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Previous: ACTION PERFORMANCE COMPANIES INC, S-3, 1997-03-07 |
Next: JPM INSTITUTIONAL FUNDS, N-30D, 1997-03-07 |
<PAGE>
SEMI-ANNUAL REPORT DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
CUTLER EQUITY INCOME FUND Cutler & Company LLC Forum Financial
CUTLER APPROVED LIST EQUITY FUND 503 Airport Road Corp.
Medford, Oregon 97504 Two Portland Square
Portland, Maine
04101
</TABLE>
To The Cutler Trust Shareholders:
We are pleased to present this semi-annual report, and our thoughts on the
performance of the portfolios of The Cutler Trust, for the six months ending
December 31, 1996.
Our Equity Income Fund had excellent results for the second half of 1996,
outperforming the average of its mutual fund peer group as well as the general
stock market. The Fund's total return of 12.31% was significantly better than
the 10.35% total return of Lipper Equity Income Index of funds and the 11.68%
achieved by S&P 500 index of common stocks.
During the quarter ending June 30, 1996, we made shifts in the Equity Income
portfolio holdings to recognize new dynamics in the marketplace. Our stringent
quality, capitalization, and yield bias remain unchanged. In our view, the
marketplace is rewarding large global players who are making efforts to enhance
shareholder value (raising dividends, buying back stock, spinning off divisions
and such). Accordingly, we now give somewhat more weight to total performance
potential than we have in the past. At a time when the market is rewarding
investors only slightly through dividend yield, we believe this will enhance
returns over adherence to a strict yield component.
Our Approved List Fund also showed good results for the period. Its total return
of 8.89% lagged the 11.28% total return of the Lipper Growth & Income as well as
the S&P 500. During the first quarter of 1997, we will review the investment
strategy of this Fund as we did with the Equity Income portfolio to take better
advantage of the changing dynamics in the economy and marketplace.
The Government Securities Fund was closed at the end of the period. With the
expansion of our Fixed Income Department in Indianapolis, Cutler & Company can
now offer individual fixed income portfolio management.
We remain optimistic on the economic front, with corporate earnings advancing
and inflation in check. Should the outlook change, we will respond prudently.
We appreciate your confidence in our management as evidenced by our increase in
assets in the Funds.
[KENNETH CUTLER SIGNATURE] [BROOKE ASHLAND SIGNATURE]
Kenneth R. Cutler Brooke C. Ashland
Chairman of the Board Chief Executive Officer
The Cutler Trust Cutler & Company LLC
1
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (98.2%)
BANKS (8.8%)
21,000 J.P. Morgan & Company, Inc. $2,050,125
46,700 KeyCorp 2,358,350
----------
4,408,475
----------
CHEMICALS (8.7%)
21,100 Clorox Company 2,117,914
23,400 E.I. du Pont de Nemours & Company 2,208,376
----------
4,326,290
----------
COMPUTER & OFFICE EQUIPMENT (3.9%)
35,500 Pitney Bowes, Inc. 1,934,750
----------
DRUGS & PHARMACEUTICALS (9.1%)
20,800 Bristol-Myers Squibb Company 2,262,000
31,500 Eli Lilly & Company 2,299,500
----------
4,561,500
----------
ELECTRIC, GAS, & UTILITY COMPANIES (3.4%)
36,200 Duke Power Company 1,674,250
----------
ELECTRICAL MACHINERY (8.7%)
21,500 Emerson Electric Company 2,080,125
22,700 General Electric Company 2,244,444
----------
4,324,569
----------
FINANCIAL SERVICES (3.9%)
18,600 Marsh & McLennan Companies, Inc. 1,934,400
----------
</TABLE>
2
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD & SOFT DRINKS (6.5%)
16,000 Campbell Soup Company $1,284,000
55,100 H.J. Heinz Company 1,969,837
----------
3,253,837
----------
FOREST PRODUCTS (3.4%)
36,300 Weyerhaeuser Company 1,719,713
----------
GENERAL MERCHANDISE TRADE (6.2%)
33,400 J.C. Penney Company, Inc. 1,628,250
30,900 May Department Stores Company 1,444,575
----------
3,072,825
----------
GLASS, OTHER BUILDING MATERIALS (3.9%)
35,000 PPG Industries, Inc. 1,964,375
----------
LIFE INSURANCE (3.9%)
36,900 Lincoln National Corporation 1,937,250
----------
PETROLEUM PRODUCTS (8.4%)
32,300 Chevron Corporation 2,099,500
21,200 Exxon Corporation 2,077,600
----------
4,177,100
----------
PRINTING & PUBLISHING (4.1%)
27,300 Gannett Company, Inc. 2,044,088
----------
SPECIALTY CHEMICAL PRODUCTS (4.6%)
27,700 Minnesota Mining & Manufacturing Company 2,295,639
----------
</TABLE>
3
<PAGE>
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
TRANSPORTATION EQUIPMENT (6.8%)
19,400 Rockwell International Corporation $1,180,975
33,800 United Technologies Corporation 2,230,800
----------
3,411,775
----------
VOICE & DATA TRANSMISSION (3.9%)
47,600 BellSouth Corporation 1,921,851
----------
TOTAL COMMON STOCK (COST $37,050,467) 48,962,687
----------
SHORT TERM HOLDINGS (1.8%)
524,807 Forum Daily Assets Treasury Fund 524,807
374,771 1784 U.S. Treasury Money Market Fund 374,771
----------
TOTAL SHORT TERM HOLDINGS (COST $899,578) 899,578
----------
TOTAL INVESTMENTS (100.0%) (COST $37,950,045) $49,862,265
----------
----------
</TABLE>
4
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (97.9%)
ALCOHOLIC BEVERAGES (1.0%)
8,000 Anheuser-Busch Companies, Inc. $ 320,000
----------
AMUSEMENT & RECREATION SERVICES (0.9%)
4,100 The Walt Disney Company 285,466
----------
BANKS (8.7%)
7,535 Banc One Corporation 324,005
4,400 First Union Corporation 325,600
3,300 J.P. Morgan & Company, Inc. 322,166
7,500 KeyCorp 378,750
3,600 NationsBank Corporation 351,900
7,700 Norwest Corporation 334,950
9,000 PNC Bank Corporation 338,630
5,900 Wachovia Corporation 333,350
----------
2,709,351
----------
BUSINESS SERVICES (0.9%)
6,600 Automatic Data Processing, Inc. 282,975
----------
CHEMICALS (7.4%)
5,100 Air Products & Chemicals, Inc. 352,541
3,300 Clorox Company 331,238
2,600 Dow Chemical Company 203,775
3,800 E.I. du Pont de Nemours & Company 358,626
11,000 Monsanto Company 427,629
7,100 Morton International, Inc. 289,325
4,100 Rohm & Haas Company 334,666
----------
2,297,800
----------
</TABLE>
5
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMUNICATIONS EQUIPMENT (1.3%)
2,393 Lucent Technologies, Inc. $ 110,677
4,800 Motorola, Inc. 294,602
----------
405,279
----------
COMPUTER & OFFICE EQUIPMENT (1.9%)
5,800 Hewlett-Packard Company 291,450
5,600 Pitney Bowes, Inc. 305,200
----------
596,650
----------
DRUGS & PHARMACEUTICALS (8.8%)
6,000 Abbott Laboratories 304,501
3,300 Bristol-Myers Squibb Company 358,875
5,000 Eli Lilly & Company 365,000
6,400 Johnson & Johnson 318,400
4,200 Merck & Company, Inc. 332,850
4,500 Pfizer, Inc. 372,938
4,800 Schering-Plough Corporation 310,800
5,200 Warner-Lambert Company 390,000
----------
2,753,364
----------
DRUGSTORES (1.1%)
8,300 Walgreen Company 332,000
----------
DURABLE GOODS-WHOLESALE (1.0%)
4,000 W.W. Grainger, Inc. 321,000
----------
</TABLE>
6
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRIC, GAS, & UTILITY COMPANIES (5.0%)
9,500 Baltimore Gas and Electric Company $ 254,125
5,800 Consolidated Natural Gas Company 320,450
5,400 Duke Power Company 249,751
7,700 Florida Progress Corporation 248,326
5,300 Northern States Power Company 243,140
9,000 Wisconsin Energy Corporation 241,878
----------
1,557,670
----------
ELECTRICAL MACHINERY (3.7%)
6,100 AMP, Inc. 234,089
3,400 Emerson Electric Company 328,951
3,600 General Electric Company 355,953
5,200 Raytheon Company 250,250
----------
1,169,243
----------
FABRICATED METAL PRODUCTS (3.3%)
5,300 Gillette Company 412,075
4,100 Illinois Tool Works, Inc. 327,491
10,200 Stanley Works 275,400
----------
1,014,966
----------
FINANCIAL SERVICES (1.0%)
3,000 Marsh & McLennan Companies, Inc. 312,000
----------
</TABLE>
7
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD & SOFT DRINKS (9.5%)
14,922 Archer Daniels Midland Company $ 328,284
3,600 CPC International Inc. 279,000
4,500 Campbell Soup Company 361,126
6,400 Coca-Cola Company 336,801
4,600 General Mills, Inc. 291,530
7,750 H.J. Heinz Company 277,066
7,600 Hershey Foods Corporation 332,500
3,300 Kellogg Company 216,565
8,800 PepsiCo, Inc. 257,400
8,000 Sara Lee Corporation 298,000
----------
2,978,272
----------
FOREST PRODUCTS (2.8%)
3,400 Kimberly Clark Corporation 323,850
8,900 Westvaco Corporation 255,880
6,200 Weyerhaeuser Company 293,728
----------
873,458
----------
GENERAL MERCHANDISE TRADE (2.6%)
5,700 J.C. Penney Company, Inc. 277,875
5,900 May Department Stores Company 275,825
11,500 Wal-Mart Stores, Inc. 263,064
----------
816,764
----------
GLASS, OTHER BUILDING MATERIALS (2.2%)
8,000 Corning, Inc. 370,000
5,800 PPG Industries, Inc. 325,528
----------
695,528
----------
GROCERY STORES (1.6%)
7,300 Albertson's, Inc. 260,065
7,800 Winn-Dixie Stores, Inc. 246,675
----------
506,740
----------
</TABLE>
8
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
INDUSTRIAL & COMMERCIAL MACHINERY (0.9%)
5,900 Dover Corporation $ 296,475
----------
INSTRUMENTS & RELATED PRODUCTS (1.1%)
7,800 Becton, Dickinson & Company 338,326
----------
LIFE INSURANCE (2.1%)
5,900 Aon Corporation 366,541
5,300 Lincoln National Corporation 278,250
----------
644,791
----------
MANUFACTURING CONGLOMERATES (0.9%)
7,800 Hillenbrand Industries 282,750
----------
PETROLEUM PRODUCTS (4.0%)
3,800 Amoco Corporation 305,900
5,100 Chevron Corporation 331,500
3,300 Exxon Corporation 323,400
2,400 Mobil Corporation 293,401
----------
1,254,201
----------
PRINTING & PUBLISHING (4.6%)
4,200 Gannett Company, Inc. 314,476
7,800 Knight-Ridder, Inc. 298,350
6,000 McGraw-Hill Companies, Inc. 276,750
7,100 R.R. Donnelley & Sons Company 222,768
4,000 Tribune Company 315,503
----------
1,427,847
----------
</TABLE>
9
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PROPERTY & CASUALTY INSURANCE (4.2%)
2,000 Allstate Corporation $ 115,750
2,950 American International Group, Inc. 319,339
5,800 Chubb Corporation 311,750
1,800 General Re Corporation 283,951
4,700 St. Paul Companies, Inc. 275,539
----------
1,306,329
----------
RAILROADS (1.0%)
3,400 Norfolk Southern Corporation 297,500
----------
SECURITIES, BROKERS, DEALERS, & ADVISORS (1.1%)
4,400 Merrill Lynch & Company, Inc. 358,600
----------
SOAPS (2.1%)
3,400 Colgate-Palmolive Company 313,650
3,200 Procter & Gamble Company 344,000
----------
657,650
----------
SPECIALTY CHEMICAL PRODUCTS (1.8%)
5,200 International Flavors & Fragrances, Inc. 234,000
4,000 Minnesota Mining & Manufacturing Company 331,395
----------
565,395
----------
TRANSPORTATION EQUIPMENT (4.3%)
3,514 Boeing Company 373,804
3,700 Johnson Controls, Inc. 306,640
5,100 Rockwell International Corporation 310,463
5,400 United Technologies Corporation 356,400
----------
1,347,307
----------
</TABLE>
10
<PAGE>
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
VOICE & DATA TRANSMISSION (4.3%)
4,300 AT&T Corporation $ 187,050
4,600 Ameritech Corporation 278,878
4,400 Bell Atlantic Corporation 284,901
7,400 BellSouth Corporation 298,776
5,400 SBC Communications, Inc. 279,450
----------
1,329,055
----------
WHOLESALE TRADE-NONDURABLE GOODS (0.8%)
7,700 Sysco Corporation 251,215
----------
TOTAL COMMON STOCK (COST $20,379,376) 30,585,967
----------
SHORT TERM HOLDINGS (2.1%)
649,821 Forum Daily Assets Treasury Fund 649,821
5,940 1784 U.S. Treasury Money Market Fund 5,940
----------
TOTAL SHORT TERM HOLDINGS (COST $655,761) 655,761
----------
TOTAL INVESTMENTS (100.0%) (COST $21,035,137) $31,241,728
----------
----------
</TABLE>
11
<PAGE>
THE CUTLER TRUST
STATEMENTS OF ASSETS & LIABLILITIES
DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
CUTLER EQUITY
INCOME CUTLER APPROVED
FUND LIST EQUITY FUND
---------------- ----------------
<S> <C> <C>
ASSETS:
Investments, at value (a) (Note 1) $49,862,265 $31,241,728
Interest, dividends and other receivables 77,939 53,827
Receivable for securities sold -- 7,920
Receivable for Fund shares sold 59,255 2,576
---------------- ----------------
Total Assets 49,999,459 31,306,051
---------------- ----------------
LIABILITIES:
Dividends payable 1,809 1,340
Accrued fees and other expenses 72,713 40,968
Payable for Fund shares redeemed 16,827 119,166
---------------- ----------------
Total Liabilities 91,349 161,474
---------------- ----------------
NET ASSETS $49,908,110 $31,144,577
---------------- ----------------
---------------- ----------------
COMPONENTS OF NET ASSETS:
Paid in Capital $38,242,376 $21,191,498
Undistributed net investment income 3,102 2,117
Unrealized appreciation (depreciation) on investments 11,912,220 10,206,591
Accumulated net realized gain (loss) on investments (249,588) (255,629)
---------------- ----------------
NET ASSETS $49,908,110 $31,144,577
---------------- ----------------
---------------- ----------------
Shares of Beneficial Interest, No Par Value 3,783,009 2,037,342
---------------- ----------------
---------------- ----------------
NET ASSET VALUE, offering price and redemption
price per share $13.19 $15.29
---------------- ----------------
---------------- ----------------
(a) Cost of Investments $37,950,045 $21,035,137
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE CUTLER TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
CUTLER EQUITY
INCOME CUTLER APPROVED
FUND LIST EQUITY FUND
---------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income $16,375 $12,946
Dividend income 741,202 370,340
---------------- ----------------
Total investment income 757,577 383,286
---------------- ----------------
EXPENSES:
Advisory fees (Note 2) 178,658 112,989
Management fees (Note 2) 23,821 15,065
Transfer agent fees (Note 2) 7,319 6,889
Shareholder services fees (Note 2) 523 --
Custodian fees 5,413 3,500
Accounting fee (Note 2) 19,000 24,000
Legal fees (Note 2) 6,677 3,133
Audit fee 7,500 5,692
Trustees fee 7,145 4,558
Registration fees 6,573 3,801
Miscellaneous 23,315 14,516
---------------- ----------------
Total expenses 285,944 194,143
Fees waived (Note 2) -- (6,000)
---------------- ----------------
Net expenses 285,944 188,143
---------------- ----------------
NET INVESTMENT INCOME 471,633 195,143
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments sold 860,540 (236,791)
Net change in unrealized appreciation (depreciation)
on investments 4,138,142 2,554,286
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 4,998,682 2,317,495
---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,470,315 $2,512,638
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE CUTLER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
CUTLER CUTLER
EQUITY APPROVED
INCOME LIST EQUITY
FUND FUND
--------------------- ---------------------
Amount Shares Amount Shares
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
NET ASSETS -- 6/30/96 $46,285,366 $30,247,807
---------- ----------
OPERATIONS:
Net investment income 471,633 195,143
Net realized gain (loss) on investments sold 860,540 (236,791)
Net change in unrealized
appreciation (depreciation) on investments 4,138,142 2,554,286
---------- ----------
5,470,315 2,512,638
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (489,285) (204,530)
Net realized capital gain on investments (4,115,498) (94,208)
---------- ----------
(4,604,783) (298,738)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 2,868,393 213,910 1,272,227 87,860
Reinvestment of dividends 4,551,373 348,315 294,637 19,724
Cost of repurchasing shares (4,662,554) (352,706) (2,883,994) (202,813)
---------- --------- ---------- ---------
2,757,212 209,519 (1,317,130) (95,229)
---------- --------- ---------- ---------
---------- --------- ---------- ---------
NET ASSETS -- 12/31/96 (Including line A) $49,908,110 $31,144,577
---------- ----------
---------- ----------
(A) Accumulated undistributed net investment income $ 3,102 $ 2,117
---------- ----------
---------- ----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE CUTLER TRUST
STATEMENTS OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
CUTLER CUTLER
EQUITY APPROVED
INCOME LIST EQUITY
FUND FUND
--------------------- ---------------------
Amount Shares Amount Shares
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
NET ASSETS -- 6/30/95 $41,469,577 $21,889,870
---------- ----------
OPERATIONS:
Net investment income 1,263,474 446,083
Net realized gain (loss) on investments sold 3,083,405 305,373
Net change in unrealized
appreciation (depreciation) on investments 4,913,660 4,740,968
---------- ----------
9,260,539 5,492,424
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment income (1,277,607) (436,925)
Net realized capital gain on investments (535,464) --
---------- ----------
(1,813,071) (436,925)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 5,500,429 453,150 5,890,195 467,208
Reinvestment of dividends 1,796,759 144,973 427,059 31,973
Cost of repurchasing shares (9,928,867) (809,714) (3,014,816) (235,675)
---------- --------- ---------- ---------
(2,631,679) (211,591) 3,302,438 263,506
---------- --------- ---------- ---------
--------- ---------
NET ASSETS -- 6/30/96 (Including line A) $46,285,366 $30,247,807
---------- ----------
---------- ----------
(A) Accumulated undistributed net investment income $ 20,754 $ 11,504
---------- ----------
---------- ----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (Unaudited)
NOTE 1 SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Cutler Trust (the "Trust") was organized on October 2, 1992, as an
open-end, management investment company under the Investment Company Act of
1940. The Trust currently has two diversified investment portfolios
(individually a "Fund" and collectively the "Funds"). The Cutler Equity Income
Fund and Cutler Approved List Equity Fund each commenced operations on
December 30, 1992. A third portfolio, the Cutler Government Securities Fund,
ceased operations on December 27, 1996.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from these estimates. The Trust's financial
statements are prepared in accordance with generally accepted accounting
principles and based upon the following significant accounting policies.
A. SECURITY VALUATION
The Trust determines the net asset value per share of each Fund as of the
close of regular trading on the New York Stock Exchange (normally 4:00 PM,
Eastern time) on each Fund business day. Securities with a maturity of 60 days
or less are valued at amortized cost. Other securities for which market
quotations are readily available are valued using the last reported sales
price provided by independent pricing services. If no sale is reported, the
mean of the last bid and asked price is used. If no mean price is available,
the last bid price is used. In the absence of readily available market
quotations, securities are valued at fair value using procedures approved by
the Trust's Board of Trustees.
B. INTEREST AND DIVIDEND INCOME
Interest income is accrued as earned. Dividend income is recorded on the
ex-dividend date.
C. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared and paid quarterly
on the Cutler Equity Income Fund and Cutler Approved List Equity Fund.
Distributions of net realized capital gain, if any, are declared and paid
annually.
Distributions from net investment income and realized capital gain are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
D. FEDERAL INCOME TAX
As it is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all its taxable income to its shareholders, no Federal income tax provision is
required.
16
<PAGE>
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
E. SECURITY TRANSACTIONS
Security transactions are recorded on a trade date basis. Realized gain and
loss on investments are recorded on the basis of identified cost.
NOTE 2 INVESTMENT ADVISORY, MANAGEMENT AND OTHER SERVICES
The investment adviser to each Fund is Cutler & Company LLC (the "Adviser").
Pursuant to an Investment Advisory Agreement effective May 1, 1996, the
Adviser receives an advisory fee from Cutler Equity Income Fund and Cutler
Approved List Equity Fund at an annual rate of 0.75% of the average daily net
assets of each Fund. Prior to May 1, 1996, the advisory fee for Cutler Equity
Income Fund and Cutler Approved List Equity Fund was 0.50%.
Effective September 11, 1996, the manager of the Trust is Forum Administrative
Services, LLC (the "Manager"), and is compensated for its services at an
annual rate of 0.10% of the average daily net assets of each Fund. In
addition, certain legal expenses were charged to the Trust by the Manager in
the amount of $1,396. Forum Financial Services, Inc. a registered
broker-dealer ("FFSI") acts as the Trust's distributor pursuant to a separate
Distribution Agreement for which it receives no compensation.
Prior to September 11, 1996, FFSI acted as Manager of the Funds and was
compensated for its services at an annual rate of 0.10% of the average daily
net assets. Forum Financial Corp. ("FFC") serves as the Trust's transfer agent
and dividend disbursing agent and is compensated for those services in the
amount of $12,000 per year for each Fund, plus certain other fees. FFC also
performs portfolio accounting for the Trust and is compensated for those
services by each Fund in the amount of $36,000 per year for each Fund, plus
certain amounts based upon the number and types of portfolio transactions. The
Manager, FFSI and
FFC are affiliated companies.
The Adviser, Manager and FFC voluntarily agreed to waive a portion of their
fees to the Trust for certain expenses so that total expenses of each of the
Funds would not exceed certain annual expense limitations. For the six months
ended December 31, 1996, FFC waived fees totaling $6,000 on behalf of the
Culter Approved List Equity Fund.
NOTE 3 TRANSACTIONS OF SECURITIES
Cost of purchases and proceeds from sales (including maturities) of portfolio
securities (excluding short-term investments) during the six months ended
December 31, 1996 were as follows.
<TABLE>
<CAPTION>
Proceeds from
Cost of Purchases Sales
----------------- ------------------
<S> <C> <C>
Cutler Equity Income Fund $ 6,969,323 $8,730,168
Cutler Approved List Equity Fund 371,513 1,846,136
</TABLE>
17
<PAGE>
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
DECEMBER 31, 1996 (Unaudited)
The tax cost basis for Federal income tax purposes and unrealized appreciation
and depreciation based upon identified tax cost as of December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized Net
Tax Cost Appreciation Depreciation Appreciation
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cutler Equity Income Fund $37,950,045 $11,912,220 $ -- $11,912,220
Cutler Approved List Equity Fund 21,035,137 10,229,288 22,697 10,206,591
</TABLE>
18
<PAGE>
THE CUTLER TRUST
FINANCIAL HIGHLIGHTS
Selected per share data and
ratios for a share outstanding
throughout the period.
<TABLE>
<CAPTION>
CUTLER EQUITY CUTLER APPROVED
INCOME FUND LIST FUND
------------------------------------------------- ----------------------------------------------------
Six Months Six Months
Ended Ended
December December
31, Year Ended June 30, 31, Year Ended June 30,
---------- ------------------------------------ ---------- ---------------------------------------
1996(f) 1996 1995 1994 1993(a) 1996(f) 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning net asset
value per share $ 12.95 $ 10.96 $ 9.56 $ 9.95 $10.00 $ 14.18 $ 11.71 $ 9.78 $ 10.09 $ 10.00
---------- ------- ------- ------- ------- ---------- ------- ------- ------- ----------
Net investment
income 0.13 0.35 0.36(b) 0.27 0.10 0.10 0.21 0.24(b) 0.21 0.08
Net realized and
unrealized gain
(loss) on
investments 1.44 2.13 1.40 (0.40) (0.05 ) 1.16 2.47 1.92 (0.31) 0.09
Dividends from net
investment income (0.14) (0.35) (0.34) (0.26) (0.10 ) (0.10) (0.21) (0.23) (0.21) (0.08)
Distributions from
net realized gain
on investments (1.19) (0.14) (0.02) -- -- (0.05) -- -- -- --
---------- ------- ------- ------- ------- ---------- ------- ------- ------- ----------
Ending net asset
value per share $ 13.19 $ 12.95 $ 10.96 $ 9.56 $ 9.95 $ 15.29 $ 14.18 $ 11.71 $ 9.78 $ 10.09
---------- ------- ------- ------- ------- ---------- ------- ------- ------- ----------
---------- ------- ------- ------- ------- ---------- ------- ------- ------- ----------
Ratios to average
net assets:
Expenses (c) 1.21%(d) 0.98% 0.97% 1.00% 0.98% (d) 1.26%(d) 1.05% 1.00% 1.00% 0.98%(d)
Net investment
income 1.99%(d) 2.81% 3.49% 3.49% 2.23% (d) 1.30%(d) 1.65% 2.20% 2.43% 2.27%(d)
Total return 12.31% 22.93% 18.63% (1.37%) 0.90% (d) 8.89% 23.01% 22.33% (1.07%) 3.31%(d)
Portfolio turnover
rate 15.86% 57.08% 43.37% 42.83% 32.04% 1.16% 8.97% 23.42% 22.27% 10.88%
Average brokerage
commission rate
(e) $0.0524 $0.0525 N/A N/A N/A $0.0600 $0.0569 N/A N/A N/A
Net assets at the
end of year (000's
omitted) $49,908 $46,285 $41,470 $19,706 $2,853 $31,145 $30,248 $21,890 $12,620 $3,618
(a) See Note 1 for applicable date of inception.
(b) Calculated using the weighted average number of shares outstanding.
(c) During the period, various fees and expenses were waived and reimbursed.
Had such waiver and reimbursements not occured, the ratio
of expenses to average net assets would have been:
1.21%(d) 0.98% 0.97% 1.45% 3.69% (d) 1.30%(d) 1.13% 1.23% 1.78% 4.53%(d)
(d) Annualized.
(e) Amount represents the average commission per share, paid to brokers, on the purchase and sale of portfolio securities.
(f) Unaudited.
</TABLE>
19
<PAGE>
THE CUTLER TRUST
TRUSTEES OF THE CUTLER TRUST
DECEMBER 31, 1996
<TABLE>
<C> <S>
KENNETH R. CUTLER
[PHOTO] Principal portfolio manager of the two equity mutual fund portfolios.
Principal portfolio manager of institutional equity funds with objectives
similar to the mutual funds, that are managed separately by Cutler & Company
LLC.
JOHN Y. KEFFER
[PHOTO] Chairman, Forum Financial Corp., Transfer Agent, Forum Financial Services,
Inc., Distributor and Forum Administrative Services, LLC, Manager for both
funds.
DR. HATTEN S. YODER, JR.
[PHOTO] Chairman Emeritus, Geophysical Laboratory, Carnegie Institute of Washington,
and consultant to the Los Alamos National Laboratory. A member of the National
Academy of Sciences, and many national and international scientific bodies.
BROOKE CUTLER ASHLAND
[PHOTO] Chief Executive Officer, Cutler & Company LLC, Investment Adviser to the
trust.
ROBERT B. WATTS, JR.
[PHOTO] Attorney in private practice. Formerly a senior level officer, counsel and
corporate secretary with over 25 years of corporate, divisional and board
level experience with two Fortune 100 companies.
</TABLE>
20
<PAGE>
THE CUTLER TRUST
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21
<PAGE>
THE CUTLER TRUST
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22
<PAGE>
THE CUTLER TRUST
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23
<PAGE>
THE CUTLER TRUST
TABLE OF CONTENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Chairman's Letter to the Shareholders....... 1
Cutler Equity Income Fund Portfolio......... 2
Cutler Approved List Equity Fund
Portfolio................................. 5
Statements of Assets and Liabilities........ 12
Statements of Operations.................... 13
Statements of Changes in Net Assets......... 14
Notes to Financial Statements............... 16
Financial Highlights (Per Share Data)....... 19
Trustees of the Cutler Trust................ 20
</TABLE>
Distributor
Forum Financial Services, Inc.
CUTLER & COMPANY LLC
INVESTMENT MANAGEMENT
INVESTMENT ADVISER TO THE TRUST
503 Airport Road, Medford, OR 97504
(800) 228-8537 - (541) 770-9000
Fax: (541) 779-0006
info @ cutler.com
- ------------------------------------------------
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
- -------------------------------------------
CUTLER EQUITY
INCOME FUND
CUTLER APPROVED LIST
EQUITY FUND
SEMI-ANNUAL REPORT
December 31, 1996
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