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THE CUTLER TRUST
The Cutler Trust (the "Trust") is an open-end, management investment company (a
mutual fund). The Cutler Equity Income Fund, Cutler Approved List Equity Fund
and Cutler Government Securities Fund (individually a "Fund" and collectively
the "Funds") are each diversified no-load portfolios of the Trust.
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<S> <C> <C> <C>
INVESTMENT ADVISER: ADMINISTRATOR: DISTRIBUTOR: SHAREHOLDER ACCOUNT
Cutler & Company, LLC Forum Administrative Forum Financial INFORMATION:
503 Airport Road Services, LLC Services, Inc. Forum Financial Corp.
Medford, Oregon 97504 Two Portland Square Two Portland Square Two Portland Square
(541) 770-9000 Portland, Maine 04101 Portland, Maine 04101 Portland, Maine 04101
(800) 228-8537 (800) 237-3113 (800) 237-3113 Toll free (888) CUTLER4
</TABLE>
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This Prospectus relates to
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
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The CUTLER EQUITY INCOME FUND seeks as generous a current income as is
consistent with diversification and long-term capital appreciation by investing
selectively within the Cutler & Company Approved List. The CUTLER APPROVED LIST
EQUITY FUND seeks current income and long-term capital appreciation by investing
in at least 90% of the common stocks within the Cutler & Company Approved List.
The CUTLER GOVERNMENT SECURITIES FUND seeks current income with safety of
principal by investing in debt instruments issued or guaranteed by the United
States Government, its agencies and instrumentalities. As the future is unknown,
obviously there can be no assurance that any Fund will achieve its investment
objectives.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission a Statement of Additional
Information dated September 15, 1996. It contains more detailed information
about the Trust and the Funds and is incorporated into this Prospectus by
reference. The Statement of Additional Information is available without charge
by contacting Cutler & Company or the Trust's Distributor at the addresses or
numbers listed above.
PLEASE READ THIS PROSPECTUS BEFORE INVESTING IN ANY OF THE FUNDS,
AND RETAIN IT FOR FUTURE REFERENCE.
It contains important information about the Funds, their investments
and the services available to its shareholders.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
September 15, 1996
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TABLE OF CONTENTS
Page
1. Expenses of Investing in the Trust. . . . . . . . . . . . . . . . . . . 3
2. Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Investment Objectives and Policies. . . . . . . . . . . . . . . . . . . 6
4 Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. Management of the Trust . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Purchases and Redemptions of Shares . . . . . . . . . . . . . . . . . .10
7. Dividends and Tax Matters . . . . . . . . . . . . . . . . . . . . . . .13
8. Performance Information . . . . . . . . . . . . . . . . . . . . . . . .14
9. The Trust and Its Shares. . . . . . . . . . . . . . . . . . . . . . . .14
1. EXPENSES OF INVESTING IN THE TRUST
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in a Fund will bear directly or indirectly.
There are no transaction charges associated with purchases or redemptions of
Fund shares.
Cutler
Cutler Approved Cutler
Equity List Government
ANNUAL FUND OPERATING EXPENSES(1) Income Equity Securities
(as a percentage of average net assets) Fund Fund Fund
--------------------------------------- ---- ---- ----
Investment Advisory Fee (after fee
waivers) 0.75% 0.73% 0.00%
Other Expenses (after expense
reimbursements) 0.44% 0.52% 1.00%
---- ---- ----
Total Annual Fund Operating Expenses 1.19% 1.25% 1.00%
(1) The expenses set forth in the table are the expenses incurred by the Funds
for the Trust's most recent fiscal year ended June 30, 1996, restated to
reflect a new advisory fee for the Equity Income Fund and the Approved List
Equity Fund approved by shareholders on March 20, 1996 and effective May 1,
1996. Prior to May 1, 1996, the advisory fee for Cutler Equity and Cutler
Approved List Equity Fund was 0.50%. Absent expense reimbursements and fee
waivers, the restated expenses of the Approved List Equity Fund and
Government Securities Fund would have been: Investment Advisory Fees,
0.75%, and 0.25%, respectively; Other Expenses, 0.52% and 1.18%,
respectively; and Total Fund Operating Expenses, 1.27%, and 1.43%,
respectively.
For a further description of the various expenses incurred in the operation of
the Fund, see "Management of the Trust - Expenses."
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EXAMPLE
You 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:
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Cutler Equity Income Fund $12 $38 $65 $145
Cutler Approved List Equity Fund $13 $40 $69 $151
Cutler Government Securities Fund $10 $32 $55 $123
The example is based on the expenses listed in the table above 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.
2. FINANCIAL HIGHLIGHTS
The following tables represent selected data for a single outstanding share of
each Fund for the periods shown. Information for the periods was audited by
Deloitte & Touche LLP, independent auditors. The Funds' financial statements for
the fiscal year ended June 30, 1996 and independent auditors' report thereon are
contained in the Annual Report of the Funds and are incorporated by reference
into the Statement of Additional Information. Further information about each
Fund's performance is contained in the Funds' Annual Report to shareholders,
which may be obtained from the Trust without charge.
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<CAPTION>
CUTLER EQUITY INCOME FUND CUTLER APPROVED LIST EQUITY FUND
------------------------- --------------------------------
Years Ended June 30, 12/30/92 Years Ended June 30, 12/30/92
to to
1996 1995 1994 6/30/93 1996 1995 1994 6/30/93
---- ---- ---- ------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $10.96 $9.56 $9.95 $10.00 $11.71 $9.78 $10.09 $10.00
Net investment income 0.35 0.36(a) 0.27 0.10 0.21 0.24(a) 0.21 0.08
Net realized and unrealized
gain (loss) on securities 2.13 1.40 (0.40) (0.05) 2.47 1.92 (0.31) 0.09
Dividends from net
investment income (0.35) (0.34) (0.26) (0.10) (0.21) (0.23) (0.21) (0.08)
Distributions from net (0.14) (0.02) 0.00 0.00 0.00 0.00 0.00 0.00
realized gains --------- ---------- ------- --------- --------- --------- --------- ---------
ENDING NET ASSET VALUE PER SHARE
$12.95 $10.96 $9.56 $9.95 $14.18 $11.71 $9.78 $10.09
--------- ---------- ------- --------- --------- --------- --------- ---------
--------- ---------- ------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses(b) .98% 0.97% 1.00% 0.98% (c) 1.05% 1.00% 1.00% 0.98% (c)
Net investment income 2.81% 3.49% 3.49% 2.23% (c) 1.65% 2.20% 2.43% 2.27% (c)
TOTAL RETURN 22.93% 18.63% (1.37%) 0.90% (c) 23.01% 22.33% (1.07%) 3.31% (c)
PORTFOLIO TURNOVER RATE 57.08% 43.37% 42.83% 32.04% 8.97% 23.42% 22.27% 10.88%
AVERAGE BROKERAGE COMMISSION RATE(d) $0.0525 --- --- --- $0.0569 --- --- ---
NET ASSETS AT THE END OF PERIOD
(000's omitted) $46,285 $41,470 $19,706 $2,853 $30,248 $21,890 $12,620 $3,618
(a) Calculated using the weighted average number of shares outstanding.
(b) During the period, various fees and expenses were waived and reimbursed, respectively. Had such waivers and reimbursements not
occurred, the ratio of expenses to average net assets would have been:
0.98% 0.97% 1.45% 3.69% (c) 1.13% 1.23% 1.78% 4.53% (c)
(c) Annualized.
(d) Amount represents the average commission per share, paid to brokers, on the purchase and sale of portfolio securities.
</TABLE>
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<TABLE>
<CAPTION>
CUTLER GOVERNMENT SECURITIES FUND
---------------------------------
Year Ended June 30, 12/30/92
to
1996 1995 1994 6/30/93
---- ---- ---- --------
<S> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $10.10 $9.81 $10.37 $10.00
Net investment income 0.55 0.46(a) 0.46 0.23
Net realized and unrealized gain(loss) on securities (0.29) 0.29 (0.56) 0.37
Dividends from net investment income (0.55) (0.46) (0.46) (0.23)
--------- -------- --------- ---------
ENDING NET ASSET VALUE PER SHARE $9.81 $10.10 $9.81 $10.37
--------- -------- --------- ---------
--------- -------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses (b) 0.75% 0.75% 0.74% 0.53% (c)
Net investment income 5.52% 4.65% 4.46% 4.14% (c)
TOTAL RETURN 2.60% 7.83% (1.03%) 12.07% (c)
PORTFOLIO TURNOVER RATE 102.70% 0.00% 13.51% 0.00%
NET ASSETS AT THE END OF PERIOD (000's omitted) $6,380 $6,796 $5,534 $696
(a) Calculated using the weighted average number of shares outstanding.
(b) During the period, various fees and expenses were waived and reimbursed, respectively. Had such waivers and reimbursements not
occurred, the ratio of expenses to average net assets would have been:
1.43% 1.47% 1.96% 2.34% (c)
(c) Annualized.
</TABLE>
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES
The investment objective of the CUTLER EQUITY INCOME FUND is to seek as generous
a current income as is consistent with diversification and long-term capital
appreciation by investing within the Cutler & Company Approved List (the
"Approved List").
The investment objective of the CUTLER APPROVED LIST EQUITY FUND is to seek
current income and long-term capital appreciation by investing in the entire
list of common stocks within the Approved List.
The investment objective of the CUTLER GOVERNMENT SECURITIES FUND is to seek
current income with safety of principal by investing in debt instruments issued
or guaranteed by the United States Government or by any of its agencies and
instrumentalities ("U.S. Government Securities").
As the future is unknown, obviously there can be no assurance that any of these
objectives will be achieved.
INVESTMENT POLICIES
CUTLER EQUITY INCOME FUND AND CUTLER APPROVED LIST EQUITY FUND. The Cutler
Equity Income Fund and Cutler Approved List Equity Fund (the "Equity Funds")
will invest only in the equity securities of the companies on Cutler & Company's
Approved List. Each company on the Approved List is listed on the New York Stock
Exchange and meets the following specific criteria. Each of the companies or its
predecessor (i) paid dividends continuously for at least 20 years, without any
reduction in the rate; (ii) has commercial paper rated Prime-1 and senior debt
rated at least A by Moody's Investors Service, Inc. or similarly rated by
another rating agency, or if no ratings are published, determined to be of
similar quality by Cutler & Company; (iii) has annual sales, assets and market
value of at least $1 billion; and (iv) in Cutler & Company's opinion has wide
ownership among major institutional investors and very liquid markets. In
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addition, each company is subjected to such other analysis as may appear prudent
including but not limited to the company's historical yield patterns, payout
ratios and debt coverage ratios. The current Approved List and its entire
history are available to any shareholder by contacting Cutler & Company or the
Trust.
Trades by the Equity Funds normally are made by Cutler & Company primarily to
maintain quality (adhering to the Approved List) and to rebalance the portfolio
to equalize positions; the Cutler Equity Income Fund will also trade within the
Approved List to improve its yield. The Equity Funds will remain as fully
invested as possible, considering cash flow and possible transactional delays,
and may invest their cash holdings in high-quality, short-term money market
instruments as described below. The Equity Funds will be rebalanced periodically
to maintain holdings of approximately equal size in each issue held by those
Funds with such rebalancing based either on cost or market. Rebalancing
frequencies, however, may vary resulting in minor "tilts" (a slightly heavier
weighting on some issues temporarily). Whereas the Cutler Approved List Equity
Fund holds at least 90% of common stocks within the Approved List, the Cutler
Equity Income Fund will hold approximately 20 to 30 of those stocks. Under
normal conditions, each Equity Fund will invest at least 65% of its total assets
in the income producing equity securities in the Approved List.
CUTLER GOVERNMENT SECURITIES FUND. The Cutler Government Securities Fund will
invest in U.S. Government Securities with such diversification as to provide a
regular cash flow of both principal and interest payments, in order to achieve
an average maturity of not less than three nor more than ten years. The U.S.
Government Securities in which the Cutler Government Securities Fund may invest
include direct obligations of the U.S. Treasury and obligations issued or
guaranteed by U.S. Government agencies and instrumentalities backed by the full
faith and credit of the U.S. Government, such as those issued by the Government
National Mortgage Association. U.S. Government Securities also include
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association. There is no
guarantee that the U.S. Government will support securities not backed by its
full faith and credit. Under normal conditions, the Cutler Government Securities
Fund will invest at least 65% of its total assets in U.S. Government Securities.
U.S. Government Securities have historically involved little risk of loss of
principal if held to maturity. Nonetheless, the market value of these securities
may vary due to fluctuations in interest rates or the issuer's creditworthiness.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates. In
other words, a decline in interest rates produces an increase in market value,
whereas an increase in interest rates produces a decrease in market value.
Moreover, the longer the remaining maturity of a security, the greater will be
the effect of interest rate changes on the market value of that security.
The Cutler Government Securities Fund may invest up to 40% of its total assets
in mortgage-related U.S. Government Securities. These securities represent an
interest in, or are secured by and payable from, a pool of mortgages (which may
have fixed or adjustable rates) made by lenders such as commercial banks,
savings associations and mortgage bankers and brokers. Interests in
mortgage-related securities differ from other forms of debt securities that
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. In contrast,
mortgage-related securities provide monthly payments that consist of interest
and, in most cases, principal. In effect, these payments are a "pass-through" of
the monthly payments made by the individual borrowers on their mortgage loans,
net of any fees paid to the issuer or guarantor of the securities or a mortgage
loan servicer. Additional payments to holders of these securities are caused by
prepayments resulting from the sale or foreclosure of the underlying residential
property or refinancing of the underlying loans.
<PAGE>
Because prepayment rates of individual pools of mortgage loans vary widely, it
is not possible to predict accurately the average life of a particular security.
Prepayments of the principal of underlying mortgage loans may shorten the
effective maturities of mortgage-related securities. Although mortgage-related
securities are issued with stated maturities up to forty years, unscheduled or
early payments of principal and interest on the underlying mortgages may shorten
considerably the effective maturities. Mortgage-related securities may have
varying assumptions for average life. The volume of prepayments of principal on
a pool of mortgages underlying a particular security will influence the yield of
that security, and the principal returned to the Fund may be reinvested in
instruments whose yield may be higher or lower than that which might have been
obtained had the prepayments not occurred. When interest rates are declining,
prepayments usually increase, with the result that reinvestment of principal
prepayments will be at a lower rate than the rate applicable to the original
mortgage-related security.
Mortgage-related securities may have interest rates that are adjusted
periodically according to a specified formula (usually with reference to some
interest rate index or market interest rate). The interest paid on these
securities is a function primarily of the indices or market rates upon which the
interest rate adjustments are based. Similar to fixed rate debt instruments,
adjustable rate securities are subject to changes in value based on changes in
market interest rates or changes in the issuer's creditworthiness. Some
adjustable rate mortgage-related securities (or the underlying mortgage loans)
are subject to caps or floors that limit the maximum change in interest rate
during a specified period or over the life of the security.
OTHER POLICIES. Unless approved by the holders of a majority of a Fund's
outstanding voting securities, a Fund may not change its investment objective,
borrow money, invest in the securities of foreign issuers or purchase securities
through a foreign market, invest in options or futures contracts, sell
securities short, lend its securities, invest in repurchase agreements or engage
in certain other activities, as more fully described in the Fund's Statement of
Additional Information. Except as otherwise indicated, investment policies of a
Fund may be changed by the Trust's Board of Trustees (the "Board") without
shareholder approval. Each Fund's net asset value will fluctuate.
For temporary defensive purposes, each Fund may invest in cash or in the
following types of high quality, short-term money market instruments: (i)
certificates of deposit and interest-bearing savings deposits of domestic
commercial banks, (ii) money market mutual funds and (iii) short-term U.S.
Government Securities.
The frequency of each Fund's portfolio transactions will vary from year to year
and is driven by the investment policies of each Fund as described above. For
more details about the portfolio turnover rate of each Fund, see "Financial
Highlights".
4. RISK CONSIDERATIONS
CUTLER EQUITY INCOME FUND AND CUTLER APPROVED LIST EQUITY FUND. The Equity Funds
invest only in the equity securities of the companies on Cutler & Company's
Approved List. Over time, stocks have shown greater growth potential than other
types of securities. Although the companies on the Approved List meet specific
criteria for stability, credit quality and the prospect of good earnings, their
stock prices can fluctuate dramatically in response to company, market, or
economic news. These Funds alone do not constitute a balanced investment plan.
When you sell your fund shares, they may be worth more or less than what you
paid for them.
CUTLER GOVERNMENT SECURITIES FUND. The Cutler Government Securities Fund will
invest in U.S. Government Securities and high-grade corporate debt with such
diversification as to provide a regular cash
<PAGE>
flow of both principal and interest payments. Because the securities in which
the Fund invests may have maturities of up to ten years, the prices of these
securities and the income they generate will vary from day to day, generally
reflecting changes in interest rates, market conditions, and other political and
economic news. By itself, the Government Securities Fund does not constitute a
balanced investment plan. When you sell your shares they may be worth more or
less than what you paid for them.
5. MANAGEMENT OF THE TRUST
The business of the Trust is managed under the direction of the Board of
Trustees. The Board formulates the general policies of the Funds and generally
meets quarterly to review the results of the Funds, monitor investment
activities and practices and discuss other matters affecting the Funds and the
Trust.
INVESTMENT ADVISER
Cutler & Company serves as investment adviser to each Fund pursuant to an
Investment Advisory Agreement with the Trust. Subject to the general control of
the Board, Cutler & Company makes and executes investment decisions for each
Fund. For its services, Cutler & Company receives an advisory fee from each
Equity Fund at an annual rate of 0.75% of each Fund's average daily net assets
and from the Government Securities Fund at an annual rate of 0.25% of that
Fund's average daily net assets. Cutler & Company has agreed to waive its fees
or reimburse expenses of the Funds to the extent the Approved List or Income
Equity Fund's expenses exceed 1.25% of its annual average daily net assets or to
the extent the Government Securities Fund's expenses exceed 1.00% of its average
daily net assets until December 31, 1997.
Cutler & Company 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 the date of this
Prospectus, Cutler & Company provided investment management services with
respect to assets of approximately $744 million, including the Funds.
Mr. Kenneth R. Cutler, who is primarily responsible for investment decisions for
the Equity Funds, entered the investment business in 1945; between 1953 and 1962
he was principal operating and investment officer of two mutual funds; between
1962 and 1977 he held various investment positions; in 1977 he founded Cutler &
Company, Inc. Mr. Cutler is the Chairman and the Vice President of the Trust.
Mr. William Gossard, who is primarily responsible for investment decisions for
the Cutler Government Securities Fund, joined Cutler & Company in 1995. Prior
thereto, he was with the trust department of BancOne and predecessor American
Fletcher National Bank. Mr. Gossard entered the investment business in 1968 and
has managed fixed income securities since that time.
Effective December 31, 1995, Cutler & Company, Inc. reorganized as a limited
liability company, Cutler & Company, LLC. As of the date of this Prospectus,
Mrs. Brooke Cutler Ashland (Kenneth Cutler's daughter) owned 59% and Geoffrey W.
Cutler (Kenneth Cutler's son) owned 17% of the outstanding limited liability
company interests in Cutler & Company, with the balance held by other
individuals.
MANAGEMENT AND DISTRIBUTION
MANAGER. Pursuant to a management agreement with the Trust, Forum Administrative
Services, LLC ("Forum") located at Two Portland Square, Portland, Maine 04101
supervises the overall management of
<PAGE>
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. For its management services, Forum
receives a fee from the Trust with respect to each Fund at an annual rate of
0.10% of each Fund's average daily net assets.
DISTRIBUTOR. Forum Financial Services, Inc. ("FFSI"), serves as the Trust's
distributor and, as agent of the Trust, offers for sale shares of the Funds.
FFSI, whose address is Two Portland Square, Portland, Maine 04101, is a
registered broker-dealer and investment adviser and is a member of the National
Association of Securities Dealers, Inc.
SHAREHOLDER SERVICES
TRANSFER AGENT. Shareholder inquiries and communications concerning a Fund may
be directed to Forum Financial Corp. ("FFC"), Two Portland Square, Portland,
Maine 04101, which acts as the Funds' transfer agent and dividend disbursing
agent. FFC maintains for each shareholder of record, an account (unless such
accounts are maintained by sub-transfer agents or processing agents) to which
all shares purchased are credited, together with any distributions that are
reinvested in additional shares. FFC also performs other transfer agency and
shareholder-related functions.
The Trust has adopted a shareholder services plan providing that the Trust may
obtain the services of the Adviser and other qualified financial institutions to
act as shareholder servicing agents for their customers. Under this plan, the
Trust has authorized FFC to enter into agreements pursuant to which the
shareholder servicing agents perform certain shareholder services not otherwise
provided by FFC. For these services, the Trust may pay the shareholder servicing
agent a fee of up to 0.25% of the average daily net assets of the shares of a
Fund owned by investors for which the shareholder servicing agent maintains a
servicing relationship.
Among the services that may be provided by FFC or by shareholder servicing
agents are: answering customer inquiries regarding account matters; assisting
shareholders in designating and changing various account options; aggregating
and processing purchase and redemption orders and transmitting and receiving
funds for shareholder orders; transmitting, on behalf of the Trust, proxy
statements, prospectuses and shareholder reports to shareholders and tabulating
proxies; processing dividend payments and providing subaccounting services for
Fund shares held beneficially; and providing such other services as the Trust or
a shareholder may request.
ACCOUNTING SERVICES. FFC also performs portfolio accounting services for the
Funds, including determination of each Fund's net asset value per share.
FORUM FINANCIAL GROUP
Forum, FFSI and FFC are members of the Forum Financial Group ("FFG") of
companies which together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, FFG
provided services to registered investment companies and collective investment
funds with assets of approximately $16 billion. Forum, FFSI and FFC are
controlled by John Y. Keffer, a trustee and the President of the Trust.
EXPENSES
The Adviser has agreed to reimburse the Trust for certain of the Funds'
operating expenses (exclusive of interest, taxes, brokerage fees and
organization expenses, all to the extent permitted by applicable state
<PAGE>
law or regulation) which in any year exceed the limits prescribed by any state
in which the Funds' shares are qualified for sale. The Trust may elect not to
qualify its shares for sale in every state. For the purpose of this obligation
to reimburse expenses, a Fund's annual expenses are estimated and accrued daily,
and any appropriate estimated payments will be made by the Adviser monthly.
Subject to the above obligations, the Trust is obligated to pay all of the
Trust's other expenses.
6. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL
You may purchase or redeem shares of the Funds without a sales charge at their
net asset value on any weekday between 9:00 a.m. and 6:00 p.m. Eastern Time
except New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas ("Fund Business Day"). The net asset
values of the Funds are calculated at 4:00 p.m., Eastern Time on each Fund
Business Day. SEE "Determination of Net Asset Value."
PURCHASES. Fund shares are issued at a price equal to the net asset value per
share next determined after an order in proper form is received and accepted.
The Trust reserves the right to reject any subscription for the purchase of its
shares and may, in the Adviser's discretion, accept portfolio securities in lieu
of cash as payment for Fund shares. Fund shares become entitled to receive
dividends on the day after the shares are issued to an investor.
REDEMPTIONS. There is no redemption charge, no minimum period of investment, and
no restriction on frequency of redemptions. Shares are redeemed at a price equal
to the net asset value per share next determined following acceptance by FFC of
the redemption order in proper form (and any supporting documentation which FFC
may require). Shares redeemed are not entitled to participate in dividends
declared after the day on which a redemption becomes effective.
The date of payment of redemption proceeds may not be postponed for more than
seven days after shares are tendered to FFC for redemption by a shareholder of
record. The right of redemption may not be suspended except in accordance with
the provisions of the Investment Company Act.
MINIMUM INVESTMENTS. There is a $25,000 ($2,000 for IRA's) minimum for initial
investments in the Fund. There is no minimum for subsequent investments. The
Trust and the Administrator each reserve the right to waive the minimum
investment requirement.
ACCOUNT STATEMENTS. Shareholders will receive from the Trust periodic statements
listing account activity during the statement period.
SHARE CERTIFICATES. FFC maintains a shareholder account for each shareholder.
The Trust does not issue share certificates.
PURCHASE AND REDEMPTION PROCEDURES
You may obtain the account application necessary to open an account by calling
toll free 888-CUTLER4 or by writing The Cutler Trust at P.O. Box 446, Portland,
Maine 04112.
<PAGE>
INITIAL PURCHASE OF SHARES
MAIL. Investors may send a check made payable to "The Cutler Trust" with a
completed account application to:
The Cutler Trust
P.O. Box 446
Portland, Maine 04112
Checks are accepted at full value subject to collection. All checks must be
drawn on a United States bank. If a check is returned unpaid, the purchase will
be canceled, and the investor will be liable for any resulting losses or fees
incurred by the Fund, the Adviser or FFC.
BANK WIRE. To make an initial investment in a Fund using the fedwire system for
transmittal of money between banks, you should first telephone FFC at 207-879-
0001 or toll free at 888-CUTLER4 to obtain an account number. You should then
instruct a member commercial bank to wire your money immediately to:
The First National Bank of Boston
Boston, Massachusetts
ABA # 011000390
For Credit to: Forum Financial Corp.
Account # 541-54171
The Cutler Trust: (Name of Fund)
(Investor's Name)
(Investor's Account Number)
You should then promptly complete and mail the account application.
If you plan to wire funds, you should instruct your bank early in the day so the
wire transfer can be accomplished the same day. Your bank may assess charges for
transmitting the money by bank wire and for use of Federal Funds. The Trust does
not charge investors for the receipt of wire transfers. Payment in the form of a
bank wire received prior to 4:00 p.m., Eastern Time on a Fund Business Day will
be treated as a Federal Funds payment received before that time.
THROUGH FINANCIAL INSTITUTIONS. You may purchase and redeem shares of the Funds
through brokers, and other financial institutions that have entered into sales
agreements with FFSI. These institutions may charge a fee for their services and
are responsible for promptly transmitting purchase, redemption and other
requests to the Trust. The Trust is not responsible for the failure of any
institution to promptly forward these requests.
If you purchase shares through a broker-dealer or financial institution, your
purchase will be subject to its procedures, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. You should acquaint yourself with the institution's procedures and
read this Prospectus in conjunction with any materials and information provided
by your institution. If you purchase Fund shares in this manner, you may or may
not be the shareholder of record and, subject to your institution's and the
Fund's procedures, may have Fund shares transferred into your name. There is
typically a one to five day settlement period for purchases and redemptions
through broker-dealers.
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SUBSEQUENT PURCHASES OF SHARES
You may purchase additional shares of a Fund by mailing a check or sending a
bank wire as indicated above. Shareholders using the wire system for subsequent
purchases should first telephone FFC at 207-879-0001 or toll free at 888-CUTLER4
to notify it of the wire transfer. All payments should clearly indicate the
shareholder's name and account number.
REDEMPTION OF SHARES
Redemption requests will not be effected unless any check used for investment
has been cleared by the shareholder's bank, which may take up to 15 calendar
days. This delay may be avoided by investing in a Fund through wire transfers.
If FFC receives a redemption request by 4:00 p.m. Eastern Time, the redemption
proceeds normally are paid on the next business day, but in no event later than
seven days after redemption, by check mailed to the shareholder of record at his
or her record address. Shareholders that wish to redeem shares by telephone or
by bank wire must elect these options by properly completing the appropriate
sections of their account application. These privileges may be modified or
terminated by the Trust at any time.
Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account with an aggregate net asset value of less than $10,000 ($2,000
for IRAs). The Fund will not redeem accounts that fall below these amounts
solely as a result of a reduction in net asset value of the Fund's shares.
REDEMPTION BY MAIL. You may redeem all or any number of your shares by sending
a written request to FFC at the address above. You must sign all written
requests for redemption and provide a signature guarantee. SEE "Other
Redemption Matters."
TELEPHONE REDEMPTIONS. A shareholder that has elected telephone redemption
privileges may make a telephone redemption request by calling FFC at 207-879-
0001 or toll free at 888-CUTLER4. In response to the telephone redemption
instruction, the Fund will mail a check to the shareholder's record address. If
the shareholder has elected wire redemption privileges, FFC may wire the
proceeds as set forth below under "Bank Wire Redemptions."
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, the Trust and FFC will employ reasonable procedures to confirm that
such instructions are genuine. Shareholders must provide FFC with the
shareholder's account number, the exact name in which the shares are registered
and some additional form of identification such as a password. The Trust or FFC
may employ other procedures such as recording certain transactions. If such
procedures are followed, neither FFC nor the Trust will be liable for any losses
due to unauthorized or fraudulent redemption requests. Shareholders should
verify the accuracy of telephone instructions immediately upon receipt of
confirmation statements.
During times of drastic economic or market changes, it may be difficult to make
a redemption by telephone. If you cannot reach FFC by telephone, you may mail or
hand-deliver your request to FFC at Two Portland Square, Portland, Maine 04101.
OTHER REDEMPTION MATTERS. A signature guarantee is required for any written
redemption request and for any endorsement on a stock certificate. In addition,
a signature guarantee also is required for instructions to change a
shareholder's record name or address, designated bank account for wire
redemptions or automatic
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investment or redemption, dividend election, telephone redemption or exchange
option election or any other option election in connection with the
shareholder's account. Signature guarantees may be provided by any eligible
institution, including a bank, a broker, a dealer, a national securities
exchange, a credit union, or a savings association that is authorized to
guarantee signatures, acceptable to the Transfer Agent. Whenever a signature
guarantee is required, the signature of each person required to sign for the
account must be guaranteed. Such guarantee must have "Signature Guaranteed"
stamped under each signature and must be signed by the eligible institution.
The Transfer Agent will deem a shareholder's account "lost" if correspondence to
the shareholder's address of record is returned for six months, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost all distributions on the account will be reinvested in additional
shares of the Fund. In addition, the amount of any outstanding (unpaid for six
months or more) checks for distributions that have been returned to the Transfer
Agent will be reinvested and the checks will be canceled.
BANK WIRE REDEMPTIONS. If you have elected wire redemption privileges, the Fund
will, upon request, transmit the proceeds of any redemption greater than $10,000
by Federal Funds wire to a bank account designated on your account application.
If you wish to request bank wire redemptions by telephone, you must also elect
telephone redemption privileges.
EXCHANGE PRIVILEGE
Shareholders of a Fund may exchange their shares for shares of any other Fund or
for shares of the Daily Assets Treasury Fund, a money market fund managed by
Forum and a separate series of Forum Funds. You may receive a copy of the
Daily Assets Treasury Fund's prospectus by writing FFC or calling toll free at
888-CUTLER4. No sales charges are imposed on exchanges between a Fund and the
Daily Assets Treasury Fund.
EXCHANGE PROCEDURES. You may request an exchange by writing to FFC at Two
Portland Square, Portland, Maine 04101. The minimum amount for an exchange to
open an account in the Daily Assets Treasury Fund is $2,500. Exchanges may only
be made between identically registered accounts. You do not need to complete a
new account application, unless you are requesting different shareholder
privileges for the new account. The Trust reserves the right to reject any
exchange request and may modify or terminate the exchange privilege at any time.
There is no charge for the exchange privilege or limitation as to frequency of
exchanges.
An exchange of shares in the Fund pursuant to the exchange privilege is, in
effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes. The exchange privilege is available to
shareholders residing in any state in which shares of the Daily Assets Treasury
Fund may legally be sold.
TELEPHONE EXCHANGES. If you have elected telephone exchange privileges, you may
request an exchange by calling FFC toll free at 888-CUTLER4. Neither the Trust
nor FFC are responsible for the authenticity of telephone instructions or
losses, if any, resulting from unauthorized telephone exchange requests. The
Trust employs reasonable procedures to insure that telephone orders are genuine
and, if it does not, may be liable for any losses due to unauthorized
transactions. Shareholders should verify the accuracy of telephone instructions
immediately upon receipt of confirmation statements.
<PAGE>
RETIREMENT ACCOUNTS
The Fund may be a suitable investment for part or all of the assets held in
retirement such as IRAs, SEP-IRAs, Keoghs, or other types of retirement
accounts. The minimum initial investment for investors opening a retirement
account or investing through an IRA is $2,000. There is no minimum for
subsequent investments.
For information on investing in the Funds for retirement, and retirement account
plans, call FFC toll free at 888-CUTLER4, or write to Two Portland Square,
Portland, Maine 04101.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of the close
of regular trading on the New York Stock Exchange (currently 4:00 P.M., Eastern
Time) on each Fund Business Day by dividing the value of the Fund's net assets
(the value of its portfolio securities and other assets less its liabilities) by
the number of the Fund's shares outstanding at the time the determination is
made. Securities owned by a Fund for which market quotations are readily
available are valued at current market value, or, in their absence, at fair
value as determined by the Board.
7. DIVIDENDS AND TAX MATTERS
DIVIDENDS
Dividends of each Equity Fund's net investment income are declared and paid
quarterly. Dividends of the Cutler Government Securities Fund's net investment
income are declared daily and paid monthly. Distributions of capital gain, if
any, realized by each Fund are made annually. Fund shares become entitled to
receive dividends and distributions on the day after the shares are issued.
Shares redeemed are not entitled to receive dividends or distributions declared
after the day on which the redemption becomes effective.
Shareholders may choose either to have dividends and distributions reinvested in
shares of the Fund or received in cash. All dividends and distributions are
treated in the same manner for Federal income tax purposes whether received in
cash or reinvested in shares of the Fund.
If reinvested, income dividends generally are invested at the Fund's net asset
value as of the last day of the quarter or month with respect to which the
dividends are paid. Capital gain distributions are reinvested at the net asset
value of the Fund on the record date for the distribution. Unless a shareholder
elects otherwise, all dividends and distributions are reinvested.
TAXES
Each Fund intends to qualify and continue to qualify for each fiscal year to be
taxed as a "regulated investment company" under the Internal Revenue Code of
1986. As such, and because the Funds intend to distribute all of their net
investment income and net capital gain each year, the Funds should each avoid
all Federal income and excise taxes.
Dividends paid by a Fund out of its net investment income (including any
realized net short-term capital gain) are taxable to shareholders as ordinary
income. Distributions by a Fund of net capital gain which the Fund designates as
"capital gain dividends" are taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder may have held his shares in the
Fund. If Fund shares are sold at a loss
<PAGE>
after being held for six months or less, the loss will be treated as long-term
capital loss to the extent of any capital gain distribution received on those
shares.
Any dividend or distribution from an Equity Fund received by a shareholder
reduces the net asset value of the shareholder's shares by the amount of the
dividend or distribution. To the extent that the income or gain comprising a
dividend or distribution was accrued by the Fund before the shareholder
purchased the shares, the dividend or distribution would be in effect a return
of capital to that shareholder. All dividends and distributions (including those
that operate as a return of capital), however, are taxable as described above to
the shareholder receiving them regardless of the length of time the shareholder
may have held the shares prior to the dividend or distribution.
It is expected that a portion of each Equity Fund's dividends to shareholders
will qualify for the dividends received deduction for corporations.
Each Fund may be required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gain distributions and redemption
proceeds) paid to individuals and certain other non-corporate shareholders.
Withholding is not required if a shareholder certifies that the shareholder's
social security or tax identification number provided to the Fund is correct and
that the shareholder is not subject to backup withholding for prior
under-reporting to the Internal Revenue Service.
Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by the Funds will
be mailed to shareholders shortly after the close of each year. The foregoing is
only a summary of some of the important Federal tax considerations generally
affecting the Funds and their shareholders. There may be other Federal, state or
local tax considerations applicable to a particular investor. Prospective
investors are urged to consult their tax advisers.
8. PERFORMANCE INFORMATION
The Funds may quote their performance in advertising in terms of yield or total
return. Both types are based on historical results and are not intended to
indicate future performance. A Fund's yield is a way of showing the rate of
income earned by the Fund as a percentage of the Fund's share price. Yield is
calculated by dividing the net investment income of a Fund for a stated period
by the average number of shares entitled to receive dividends and expressing the
result as an annualized percentage rate based on the Fund's share price at the
end of the period. Total Return refers to the average annual compounded rates of
return over some representative period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment, after giving effect to the reinvestment of all dividends and
distributions and deductions of expenses, if any, during the period. Because
average annual returns tend to smooth out variations in a Fund's returns,
shareholders should recognize that they are not the same as actual year-by-year
results.
The Funds' advertisements may reference ratings and rankings among similar funds
by independent evaluators such as Lipper Analytical Services, Inc. or
CDA/Wiesenberger. In addition, the performance of a Fund may be compared to
recognized indices of market performance. The comparative material found in the
Funds' advertisements, sales literature or reports to shareholders may contain
performance ratings. These are not to be considered representative or indicative
of future performance.
<PAGE>
9. THE TRUST AND ITS SHARES
The Trust was organized as a Delaware business trust on October 2, 1992. The
trustees of the Trust have the authority to issue an unlimited number of shares
of beneficial interest of separate series, with no par value per share. Except
for the Funds, no other series of shares are currently authorized. The Board
may, without shareholder approval, issue the shares in an unlimited number of
separate series and may in the future divide existing series into two or more
classes.
Shares issued by the Trust have no conversion, subscription or preemptive
rights. Shareholders of a Fund have equal and exclusive rights to dividends and
distributions declared by that Fund and to the net assets of that Fund upon
liquidation or dissolution. Voting rights are not cumulative and the shares of
each series (the Funds) of the Trust will be voted separately except when an
aggregate vote is required by law. The Trust does not hold annual meetings of
shareholders, and it is anticipated that shareholder meetings will be held only
when specifically required by law. Shareholders have available certain
procedures for the removal of trustees. The Trust will call a shareholder
meeting for the purpose of removing a trustee when 10% of the outstanding shares
call for a meeting and will assist in certain shareholder communications.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT OF
ADDITIONAL INFORMATION AND THE FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION
WITH THE OFFERING OF THE FUNDS' SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO
ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
Account Information and
Shareholder Servicing: Distribution:
Forum Financial Corp. Forum Financial Services, Inc.
P.O. Box 446 Two Portland Square
Portland, Maine 04112 Portland, Maine 04101
(207) 879-0001 (800) 237-3113
