<PAGE>
SEMI-ANNUAL REPORT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
[LETTERHEAD]
To The Cutler Trust Shareholders:
During the first six months of our fiscal year through December, the Equity
Income Fund rose 16.72%, and the Approved List Fund rose 14.60%, both
outperforming their peer group averages as compiled by Lipper Analytical
Services. The good performance is only part of the good things we have to
report.
Mr. John Ray will be joining the fund team as my principal equity backup in
addition to his own Equity Value portfolio management. Before joining Cutler &
Company in 1995, John was the President of Commerce Capital Management, Inc. in
Memphis, Tennessee, where he served as a research analyst and value style
portfolio manager. We have great confidence that he will add substantial value
to our team.
We are adding new trustees to the Cutler Trust: Brooke Cutler Ashland, my
daughter who has now assumed the role of Chief Executive Officer of Cutler &
Company LLC, and Robert E. Watts Esq., formerly the Secretary and General
Counsel of Rockwell International. Brooke brings great energy to the trust, and
Bob brings an incredible corporate perspective.
At the start of our current fiscal year in July, we were fortunate to bring Mr.
William Gossard from Banc One to manage our Government Securities Fund. During
our first six months through December the fund rose 4.81%. We are most pleased
to add his broad experience and expertise. He is assisted by JoEllen McBeth, who
heads our Fixed Income trading and manages short-term accounts.
I expect that the team we have assembled will add vigor, enthusiasm and
substantial value to your portfolio. The team is eager to move forward, and
believes that you would be better served if some minor changes were made to
allow us to expand the number of shareholders. We know from experience that
growing assets enhances performance.
Shortly you will receive notice of a special meeting of shareholders at which
time we will ask you to support changes that will permit the general public to
buy our shares and expand our distribution process to include banks and
broker-dealers as appropriate. Please read the proxy material carefully, call
any of us with any questions you may have, and return the proxy as soon as
convenient.
Sincerely,
/s/ Kenneth R. Cutler
Kenneth R. Cutler
Chairman, The Cutler Trust
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
COMMON STOCK (96.5%)
<C> <S> <C>
ACCIDENT & HEALTH INSURANCE (3.7%)
25,400 Aetna Life & Casualty Company $ 1,758,950
--------------
BANKS (11.7%)
22,200 JP Morgan & Company 1,781,550
49,600 KeyCorp 1,798,000
60,200 PNC Bank Corporation 1,941,450
--------------
5,521,000
--------------
BUSINESS SERVICES (4.1%)
30,100 Dun & Bradstreet Corporation 1,948,975
--------------
CHEMICALS (3.7%)
24,900 Du Pont (E.I.) De Nemours & Company 1,739,887
--------------
DRUGS & PHARMACEUTICALS (9.0%)
23,200 Bristol-Myers Squibb Company 1,992,300
40,600 Eli Lilly and Company 2,283,750
--------------
4,276,050
--------------
ELECTRIC COMPANIES (11.0%)
59,900 Central & Southwest Corporation 1,669,712
37,900 Duke Power Company 1,795,512
50,250 Florida Progress Corporation 1,777,594
--------------
5,242,818
--------------
FINANCIAL SERVICES (3.6%)
19,500 Marsh & McLennan Companies, Inc. 1,730,625
--------------
2
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD AND SOFT DRINKS (7.8%)
32,800 General Mills, Inc. $ 1,894,200
54,600 H.J. Heinz & Company 1,808,625
--------------
3,702,825
--------------
GENERAL MERCHANDISE TRADE (3.3%)
33,000 J.C. Penney Company, Inc. 1,571,625
--------------
LIFE INSURANCE (4.1%)
36,500 Lincoln National Corporation 1,961,875
--------------
LUMBER & WOOD PRODUCTS (3.3%)
35,900 Weyerhaeuser Company 1,552,675
--------------
MISCELLANEOUS CHEMICAL PRODUCTS (3.8%)
27,300 Minnesota Mining & Manufacturing Company 1,808,625
--------------
PETROLEUM PRODUCTS (11.3%)
33,600 Chevron Corporation 1,764,000
22,100 Exxon Corporation 1,770,763
16,500 Mobil Corporation 1,848,000
--------------
5,382,763
--------------
PROPERTY & CASUALTY INSURANCE (3.8%)
32,200 St. Paul Companies, Inc. 1,791,125
--------------
RAILROADS (3.8%)
23,000 Norfolk Southern Corporation 1,825,625
--------------
3
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
VOICE & DATA TRANSMISSION (8.5%)
27,800 Bell Atlantic Corporation $ 1,859,125
49,600 Bellsouth Corporation 2,157,600
--------------
4,016,725
--------------
TOTAL COMMON STOCK (COST $37,135,807) 45,832,168
SHORT-TERM HOLDINGS (3.5%)
1,105,601 Forum Daily Assets Treasury Fund 1,105,601
162,665 Monarch Government Cash Fund 162,665
415,058 1785 U.S. Treasury Money Market Fund 415,058
--------------
TOTAL SHORT-TERM HOLDINGS (COST $1,683,324) 1,683,324
--------------
TOTAL INVESTMENTS (100.0%) (COST
$38,819,131) $47,515,492
--------------
--------------
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (98.5%)
ACCIDENT & HEALTH INSURANCE (0.8%)
3,200 Aetna Life & Casualty Company $ 221,600
--------------
ALCOHOLIC BEVERAGES (0.9%)
3,600 Anheuser-Busch Companies, Inc. 240,750
--------------
AMUSEMENT & RECREATION SERVICES (0.8%)
3,900 The Walt Disney Company 230,100
--------------
BANKS (7.2%)
6,350 Banc One Corporation 239,713
4,400 First Union Corporation 244,750
3,100 JP Morgan & Company 248,775
6,600 KeyCorp 239,250
3,400 NationsBank Corporation 236,725
7,700 Norwest Corporation 254,100
8,200 PNC Bank Corporation 264,450
5,300 Wachovia Corporation 242,475
--------------
1,970,238
--------------
BUSINESS SERVICES (1.8%)
3,300 Automated Data Processing, Inc. 245,025
3,800 Dun & Bradstreet Corporation 246,050
--------------
491,075
--------------
5
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
CHEMICALS (5.5%)
4,300 Air Products & Chemicals, Inc. $ 226,825
3,800 Du Pont (E.I.) De Nemours & Company 265,525
3,000 Great Lakes Chemical Corporation 216,000
2,200 Monsanto Company 269,500
7,100 Morton International, Inc. 254,712
4,100 Rohm & Haas Company 263,937
--------------
1,496,499
--------------
COMMUNICATIONS EQUIPMENT (0.8%)
3,600 Motorola, Inc. 205,200
--------------
COMPUTER & OFFICE EQUIPMENT (1.8%)
2,800 Hewlett Packard Company 234,500
5,500 Pitney Bowes, Inc. 258,500
--------------
493,000
--------------
DRUGS & PHARMACEUTICALS (8.0%)
6,000 Abbott Laboratories 250,500
3,300 Bristol-Myers Squibb Company 283,388
5,000 Eli Lilly & Company 281,250
3,200 Johnson & Johnson 274,000
4,000 Merck & Company, Inc. 263,000
4,500 Pfizer, Inc. 283,500
4,800 Schering-Plough Corporation 262,800
2,600 Warner Lambert Company 252,525
--------------
2,150,963
--------------
DURABLE GOODS-WHOLESALE (0.9%)
3,800 W. W. Grainger, Inc. 251,750
--------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRIC COMPANIES (4.7%)
9,100 Central & Southwest Corporation $ 253,663
5,400 Duke Power Company 255,825
7,200 Florida Progress Corporation 254,700
5,100 Northern States Power Company 250,537
8,200 Wisconsin Energy Corporation 251,125
--------------
1,265,850
--------------
ELECTRICAL MACHINERY (3.7%)
6,100 AMP, Inc. 234,087
3,200 Emerson Electric Company 261,600
3,600 General Electric Company 259,200
5,200 Raytheon Company 245,700
--------------
1,000,587
--------------
FABRICATED METAL PRODUCTS (2.8%)
5,300 Gillette Company 276,263
3,900 Illinois Tool Works, Inc. 230,100
5,100 Stanley Works 262,650
--------------
769,013
--------------
FINANCIAL SERVICES (0.9%)
2,800 Marsh & McLennan Companies, Inc. 248,500
--------------
FOOD & SOFT DRINKS (9.3%)
14,212 Archer Daniels Midland Company 255,817
4,500 Campbell Soup Company 270,000
3,200 Coca-Cola Company 237,600
3,600 CPC International, Inc. 247,050
4,300 General Mills, Inc. 248,325
7,350 H.J. Heinz & Company 243,468
3,800 Hershey Foods Corporation 247,000
7
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD & SOFT DRINKS (CONTINUED)
3,300 Kellogg Company $ 254,925
4,400 PepsiCo, Inc. 245,850
7,600 Sara Lee Corporation 242,250
--------------
2,492,285
--------------
GAS SYSTEMS (1.9%)
8,600 Baltimore Gas & Electric Company 245,100
5,800 Consolidated Natural Gas Company 263,175
--------------
508,275
--------------
GENERAL MERCHANDISE TRADE (2.5%)
4,900 J.C. Penney Company, Inc. 233,363
5,100 May Department Stores 215,475
9,800 Wal-Mart Stores, Inc. 219,275
--------------
668,113
--------------
GLASS, OTHER BUILDING MATERIALS (1.7%)
6,900 Corning, Inc. 220,800
5,400 PPG Industries, Inc. 247,050
--------------
467,850
--------------
GROCERY STORES (1.9%)
7,300 Albertson's, Inc. 239,989
7,800 Winn-Dixie Stores, Inc. 287,625
--------------
527,614
--------------
Industrial & Commercial Machinery (0.8%)
5,900 Dover Corporation 217,563
--------------
8
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
INSTRUMENTS & RELATED PRODUCTS (1.9%)
5,400 Bausch & Lomb, Inc. $ 213,975
3,900 Becton, Dickinson & Company 292,500
--------------
506,475
--------------
LIFE INSURANCE (2.1%)
5,900 Aon Corporation 294,264
5,300 Lincoln National Corporation 284,875
--------------
579,139
--------------
LUMBER & WOOD PRODUCTS (0.8%)
5,200 Weyerhaeuser Company 224,900
--------------
MANUFACTURING CONGLOMERATES & MISCELLANEOUS
(0.9%)
7,500 Hillenbrand Industries 254,062
--------------
MISCELLANEOUS CHEMICAL PRODUCTS (1.8%)
4,600 International Flavors & Fragrances 220,800
4,000 Minnesota Mining & Manufacturing Company 265,000
--------------
485,800
--------------
MISCELLANEOUS TRADE (0.9%)
8,300 Walgreen Company 247,962
--------------
PAPER PRODUCTS (1.9%)
3,400 Kimberly Clark Corporation 281,350
8,900 Westvaco Corporation 246,975
--------------
528,325
--------------
9
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PERSONAL SERVICES (0.8%)
5,600 H & R Block, Inc. $ 226,800
--------------
PETROLEUM PRODUCTS (3.8%)
3,500 Amoco Corporation 251,562
4,900 Chevron Corporation 257,250
3,300 Exxon Corporation 264,412
2,200 Mobil Corporation 246,400
--------------
1,019,624
--------------
PRIMARY METAL PRODUCTS (0.9%)
4,300 Nucor Corporation 245,637
--------------
PRINTING & PUBLISHING (5.3%)
6,400 Dow Jones & Company, Inc. 255,200
4,200 Gannett Company, Inc. 257,775
3,900 Knight-Ridder, Inc. 243,750
2,800 McGraw-Hill Companies, Inc. 243,950
5,900 RR Donnelley & Sons Company 232,312
3,600 Tribune Company 220,050
--------------
1,453,037
--------------
PROPERTY & CASUALTY INSURANCE (3.5%)
2,650 American International Group 245,125
2,400 Chubb Corporation 232,200
1,500 General Re Corporation 232,500
4,200 St. Paul Companies, Inc. 233,625
--------------
943,450
--------------
10
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
RAILROADS (0.9%)
3,200 Norfolk Southern Corporation $ 254,000
--------------
RESTAURANTS (0.9%)
7,700 Sysco Corporation 250,250
--------------
RUBBER PRODUCTS (0.8%)
8,100 Rubbermaid, Inc. 206,550
--------------
SANITARY SERVICES (0.7%)
6,400 Browning-Ferris Industries, Inc. 188,800
--------------
SECURITIES, BROKERS, DEALERS & ADVISORS (0.7%)
3,900 Merrill Lynch & Company 198,900
--------------
SOAP (2.7%)
3,300 Clorox Company 236,362
3,400 Colgate Palmolive Company 238,850
3,000 Procter & Gamble Company 249,000
--------------
724,212
--------------
TRANSPORTATION EQUIPMENT (3.8%)
3,300 Boeing Company 258,638
3,700 Johnson Controls, Inc. 254,375
5,100 Rockwell International Corporation 269,662
2,700 United Technologies Corporation 256,162
--------------
1,038,837
--------------
11
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
VOICE & DATA TRANSMISSION (4.7%)
3,600 American Telephone & Telegraph Company $ 233,100
4,600 Ameritech Corporation 271,400
3,800 Bell Atlantic Corporation 254,125
6,400 BellSouth Corporation 278,400
4,200 SBC Communications, Inc. 241,500
--------------
1,278,525
--------------
TOTAL COMMON STOCKS (COST $20,848,084) 26,772,110
--------------
SHORT-TERM HOLDINGS (1.5%)
409,121 Forum Daily Assets Treasury Fund 409,121
--------------
TOTAL SHORT-TERM HOLDINGS (COST $409,121) 409,121
--------------
TOTAL INVESTMENTS (100%) (COST $21,257,205) $ 27,181,231
--------------
--------------
</TABLE>
<PAGE>
THE CUTLER TRUST
CUTLER GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE SECURITY DESCRIPTION VALUE
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (75.0%)
$ 595,000 U.S. Treasury Notes, 7.125%, due 10/15/98 $ 623,635
600,000 U.S. Treasury Notes, 6.00%, due 10/15/99 613,500
500,000 U.S. Treasury Notes, 5.50%, due 4/15/00 503,906
400,000 U.S. Treasury Notes, 4.75%, due 8/31/98 395,250
400,000 U.S. Treasury Notes, 7.75%, due 1/31/00 434,750
2,000,000 U.S. Treasury Notes, 6.50%, due 08/15/05 2,131,251
100,000 U.S. Treasury Notes, 6.00%, due 9/1/97 101,250
300,000 U.S. Treasury Notes, 5.75%, due 9/30/97 302,812
--------------
TOTAL U.S. TREASURY OBLIGATIONS (COST $4,984,048) $ 5,106,354
--------------
MORTGAGE BACKED SECURITIES (23.5%)
496,196 Federal Home Loan Mortgage Corp., 6.50%, due 10/01/10 499,599
484,583 Federal Home Loan Mortgage Corp., 7.00%, due 09/01/10 494,424
600,000 Federal National Mortgage Assoc., 6.18%, due 11/20/00 606,240
--------------
TOTAL MORTGAGE BACKED SECURITIES (COST $1,576,689) 1,600,263
--------------
<CAPTION>
SHARES
<C> <S> <C>
SHORT-TERM HOLDINGS (1.5%)
99,979 Forum Daily Assets Treasury Fund 99,979
--------------
TOTAL SHORT-TERM HOLDINGS (COST $99,979) 99,979
--------------
TOTAL INVESTMENTS (100.0%) (COST $6,660,716) $ 6,806,596
--------------
--------------
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER CUTLER
EQUITY APPROVED GOVERNMENT
INCOME LIST EQUITY SECURITIES
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value $47,515,492 $27,181,231 $6,806,596
Interest, dividends and other receivables 38,041 48,194 103,392
Receivable for shares issued 10,000 12,500 2,500
----------- ------------ -----------
Total assets 47,563,533 27,241,925 6,912,488
----------- ------------ -----------
LIABILITIES:
Dividends payable -- -- 1,004
Accrued fees and other expenses 91,064 41,258 10,856
Payable for shares redeemed -- -- 1,000
----------- ------------ -----------
Total liabilities 91,064 41,258 12,860
----------- ------------ -----------
NET ASSETS $47,472,469 $27,200,667 $6,899,628
----------- ------------ -----------
----------- ------------ -----------
COMPONENTS OF NET ASSETS:
Capital paid in $38,544,645 $21,290,655 $6,809,888
Undistributed net investment income 18,473 3,783 720
Unrealized appreciation 8,696,361 5,924,026 145,880
Accumulated net realized gains (losses) 212,990 (17,797) (56,860)
----------- ------------ -----------
NET ASSETS $47,472,469 $27,200,667 $6,899,628
----------- ------------ -----------
----------- ------------ -----------
SHARES OUTSTANDING 3,814,422 2,044,946 668,379
----------- ------------ -----------
----------- ------------ -----------
NET ASSET VALUE PER SHARE $12.45 $13.30 $10.32
----------- ------------ -----------
----------- ------------ -----------
(a) Cost of Investments $38,891,131 $21,257,205 $6,660,716
</TABLE>
See notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
STATEMENTS OF OPERATIONS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER CUTLER
EQUITY APPROVED GOVERNMENT
INCOME LIST EQUITY SECURITIES
FUND FUND FUND
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $34,650 $11,695 $196,487
Dividend income 870,857 349,390 --
----------- ----------- -----------
Total investment income 905,507 361,085 196,487
----------- ----------- -----------
EXPENSES:
Advisory 109,273 62,309 8,395
Management 21,855 12,462 3,358
Transfer agency 7,059 6,689 6,293
Custodian 4,040 6,613 1,674
Accounting 18,000 24,000 19,000
Legal 21,132 6,093 545
Auditing 18,081 3,802 1,227
Trustees 3,226 1,806 508
Compliance 8,666 3,534 2,605
Other 5,464 3,533 656
----------- ----------- -----------
Total expenses 216,796 130,841 44,261
Expenses reimbursed and -- (6,000) (19,012)
fees waived ----------- ----------- -----------
Net expenses 216,796 124,841 25,249
----------- ----------- -----------
NET INVESTMENT INCOME 688,711 236,244 171,238
----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on
investments 291,025 212,206 (54,618)
Change in unrealized
appreciation 5,835,943 3,012,689 199,077
----------- ----------- -----------
NET GAIN ON INVESTMENTS 6,126,968 3,224,895 144,459
----------- ----------- -----------
INCREASE IN NET ASSETS
FROM OPERATIONS $6,815,679 $3,461,139 $315,697
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<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 688,711 236,244 171,238
Realized gain (loss) on investments 291,025 212,206 (54,618)
Change in unrealized appreciation 5,835,943 3,012,689 199,077
----------- ----------- ----------
6,815,679 3,461,139 315,697
----------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (705,125) (234,807) (170,518)
Realized capital gain (535,464) -- --
----------- ----------- ----------
(1,240,589) (234,807) (170,518)
----------- ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 2,393,378 233,549 3,772,232 322,782 905,672 91,993
Reinvested dividends 1,530,954 100,906 333,438 17,681 180,059 15,396
----------- --------- ----------- --------- ---------- ---------
3,924,332 334,455 4,105,670 340,463 1,085,731 107,389
Shares repurchased (3,496,530) (305,114) (2,021,205) (164,582) (1,126,865) (111,710)
----------- --------- ----------- --------- ---------- ---------
427,802 29,341 2,084,465 175,881 (41,134) (4,321)
----------- --------- ----------- --------- ---------- ---------
--------- --------- ---------
NET ASSETS-12/31/95 $47,472,469 $27,200,667 $6,899,628
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
See notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED JUNE 30, 1995
- --------------------------------------------------------------------------------
<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
Realized gain (loss) on investments 843,392 (130,093) --
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)
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>
17
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
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 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. All Funds are diversified. The
Trust's financial statements are prepared in accordance with generally
accepted accounting principles.
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 by dividing the value of a
Fund's net assets by the number of shares outstanding at the time the
determination is made. Securities, other than short-term, held by each of
the Funds 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 determined by the Board of Trustees. Securities with maturity of
sixty days or less are valued at amortized cost.
b. PURCHASES AND REDEMPTIONS OF SHARES
Purchases and redemptions of each Fund's shares are effected at the time of
determination of the next net asset value following the receipt of any
purchase or redemption order.
c. SECURITY TRANSACTIONS
Investment security transactions are recorded on trade date. Realized gains
and losses on investments are calculated on the basis of identified cost.
d. INTEREST AND DIVIDEND INCOME
Interest income is accrued as earned. Dividend income is recorded on
ex-date. Dividends to shareholders are declared and paid quarterly in the
Cutler Equity Income Fund and Cutler Approved List Equity Fund. Dividends
to shareholders are declared daily and paid monthly in the Cutler
Government Securities Fund. Net capital gain, if any, is distributed at
least annually to shareholders. Distributions from net investment income
and realized capital gain are based on amounts calculated in accordance
with applicable income tax regulations. Any differences between financial
statement amounts available for distribution and distributions made in
accordance with income tax regulations are primarily attributable to wash
sales and capital loss carryforwards.
18
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THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
DECEMBER 31, 1995
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e. FEDERAL INCOME TAXES
Each Fund has qualified and intends to continue to qualify as a regulated
investment company and distribute all of its taxable income. Therefore, no
provision for federal income tax is required. As of June 30, 1995, certain
of the Funds have capital loss carryforwards available to offset future
capital gains as follows:
Year of Expiration
2002 2003
---- ----
Cutler Approved List Equity Fund 11,759 201,942
Cutler Government Securities Fund -- 2,242
NOTE 2 INVESTMENT ADVISORY, MANAGEMENT AND OTHER SERVICES
The investment adviser to each Fund is Cutler & Company, L.L.C. Pursuant to
an Investment Advisory Agreement, the Adviser receives an advisory fee
from the Cutler Equity Income Fund, the Cutler Approved List Equity Fund
and the Cutler Government Securities Fund at an annual rate of 0.50%,
0.50% and 0.25% of the respective average daily net assets of each Fund.
Forum Financial Services, Inc. ("Forum") serves as the Trust's manager and
is compensated for those services at an annual rate of 0.10% of the
average daily net assets of each Fund. In addition, certain legal expenses
of $4,482 were charged to the Trust by Forum for the Cutler Equity Income
Fund. Forum also acts as the Trust's distributor pursuant to a separate
Distribution Agreement with the Trust. Forum receives no compensation under
that agreement.
Forum Financial Corp. 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. Forum Financial Corp. 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. Forum
Financial Corp. and Forum are affiliated companies.
For the period ended December 31, 1995, fees waived for each Fund by the
Investment Adviser, Manager, and Transfer Agent & Accounting were as
follows:
Investment Transfer Agent
Adviser Manager & Accounting
------- ------- ------------
Cutler Approved List Equity Fund $ -- $ -- $6,000
Cutler Government Securities Fund 8,396 3,358 7,258
19
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THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS OF SECURITIES
Cost of purchases and proceeds from sales (including maturities) of
portfolio securities (excluding short-term investments) during the
period were as follows:
Cost of Proceeds From
Purchases Sales
--------- -----
Cutler Equity Income Fund $10,069,356 $8,025,805
Cutler Approved List Equity Fund 3,809,459 1,812,096
Cutler Government Securities Fund 4,667,397 4,546,402
The cost basis for Federal income tax purposes is $38,819,733,
$21,286,610 and $6,660,716 for the Cutler Equity Income Fund, Cutler
Approved List Equity Fund and Cutler Government Securities Fund,
respectively.
Unrealized appreciation and depreciation as of December 31, 1995 were as
follows:
Unrealized Unrealized
Appreciation Depreciation
------------ ------------
Cutler Equity Income Fund $8,813,665 $117,304
Cutler Approved List Equity Fund 6,035,844 111,818
Cutler Government Securities Fund 167,189 21,309
20
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THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
CUTLER GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
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Selected per share data and ratios for a share outstanding throughout the
period.
<TABLE>
<CAPTION>
CUTLER EQUITY INCOME FUND
------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
------------ -------------------------------------
1995 1995 1994 1993 (a)
<S> <C> <C> <C> <C>
Beginning net asset value per share $10.96 $9.56 $9.95 $10.00
------ ------ ----- ------
Net investment income 0.19 0.36 (b) 0.27 0.10
Net realized and unrealized gain (loss) on securities 1.63 1.40 (0.40) (0.05)
Dividends from net investment income (0.19) (0.34) (0.26) (0.10)
Distributions from net realized gains (0.14) (0.02) 0.00 0.00
------ ------ ----- ------
Ending net asset value per share $12.45 $10.96 $9.56 $9.95
------ ------ ----- ------
------ ------ ----- ------
Ratios to average net assets:
Expenses (c) 0.99% (d) 0.97% 1.00% 0.98% (d)
Net investment income 3.16% (d) 3.49% 3.49% 2.23% (d)
Total return 16.72% 18.63% -1.37% 0.90% (d)
Portfolio turnover rate 19.24% 43.37% 42.83% 32.04%
Net assets at the end of year (000's omitted) $47,472 $41,470 $19,706 $2,853
(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 occurred,
the ratio of expenses to average net assets would have been: 0.99% (d) 0.97% 1.45% 3.69% (d)
(d) Annualized.
<CAPTION>
CUTLER APPROVED LIST FUND
------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
------------ -------------------------------------
1995 1995 1994 1993 (a)
<S> <C> <C> <C> <C>
Beginning net asset value per share $11.71 $9.78 $10.09 $10.00
------ ------ ----- ------
Net investment income 0.12 0.24 (b) 0.21 0.08
Net realized and unrealized gain (loss) on securities 1.59 1.92 (0.31) 0.09
Dividends from net investment income (0.12) (0.23) (0.21) (0.08)
Distributions from net realized gains 0.00 0.00 0.00 0.00
------ ------ ----- ------
Ending net asset value per share $13.30 $11.71 $9.78 $10.09
------ ------ ----- ------
------ ------ ----- ------
Ratios to average net assets:
Expenses (c) 1.00% (d) 1.00% 1.00% 0.98% (d)
Net investment income 1.90% (d) 2.20% 2.43% 2.27% (d)
Total return 14.60% 22.33% -1.07% 3.31% (d)
Portfolio turnover rate 7.46% 23.42% 22.27% 10.88%
Net assets at the end of year (000's omitted) $27,201 $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 occurred,
the ratio of expenses to average net assets would have been: 1.05% (d) 1.23% 1.78% 4.53% (d)
(d) Annualized.
<CAPTION>
CUTLER GOVERNMENT SECURITIES FUND
------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
------------ -------------------------------------
1995 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 0.26 0.46 (b) 0.46 0.23
Net realized and unrealized gain (loss) on securities 0.22 0.29 (0.56) 0.37
Dividends from net investment income (0.26) (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 $10.32 $10.10 $9.81 $10.37
------ ------ ----- ------
------ ------ ----- ------
Ratios to average net assets:
Expenses 0.75% (d) 0.75% 0.74% 0.53% (d)
Net investment income 5.11% (d) 4.65% 4.46% 4.14% (d)
Total return 4.81% 7.83% -1.03% 12.07% (d)
Portfolio turnover rate 71.68% 0.00% 13.51% 0.00%
Net assets at the end of year (000's omitted) $6,900 $6,796 $5,534 $696
(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 occurred,
the ratio of expenses to average net assets would have been: 1.32% (d) 1.47% 1.96% 2.34% (d)
(d) Annualized.
</TABLE>
21
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THE CUTLER TRUST
TRUSTEES OF THE CUTLER TRUST
DECEMBER 31, 1995
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[PHOTO] KENNETH R. CUTLER, CHAIRMAN OF THE BOARD
Principal portfolio manager of the two equity mutual fund
portfolios.
[PHOTO] JOHN Y. KEFFER, PRESIDENT
Chairman, Forum Financial Corp., Transfer Agent, and Forum
Financial Services, Inc., Distributor and Administrator for all
three funds, also performs such functions as computing the daily
net asset value, filing regulatory forms, etc.
[PHOTO] DR. HATTEN S. YODER, JR., INDEPENDENT TRUSTEE
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. Dr. Yoder
serves as the Trust's mandatory independent trustee, who must
approve all outside contracts, such as those with Cutler &
Company LLC, Forum Financial Group and the custodian, auditors,
and legal counsel.
[PHOTO] BROOKE CUTLER ASHLAND, TRUSTEE
Chief Executive Officer, Cutler & Company LLC. Investment
Adviser to the trust.
[PHOTO] ROBERT B. WATTS, JR., INDEPENDENT TRUSTEE
Attorney in private practice. Formerly a senior level officer,
general counsel and corporate secretary with over 25 years of
corporate, divisional and board level experience with two
Fortune 100 companies.
22
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THE CUTLER TRUST
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23
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THE CUTLER TRUST
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TABLE OF CONTENTS
DECEMBER 31, 1995
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Page
----
Chairman's Letter to the Shareholders................... 1
Cutler Equity Income Fund Portfolio..................... 2
Cutler Approved List Equity Fund Portfolio.............. 5
Cutler Government Securities Fund Portfolio............. 13
Statements of Assets and Liabilities.................... 14
Statements of Operations................................ 15
Statements of Changes in Net Assets..................... 16
Notes to Financial Statements........................... 18
Financial Highlights (Per Share Data)................... 21
Trustees of the Cutler Trust............................ 22
Manager and Distributor
Forum Financial Services
[LOGO]
CUTLER & COMPANY LLC
INVESTMENT COUNSEL
INVESTMENT ADVISER TO THE TRUST
503 Airport Road, Medford, OR 97504
(800) 228-8537 - (541) 770-9000
Fax: (541) 779-0006
[email protected]
CUTLER EQUITY INCOME
FUND
CUTLER APPROVED LIST
EQUITY FUND
CUTLER GOVERNMENT
SECURITIES FUND
SEMI-ANNUAL REPORT
December 31, 1995
