Agreement is not approved as to a Fund,
the Adviser may continue to render to the Fund the services described herein in
the manner and to the extent permitted by the Act.
(c) This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, (i) by the Board or by a vote of a majority
of the outstanding voting securities of the Fund on 60 days' written notice to
the Adviser or (ii) by the Adviser on 60 days' written notice to the Trust. This
Agreement shall automatically terminate in the event of its assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the Adviser's
right, or the right of any of its officers, directors or employees (whether or
not they are a trustee, officer, employee or other affiliated person of the
Trust) to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
(b) The Adviser represents that it is currently registered, and during the
entire period this Agreement is in effect will be registered, as an investment
adviser under the Investment Advisers Act of 1940.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser
- 5 -
<PAGE>
agrees that, in asserting any rights or claims under this Agreement, it shall
look only to the assets and property of the Trust or the Fund to which the
Adviser's rights or claims relate in settlement of such rights or claims, and
not to the Trustees of the Trust or the shareholders of the Funds.
SECTION 9. "CUTLER" NAME
If the Adviser ceases to act as investment adviser to the Trust or any
Fund whose name includes the word "Cutler," or if the Adviser requests in
writing, the Trust shall take prompt action to change the name of the Trust or
any such Fund to a name that does not include the word "Cutler." The Adviser may
from time to time make available without charge to the Trust for the Trust's use
any marks or symbols owned by the Adviser, including marks or symbols containing
the word "Cutler" or any variation thereof, as the Adviser deems appropriate.
Upon the Adviser's request in writing, the Trust shall cease to use any such
mark or symbol at any time. The Trust acknowledges that any rights in or to the
word "Cutler" and any such marks or symbols which may exist on the date of this
Agreement or arise hereafter are, and under any and all circumstances shall
continue to be, the sole property of the Adviser. The Adviser may permit other
parties, including other investment companies, to use the word "Cutler" in their
names without the consent of the Trust. The Trust shall not use the word
"Cutler" in conducting any business other than that of an investment company
registered under the Act without the permission of the Adviser.
SECTION 10. [Reserved]
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
- 6 -
<PAGE>
(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CUTLER TRUST
By: ____________________
John Y. Keffer
President
CUTLER & COMPANY, LLC
By: ____________________
Brooke R. Ashland
Chief Executive Officer
and Manager
- 7 -
<PAGE>
THE CUTLER TRUST
INVESTMENT ADVISORY AGREEMENT
Schedule A
Advisory Fees
Fee as a % of
the Annual Average Daily
Fund Net Assets of the Fund
---- ----------------------
Cutler Equity Income Fund 0.75%
Cutler Approved List Equity Fund 0.75%
Cutler Government Securities Fund 0.25%
<PAGE>
THE CUTLER TRUST
Two Portland Square
Portland, Maine 04101
------------------------------
CUTLER APPROVED LIST EQUITY FUND
------------------------------
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints Max Berueffy
and David I. Goldstein (or if only one shall act then that one) proxies with the
power of substitution to vote all the shares of beneficial interest of Cutler
Approved List Equity Fund (the "Fund") registered in the name of the undersigned
at a Special Meeting of the Stockholders to be held at the offices of Forum
Financial Services, Inc., Two Portland Square, Portland, Maine 04101 on March
20, 1996 at 10:00 a.m. and at any adjournments thereof:
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
<PAGE>
<TABLE>
<CAPTION>
1. To elect Trustees. |_| FOR all nominees |_| WITHHOLD AUTHORITY |_| EXCEPTIONS
listed below for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee mark the "Exceptions" box and strike a line through the
nominee's name in the list below.)
Kenneth R. Cutler John Y. Keffer Dr. Hatten S. Yoder, Jr. Brooke Cutler Ashland Robert B. Watts, Jr.
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as independent certified public
accountants for the fiscal year of the Fund ending June 30, 1996. FOR |_| AGAINST |_| ABSTAIN |_|
3. To approve the proposed amendment to the investment advisory agreement between the
Trust and Cutler & Company, LLC to provide for an increase in the advisory fees
payable by the Fund . FOR |_| AGAINST |_| ABSTAIN |_|
4. To approve the proposal to eliminate the fundamental investment policy of the
Fund prohibiting "paying up" in connection with portfolio transactions. FOR |_| AGAINST |_| ABSTAIN |_|
5. To transact such other business as may properly come before the meeting.
</TABLE>
The shares of beneficial interest represented by this Proxy will be voted
in accordance with the specifications made above. If no specifications are made,
such shares will be voted FOR the election of all nominees for Trustee and FOR
all the other Proposals.
Address Change
and/or Comments Mark Here |_|
I (we) do |_| do not |_| expect to be present at the meeting.
PROXY DEPARTMENT
PORTLAND, MAINE 04101
Receipt acknowledged of the Proxy Statement
for a Special Meeting of Stockholders to be
held on March 20, 1996.
Date , 1996
___________________________________________
Signature
___________________________________________
Signature
Votes must be indicated
(x) in Black or Blue ink.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
THE CUTLER TRUST
Two Portland Square
Portland, Maine 04101
------------------------------
CUTLER EQUITY INCOME FUND
------------------------------
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints Max Berueffy
and David I. Goldstein (or if only one shall act then that one) proxies with the
power of substitution to vote all the shares of beneficial interest of Cutler
Equity Income Fund (the "Fund") registered in the name of the undersigned
at a Special Meeting of the Stockholders to be held at the offices of Forum
Financial Services, Inc., Two Portland Square, Portland, Maine 04101 on March
20, 1996 at 10:00 a.m. and at any adjournments thereof:
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
<PAGE>
<TABLE>
<CAPTION>
1. To elect Trustees. |_| FOR all nominees |_| WITHHOLD AUTHORITY |_| EXCEPTIONS
listed below for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee mark the "Exceptions" box and strike a line through the
nominee's name in the list below.)
Kenneth R. Cutler John Y. Keffer Dr. Hatten S. Yoder, Jr. Brooke Cutler Ashland Robert B. Watts, Jr.
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as independent certified public
accountants for the fiscal year of the Fund ending June 30, 1996. FOR |_| AGAINST |_| ABSTAIN |_|
3. To approve the proposed amendment to the investment advisory agreement between the
Trust and Cutler & Company, LLC to provide for an increase in the advisory fees
payable by the Fund . FOR |_| AGAINST |_| ABSTAIN |_|
4. To approve the proposal to eliminate the fundamental investment policy of the
Fund prohibiting "paying up" in connection with portfolio transactions. FOR |_| AGAINST |_| ABSTAIN |_|
5. To transact such other business as may properly come before the meeting.
</TABLE>
The shares of beneficial interest represented by this Proxy will be voted
in accordance with the specifications made above. If no specifications are made,
such shares will be voted FOR the election of all nominees for Trustee and FOR
all the other Proposals.
Address Change
and/or Comments Mark Here |_|
I (we) do |_| do not |_| expect to be present at the meeting.
PROXY DEPARTMENT
PORTLAND, MAINE 04101
Receipt acknowledged of the Proxy Statement
for a Special Meeting of Stockholders to be
held on March 20, 1996.
Date , 1996
___________________________________________
Signature
___________________________________________
Signature
Votes must be indicated
(x) in Black or Blue ink.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
THE CUTLER TRUST
Two Portland Square
Portland, Maine 04101
------------------------------
CUTLER GOVERNMENT SECURITIES FUND
------------------------------
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints Max Berueffy
and David I. Goldstein (or if only one shall act then that one) proxies with the
power of substitution to vote all the shares of beneficial interest of Cutler
Government Securities Fund (the "Fund") registered in the name of the
undersigned at a Special Meeting of the Stockholders to be held at the offices
of Forum Financial Services, Inc., Two Portland Square, Portland, Maine 04101 on
March 20, 1996 at 10:00 a.m. and at any adjournments thereof:
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
<PAGE>
<TABLE>
<CAPTION>
1. To elect Trustees. |_| FOR all nominees |_| WITHHOLD AUTHORITY |_| EXCEPTIONS
listed below for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee mark the "Exceptions" box and strike a line through the
nominee's name in the list below.)
Kenneth R. Cutler John Y. Keffer Dr. Hatten S. Yoder, Jr. Brooke Cutler Ashland Robert B. Watts, Jr.
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as independent certified public
accountants for the fiscal year of the Fund ending June 30, 1996. FOR |_| AGAINST |_| ABSTAIN |_|
4. To approve the proposal to eliminate the fundamental investment policy of the
Fund prohibiting "paying up" in connection with portfolio transactions. FOR |_| AGAINST |_| ABSTAIN |_|
5. To transact such other business as may properly come before the meeting.
</TABLE>
The shares of beneficial interest represented by this Proxy will be voted
in accordance with the specifications made above. If no specifications are made,
such shares will be voted FOR the election of all nominees for Trustee and FOR
all the other Proposals.
Address Change
and/or Comments Mark Here |_|
I (we) do |_| do not |_| expect to be present at the meeting.
PROXY DEPARTMENT
PORTLAND, MAINE 04101
Receipt acknowledged of the Proxy Statement
for a Special Meeting of Stockholders to be
held on March 20, 1996.
Date , 1996
___________________________________________
Signature
___________________________________________
Signature
Votes must be indicated
(x) in Black or Blue ink.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
