<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 1996
File No. 33-52850
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 6
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 8
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THE CUTLER TRUST
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: 207-879-1900
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Max Berueffy, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective:
X immediately upon filing pursuant to Rule 485, paragraph (b)
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on [ ] pursuant to Rule 485, paragraph (b)
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60 days after filing pursuant to Rule 485, paragraph (a)(i)
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on [ ] pursuant to Rule 485, paragraph (a)(i)
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75 days after filing pursuant to Rule 485, paragraph (a)(ii)
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on [ ] pursuant to Rule 485, paragraph (a)(ii)
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this post-effective amendment designates a new effective date for a
- ----- previously filed post-effective amendment
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the investment Company
Act of 1940; accordingly, no fee is payable herewith. A Rule 24f-2 Notice for
the Registrant's fiscal year ending June 30, 1996 was filed with the Commission
on or about August 27, 1996.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART A
Form N-1A Location in Prospectus
Item No. (Caption)
- --------- ----------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses of Investing in the Trust
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description of Investment Objectives
Registrant and Policies; The Trust
and its Shares
Item 5. Management of the Fund Management of the Trust
Item 5A. Management's Discussion of Not Applicable
Fund Performance
Item 6. Capital Stock and Investment Objectives and
Other Securities Policies; Dividends and
Tax Matters; The Trust and
its Shares; Management of
the Trust - Shareholder
Servicing
Item 7. Purchase of Securities Purchases and Redemptions
Being Offered of Shares; Management of
the Trust - Manager
Item 8. Redemption or Purchases and Redemptions
Repurchase of Shares
Item 9. Pending Legal Not Applicable
Proceedings
<PAGE>
PART B
Location in Statement
Form N-1A of Additional Information
Item No. (Caption)
- --------- -------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information
and History Not Applicable
Item 13. Investment Objectives Investment Policies;
and Policies Investment Limitations
Item 14. Management of the Management of the Trust; The Trust
Registrant and its Share-holders
Item 15. Control Persons and Management of the Trust; The Trust
Principal Holders of and its Shareholders
Securities
Item 16. Investment Advisory and Management of the Trust
Other Services
Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices
Item 18. Capital Stock and Other Determination of Net
Securities Asset Value; The Trust
and its Shareholders
Item 19. Purchase, Redemption Determination of Net
and Pricing of Securities Asset Value; Additional
Being Offered Purchase and Redemption
Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management of the Trust - Manager
Item 22. Calculation of Performance Data
Performance Data
Item 23. Financial Statements Report of Independent
Auditors; Financial Statements
<PAGE>
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.
<TABLE>
<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
<PAGE>
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."
<PAGE>
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.
<TABLE>
<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>
<PAGE>
<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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
September 15, 1996
This Statement of Additional Information supplements the Prospectus offering
shares of the Cutler Equity Income Fund, the Cutler Approved List Equity Fund
and the Cutler Government Securities Fund (each a "Fund" and collectively the
"Funds"), three portfolios of The Cutler Trust (the "Trust"), and should be read
only in conjunction with the applicable Prospectus, a copy of which may be
obtained by an investor without charge by contacting the Trust's Shareholder
Servicing Agent at the address listed above.
TABLE OF CONTENTS
Page
1. Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Investment Limitations. . . . . . . . . . . . . . . . . . . . . . . 3
3. Management of the Trust . . . . . . . . . . . . . . . . . . . . . . 4
Cutler & Company
Manager and Distributor
Transfer Agent
Custodian and Auditor
Expenses
4. Determination of Net Asset Value. . . . . . . . . . . . . . . . . . 8
5. Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . 8
6. Additional Purchase and Redemption Information. . . . . . . . . . .10
Exchanges Between Funds
Additional Redemption Matters
7. Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8. The Trust and its Shareholders. . . . . . . . . . . . . . . . . . .11
9. Performance Data. . . . . . . . . . . . . . . . . . . . . . . . . .12
Yield Calculations
Total Return Calculations
10. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .14
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES
Except for cash balances, the Cutler Equity Income Fund and the Cutler Approved
List Equity Fund (the "Equity Funds") invest in securities on the Cutler &
Company Approved List (the "Approved List"). Each Fund may invest in shares of
other investment companies to the extent permitted under the 1940 Act. A Fund
will bear its pro rata portion of another mutual fund's expenses.
As a fundamental policy of each Fund, no portfolio transactions may be executed
with Cutler & Company or any of its affiliates. See "Portfolio Transactions."
THE CUTLER GOVERNMENT SECURITIES FUND
At times, some of the mortgage-related U.S. Government Securities in which the
Cutler Government Securities Fund may invest may have higher-than-market
interest rates, and will therefore be purchased at a premium above their par
value. Unscheduled prepayments on these securities, which are made at par, will
cause the Fund to suffer a loss equal to the unamortized premium, if any.
Although the rate adjustment feature of adjustable rate mortgage-related
securities that the Fund may purchase may act as a buffer to reduce sharp
changes in the value of these securities, they are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on adjustable rate mortgage-related securities may lag
behind changes in prevailing market interest rates. During periods of declining
interest rates, income to the Fund derived from adjustable rate mortgages that
are not prepaid will decrease as the coupon rate resets along with the decline
in interest rates, in contrast to the income on fixed-rate mortgages which will
remain constant.
During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Fund's adjustable rate mortgage-related investments may
lag behind changes in market interest rates. This lag may result in a slightly
lower value until the coupons reset to market rates. Some adjustable rate
mortgage-related securities may have "caps" that limit the maximum amount by
which the interest rate paid by a borrower may change at each reset date or over
the life of the loan, and fluctuation in interest rates above these levels could
cause these securities to "cap out" and to behave more like fixed-rate
securities.
Since the inception of the mortgage-related, pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid. The Government National Mortgage Association
("GNMA") issues GNMA Certificates that represent an interest in one mortgage or
a pool of mortgages that are insured by the Federal Housing Administration or
the Farmers Home Administration or are guaranteed by the Veterans
Administration. Residential mortgage loans are pooled also by the Federal Home
Loan Mortgage Corporation ("FHLMC"), which issues participation certificates
("PCs") which represent interests in mortgages from FHLMC's national portfolio.
In addition, the Federal National Mortgage Association ("FNMA") purchases
residential mortgages from a list of approved institutions and issues
pass-through securities.
In addition, the Fund may invest in Collateralized Mortgage Obligations (CMOs),
mortgage-related securities that are typically structured with a number of
classes or series that have different maturities and are generally retired in
sequence. Each class of bonds receives periodic interest payments according to
the coupon rate on the bonds. All monthly principal payments and any
prepayments from the collateral pool, however, are paid first to the "Class 1"
bondholders. The principal payments are such that the Class 1 bonds will be
completely repaid no later than, for example, five years after the offering
date. Thereafter, all
<PAGE>
payments of principal are allocated to the next most senior class of bonds until
that class of bonds has been fully repaid. Although full payoff of each class
of bonds is contractually required by a certain date, any or all classes of
bonds may be paid off sooner than expected because of an acceleration in
prepayments of the obligations comprising the collateral pool.
2. INVESTMENT LIMITATIONS
Each Fund has adopted the following fundamental investment limitations. These
limitations, along with any investment policies deemed to be fundamental, cannot
be changed without the affirmative vote of the lesser of (i) more than 50% of
the outstanding shares of the Fund or (ii) 67% of the shares of the Fund present
or represented at a shareholders meeting at which the holders of more than 50%
of the outstanding shares of the Fund are present or represented. Each Fund may
not:
(1) With respect to 75% of its assets, purchase a security other than an
obligation issued or guaranteed as to principal and interest by the
United States Government, its agencies or instrumentalities ("U.S.
Government Securities") if, as a result, more than 5% of the Fund's
total assets would be invested in the securities of a single issuer.
(2) Purchase a security other than a U.S. Government Security if,
immediately after the purchase, more than 25% of the value of the
Fund's total assets would be invested in the securities of issuers
having their principal business activities in the same industry.
(3) Underwrite securities of other issuers, except to the extent that the
Fund may be considered to be acting as an underwriter in connection
with the disposition of portfolio securities.
(4) Purchase or sell real estate or any interest therein, except that the
Fund may invest in debt obligations secured by real estate or
interests therein or issued by companies that invest in real estate or
interests therein.
(5) Purchase or sell physical commodities or contracts relating to
physical commodities; borrow money; invest in the securities of
foreign issuers or purchase securities through a foreign market;
purchase or write options or invest in futures contracts; or purchase
securities on margin or make short sales of securities, except for the
use of short-term credit necessary for the clearance of purchases and
sales of portfolio securities.
(6) Issue senior securities except as appropriate to evidence indebtedness
that the Fund may be permitted to incur, and provided that the Fund
may issue shares of series or classes that the Board of Trustees (the
"Board") may establish.
(7) Enter into repurchase agreements, lend securities or otherwise make
loans; except through the purchase of debt securities that may be
purchased by the Fund.
Each Fund has adopted the following nonfundamental investment limitations that
may be changed by the Board without shareholder approval. Each Fund may not:
(a) Invest in securities (other than fully-collateralized debt
obligations) issued by companies that have conducted continuous
operations for less than three years, including the operations of
predecessors (unless guaranteed as to principal and interest by an
issuer in whose securities the Fund could invest) if, as a result,
more than 5% of the value of the Fund's total assets would be so
invested.
(b) Invest in or hold securities of any issuer other than the Fund if, to
the Fund's knowledge, those Trustees and officers of the Trust or the
Fund's investment adviser, individually owning beneficially more than
1/2 of 1% of the securities of the issuer, in the aggregate own more
than 5% of the issuer's securities.
(c) Invest in oil, gas or other mineral exploration or development
programs, or leases, or in real estate limited partnerships; provided
that the Fund may invest in securities issued by companies engaged in
such activities.
<PAGE>
(d) Acquire securities that are not readily marketable ("illiquid") or are
subject to restrictions on the sale of such securities to the public
without registration under the Securities Act of 1933.
Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of the Fund's
assets, the change in status of a security or purchases and redemptions of
shares will not be considered a violation of the limitation.
3. MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations during
the past five years are set forth below.
* BROOKE R. ASHLAND, age 45, Trustee.
Ms. Ashland is currently Chief Executive Officer and Manager of Cutler &
Company, LLC. Prior thereto she was President, Trustee Investment
Services, Inc. (financial services marketing firm) 1990-1994. Ms. Ashland
has been associated with Cutler & Company, Inc. since 1977 in various
capacities such as Assistant to the Chairman, CFO and Secretary. Her
address is 503 Airport Road, Medford, Oregon 97504.
* KENNETH R. CUTLER, age 76, Trustee, Chairman of the Board and Vice President.
Principal Portfolio Manager of the Equity Funds and Investment Committee
Member, Cutler & Company, LLC (registered investment adviser). His address
is 503 Airport Road, Medford, Oregon 97504.
* JOHN Y. KEFFER, age 54, Trustee and President.
President and Director, Forum Financial Services, Inc. (registered
broker-dealer), Forum Financial Corp. (registered transfer agent) and Forum
Advisors, Inc. (registered investment adviser). Mr. Keffer is also a
director and/or officer of various registered investment companies for
which Forum Financial Services, Inc. serves as manager, administrator
and/or distributor. His address is Two Portland Square, Portland, Maine
04101.
DR. HATTEN S. YODER, JR., age 75, Trustee.
Director Emeritus, Geophysical Laboratory, Carnegie Institution of
Washington and consultant to the Los Alamos National Laboratory. Dr. Yoder
has been a director of the Geophysical Laboratory and consultant to the Los
Alamos National Laboratory since 1971. His address is 6709 Melody Lane,
Bethesda, Maryland 20817.
ROBERT B. WATTS, JR., age 65, Trustee.
Counsel, Northhaven Associates (private legal practice) since 1990. His
address is 2230 Brownsboro Highway Eagle Point, Oregon 97524.
CAROL FISCHER, age 40, Vice President, Assistant Secretary and Assistant
Treasurer.
Chief Operating Officer of Cutler & Company, LLC (registered investment
adviser). Prior thereto, Ms. Fischer was associated with Cutler & Company,
Inc., in various capacities. Her address is 503 Airport Road, Medford,
Oregon 97504.
<PAGE>
MAX BERUEFFY, age 44, Vice President and Secretary.
Counsel, Forum Financial Services, Inc., with which he has been associated
since May 1994. Prior to that, Mr. Berueffy was a member of the staff of
the U.S. Securities and Exchange Commission. Mr. Berueffy is also an
officer of various registered investment companies for which Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine 04101.
DAVID I. GOLDSTEIN, age 35, Assistant Secretary.
Counsel, Forum Financial Services, Inc., with which he has been associated
since 1991. Prior thereto, Mr. Goldstein was associated with the law firm
of Kirkpatrick & Lockhart. Mr. Goldstein is also an officer of various
registered investment companies for which Forum Financial Services, Inc.
serves as manager, administrator and/or distributor. His address is Two
Portland Square, Portland, Maine 04101.
TRACI E. BLOCK, age 40, Assistant Secretary.
Fund Administrator, Forum Financial Services, Inc., with which she has been
associated since 1995. Prior thereto, Ms. Block was a legal assistant with
the law firm of Pierce, Atwood in Portland, Maine. Ms. Block is also an
officer of various registered investment companies for which Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. Her address is Two Portland Square, Portland, Maine 04101.
MICHAEL D. MARTINS, age 30, Treasurer.
Director of Fund Accounting, Forum Financial Corp. Prior to that, Mr.
Martins was a Manager of Deloitte & Touche, LLP. Mr. Martins is also an
officer of various registered investment companies for which Forum
Financial Corp. serves as fund accountant and/or transfer agent. His
address is Two Portland Square, Portland, Maine 04101.
LYNN Y. KELLEY, age 29, Assistant Treasurer.
Fund Accounting Manager, Forum Financial Corp., with which she has been
associated since December 1993. Prior to that, Ms. Kelley was Senior-in-
Charge in Fund Accounting with Investors Bank and Trust Company. Her
address is Two Portland Square, Portland, Maine 04101.
* John Y. Keffer, Brooke R. Ashland and Kenneth R. Cutler are interested persons
of the Trust as that term is defined in the 1940 Act. Kenneth R. Cutler is
Brooke R. Ashland's father.
For the fiscal year ended June 30, 1996, the aggregate compensation paid to the
Trustees of the Trust by the funds is as follows: Dr. Hatten S. Yoder, Jr.,
$10,000; Mr. Robert B. Watts, $2,500, Jr. Messrs. Cutler and Keffer received no
compensation for their services as Trustee for the past year and no officer of
the Trust is compensated by the Trust. Non interested Trustees are reimbursed
for travel and related expenses incurred in attending meetings of the Board.
CUTLER & COMPANY
Under an Investment Advisory Agreement with the Trust (the "Agreement"), Cutler
& Company furnishes at its own expense all services, facilities and personnel
necessary in connection with managing each Fund's investments and effecting
portfolio transactions for each Fund.
The Agreement provides for an initial term of twelve months from its effective
date with respect to a Fund and for its continuance in effect for successive
twelve-month periods thereafter, provided the Agreement is
<PAGE>
specifically approved at least annually by the Board or by vote of the
shareholders, and in either case, by a majority of the Trustees who are not
parties to the Agreement or interested persons of any such party at a meeting
called for the purpose of voting on the Agreement. The Agreement is terminable
without penalty by the Trust with respect to a Fund on 60 days' written notice
when authorized either by vote of the Fund's shareholders or by a vote of a
majority of the Board, or by Cutler & Company on 60 days' written notice, and
will automatically terminate in the event of its assignment. The Agreement also
provides that, with respect to each Fund, Cutler & Company shall not be liable
for any error of judgment or mistake of law or for any act or omission in the
performance of its duties to the Fund, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under the Agreement.
The following table shows the dollar amount of fees payable under the Investment
Advisory Agreements between Cutler & Company and the Trust with respect to each
Fund, the amount of fee that was waived by Cutler & Company, if any, and the
actual fee received by Cutler & Company. The data are for the past three fiscal
years.
Advisory Fee Advisory Fee Advisory Fee
Payable Waived Retained
------- ------ --------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1996 244,542 0 244,542
Year Ended June 30, 1995 163,051 0 163,051
Year Ended June 30, 1994 54,007 30,495 23,512
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1996 147,509 4,351 143,158
Year Ended June 30, 1995 83,557 15,411 68,146
Year Ended June 30, 1994 38,186 38,186 0
CUTLER GOVERNMENT SECURITIES FUND
Year Ended June 30, 1996 16,509 16,509 0
Year Ended June 30, 1995 14,952 14,952 0
Year Ended June 30, 1994 10,134 10,134 0
MANAGER AND DISTRIBUTOR
Forum Administrative Services, LLC ("Forum") supervises the overall management
of the Trust (which includes, among other responsibilities, monitoring of
performance and billing of the transfer agent and custodian and arranging for
maintenance of books and records of the Trust), and provides the Trust with
general office facilities pursuant to a Management Agreement with the Trust.
The Management Agreement provides for an initial term of twelve months from its
effective date with respect to a Fund and for its automatic renewal each year
thereafter for an additional term of one year.
The Management Agreement terminates automatically if it is assigned and may be
terminated without penalty with respect to any Fund by vote of that Fund's
shareholders or by either party on not more than 60 days' written notice. The
Management Agreement also provides that Forum shall not be liable for any error
of judgment or mistake of law or for any act or omission in the administration
or management of the Trust, except for willful misfeasance, bad faith or gross
negligence in the performance of Forum's duties or by reason of reckless
disregard of its obligations and duties under the Management Agreement.
<PAGE>
At the request of the Board, Forum provides persons satisfactory to the Board to
serve as officers of the Trust. Those officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
Forum, Cutler & Company or their affiliates.
The following table shows the dollar amount of fees payable under the Management
Agreements between Forum and the Trust with respect to each Fund, the amount of
fee that was waived by Forum, if any, and the actual fee received by Forum. The
data are for the past three fiscal years.
Management Management Management
Fee Fee Fee
Payable Waived Retained
------- ------ -------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1996 45,027 0 45,027
Year Ended June 30, 1995 32,610 0 32,610
Year Ended June 30, 1994 10,802 3,098 7,704
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1996 26,997 0 26,997
Year Ended June 30, 1995 16,711 7,613 9,098
Year Ended June 30, 1994 7,637 4,794 2,843
CUTLER GOVERNMENT SECURITIES FUND
Year Ended June 30, 1996 6,604 6,604 0
Year Ended June 30, 1995 5,981 5,981 0
Year Ended June 30, 1994 4,054 4,054 0
Forum Financial Services, Inc. ("FFSI") is the Trust's distributor and acts as
the agent of the Trust in connection with the offering of shares of the Funds
pursuant to a separate Distribution Agreement. The Distribution Agreement
provides for an initial term of twelve months from its effective date and for
its continuance in effect for successive twelve-month periods thereafter,
provided the agreement is specifically approved at least annually by the Board
or by vote of the shareholders, and in either case, by a majority of the
Trustees who are not parties to the Distribution Agreement or interested persons
of any such party at a meeting called for the purpose of voting on the
Distribution Agreement. All subscriptions for Shares obtained by Forum are
directed to the Trust for acceptance and are not binding on the Trust until
accepted by it. FFSI receives no compensation or reimbursement of expenses for
the distribution services provided pursuant to the Distribution Agreement.
The Distribution Agreement provides that FFSI shall not be liable for any error
of judgment or mistake of law or for any act or omission in the administration
or management of the Trust, except for willful misfeasance, bad faith or gross
negligence in the performance of FFSI's duties or by reason of reckless
disregard of its obligations and duties under the Distribution Agreement. The
Distribution Agreement also provides for certain indemnification of FFSI.
The Distribution Agreement is terminable with respect to a Fund without penalty
by the Trust on 60 days' written notice when authorized either by vote of the
Fund's shareholders or by a vote of a majority of the Board, or by FFSI on 60
days' written notice, and will automatically terminate in the event of its
assignment.
TRANSFER AGENT
Forum Financial Corp. ("FFC") acts as transfer agent, dividend disbursing agent
and fund accountant for the Trust pursuant to a Transfer Agency and Fund
Accounting Agreement. The Transfer Agency and Fund Accounting Agreement
provides for an initial term of twelve months from its effective date with
respect to
<PAGE>
a Fund and for its automatic renewal for successive one-year periods thereafter.
Cutler & Company may act as a sub transfer agent or processing agent. For its
services, FFC is paid a transfer agent fee at an annual rate of $12,000 per year
plus certain account charges and is reimbursed for certain expenses incurred on
behalf of the Funds. FFC is paid an additional fee for its portfolio accounting
services of $36,000 per year for each Fund, subject to adjustments for the
number and type of portfolio transactions.
The following table shows the dollar amount of fees payable under the Transfer
Agency and Fund Accounting Agreements between Forum and the Trust with respect
to each Fund, the amount of fee that was waived by Forum, if any, and the actual
fee received by Forum. The data are for the past three fiscal years.
Transfer Transfer Transfer
Agent Agent Agent
and and and
Accounting Accounting Accounting
Fee Fee Fee
Payable Waived Retained
------- ------ --------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1996 54,422 0 54,422
Year Ended June 30, 1995 50,716 0 50,716
Year Ended June 30, 1994 49,706 13,754 35,952
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1996 63,471 12,000 51,471
Year Ended June 30, 1995 60,989 0 60,989
Year Ended June 30, 1994 48,471 15,682 32,789
CUTLER GOVERNMENT SECURITIES FUND
Year Ended June 30, 1996 51,118 9,334 41,784
Year Ended June 30, 1995 48,465 12,465 36,000
Year Ended June 30, 1994 49,294 33,162 16,132
CUSTODIAN AND AUDITOR
Pursuant to a Custodian Agreement with the Trust, The First National Bank of
Boston, 100 Federal Street, Boston, Massachusetts 02106, acts as the custodian
of the Trust's assets. The custodian's responsibilities include safeguarding
and controlling the Funds' cash and securities, determining income and
collecting interest on the Funds' investments.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281-
1438, independent auditors, has been chosen by the Board to act as auditor for
the Trust.
EXPENSES
Each Fund's expenses comprise Trust expenses attributable to the Fund that are
allocated to the Fund, and those not attributable to a particular Fund that are
allocated among all Funds in proportion to their average net assets. Cutler &
Company voluntarily agreed to waive its fees or reimburse each Fund to the
extent a Fund's total expenses exceed the amounts indicated in the Prospectus
until December 31, 1997. This voluntary limit may be discontinued at any time
after that date. Any waivers or reimbursements have the effect of increasing
the Funds' yield and may not be recouped at a later date. Cutler & Company also
has agreed to reimburse the Trust for certain of each Fund's operating expenses
(exclusive of interest, taxes, brokerage fees and organization and extraordinary
expenses, all to the extent permitted by applicable state law or regulation)
which in any year exceed the limits prescribed by any state in which the Fund's
shares are qualified for sale. Forum believes that currently the most
restrictive expense limitation imposed by any state is 2-1/2% of the first $30
million of each Fund's average net assets, 2% of the next $70 million of its
average net assets and 1-1/2% of its average net assets in excess of $100
million. For the purpose of this
<PAGE>
obligation to reimburse expenses, each Fund's annual expenses are estimated and
accrued daily, and any appropriate estimated payments are made monthly.
Subject to any fee waiver or expense reimbursement arrangements, the Trust pays
all of its expenses, including: interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of shares; premiums of
insurance for the Trust, its Trustees and officers and fidelity bond premiums;
applicable fees, interest charges and expenses of third parties, including
Cutler & Company, Forum, FFC, the Trust's custodian and shareholder servicing
agents; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; telecommunications
expenses; funds transmission expenses; auditing, legal and compliance expenses;
costs of forming the Trust and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information and
shareholder reports and delivering them to existing shareholders; expenses of
meetings of shareholders and proxy solicitations therefor; costs of maintaining
books and accounts and preparing tax returns; costs of reproduction, stationery
and supplies; fees and expenses of the Trust's Trustees; compensation of the
Trust's officers and employees who are not officers of Cutler & Company, Forum
or their respective affiliates; costs of other personnel who may be employees of
Cutler & Company, Forum or their respective affiliates performing services for
the Trust; costs of Trustee meetings; Securities and Exchange Commission
registration fees and related expenses; and state or foreign securities laws
registration fees and related expenses.
4. DETERMINATION OF NET ASSET VALUE
The Trust does not determine net asset value on the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. Purchases and redemptions are effected as of
the next determined net asset value following the receipt of any purchase or
redemption order.
In determining the approximate market value of portfolio investments, the Funds
may employ outside organizations, which may use a matrix or formula method that
takes into consideration market indices, matrices, yield curves and other
specific adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.
5. PORTFOLIO TRANSACTIONS
The Equity Funds will effect purchases and sales through brokers who charge
commissions. Allocations of transactions to brokers and the frequency of
transactions are determined by Cutler & Company in its best judgment and in a
manner deemed to be in the best interest of shareholders of the Funds rather
than by any formula. The primary consideration is prompt execution of orders in
an effective manner and at the most favorable price available to the Funds.
Purchases and sales of portfolio securities for the Cutler Government Securities
Fund usually are principal transactions. These purchases are made directly from
the issuer or from a market maker for the securities. There usually are no
brokerage commissions paid for such purchases. Purchases from dealers serving
as market makers include the spread between the bid and asked prices. No
portfolio transactions are executed with Cutler & Company or any of its
affiliates.
Any Fund may not always pay the lowest commission or spread available. Rather,
in determining the amount of commission, including certain dealer spreads, paid
in connection with Fund transactions, the Adviser takes into account such
factors as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the services described below) and any
risk assumed by the executing broker. The Adviser may also take into account
payments made by brokers effecting transactions for the
<PAGE>
Fund (i) to the Fund or (ii) to other persons on behalf of the Fund for services
provided to it for which it would be obligated to pay.
Consistent with section 28(e) of the Securities and Exchange Act, the exercise
of the Adviser's fiduciary duties under its Investment Advisory agreement with
the Trust, and any other applicable law, the Adviser may allocate brokerage on
behalf of the Trust to brokers who provide research services and may cause the
Fund to pay these brokers a higher amount of commission than may be charged by
other brokers. Such research and analysis may be used by the Adviser in
connection with services to clients other than the Fund, and the Adviser's fee
is not reduced by reason of the Adviser's receipt of the research services.
Investment decisions for each Fund will be made independently from those for any
other account (including another Fund) that is or may in the future become
managed by Cutler & Company or its affiliates. When a Fund and other accounts
managed by Cutler & Company are contemporaneously engaged in the purchase or
sale of the same security, however, the transactions may be averaged as to price
and allocated equitably to each account. In some cases, this policy might
adversely affect the price paid or received by a Fund or the size of the
position obtainable for the Fund. In addition, when purchases or sales of the
same security for a Fund and for other accounts managed by Cutler & Company
occur contemporaneously, the purchase or sale orders may be aggregated in order
to obtain any price advantages available to large denomination purchases or
sales.
The following table shows the aggregate brokerage commissions with respect to
each Fund. The data are for the past three fiscal years or shorter period if
the Fund has been in operation for a shorter period.
Aggregate
Commissions
Paid
----
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1996 50,146
Year Ended June 30, 1995 42,374
Year Ended June 30, 1994 22,010
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1996 10,983
Year Ended June 30, 1995 19,824
Year Ended June 30, 1994 15,452
CUTLER GOVERNMENT SECURITIES FUND
Year Ended June 30, 1996 0
Year Ended June 30, 1995 0
Year Ended June 30, 1994 0
6. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of each Fund are sold on a continuous basis by the distributor at net
asset value without any sales charge. Shareholders may effect purchases or
redemptions or request any shareholder privilege in person at FFC's offices
located at Two Portland Square, Portland, Maine 04101.
<PAGE>
EXCHANGES BETWEEN FUNDS
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. Exchange transactions will be
made on the basis of relative net asset value per share at the time of the
exchange transaction. For Federal tax purposes, exchange transactions are
treated as sales on which a purchaser will realize a capital gain or loss
depending on whether the value of the shares redeemed is more or less than his
basis in such shares at the time of the transaction.
Proceeds of an exchange transaction may be invested only in another Fund account
for which the share registration is the same as the account from which the
exchange is made. The terms of the exchange privilege are subject to change,
and the privilege may be terminated by any Fund or the Trust. However, the
privilege will not be terminated, and no material change that restricts the
availability of the privilege to shareholders will be implemented, without 60
days' notice to shareholders, to the extent required by applicable regulation.
ADDITIONAL REDEMPTION MATTERS
Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partly in portfolio securities if the Board of Trustees
determines economic conditions exist which would make payment in cash
detrimental to the best interests of the Fund. If payment for shares redeemed
is made wholly or partly in portfolio securities, brokerage costs may be
incurred by the shareholder in converting the securities to cash. The Trust
has filed an election with the Securities and Exchange Commission pursuant to
which each Fund may only effect a redemption in portfolio securities if the
particular shareholder is redeeming more than $250,000 or 1% of the Fund's total
net assets, whichever is less, during any 90-day period.
In addition to the situations described in the Prospectus under "Purchases and
Redemptions of Shares," the Trust may redeem shares involuntarily to reimburse
each Fund for any loss sustained by reason of the failure of a shareholder to
make full payment for shares purchased by the shareholder or to collect any
charge relating to transactions effected for the benefit of a shareholder which
is applicable to the Fund's shares as provided in the Prospectus from time to
time.
Shareholders' rights of redemption may not be suspended, except (i) for any
period during which the New York Stock Exchange, Inc. is closed (other than
customary weekend and holiday closings) or during which the Securities and
Exchange Commission determines that trading thereon is restricted, (ii) for any
period during which an emergency (as determined by the Securities and Exchange
Commission) exists as a result of which disposal by a Fund of its securities is
not reasonably practicable or as a result of which it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
(iii) for such other period as the Securities and Exchange Commission may by
order permit for the protection of the shareholders of the Fund.
Fund shares are normally issued for cash only. In the Adviser's discretion,
however, each Fund may accept portfolio securities that meet the investment
objective and policies of the Fund as payment for Fund shares. The Fund will
only accept securities that (i) are not restricted as to transfer either by law
or liquidity of market and (ii) have a value which is readily ascertainable (and
not established only by valuation procedures).
<PAGE>
7. TAXATION
Qualification as a regulated investment company under the Internal Revenue Code
of 1986 does not involve governmental supervision of management or investment
practices or policies. Investors should consult their own counsel for a
complete understanding of the requirements the Funds must meet to qualify for
such treatment. The information set forth in the Prospectus and the following
discussion relate solely to Federal income taxes on dividends and distributions
by the Funds. Investors should consult their own counsel for further details
and for the application of state and local tax laws to the investor's particular
situation.
In order to qualify for treatment as a regulated investment company under the
Internal Revenue Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its net investment income (which includes
dividends, interest and the excess of net short-term capital gain over net
long-term capital losses) and must meet several additional requirements. Among
these requirements are the following: (1) each Fund must derive at least 90% of
its gross income each taxable year from dividends, interest, gains from the sale
or other disposition of securities and certain other income; (2) each Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities held for less than three months; (3) at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. Government
Securities, securities of other regulated investment companies and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets or
10% of the outstanding voting securities of the issuer; and (4) at the close of
each quarter of the Fund's taxable year, not more than 25% of the value of its
total assets may be invested in securities (other than U.S. Government
Securities or securities of other regulated investment companies) of any one
issuer.
8. THE TRUST AND ITS SHAREHOLDERS
The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this point.
The Trust Instrument contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations and expenses of the Trust and requires that
a disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder or former shareholder held personally liable
for the obligations of the series. The Trust Instrument also provides that each
series shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the series and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law does not
apply, no contractual limitation of liability was in effect, and the portfolio
is unable to meet its obligations. The Trust believes that, in view of the
above, the risk of personal liability to shareholders is remote.
The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Each series' capital consists of shares of beneficial interest. Shares are
fully paid and nonassessable, except as set forth above with respect to Trustee
and shareholder liability. Shareholders representing 10% or more of the Trust
or a series may, as set forth in the Trust Instrument, call meetings of the
Trust or series for any purpose related to the Trust or series, as the case may
be, including, in the case of a meeting of the entire
<PAGE>
Trust, the purpose of voting on removal of one or more Trustees. The Trust or
any series may be terminated upon the sale of its assets to, or merger with,
another open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally such terminations must be
approved by the vote of the holders of a majority of the outstanding shares of
the Trust or the series; however, the Trustees may, without prior shareholder
approval, change the form of organization of the Trust by merger, consolidation
or incorporation. If not so terminated or reorganized, the Trust and its series
will continue indefinitely. Under the Trust, the Trustees may, without
shareholder vote, cause the Trust to merge or consolidate into one or more
trusts, partnerships or corporations or cause the Trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the Trust's registration
statement.
Although each Fund is offering only its own shares, it is possible that a Fund
might become liable for any misstatement in the Prospectus of another Fund. The
Board has considered this factor in approving the use of a single combined
Prospectus.
As of August 31, 1996, the officers and directors of the Trust owned as a group
less than 1% of the outstanding shares of the Fund. Also as of that date, the
following persons owned of record 5% or more of the outstanding shares of the
Fund:
CUTLER EQUITY INCOME FUND
ENTERPRISE TRUST & INVESTMENT CO. TTEE THE KARL KIRCHGESSNER FOUNDATION
FBO BIG CREEK LUMBER PROFIT SHARING 1278 Glenneyre, Suite 311
3654 Highway 1 Laguna Beach, CA 92651
Davenport, CA 95014 8.45%
9.77%
CUTLER APPROVED LIST EQUITY FUND
THE KARL KIRCHGESSNER FOUNDATION HAROLD E. GRAY - IRA ACCOUNT
1278 Glenneyre, Suite 311 810 Whitney.
Laguna Beach, CA 92651 Visalia, CA 93277
35.26% 5.17%
CUTLER GOVERNMENT SECURITIES FUND
MICHELETTI, INC. THE KARL KIRCHGESSNER FOUNDATION STEEL STRUCTURES, INC.
MPP & P/S PLAN 1278 Glenneyre, Suite 311 MPP & P/S PLAN
P.O. Box 26620 Laguna Beach, CA 92651 P.O. Box 1170
San Jose, CA 95159 12.01% Madera, CA 93659
16.17% 10.82%
9. PERFORMANCE DATA
Each Fund may quote performance in various ways. All performance information
supplied by a Fund in advertising is historical and is not intended to indicate
future returns. A Fund's net asset value, yield and total return fluctuate in
response to market conditions and other factors, and the value of Fund shares
when redeemed may be more or less than their original cost.
<PAGE>
In performance advertising a Fund may compare any of its performance information
with data published by independent evaluators such as Lipper Analytical
Services, Inc., CDA/Wiesenberger or other companies that track the investment
performance of investment companies ("Fund Tracking Companies"). A Fund may
also compare any of its performance information with the performance of
recognized stock, bond and other indexes, including but not limited to the
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average, U.S. Treasury bonds, bills or notes, the Salomon Brothers Bond Index,
the Shearson Lehman Bond Index, and changes in the Consumer Price Index as
published by the U.S. Department of Commerce. A Fund may refer to general
market performances over past time periods such as those published by Ibbotson
Associates. A Fund may also refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of a Fund and comparative mutual fund
data and ratings reported in independent periodicals, such as newspapers and
financial magazines.
For the 30 day period ended June 30, 1996, the annualized yield of the Cutler
Government Securities Fund was 6.75%. For the one year period ended June 30,
1996, the average annual total returns of the Cutler Equity Income Fund, Cutler
Approved List Equity Fund and Cutler Government Securities Fund were 22.93%,
23.01%, and 2.60%, respectively. Since commencement of operations on December
30, 1992, the average annual total returns of the Cutler Equity Income Fund,
Cutler Approved List Equity Fund and Cutler Government Securities Fund were
11.08%, 12.56%, and 4.35%, respectively.
YIELD CALCULATIONS
Yields for a Fund used in advertising are computed by dividing the Fund's
interest income for a given 30 days or one-month period, net of expenses, if
any, by the average number of shares entitled to receive distributions during
the period, dividing this figure by the Fund's net asset value per share at the
end of the period and annualizing the result (assuming compounding of income) in
order to arrive at an annual percentage rate. Capital gain and loss generally
are excluded from these calculations.
Income calculated for the purpose of determining a Fund's yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a Fund may differ from the rate of
distribution the Fund paid over the same period or the rate of income reported
in the Fund's financial statements.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that a Fund's yield for any given
period is not an indication or representation by the Fund of future yields or
rates of return on the Fund's shares. The yields of the Funds are not fixed or
guaranteed, and an investment in the Funds is not insured or guaranteed.
Accordingly, yield information may not necessarily be used to compare shares of
the Funds with investment alternatives which, like money market instruments or
bank accounts, may provide a fixed rate of interest. Also, it may not be
appropriate to compare a Fund's yield information directly to similar
information regarding investment alternatives that are insured or guaranteed.
TOTAL RETURN CALCULATIONS
Each Fund may advertise its total return. Total returns quoted in advertising
reflect all aspects of a Fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the Fund's net asset
value per share over the period. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a Fund over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. Whereas
average annual returns are a
<PAGE>
convenient means of comparing investment alternatives, investors should realize
that the performance is not constant over time but changes from year to year,
and that average annual returns represent averaged figures as opposed to the
actual year-to-year performance of a Fund.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over a given period
according to the following formula:
n
P(1+T) = ERV, where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value (ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 payment made at the beginning
of the applicable period).
In addition to average annual returns, the Funds may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Total returns may be broken down into their components of
income and capital (including capital gain and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return.
Period total return is calculated according to the following formula:
PT = (ERV/P-1), where:
PT = period total return.
The other definitions are the same as in average annual total return above.
10. FINANCIAL STATEMENTS
The financial statements of the Trust for its fiscal year ended June 30, 1996
(which include statements of assets and liabilities, statements of operations,
statements of changes in net assets, notes to financial statements, financial
highlights, statements of investments and the auditors' report thereon) are
included in the Annual Report to Shareholders of the Trust delivered along with
this Statement of Additional Information, and are incorporated herein by
reference.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Included in the Prospectus:
Financial Highlights.
Included in each Statement of Additional Information:
Audited financial statements for the fiscal year ended June 30, 1996
including Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Notes to Financial
Statements, Financial Highlights, Portfolio of Investments and Report
of Independent Auditors (for each Fund, filed with the Securities and
Exchange Commission on August __, 1996 for such Fund pursuant to Rule
30b2-1 under the Investment Company Act of 1940, as amended, and
incorporated herein by reference.
(b) Exhibits.
NOTE: * INDICATES THAT THE EXHIBIT IS INCORPORATED HEREIN BY REFERENCE. ALL
REFERENCES TO A POST-EFFECTIVE AMENDMENT ("PEA") OR PRE-EFFECTIVE AMENDMENT
("PreEA") ARE TO PEAS AND PreEAS TO REGISTRANT'S REGISTRATION STATEMENT ON FORM
N-1A, FILE NO. 33-52850.
(1)* Copy of Registrant's Trust Instrument (filed on March 8, 1996 as
Exhibit 1 of PEA 4).
(2)* Copy of Registrant's By-Laws (filed on March 8, 1996 as Exhibit 2 of
PEA 4).
(3) None.
(4) None.
(5)* Copy of Investment Advisory Agreement between Registrant and Cutler
& Company, LLC (filed on March 8, 1996 as Exhibit 5 of PEA 4).
(6)* Copy of Distribution Agreement between Registrant and Forum
Financial Services, Inc. (filed on March 8, 1996 as Exhibit 6 of PEA
4).
(7) None.
<PAGE>
(8)* Copy of Custodian Agreement between Registrant and The First
National Bank of Boston (filed on March 8, 1996 as Exhibit 8 of PEA
4).
(9) (a)* Copy of Management Agreement between Registrant and Forum
Financial Services, Inc. (filed on March 8, 1996 as Exhibit
9(a) of PEA 4).
(b)* Copy of Transfer Agency and Fund Accounting Agreement
between Registrant and Forum Financial Corp. (filed on March
8, 1996 as Exhibit 9(b) of PEA 4).
(c)* Copy of Shareholder Service Plan (filed on March 8, 1996 as
Exhibit 9(c) of PEA 4).
(d)* Copy of Form of Shareholder Service Agreement (filed on
March 8, 1996 as Exhibit 9(d) of PEA 4).
(10)* Opinion of counsel (filed on March 8, 1996 as Exhibit 10 of PEA 4).
(11) Consent of independent auditors (filed herewith).
(12) None.
(13)* Investment Representation letter (filed on March 8, 1996 as Exhibit
13 of PEA 4).
(14) None.
(15) None.
(16) None.
Other Exhibits:
(A)* Power of Attorney, Brooke R. Ashland, Trustee of Registrant
(filed on March 8, 1996 as Other Exhibit (A) of PEA 4).
(B)* Power of Attorney, Kenneth R. Cutler, Trustee of Registrant
(filed on March 8, 1996 as Other Exhibit (B) of PEA 4).
(C)* Power of Attorney, Hatten S. Yoder, Jr., Trustee of
Registrant (filed on March 8, 1996 as Other Exhibit (C) of
PEA 4).
(D)* Power of Attorney, John Y. Keffer, Trustee of Registrant
(filed on March 8, 1996 as Other Exhibit (D) of PEA 4).
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF AUGUST 31, 1996.
Title of Class of Shares
of Beneficial Interest Number of Holders
------------------------ -----------------
Cutler Equity Income Fund 149
Cutler Approved List Equity Fund 105
Cutler Government Securities Fund 42
ITEM 27. INDEMNIFICATION.
The general effect of Section 10.02 of the Registrant's Trust Instrument is
to indemnify existing or former trustees and officers of the Trust to the
fullest extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
the Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. This description is modified in its entirety by the provisions of
Section 10.02 of the Registrant's Trust Instrument contained in the Registration
Statement as Exhibit 1, filed herewith.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The description of Cutler & Company, LLC under the caption "Management of
the Trust" in both the Prospectus and the Statement of Additional Information,
constituting Parts A and B, respectively, of this Registration Statement, is
incorporated by reference herein.
<PAGE>
The following are the managing members of Cutler & Company, LLC, including
their business connections that are of a substantial nature. The address of
Cutler & Company, LLC is 503 Airport Road, Medford, Oregon 97504.
Brooke Cutler Ashland, Chief Executive Officer and Manager. A founding
shareholder of Cutler & Company, Inc. in 1977, and has been associated with
the company since that time in various capacities such as Assistant to the
Chairman, CFO and Secretary.
Geoffrey W. Cutler, Senior Portfolio Manager, Investment Committee Member
and Manager. A founding shareholder of Cutler & Company, Inc. in 1977, Mr.
Cutler joined Cutler & Company, Inc. in 1978 in the capacity of President
and has been associated with the company since that time.
Stephen F. Brennan, Director of Marketing and Manager. Mr. Brennan joined
Cutler & Company, Inc. in 1994, and has been associated with the company
since that time. For the preceding three years, he had been Vice
President, Marketing, Equitable Capital/ Alliance Capital Management.
Michael T. Dieschbourg, CIMA, Managing Director, Investment Committee
Member and Manager. Mr. Dieschbourg joined Cutler & Company, Inc. in 1995,
and has been associated with the company since that time. For the
preceding three years, he had been Senior Investment Management Consultant,
Prudential Bache Securities.
John F. Ray, Senior Portfolio Manager, Investment Committee Member and
Manager. Mr. Ray joined Cutler & Company, Inc. in 1995, and has been
associated with the company since that time. For the preceding three
years, he had been Chairman and President, Commerce Capital Management,
Inc.
William G. Gossard, Director of Fixed Income, Investment Committee Member
and Manager. Mr. Gossard joined Cutler & Company, Inc. in 1995, and has
been associated with the company since that time. For the preceding three
years, he had been Vice President and Senior Portfolio Manager, Fixed
Income, Banc One Investment Advisors.
Carol Fischer, Chief Operating Officer. Prior thereto, Ms. Fischer was
associated with Cutler & Company, Inc., in various capacities
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Forum Financial Services, Inc., Registrant's underwriter, serves as
underwriter to Avalon Capital, Inc., Core Trust (Delaware), The CRM Funds,
The Cutler Trust, Forum Funds, Inc., Monarch Funds, Norwest Advantage
Funds, Norwest Select Funds, Sound Shore Fund, Inc., Stone Bridge Funds,
Inc. and Trans Adviser Funds, Inc.
(b) John Y. Keffer, President and Secretary of Forum Financial Services, Inc.,
is the Chairman and President of Registrant. David R. Keffer, Vice
President and Treasurer of
<PAGE>
Forum Financial Services, Inc., is the Vice President, Assistant Treasurer
and Assistant Secretary of Registrant. Their business address is Two
Portland Square, Portland, Maine 04101.
(c) Not Applicable.
ITEM 30. LOCATION OF BOOKS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of Forum Financial Services, Inc., Two
Portland Square, Portland, Maine 04101, Forum Administrative Service, LLC,
Two Portland Square, Portland, Maine 04101, and Forum Financial Corp., Two
Portland Square, Portland, Maine 04101. The records required to be
maintained under Rule 31a-1(b)(1) with respect to journals of receipts and
deliveries of securities and receipts and disbursements of cash are
maintained at the offices of the Registrant's custodian. The records
required to be maintained under Rule 31a-1(b)(5), (6) and (9) are maintained
at the offices of the Registrant's adviser, as listed in Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES.
Not Applicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to:
(i) contain in its Trust Instrument or Bylaws provisions for assisting
shareholder communications and for the removal of trustees substantially similar
to those provided for in Section 16(c) of the Investment Company Act of 1940,
except to the extent such provisions are mandatory or prohibited under
applicable Delaware law.
(ii) furnish each person to whom a prospectus is delivered with a copy of
Registrant's latest annual report to shareholders relating to the portfolio or
class thereof to which the prospectus relates upon request and without charge.
Notwithstanding any undertaking to the contrary in previous filings of its
Registration Statement, the Registrant does not undertake to hold any meetings
of shareholders except as required by applicable federal or state law or the
provisions of its Trust Instrument.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Portland, and State of Maine on the 12th
day of September, 1996.
THE CUTLER TRUST
By: /s/ John Y. Keffer
------------------
John Y. Keffer
President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registrant's Registration Statement has been signed below by the following
persons on the 12th day of September, 1996.
Signatures Title
---------- -----
(a) Principal Executive Officer
/s/ John Y. Keffer President
-------------------------
John Y. Keffer
(b) Principal Financial and
Accounting Officer
/s/ Michael D. Martins Treasurer
-------------------------
Michael D. Martins
(c) All of the Trustees
/s/ John Y. Keffer Trustee
-------------------------
John Y. Keffer
Brooke R. Ashland*
Kenneth R. Cutler* Trustee
Hatten Yoder, Jr.* Trustee
By: /s/ John Y. Keffer
-------------------------
John Y. Keffer
Attorney in Fact*
<PAGE>
INDEX TO EXHIBITS
Sequential
Exhibit Page Number
- ------- -----------
11 Consent of Independent Auditors
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 6 to Registration
Statement No. 33-52850 of The Cutler Trust of our report dated August 16, 1996,
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement, and to the references to us under the
headings "Financial Highlights" in the Prospectus, which is a part of such
Registration Statement, and "Custodian and Auditor" in the Statement of
Additional Information.
/S/Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
September 9, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CUTLER APPROVED LIST EQUITY FUND DATED 6/30/96 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 020
<NAME> CUTLER APPROVED LIST EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 22,592,837
<INVESTMENTS-AT-VALUE> 30,245,142
<RECEIVABLES> 43,522
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,288,664
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,857
<TOTAL-LIABILITIES> 40,857
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,508,628
<SHARES-COMMON-STOCK> 2,132,571
<SHARES-COMMON-PRIOR> 1,869,065
<ACCUMULATED-NII-CURRENT> 11,504
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 75,370
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,652,305
<NET-ASSETS> 30,247,807
<DIVIDEND-INCOME> 701,125
<INTEREST-INCOME> 28,030
<OTHER-INCOME> 0
<EXPENSES-NET> 283,072
<NET-INVESTMENT-INCOME> 446,083
<REALIZED-GAINS-CURRENT> 305,373
<APPREC-INCREASE-CURRENT> 4,740,968
<NET-CHANGE-FROM-OPS> 5,492,424
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 436,925
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,890,195
<NUMBER-OF-SHARES-REDEEMED> 3,014,816
<SHARES-REINVESTED> 427,059
<NET-CHANGE-IN-ASSETS> 8,357,937
<ACCUMULATED-NII-PRIOR> 367,432
<ACCUMULATED-GAINS-PRIOR> (130,093)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 147,509
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 305,928
<AVERAGE-NET-ASSETS> 26,997,453
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 2.47
<PER-SHARE-DIVIDEND> .21
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.18
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CUTLER EQUITY INCOME FUND DATED 6/30/96 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT
</LEGEND>
<SERIES>
<NUMBER> 010
<NAME> CUTLER EQUITY INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 38,750,846
<INVESTMENTS-AT-VALUE> 46,524,924
<RECEIVABLES> 59,651
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,584,575
<PAYABLE-FOR-SECURITIES> 218,425
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80,784
<TOTAL-LIABILITIES> 299,209
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,485,164
<SHARES-COMMON-STOCK> 3,573,490
<SHARES-COMMON-PRIOR> 3,785,081
<ACCUMULATED-NII-CURRENT> 20,754
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,005,370
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,774,078
<NET-ASSETS> 46,285,366
<DIVIDEND-INCOME> 1,643,980
<INTEREST-INCOME> 60,258
<OTHER-INCOME> 0
<EXPENSES-NET> 440,764
<NET-INVESTMENT-INCOME> 1,263,474
<REALIZED-GAINS-CURRENT> 3,083,405
<APPREC-INCREASE-CURRENT> 4,913,660
<NET-CHANGE-FROM-OPS> 9,260,539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,277,607
<DISTRIBUTIONS-OF-GAINS> 535,464
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,500,429
<NUMBER-OF-SHARES-REDEEMED> 9,928,867
<SHARES-REINVESTED> 1,796,759
<NET-CHANGE-IN-ASSETS> 4,815,789
<ACCUMULATED-NII-PRIOR> 1,136,677
<ACCUMULATED-GAINS-PRIOR> 843,392
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 244,542
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440,764
<AVERAGE-NET-ASSETS> 45,026,490
<PER-SHARE-NAV-BEGIN> 10.96
<PER-SHARE-NII> .35
<PER-SHARE-GAIN-APPREC> 2.13
<PER-SHARE-DIVIDEND> .35
<PER-SHARE-DISTRIBUTIONS> .14
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.95
<EXPENSE-RATIO> .98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM
CUTLER GOVERNMENT SECURITIES FUND DATED 6/30/96 AND IS QUALIFIED
IN INTS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 030
<NAME> CUTLER GOVERNMENT SECURITIES FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 6,494,703
<INVESTMENTS-AT-VALUE> 6,289,131
<RECEIVABLES> 99,859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,388,990
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,723
<TOTAL-LIABILITIES> 8,723
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,623,239
<SHARES-COMMON-STOCK> 650,527
<SHARES-COMMON-PRIOR> 672,700
<ACCUMULATED-NII-CURRENT> 1,713
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (39,113)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (205,572)
<NET-ASSETS> 6,380,267
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 413,936
<OTHER-INCOME> 0
<EXPENSES-NET> 49,667
<NET-INVESTMENT-INCOME> 364,269
<REALIZED-GAINS-CURRENT> (36,871)
<APPREC-INCREASE-CURRENT> (152,375)
<NET-CHANGE-FROM-OPS> 175,023
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 362,556
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,066,999
<NUMBER-OF-SHARES-REDEEMED> 1,628,925
<SHARES-REINVESTED> 334,143
<NET-CHANGE-IN-ASSETS> (415,316)
<ACCUMULATED-NII-PRIOR> 276,319
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,509
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 94,421
<AVERAGE-NET-ASSETS> 6,603,743
<PER-SHARE-NAV-BEGIN> 10.10
<PER-SHARE-NII> .55
<PER-SHARE-GAIN-APPREC> (.29)
<PER-SHARE-DIVIDEND> .55
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.81
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
