<PAGE>
ANNUAL REPORT JUNE 30, 1996
<TABLE>
<S> <C> <C>
CUTLER EQUITY INCOME FUND Cutler & Company LLC Forum Financial
CUTLER APPROVED LIST EQUITY FUND 503 Airport Road Corp.
CUTLER GOVERNMENT SECURITIES FUND Medford, Oregon 97504 Two Portland Square
Portland, Maine
04101
</TABLE>
To the Cutler Trust Shareholders:
The fiscal year ended June 30, 1996, was a good one for equities. A general
flight to quality favored our high quality holdings over technology and other
consolidating groups. The Cutler Equity Income and the Cutler Approved List
Funds were both profitable in every quarter, with the quarter ending in December
particularly strong. For the fiscal year ending June 30, 1996, the Cutler Equity
Income Fund had a total return of 22.93% and the Cutler Approved List Fund had a
total return of 23.01%. By comparison, Standard & Poor's 500 Index had a total
return of 25.98%.
The year was a difficult one for bonds generally. The Cutler Government
Securities Fund total return was 2.60% compared to 4.89% for the Merrill Lynch
1-10 Year Intermediate Term Treasury Index.
During the March quarter, the Board was enlarged to five trustees, the Funds
were opened to public participation, and we moved to implement the new prudence
standard of "total return" by broadening industrial diversification within the
discipline of our traditional quality criteria.
All of us appreciate your support and loyalty. As always, if you have any
questions, please let us help.
Sincerely,
[SIGNATURE]
Kenneth R. Cutler
Chairman, The Cutler Trust
1
<PAGE>
THE CUTLER TRUST
INVESTMENT ADVISOR'S REPORT JUNE 30, 1996
During the past 18 months, the rising stock and bond markets increased
investors' wealth by about $2.4 TRILLION. Those who are part of the game feel
rich and, increasingly, those who are not, want in. Certain imbalances obviously
result.
Mutual funds are proliferating, with a surprising number of these funds
channeling a torrent of new money into newer, smaller and speculative issues.
The newer players tend to be numbers-driven, focused on the bottom line with
little regard or understanding of how or why they come about. In some parts of
the market, there are feeding frenzies that clearly have no sound economic
footing, simply whirling games of musical chairs. There will be casualties.
The markets have broadened to a very great extent, with literally thousands of
new or small companies emerging as part of the game.
In the past, we have discussed the relationship of the Dow Jones Industrial
Average to the Gross Domestic Product. Last year, the Dow was equal to
approximately 70% of the GDP expressed in billions. This year, as both
indicators rose, the ratio stands at approximately 75% -- a still moderate
evaluation of the market historically. Some recent studies of the relationship
between the entire market and the GDP, however, indicate an all-time high, which
could indicate that issuers that have recently gone public could be vulnerable.
Portfolio strategy for the Cutler Approved List Fund was consistent with prior
years, except that we are allowing the winners to run longer before leveling.
The Cutler Equity Income Fund was diversified more widely to reduce dependence
on the interest rate cycle and nudge toward more active "total return." The
Cutler Government Securities Fund lengthened maturities and broadened holdings.
We feel very confident in owning large, high quality companies that are capable
of participating in and reflecting the long term growth of both the domestic,
and to a growing extent, the global economy, and that have the market liquidity
that allows us to shift with change.
2
<PAGE>
THE CUTLER TRUST
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
JUNE 30, 1996
These charts reflect a comparison of changes in value of a $10,000 investment in
the Cutler Equity Income Fund, The Cutler Approved List Equity Fund and The
Cutler Government Securities Fund, including reinvestment of all dividends and
distributions, and the performance of the Standard & Poor's 500 composite stock
index ("S&P 500") for the equity funds, and the Merrill Lynch Intermediate
Government Bond Index for the bond fund.
The S&P 500 is a capitalization weighted index composed of 500 companies ranging
in size from very large to fairly small, and ranging from very high quality to
speculative. It reflects the reinvestment of dividends. Over a long period of
time, the S&P 500 is a suitable benchmark, but for short periods, a portfolio
made up of high quality issues will over perform or under perform the index
according to the market swings of the speculative component of the index.
The Merrill Lynch 1-10 Year Intermediate Term Treasury Index reflects comparable
issues with comparable maturities, to our bond fund. The difference in
performance reflects the shifting structural mix and costs of the fund versus no
cost for any index. Investment return and principal value of an investment in
the funds will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Past performance is not predictive
nor a guarantee of future results.
EDGAR REPRESENTATION OF DATA
POINTS USED IN PRINTED GRAPHIC
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUTLER APPROVED LIST EQUITY FUND
<S> <C> <C>
VS. S & P 500 INDEX
Average Annual Total Return
FUND S & P 500 Index
One Year 23.01% 25.98%
Since
Inception 12.56% 16.14%
DATE FUND S&P
12/30/1992 10000 10000
12/31/1992 9910 10000
1/31/1993 9770 10084
2/28/1993 9950 10221
3/31/1993 10100 10437
4/30/1993 9990 10184
5/31/1993 10151 10455
6/30/1993 10166 10485
7/31/1993 10055 10444
8/31/1993 10479 10839
9/30/1993 10353 10754
10/31/1993 10546 10976
11/30/1993 10394 10872
12/31/1993 10500 11004
1/31/1994 10663 11378
2/28/1994 10358 11069
3/31/1994 9996 10588
4/30/1994 10109 10723
5/31/1994 10273 10899
6/30/1994 10058 10632
7/31/1994 10316 10981
8/31/1994 10799 11431
9/30/1994 10542 11152
10/31/1994 10677 11402
11/30/1994 10367 10987
12/31/1994 10586 11150
1/31/1995 10909 11438
2/28/1995 11294 11883
3/31/1995 11513 12234
4/30/1995 11744 12594
5/31/1995 12151 13097
6/30/1995 12306 13401
7/31/1995 12537 13845
8/31/1995 12600 13879
9/30/1995 13154 14465
10/31/1995 13091 14413
11/30/1995 13777 15046
12/31/1995 14102 15336
1/31/1996 14515 15858
2/29/1996 14579 16005
3/31/1996 14666 16159
4/30/1996 14774 16396
5/31/1996 15062 16818
6/30/1996 15138 16881
</TABLE>
<TABLE>
<CAPTION>
CUTLER EQUITY INCOME FUND
VS. S & P 500 INDEX
<S> <C> <C>
Average Annual Total Return
FUND S & P 500 Index
One Year 22.93% 25.98%
Since
Inception 11.08% 16.14%
DATE FUND S&P
12/30/1992 10000 10000
12/31/1992 9900 10000
1/31/1993 9770 10084
2/28/1993 9921 10221
3/31/1993 10111 10437
4/30/1993 9870 10184
5/31/1993 9980 10455
6/30/1993 10046 10485
7/31/1993 10136 10444
8/31/1993 10550 10839
9/30/1993 10585 10754
10/31/1993 10839 10976
11/30/1993 10534 10872
12/31/1993 10509 11004
1/31/1994 10734 11378
2/28/1994 10315 11069
3/31/1994 9896 10588
4/30/1994 9999 10723
5/31/1994 10164 10899
6/30/1994 9907 10632
7/31/1994 10114 10981
8/31/1994 10487 11431
9/30/1994 10260 11152
10/31/1994 10395 11402
11/30/1994 10072 10987
12/31/1994 10206 11150
1/31/1995 10745 11438
2/28/1995 11020 11883
3/31/1995 11147 12234
4/30/1995 11392 12594
5/31/1995 11840 13097
6/30/1995 11754 13401
7/31/1995 11894 13845
8/31/1995 11969 13879
9/30/1995 12655 14465
10/31/1995 12601 14413
11/30/1995 13152 15046
12/31/1995 13719 15336
1/31/1996 13962 15858
2/29/1996 13940 16005
3/31/1996 14138 16159
4/30/1996 14104 16396
5/31/1996 14337 16818
6/30/1996 14448 16881
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUTLER GOVT. SECURITIES FUND
<S> <C> <C>
VS. MERRILL LYNCH INT. 1-10 YEAR TREASURY
Average Annual Total Return
FUND ML
One Year 2.60% 4.87%
Since
Inception 4.35% 5.77%
DATE FUND ML
12/30/1992 10000 10000
12/31/1992 10000 10000
1/31/1993 10207 10187
2/28/1993 10386 10340
3/31/1993 10407 10379
4/30/1993 10525 10461
5/31/1993 10452 10430
6/30/1993 10602 10580
7/31/1993 10554 10602
8/31/1993 10749 10764
9/30/1993 10790 10811
10/31/1993 10811 10830
11/30/1993 10726 10778
12/31/1993 10769 10820
1/31/1994 10859 10928
2/28/1994 10706 10773
3/31/1994 10571 10622
4/30/1994 10490 10550
5/31/1994 10498 10561
6/30/1994 10494 10568
7/31/1994 10609 10699
8/31/1994 10639 10732
9/30/1994 10562 10646
10/31/1994 10567 10649
11/30/1994 10509 10595
12/31/1994 10542 10636
1/31/1995 10680 10812
2/28/1995 10863 11019
3/31/1995 10909 11079
4/30/1995 11015 11207
5/31/1995 11260 11527
6/30/1995 11316 11602
7/31/1995 11335 11610
8/31/1995 11404 11705
9/30/1995 11462 11784
10/31/1995 11566 11916
11/30/1995 11725 12065
12/31/1995 11860 12188
1/31/1996 11951 12293
2/29/1996 11715 12155
3/31/1996 11630 12097
4/30/1996 11544 12059
5/31/1996 11475 12052
6/30/1996 11610 12170
</TABLE>
(a) See Note 1 for applicable date of inception.
3
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (98.3%)
BANKS (8.1%)
50,100 KeyCorp $1,941,375
60,900 PNC Bank Corporation 1,811,775
----------
3,753,150
----------
CHEMICALS (4.3%)
25,200 Du Pont (E.I.) De Nemours & Company 1,993,950
----------
COMPUTER & OFFICE EQUIPMENT (3.6%)
35,500 Pitney-Bowes, Inc. 1,695,125
----------
DRUGS & PHARMACEUTICALS (9.5%)
23,500 Bristol-Myers Squibb Company 2,115,000
35,200 Eli Lilly and Company 2,288,000
----------
4,403,000
----------
ELECTRIC COMPANIES (4.2%)
38,300 Duke Power Company 1,962,875
----------
ELECTRICAL MACHINERY (9.1%)
21,500 Emerson Electric Company 1,943,063
26,200 General Electric Company 2,266,300
----------
4,209,363
----------
FINANCIAL SERVICES (4.1%)
19,700 Marsh & McLennan Companies, Inc. 1,901,050
----------
</TABLE>
4
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD AND SOFT DRINKS (3.6%)
55,100 H.J. Heinz & Company $1,673,663
----------
GENERAL MERCHANDISE TRADE (4.2%)
5,000 May Department Stores Companies 218,750
33,400 J.C. Penney Company, Inc. 1,753,500
----------
1,972,250
----------
GLASS, OTHER BUILDING MATERIALS (3.7%)
35,000 PPG Industries, Inc. 1,706,250
----------
LIFE INSURANCE (3.7%)
36,900 Lincoln National Corporation 1,706,625
----------
LUMBER & WOOD PRODUCTS (3.3%)
36,300 Weyerhaeuser Company 1,542,750
----------
SPECIALTY CHEMICAL PRODUCTS (4.1%)
27,700 Minnesota Mining & Manufacturing Company 1,911,300
----------
PETROLEUM PRODUCTS (8.5%)
34,000 Chevron Corporation 2,006,000
22,400 Exxon Corporation 1,946,000
----------
3,952,000
----------
PROPERTY & CASUALTY INSURANCE (3.7%)
32,600 St. Paul Companies, Inc. 1,744,100
----------
RAILROADS (4.2%)
23,300 Norfolk Southern Corporation 1,974,675
----------
</TABLE>
5
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SOAPS (4.0%)
21,100 Clorox Company $1,869,987
----------
TRANSPORTATION EQUIPMENT (4.2%)
16,900 United Technologies Corporation 1,943,500
----------
VOICE & DATA TRANSMISSION (8.2%)
28,400 Ameritech Corporation 1,686,250
50,100 BellSouth Corporation 2,122,987
----------
3,809,237
----------
TOTAL COMMON STOCK (COST $37,950,772) 45,724,850
----------
SHORT TERM HOLDINGS (1.7%)
322,358 Forum Daily Assets Treasury Fund 322,358
665 Monarch Government Cash Fund 665
477,051 1784 U.S. Treasury Money Market Fund 477,051
----------
TOTAL SHORT TERM HOLDINGS (COST $800,074) 800,074
----------
TOTAL INVESTMENTS (100.0%) (COST $38,750,846) $46,524,924
----------
----------
</TABLE>
6
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (98.3%)
ALCOHOLIC BEVERAGES (1.0%)
4,000 Anheuser-Busch Companies, Inc. $ 300,000
----------
AMUSEMENT & RECREATION SERVICES (0.9%)
4,100 The Walt Disney Company 257,787
----------
BANKS (7.2%)
7,535 Banc One Corporation 256,190
4,400 First Union Corporation 267,850
3,300 JP Morgan & Company 279,262
7,500 KeyCorp 290,625
3,600 NationsBank Corporation 297,450
7,700 Norwest Corporation 268,538
9,000 PNC Bank Corporation 267,751
5,900 Wachovia Corporation 258,126
----------
2,185,792
----------
BUSINESS SERVICES (1.8%)
6,600 Automatic Data Processing, Inc. 254,926
4,400 Dun & Bradstreet Corporation 275,000
----------
529,926
----------
CHEMICALS (5.7%)
5,100 Air Products & Chemicals, Inc. 294,525
3,800 Du Pont (E.I.) De Nemours & Company 300,675
3,900 Great Lakes Chemical Corporation 242,776
11,000 Monsanto Company 357,500
7,100 Morton International, Inc. 264,475
4,100 Rohm & Haas Company 257,275
----------
1,717,226
----------
</TABLE>
7
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMUNICATIONS EQUIPMENT (1.0%)
4,800 Motorola, Inc. $ 301,800
----------
COMPUTER & OFFICE EQUIPMENT (1.8%)
2,900 Hewlett Packard Company 288,913
5,600 Pitney Bowes, Inc. 267,400
----------
556,313
----------
DRUGS & PHARMACEUTICALS (7.9%)
6,000 Abbott Laboratories 261,000
3,300 Bristol-Myers Squibb Company 297,000
5,000 Eli Lilly & Company 325,000
6,400 Johnson & Johnson 316,801
4,200 Merck & Company, Inc. 271,425
4,500 Pfizer, Inc. 321,187
4,800 Schering-Plough Corporation 301,200
5,200 Warner Lambert Company 286,000
----------
2,379,613
----------
DURABLE GOODS-WHOLESALE (1.0%)
4,000 W. W. Grainger, Inc. 310,000
----------
ELECTRIC COMPANIES (3.5%)
5,400 Duke Power Company 276,750
7,700 Florida Progress Corporation 267,575
5,300 Northern States Power Company 261,688
9,000 Wisconsin Energy Corporation 259,875
----------
1,065,888
----------
ELECTRICAL MACHINERY (3.7%)
6,100 AMP, Inc. 244,762
3,400 Emerson Electric Company 307,276
3,600 General Electric Company 311,400
5,200 Raytheon Company 268,450
----------
1,131,888
----------
</TABLE>
8
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FABRICATED METAL PRODUCTS (3.0%)
5,300 Gillette Company $ 330,587
4,100 Illinois Tool Works, Inc. 277,263
10,200 Stanley Works 303,450
----------
911,300
----------
FINANCIAL SERVICES (1.0%)
3,000 Marsh & McLennan Companies, Inc. 289,500
----------
FOOD & SOFT DRINKS (9.1%)
14,212 Archer Daniels Midland Company 271,804
4,500 Campbell Soup Company 317,250
6,400 Coca-Cola Company 312,800
3,600 CPC International, Inc. 259,200
4,600 General Mills, Inc. 250,700
7,750 H.J. Heinz & Company 235,406
3,800 Hershey Foods Corporation 278,825
3,300 Kellogg Company 241,725
8,800 PepsiCo, Inc. 311,300
8,000 Sara Lee Corporation 259,000
----------
2,738,010
----------
GAS SYSTEMS (1.9%)
9,500 Baltimore Gas & Electric Company 269,562
5,800 Consolidated Natural Gas Company 303,050
----------
572,612
----------
GENERAL MERCHANDISE TRADE (2.8%)
5,700 J.C. Penney Company, Inc. 299,250
5,900 May Department Stores 258,125
11,500 Wal-Mart Stores, Inc. 291,812
----------
849,187
----------
</TABLE>
9
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
GLASS, OTHER BUILDING MATERIALS (1.9%)
8,000 Corning, Inc. $ 307,000
5,800 PPG Industries, Inc. 282,750
----------
589,750
----------
GROCERY STORES (1.9%)
7,300 Albertson's, Inc. 302,037
7,800 Winn-Dixie Stores, Inc. 275,925
----------
577,962
----------
INDUSTRIAL & COMMERCIAL MACHINERY (0.9%)
5,900 Dover Corporation 272,137
----------
INSTRUMENTS & RELATED PRODUCTS (1.9%)
6,900 Bausch & Lomb, Inc. 293,250
3,900 Becton, Dickinson & Company 312,975
----------
606,225
----------
LIFE INSURANCE (1.8%)
5,900 Aon Corporation 299,425
5,300 Lincoln National Corporation 245,125
----------
544,550
----------
LUMBER & WOOD PRODUCTS (0.9%)
6,200 Weyerhaeuser Company 263,500
----------
MANUFACTURING CONGLOMERATES (1.0%)
7,800 Hillenbrand Industries 290,550
----------
</TABLE>
10
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SPECIALTY CHEMICAL PRODUCTS (1.7%)
5,200 International Flavors & Fragrances $ 247,650
4,000 Minnesota Mining & Manufacturing Company 276,000
----------
523,650
----------
DRUGSTORES (0.9%)
8,300 Walgreen Company 278,050
----------
PAPER PRODUCTS (1.7%)
3,400 Kimberly Clark Corporation 262,650
8,900 Westvaco Corporation 265,887
----------
528,537
----------
PERSONAL SERVICES (0.8%)
7,000 H & R Block, Inc. 228,375
----------
PETROLEUM PRODUCTS (3.7%)
3,800 Amoco Corporation 275,025
5,100 Chevron Corporation 300,900
3,300 Exxon Corporation 286,687
2,400 Mobil Corporation 269,100
----------
1,131,712
----------
PRIMARY METAL PRODUCTS (0.8%)
4,800 Nucor Corporation 243,000
----------
</TABLE>
11
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PRINTING & PUBLISHING (5.6%)
7,100 Dow Jones & Company, Inc. $ 296,425
4,200 Gannett Company, Inc. 297,150
3,900 Knight-Ridder, Inc. 282,750
6,000 McGraw-Hill Companies, Inc. 274,500
7,100 RR Donnelley & Sons Company 247,612
4,000 Tribune Company 290,500
----------
1,688,937
----------
PROPERTY & CASUALTY INSURANCE (3.7%)
2,950 American International Group 290,943
5,800 Chubb Corporation 289,275
1,800 General Re Corporation 274,050
4,700 St. Paul Companies, Inc. 251,450
----------
1,105,718
----------
RAILROADS (1.0%)
3,400 Norfolk Southern Corporation 288,150
----------
RESTAURANTS (0.9%)
7,700 Sysco Corporation 263,725
----------
RUBBER PRODUCTS (0.8%)
9,100 Rubbermaid, Inc. 247,975
----------
SANITARY SERVICES (0.9%)
9,300 Browning-Ferris Industries, Inc. 269,700
----------
SECURITIES, BROKERS, DEALERS & ADVISORS (0.9%)
4,400 Merrill Lynch & Company 286,550
----------
</TABLE>
12
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SOAPS (2.9%)
3,300 Clorox Company $ 292,462
3,400 Colgate Palmolive Company 288,150
3,200 Procter & Gamble Company 290,000
----------
870,612
----------
TRANSPORTATION EQUIPMENT (3.8%)
3,300 Boeing Company 287,512
3,700 Johnson Controls, Inc. 257,150
5,100 Rockwell International Corporation 291,975
2,700 United Technologies Corporation 310,500
----------
1,147,137
----------
VOICE & DATA TRANSMISSION (4.6%)
4,300 American Telephone & Telegraph Company 266,600
4,600 Ameritech Corporation 273,126
4,400 Bell Atlantic Corporation 280,500
7,400 BellSouth Corporation 313,575
5,400 SBC Communications, Inc. 265,950
----------
1,399,751
----------
TOTAL COMMON STOCK (COST $22,090,790) 29,743,095
----------
SHORT TERM HOLDINGS (1.7%)
502,047 Forum Daily Assets Treasury Fund 502,047
----------
TOTAL SHORT TERM HOLDINGS (COST $502,047) 502,047
----------
TOTAL INVESTMENTS (100.0%) (COST $22,592,837) $30,245,142
----------
----------
</TABLE>
13
<PAGE>
THE CUTLER TRUST
CUTLER GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
FACE SECURITY DESCRIPTION VALUE
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (46.5%)
$ 470,000 U.S. Treasury Notes, 6.00%, due 10/15/99 $ 465,739
500,000 U.S. Treasury Notes, 5.50%, due 4/15/00 485,312
2,000,000 U.S. Treasury Notes, 6.50%, due 8/15/05 1,970,623
---------
TOTAL U.S. TREASURY OBLIGATIONS (COST $3,046,423) 2,921,674
---------
GOVERNMENT AGENCY NOTES (12.5%)
600,000 Federal National Mortgage Assoc., 6.18%, due 11/20/00 583,143
200,000 Federal National Mortgage Assoc., 7.00%, due 04/20/01 199,809
---------
TOTAL GOVERNMENT AGENCY NOTES (COST $800,281) 782,952
---------
MORTGAGE BACKED SECURITIES (39.7%)
475,265 Federal Home Loan Mortgage Corp., 6.50%, due 10/01/10 461,064
454,791 Federal Home Loan Mortgage Corp., 7.00%, due 09/01/10 449,875
1,004,120 Government National Mortgage Assoc., 6.50%, due 11/15/09 978,775
181,412 Small Business Administration, Adjustable Rate Pool 502207, 9.875%,
due 10/25/01 189,804
385,887 Small Business Administration, Adjustable Rate Pool 503115, 9.475%,
due 04/25/09 420,617
---------
TOTAL MORTGAGE BACKED SECURITIES (COST $2,563,629) 2,500,135
---------
SHORT TERM HOLDINGS (1.3%)
84,370 Forum Daily Assets Treasury Fund 84,370
---------
TOTAL SHORT TERM HOLDINGS (COST $84,370) 84,370
---------
TOTAL INVESTMENTS (100.0%) (COST $6,494,703) $6,289,131
---------
---------
</TABLE>
14
<PAGE>
THE CUTLER TRUST
STATEMENTS OF ASSETS & LIABLILITIES
JUNE 30, 1996
<TABLE>
<CAPTION>
CUTLER EQUITY CUTLER
INCOME CUTLER APPROVED GOVERNMENT
FUND LIST EQUITY FUND SECURITIES FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (a) $46,524,924 $30,245,142 $6,289,131
Interest, dividends and other
receivables 53,056 41,918 99,259
Receivable for shares issued 6,595 1,604 600
---------------- ---------------- ----------------
Total assets 46,584,575 30,288,664 6,388,990
---------------- ---------------- ----------------
LIABILITIES:
Dividends payable 4,534 1,186 1,854
Accrued fees and other expenses 67,723 39,006 5,269
Payable for securities purchased 218,425 -- --
Payable for shares redeemed 8,527 665 1,600
---------------- ---------------- ----------------
Total liabilities 299,209 40,857 8,723
---------------- ---------------- ----------------
NET ASSETS $46,285,366 $30,247,807 $6,380,267
---------------- ---------------- ----------------
---------------- ---------------- ----------------
COMPONENTS OF NET ASSETS:
Capital paid in $35,485,164 $22,508,628 $6,623,239
Undistributed net investment income 20,754 11,504 1,713
Unrealized appreciation(depreciation) 7,774,078 7,652,305 (205,572)
Accumulated net realized gains
(losses) 3,005,370 75,370 (39,113)
---------------- ---------------- ----------------
NET ASSETS $46,285,366 $30,247,807 $6,380,267
---------------- ---------------- ----------------
---------------- ---------------- ----------------
SHARES OUTSTANDING 3,573,490 2,132,571 650,527
---------------- ---------------- ----------------
---------------- ---------------- ----------------
NET ASSET VALUE PER SHARE $12.95 $14.18 $9.81
---------------- ---------------- ----------------
---------------- ---------------- ----------------
(a) Cost of Investments $38,750,846 $22,592,837 $6,494,703
</TABLE>
See notes to Financial Statements.
15
<PAGE>
THE CUTLER TRUST
STATEMENTS OF OPERATIONS
JUNE 30, 1996
<TABLE>
<CAPTION>
CUTLER EQUITY CUTLER
INCOME CUTLER APPROVED GOVERNMENT
FUND LIST EQUITY FUND SECURITIES FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $60,258 $28,030 $413,936
Dividend income 1,643,980 701,125 --
---------------- ---------------- ----------------
Total investment income 1,704,238 729,155 413,936
---------------- ---------------- ----------------
EXPENSES:
Advisory 244,542 147,509 16,509
Management 45,027 26,997 6,604
Transfer agency 17,422 15,471 13,118
Custodian 10,158 11,592 2,966
Accounting 37,000 48,000 38,000
Legal 29,580 18,201 4,188
Auditing 19,467 13,561 5,643
Trustees 7,474 4,458 1,108
Other 30,094 20,139 6,285
---------------- ---------------- ----------------
Total expenses 440,764 305,928 94,421
Expenses reimbursed and fees waived -- (22,856) (44,754)
---------------- ---------------- ----------------
Net expenses 440,764 283,072 49,667
---------------- ---------------- ----------------
NET INVESTMENT INCOME 1,263,474 446,083 364,269
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain (loss) on investments 3,083,405 305,373 (36,871)
Change in unrealized appreciation
(depreciation) 4,913,660 4,740,968 (152,375)
---------------- ---------------- ----------------
NET GAIN (LOSS) ON INVESTMENTS 7,997,065 5,046,341 (189,246)
---------------- ---------------- ----------------
INCREASE IN NET ASSETS FROM OPERATIONS $9,260,539 $5,492,424 $175,023
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
See notes to Financial Statements.
16
<PAGE>
THE CUTLER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
CUTLER CUTLER CUTLER
EQUITY APPROVED GOVERNMENT
INCOME LIST EQUITY SECURITIES
FUND FUND FUND
---------------------- ---------------------- ----------------------
Amount Shares Amount Shares Amount Shares
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS -- 6/30/95 $41,469,577 $21,889,870 $ 6,795,583
----------- ----------- -----------
OPERATIONS:
Net investment income 1,263,474 446,083 364,269
Net realized gain (loss) on investments 3,083,405 305,373 (36,871)
Net change in unrealized
appreciation (depreciation) 4,913,660 4,740,968 (152,375)
----------- ----------- -----------
9,260,539 5,492,424 175,023
----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,277,607) (436,925) (362,556)
Net realized capital gain (535,464) -- --
----------- ----------- -----------
(1,813,071) (436,925) (362,556)
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 5,500,429 453,150 5,890,195 467,208 1,066,999 106,010
Reinvested dividends 1,796,759 144,973 427,059 31,973 334,143 33,180
----------- --------- ----------- --------- ----------- ---------
7,297,188 598,123 6,317,254 499,181 1,401,142 139,190
Shares repurchased (9,928,867) (809,714) (3,014,816) (235,675) (1,628,925) (161,363)
----------- --------- ----------- --------- ----------- ---------
(2,631,679) (211,591) 3,302,438 263,506 (227,783) (22,173)
----------- --------- ----------- --------- ----------- ---------
--------- --------- ---------
NET ASSETS -- 6/30/96 $46,285,366 $30,247,807 $ 6,380,267
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to Financial Statements.
17
<PAGE>
THE CUTLER TRUST
STATEMENTS OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
CUTLER CUTLER CUTLER
EQUITY APPROVED GOVERNMENT
INCOME LIST EQUITY SECURITIES
FUND FUND FUND
---------------------- ---------------------- ----------------------
Amount Shares Amount Shares Amount Shares
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS -- 6/30/94 $19,705,733 $12,620,188 $ 5,533,810
----------- ----------- -----------
OPERATIONS:
Net investment income 1,136,677 367,432 276,319
Net realized gain (loss) on investments 843,392 (130,093) --
Net change in unrealized
appreciation 3,787,298 3,283,482 205,221
----------- ----------- -----------
5,767,367 3,520,821 481,540
----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,114,462) (371,475) (278,032)
Net realized capital gain (63,046) -- --
----------- ----------- -----------
(1,177,508) (371,475) (278,032)
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 20,240,681 2,018,082 8,098,135 764,910 1,365,634 139,004
Reinvested dividends 1,309,799 129,437 432,393 40,732 275,345 27,980
----------- --------- ----------- --------- ----------- ---------
21,550,480 2,147,519 8,530,528 805,642 1,640,979 166,984
Shares repurchased (4,376,495) (424,107) (2,410,192) (226,571) (582,714) (58,555)
----------- --------- ----------- --------- ----------- ---------
17,173,985 1,723,412 6,120,336 579,071 1,058,265 108,429
----------- --------- ----------- --------- ----------- ---------
--------- --------- ---------
NET ASSETS -- 6/30/95 $41,469,577 $21,889,870 $ 6,795,583
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to Financial Statements.
18
<PAGE>
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Cutler Trust (the "Trust") was organized on October 2, 1992 as an
open-end, management investment company under the Investment Company Act of
1940. The Trust currently has three diversified investment portfolios
(individually a "Fund" and collectively the "Funds"). The Cutler Equity Income
Fund, Cutler Approved List Equity Fund, and Cutler Government Securities Fund
each commenced operations on December 30, 1992. The Trust's financial
statements are prepared in accordance with generally accepted accounting
principles ("GAAP") which permit management to make certain estimates and
assumptions at the date of the financial statements and are based, in part, on
the following accounting policies.
A. PORTFOLIO VALUATION
The Trust determines the net asset value per share of each Fund as of the
close of regular trading on the New York Stock Exchange (currently 4:00 P.M.,
Eastern time) on each Fund business day. Securities with a maturity of 60 days
or less are valued at amortized cost. Other securities for which market
quotations are readily available are valued using the last reported sales
price provided by independent pricing services. If no sale is reported, the
mean of the last bid and ask price is used. If no mean price is available, the
last bid price is used. In the absence of readily available market quotations,
securities are valued at fair value using procedures approved by the Trust's
Board of Trustees.
B. INTEREST AND DIVIDEND INCOME AND DIVIDENDS TO SHAREHOLDERS
Interest income is accrued as earned. Dividend income is recorded on ex-date.
Distributions of net investment income to shareholders are declared and paid
quarterly in the Cutler Equity Income Fund and Cutler Approved List Equity
Fund while distributions of net investment income to shareholders are declared
daily and paid monthly in the Cutler Government Securities Fund. Net capital
gains are distributed to shareholders at least annually.
Distributions from net investment income and realized capital gains are based
on their tax basis. The difference between financial statement amounts
available for distribution and distributions made in accordance with income
tax regulations are primarily attributable to the deferral of post-October 31
losses, wash sales and utilization of capital loss carryovers.
C. FEDERAL INCOME TAXES
Each Fund has qualified and intends to continue to qualify as a regulated
investment company. Each fund distributes all of its taxable income and,
therefore, no federal income tax provision is required.
D. SECURITY TRANSACTIONS
Investment security transactions are recorded on a trade date basis. Realized
gains and losses on investments are calculated on the basis of identified
cost.
19
<PAGE>
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 1996
NOTE 2 INVESTMENT ADVISORY, MANAGEMENT AND OTHER SERVICES
The investment adviser to each Fund is Cutler & Company LLC (the "Adviser").
Pursuant to an Investment Advisory Agreement effective May 1, 1996, the
Adviser receives an advisory fee from Cutler Equity Income Fund, Cutler
Approved List Equity Fund and Cutler Government Securities Fund at an annual
rate of 0.75%, 0.75% and 0.25% of the respective average daily net assets of
each Fund. Prior to May 1, 1996, the advisory fee for Cutler Equity Income
Fund and Cutler Approved List Equity Fund was 0.50%.
The manager of the Trust is Forum Financial Services, Inc. (the "Manager"), a
registered broker-dealer. The Manager is compensated for its services at an
annual rate of 0.10% of the average daily net assets of each Fund. In
addition, certain legal expenses were charged to the Trust by the Manager in
the amount of $10,755. The Manager also acts as the Trust's distributor
pursuant to a separate Distribution Agreement with the Trust for which no
compensation is received.
Forum Financial Corp. ("FFC") serves as the Trust's transfer agent and
dividend disbursing agent and is compensated for those services by each Fund
in the amount of $12,000 per year plus certain account charges. FFC also
performs portfolio accounting for the Trust and is compensated for those
services by each Fund in the amount of $36,000 per year, plus certain amounts
based upon the number and types of portfolio transactions. The Manager and FFC
are affiliated companies.
For the year ended June 30, 1996, fees waived and expenses reimbursed for each
Fund by the Investment Adviser, Manager, and Transfer Agent & Accounting were
as follows:
<TABLE>
<CAPTION>
Expenses
Fees Waived Reimbursed
----------------------------------------- -----------
Investment Transfer Agent
Adviser Manager & Accounting Manager
----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Cutler Approved List Equity Fund $ 4,351 $ -- $ 12,000 $ 6,505
Cutler Government Securities
Fund 16,509 6,604 9,334 12,307
</TABLE>
20
<PAGE>
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 1996
NOTE 3 TRANSACTIONS OF SECURITIES
Cost of purchases and proceeds from sales (including maturities) of portfolio
securities (excluding short-term investments) during the year ended June 30,
1996, cost basis for Federal income tax purposes and unrealized appreciation
and depreciation based upon identified tax cost as of June 30, 1996 were as
follows:
<TABLE>
<CAPTION>
Cost of Proceeds Tax Cost Unrealized Unrealized
Purchases From Sales Basis Appreciation Depreciation
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cutler Equity Income Fund $22,238,464 $24,793,591 $38,751,448 $8,013,841 $ 240,365
Cutler Approved List Equity Fund 5,513,451 2,366,551 22,623,289 7,769,754 147,901
Cutler Government Securities
Fund 6,573,819 6,513,503 6,494,703 9,562 215,134
</TABLE>
NOTE 4 CAPITAL LOSS CARRYFORWARD
As of June 30, 1996, Cutler Government Securities Fund has capital loss
carryforwards available to offset future capital gains in the amounts of
$2,242 and $7,908 until the years 2003 and 2004, respectively.
21
<PAGE>
THE CUTLER TRUST
FINANCIAL HIGHLIGHTS
Selected per share data and
ratios for a share outstanding
throughout the periods.
<TABLE>
<CAPTION>
CUTLER EQUITY CUTLER APPROVED
INCOME FUND LIST EQUITY FUND
------------------------------------------------ -----------------------------------------------
Year Ended June 30, Year Ended June 30,
------------------------------------------------ -----------------------------------------------
1996 1995 1994 1993(a) 1996 1995 1994 1993(a)
<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(b) 0.27 0.10 0.21 0.24(b) 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
realized gains (0.14) (0.02) 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ----------- ----------- ---------- ---------- ---------- -----------
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 (c) 0.98% 0.97% 1.00% 0.98% (d) 1.05% 1.00% 1.00% 0.98%(d)
Net investment income 2.81% 3.49% 3.49% 2.23% (d) 1.65% 2.20% 2.43% 2.27%(d)
Total return 22.93% 18.63% (1.37%) 0.90% (d) 23.01% 22.33% (1.07%) 3.31%(d)
Portfolio turnover rate 57.08% 43.37% 42.83% 32.04% 8.97% 23.42% 22.27% 10.88%
Average brokerage
commission rate (e) $0.0525 -- -- -- $0.0569 -- -- --
Net assets at the end of
year (000's omitted) $46,285 $41,470 $19,706 $2,853 $30,248 $21,890 $12,620 $3,618
(a) See Note 1 for applicable date of inception.
(b) Calculated using the weighted average number of shares outstanding.
(c) During the period, various fees and expenses were waived and reimbursed.
Had such waiver and reimbursements not occured, the ratio
of expenses to average net assets would have been:
0.98% 0.97% 1.45% 3.69% (d) 1.13% 1.23% 1.78% 4.53%(d)
(d) Annualized.
(e) Amount represents the average commission per share, paid to brokers,
on the purchase and sale of portfolio securities.
<CAPTION>
CUTLER GOVERNMENT
SECURITIES FUND
------------------------------------------------
Year Ended June 30,
------------------------------------------------
1996 1995 1994 1993(a)
<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(b) 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)
Distributions from net
realized gains 0.00 0.00 0.00 0.00
----------- ---------- ---------- -----------
Ending net asset value
per share $ 9.81 $ 10.10 $ 9.81 $ 10.37
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
Ratios to average net
assets:
Expenses (c) 0.75% 0.75% 0.74% 0.53% (d)
Net investment income 5.52% 4.65% 4.46% 4.14% (d)
Total return 2.60% 7.83% (1.03%) 12.07% (d)
Portfolio turnover rate 102.70% 0.00% 13.51% 0.00%
Average brokerage
commission rate (e) N/A -- -- --
Net assets at the end of
year (000's omitted) $6,380 $6,796 $5,534 $696
(a) See Note 1 for applic
(b) Calculated using the
(c) During the period, va
Had such waiver and re
of expenses to average
1.43% 1.47% 1.96% 2.34% (d)
(d) Annualized.
(e) Amount represents the
on the purchase and sa
</TABLE>
22
<PAGE>
THE CUTLER TRUST
REPORT OF INDEPENDENT AUDITORS
Shareholders and Trustees
The Cutler Trust
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of The Cutler Trust, consisting of the Cutler
Equity Income Fund, Cutler Approved List Equity Fund and Cutler Government
Securities Fund, as of June 30, 1996, the related statements of operations for
the year then ended, and of changes in net assets for each of the two years in
the period then ended and the financial highlights for each of the three years
in the period then ended and for the period December 30, 1992 (commencement of
investment operations) to June 30, 1993. These financial statements and
financial highlights are the responsibility of The Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
June 30, 1996 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
portfolios constituting The Cutler Trust as of June 30, 1996, the results of
their operations, the changes in their net assets, and the financial highlights
for the above stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
August 16, 1996
23
<PAGE>
THE CUTLER TRUST
OTHER INFORMATION (unaudited)
JUNE 30, 1996
FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
Income Dividends -- All of the income dividends paid by each Fund were ordinary
income for federal income tax purposes. The percentage of income dividends that
were qualifying dividends for the corporate dividends received deduction in
Cutler Equity Income Fund and Cutler Approved List Equity Fund were 96.50% and
96.17%, respectively.
Capital Gain Dividends -- Cutler Equity Income Fund declared short term capital
gain dividends of $0.14 per share in December 1995.
SPECIAL MEETING OF SHAREHOLDERS
A special meeting of the shareholders of the Trust was held on March 20, 1996.
The meeting was continued until March 22, 1996 when a quorum for the Trust and
each of the Funds was obtained.
The following is a summary of the votes cast by the shares present at the
meeting:
PROPOSAL (I): 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. Required vote: plurality of shares present.
<TABLE>
<CAPTION>
% For Shares For Shares Against Shares Abstain
----------- ------------ ------------------- ---------------------
<S> <C> <C> <C> <C>
Robert B. Watts, Jr. 100% 4,141,386.624 0 0
Kenneth R. Cutler 100% 4,141,386.624 0 0
John Y. Keffer 100% 4,141,386.624 0 0
Dr. Hatten S. Yoder,
Jr. 100% 4,141,386.624 0 0
Brooke Cutler Ashland 100% 4,141,386.624 0 0
</TABLE>
PROPOSAL (II): 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. Required vote: majority (50%) of shares present.
<TABLE>
<CAPTION>
Shares
% For Shares For Against Shares Abstain
--------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
99.63% 4,125,939.420 0 15,476.997
</TABLE>
24
<PAGE>
THE CUTLER TRUST
OTHER INFORMATION (unaudited) (continued)
JUNE 30, 1996
PROPOSAL (III): 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 FROM .50% TO .75%. Required vote: "majority of
outstanding voting securities" of each series voting separately, i.e. the lesser
of: (a) 67% or more of the shares present if more than 50% are present or (b)
more than 50% of the outstanding shares.
<TABLE>
<CAPTION>
Shares
Fund % For Shares For Against Shares Abstain
- ------------------------------- --------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Cutler Equity Income Fund 90.36% 1,976,242.626 140,097.212 70,842.797
Cutler Approved List Equity
Fund 93.77% 1,439,599.015 95,715.306 0
</TABLE>
PROPOSAL (IV): 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. Required vote: "majority of outstanding
voting securities" of each series voting separately, i.e. the lesser of: (a) 67%
or more of the shares present if more than 50% are present or (b) more than 50%
of the outstanding shares.
<TABLE>
<CAPTION>
Shares
Fund % For Shares For Against Shares Abstain
- -------------------------------- --------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Cutler Equity Income Fund 84.70% 1,853,069.306 106,817.184 227,871.875
Cutler Approved List Equity Fund 86.69% 1,257,365.462 136,983.270 56,134.391
Cutler Government Securities
Fund 86.78% 363,034.294 0 55,305.669
</TABLE>
25
<PAGE>
THE CUTLER TRUST
TRUSTEES OF THE CUTLER TRUST
JUNE 30, 1996
<TABLE>
<C> <S>
KENNETH R. CUTLER
[PHOTO] Principal portfolio manager of the two equity mutual fund portfolios.
Principal portfolio manager of institutional equity funds with objectives
similar to the mutual funds, that are managed separately by Cutler & Company
LLC.
JOHN Y. KEFFER
[PHOTO] Chairman, Forum Financial Corp., Transfer Agent, and Forum Financial Services,
Inc., Distributor and Administrator for all three funds.
DR. HATTEN S. YODER, JR.
[PHOTO] Chairman Emeritus, Geophysical Laboratory, Carnegie Institute of Washington,
and consultant to the Los Alamos National Laboratory. A member of the National
Academy of Sciences, and many national and international scientific bodies.
BROOKE CUTLER ASHLAND
[PHOTO] Chief Executive Officer, Cutler & Company LLC, Investment Adviser to the
trust.
ROBERT B. WATTS, JR.
[PHOTO] Attorney in private practice. Formerly a senior level officer, counsel and
corporate secretary with over 25 years of corporate, divisional and board
level experience with two Fortune 100 companies.
</TABLE>
26
<PAGE>
THE CUTLER TRUST
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27
<PAGE>
THE CUTLER TRUST
TABLE OF CONTENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Chairman's Letter to the Shareholders....... 1
Investment Adviser's Report................. 2
Comparison of Change in Value of $10,000
Investment................................ 3
Cutler Equity Income Fund Portfolio......... 4
Cutler Approved List Equity Fund
Portfolio................................. 7
Cutler Government Securities Fund
Portfolio................................. 14
Statements of Assets and Liabilities........ 15
Statements of Operations.................... 16
Statements of Changes in Net Assets......... 17
Notes to Financial Statements............... 19
Financial Highlights (Per Share Data)....... 22
Report of Independent Auditors.............. 23
Other Information........................... 24
Trustees of the Cutler Trust................ 26
</TABLE>
Manager and Distributor
Forum Financial Services
CUTLER & COMPANY LLC
INVESTMENT MANAGEMENT
INVESTMENT ADVISER TO THE TRUST
503 Airport Road, Medford, OR 97504
(800) 228-8537 - (541) 770-9000
Fax: (541) 779-0006
info @ cutler.com
CUTLER EQUITY
INCOME FUND
CUTLER APPROVED LIST
EQUITY FUND
CUTLER GOVERNMENT
SECURITIES FUND
ANNUAL REPORT
June 30, 1996
