<PAGE>
ANNUAL REPORT JUNE 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CUTLER EQUITY INCOME FUND Cutler & Company, LLC Forum Financial Corp.
CUTLER APPROVED LIST EQUITY FUND 503 Airport Road Two Portland Square
Medford, OR 97504 Portland, Maine 04101
</TABLE>
- --------------------------------------------------------------------------------
To The Cutler Trust Shareholders:
We are pleased to present our 1998 Annual Report for the fiscal year ended June
30, 1998. This has been an extraordinary year for the markets, with many
divergent anomalies -- newly issued stocks trading wildly, the broad range of
smaller issues just treading water, and a mere handful of large, dominant issues
leading the popular averages higher. The S&P 500 Index of common stocks
increased 30.16%.
With the popular averages currently hard to relate to, we increasingly have
related our performance to our peer groups, as measured by Lipper Analytical
Services, Inc.+ The following table presents these comparisons in context, and
on page 3, our life-of-the-fund data is compared with the S&P 500.
Annualized performance through June 30, 1998.
<TABLE>
<CAPTION>
Cutler Lipper Cutler Approved Lipper
Equity Income Equity Income* List Growth & Income*
----------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
1 Year...................... 21.60% 21.05% 24.90% 22.24%
2 Year...................... 29.39% 24.06% 28.00% 25.58%
3 Year...................... 27.16% 22.96% 26.29% 24.33%
5 Year...................... 19.20% 17.47% 19.51% 19.00%
Since Inception
(12/30/92)................ 17.40% 17.50% 17.94% 18.62%
</TABLE>
We are pleased to tell you that Robert W. Lamberti, CFA, Portfolio Manager and
Head Equity Analyst in our Philadelphia institutional office, will join Ken
Cutler in co-managing the Approved List Fund.
We continue to believe that in times of diverging markets and economic
uncertainty, investors will be rewarded by conservative stock selection with a
bias toward companies offering dividend yield, high market capitalization, and
demonstrating continuing total performance. We appreciate your confidence in our
management. As always, if you have any questions, please let us help.
Sincerely,
<TABLE>
<S> <C>
/s/ Kenneth R. Cutler /s/ Brooke R. Ashland
Kenneth R. Cutler Brooke R. Ashland
Chairman of the Board Chief Executive Officer
The Cutler Trust Cutler & Company, LLC
</TABLE>
- ------------------------
*The Lipper Equity Income Fund Index is an ndex of thirty equity income funds.
The Lipper Growth & Income Fund Index is an index of thirty growth & income
funds. Individuals cannot invest directly in this index.
+ Lipper classifies mutual funds by investment objective defined in the Wall
Street Journal.
Past performance is no guarantee of future results.
Total return reflects reinvestment of all dividends, income and capital gains.
Investment return and principal value of an investment in the Cutler Funds will
fluctuate so that when redeemed, shares may be worth more or less than their
original cost. For the period reported, some of the Funds' fees were waived or
expenses reimbursed; otherwise, total return would have been lower.
1
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
INVESTMENT ADVISER'S REPORT JUNE 30, 1998
- --------------------------------------------------------------------------------
Last year we stated: "For the moment, America seems to be enjoying the best of
all worlds. Any literate and willing worker can find a job, companies make
increasing profits just by intelligently holding out their hand, and
miraculously prices don't go up (except for things you buy). We are dealing with
a worldwide flow of financial transactions of such size, and traveling at such
speed, as to be only vaguely comprehensible. It is easy to see why irrational
exuberance can dance around the margins."
This year we cautiously continue those observations, except to note that many
companies find it increasingly difficult to find places to hold out their hands,
and exuberance is becoming narrower and more selective.
Over many years we have discussed the relationship of the Dow Jones Industrial
Average to the Gross Domestic Product. This seems to have served as a
"rationality ratio", with the Dow related to the GDP expressed in billions. For
the past three years we have reported ratios of 70%, 75%, and 97%. This year the
ratio is 107% (and this is well behind the S&P 500 this year). The rational
parameters historically seem to be between 60% and 140%. By this measure,
however imperfect, the blue-chip sector appears worthy of increasingly close
attention and selectivity.
It is in this context that we view the performance of the portfolios of The
Cutler Trust. Throughout the year, we felt quite confident in owning large, high
quality companies, capable of participating in, and reflecting the long-term
growth of, the domestic, and cautiously, the global economy. We also were aware
of the added value that these are the types of companies with the market
liquidity that allows us to shift with change.
Particular matters that we are following closely include the Asian crises
currently unfolding, the European Monetary Union, due to begin taking effect at
the end of this year, and the "Year 2000" computer problems due a year later.
EQUITY INCOME FUND
The Equity Income Fund typically invests in the top quartile of the "Approved
List" as arrayed to assist our selection of those issues most likely to reflect
our current strategy, which is total return. Since this is a concentrated
strategy, we may hold some temporary cash reserves pending redeployment. At June
30, 1998, we held 11.6% of the portfolio in U.S. Treasury Bills, vs. 7.9% last
year.
APPROVED LIST FUND
The Approved List Fund typically invests in 90% to 100% of the issues on the
"Approved List"; currently, we hold 96 issues, or 93% of the List. During flat
market periods we are inclined to invest generally equal amounts in each issue
on the List. Currently we are overweighted toward those demonstrating continuing
total return. We will continue to shift weighting as appropriate.
2
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
JUNE 30, 1998
- --------------------------------------------------------------------------------
These charts reflect a comparison of changes in value of a $10,000 investment in
the Cutler Equity Income Fund and Approved List Equity Fund since inception,
including reinvestment of all dividends and distributions, and the performance
of the Standard & Poor's 500 Index ("S&P 500"). The index does not reflect
expenses, which have been deducted from the Fund's return.
The S&P 500 is a market weighted index composed of 500 large capitalization
companies and reflects the reinvestment of dividends. Shares may be worth more
or less at redemption than at original purchase. Past performance is not
predictive nor a guarantee of future results.
Cutler Equity Income Fund
vs. S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUTLER EQUITY FUND S&P 500
<S> <C> <C> <C> <C>
12/30/92 $9,900.00 $10,000.00
01/31/93 $9,770.00 $10,083.53
02/28/93 $9,920.00 $10,220.91
03/31/93 $10,110.00 $10,436.55
04/30/93 $9,868.57 $10,184.30
05/31/93 $9,979.22 $10,455.93
06/30/93 $10,044.61 $10,486.46
07/31/93 $10,135.47 $10,444.28
08/31/93 $10,549.37 $10,839.75
09/30/93 $10,584.70 $10,754.18
10/31/93 $10,838.41 $10,976.46
11/30/93 $10,533.96 $10,872.31
12/31/93 $10,508.59 $11,003.80
01/31/94 $10,733.04 $11,377.55
02/28/94 $10,314.74 $11,068.99
03/31/94 $9,896.43 $10,587.05
04/30/94 $9,999.30 $10,722.92
05/31/94 $10,163.90 $10,898.44
06/30/94 $9,906.72 $10,631.54
07/31/94 $10,113.98 $10,980.39
08/31/94 $10,487.03 $11,429.80
09/30/94 $10,259.05 $11,150.80
10/31/94 $10,394.72 $11,400.49
11/30/94 $10,071.19 $10,985.85
12/31/94 $10,205.31 $11,148.47
01/31/95 $10,744.10 $11,437.35
02/28/95 $11,018.77 $11,882.65
03/31/95 $11,145.55 $12,232.73
04/30/95 $11,390.39 $12,592.70
05/31/95 $11,837.48 $13,095.01
06/30/95 $11,752.32 $13,398.95
07/31/95 $11,891.72 $13,843.04
08/31/95 $11,966.78 $13,877.71
09/30/95 $12,653.05 $14,463.05
10/31/95 $12,598.97 $14,411.41
11/30/95 $13,150.52 $15,043.42
12/31/95 $13,717.76 $15,333.18
01/31/96 $13,960.16 $15,854.44
02/29/96 $13,938.12 $16,001.83
03/31/96 $14,136.45 $16,155.93
04/30/96 $14,103.13 $16,393.88
05/31/96 $14,336.34 $16,816.00
06/30/96 $14,447.38 $16,880.09
07/31/96 $14,045.76 $16,134.66
08/31/96 $14,179.63 $16,475.49
09/30/96 $15,016.35 $17,401.97
10/31/96 $15,824.40 $17,881.76
11/30/96 $16,744.69 $19,232.21
12/31/96 $16,225.60 $18,851.22
01/31/97 $17,234.32 $20,028.29
02/28/97 $17,738.68 $20,185.52
03/31/97 $17,146.98 $19,357.71
04/30/97 $18,060.50 $20,512.34
05/31/97 $18,899.95 $21,760.37
06/30/97 $19,887.53 $22,734.73
07/31/97 $20,828.66 $24,543.17
08/31/97 $19,602.72 $23,169.24
09/30/97 $20,729.60 $24,437.39
10/31/97 $20,096.16 $23,622.16
11/30/97 $21,027.69 $24,714.75
12/31/97 $21,637.46 $25,138.88
01/31/98 $21,774.23 $25,416.64
02/28/98 $22,745.32 $27,248.75
03/31/98 $23,765.65 $28,643.01
04/30/98 $23,546.36 $28,931.07
05/31/98 $23,244.83 $28,434.33
06/30/98 $24,182.29 $29,588.42
Average Annual Total Return Value
Since Inception on
One Year Five Year 12/30/92 6/30/98
Cutler Equity Fund 21.60% 19.20% 17.40% $24,182
S&P 500 Index 30.15% 23.04% 21.80% $29,588
</TABLE>
Cutler Approved List Equity Fund
vs. S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUTLER APPROVED LIST S&P 500
<S> <C> <C> <C> <C>
12/30/92 $9,910.00 $10,000.00
01/31/93 $9,770.00 $10,083.53
02/28/93 $9,950.00 $10,220.91
03/31/93 $10,100.00 $10,436.55
04/30/93 $9,989.45 $10,184.30
05/31/93 $10,150.25 $10,455.93
06/30/93 $10,165.32 $10,486.46
07/31/93 $10,054.50 $10,444.28
08/31/93 $10,477.64 $10,839.75
09/30/93 $10,351.71 $10,754.18
10/31/93 $10,544.15 $10,976.46
11/30/93 $10,392.22 $10,872.31
12/31/93 $10,498.58 $11,003.80
01/31/94 $10,661.35 $11,377.55
02/28/94 $10,356.15 $11,068.99
03/31/94 $9,995.01 $10,587.05
04/30/94 $10,107.55 $10,722.92
05/31/94 $10,271.23 $10,898.44
06/30/94 $10,056.39 $10,631.54
07/31/94 $10,313.46 $10,980.39
08/31/94 $10,796.74 $11,429.80
09/30/94 $10,539.68 $11,150.80
10/31/94 $10,674.14 $11,400.49
11/30/94 $10,363.85 $10,985.85
12/31/94 $10,583.63 $11,148.47
01/31/95 $10,906.24 $11,437.35
02/28/95 $11,291.29 $11,882.65
03/31/95 $11,509.83 $12,232.73
04/30/95 $11,739.82 $12,592.70
05/31/95 $12,147.52 $13,095.01
06/30/95 $12,301.72 $13,398.95
07/31/95 $12,532.83 $13,843.04
08/31/95 $12,595.87 $13,877.71
09/30/95 $13,150.02 $14,463.05
10/31/95 $13,086.70 $14,411.41
11/30/95 $13,772.70 $15,043.42
12/31/95 $14,097.23 $15,333.18
01/31/96 $14,510.61 $15,854.44
02/29/96 $14,574.20 $16,001.83
03/31/96 $14,661.64 $16,155.93
04/30/96 $14,768.04 $16,393.88
05/31/96 $15,055.32 $16,816.00
06/30/96 $15,132.46 $16,880.09
07/31/96 $14,481.48 $16,134.66
08/31/96 $14,726.93 $16,475.49
09/30/96 $15,551.33 $17,401.97
10/31/96 $15,883.35 $17,881.76
11/30/96 $16,868.69 $19,232.21
12/31/96 $16,478.02 $18,851.22
01/31/97 $17,253.96 $20,028.29
02/28/97 $17,652.71 $20,185.52
03/31/97 $17,073.99 $19,357.71
04/30/97 $17,981.72 $20,512.34
05/31/97 $18,878.64 $21,760.37
06/30/97 $19,851.21 $22,734.73
07/31/97 $21,161.62 $24,543.17
08/31/97 $19,786.23 $23,169.24
09/30/97 $20,836.72 $24,437.39
10/31/97 $20,380.92 $23,622.16
11/30/97 $21,401.05 $24,714.75
12/31/97 $21,956.66 $25,138.88
01/31/98 $22,050.80 $25,416.64
02/28/98 $23,333.37 $27,248.75
03/31/98 $24,633.59 $28,643.01
04/30/98 $24,562.91 $28,931.07
05/31/98 $24,032.77 $28,434.33
06/30/98 $24,793.80 $29,588.42
Average Annual Total Return Value
Since Inception on
One Year Five Year 12/30/92 6/30/98
Cutler Approved List 24.90% 19.51% 17.94% $24,794
S&P 500 Index 30.15% 23.04% 21.80% $29,588
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (86.6%)
BANKS (4.0%)
45,000 State Street Corp. $ 3,127,500
------------
BUSINESS SERVICES (2.9%)
31,000 Automatic Data Processing, Inc. 2,259,125
------------
CHEMICALS (1.9%)
20,000 E.I. du Pont de Nemours & Co. 1,492,500
------------
COMMUNICATIONS EQUIPMENT (3.9%)
36,000 Lucent Technologies, Inc. 2,994,750
------------
DRUGS & PHARMACEUTICALS (11.8%)
29,300 Bristol-Myers Squibb Co. 3,367,670
24,000 Pfizer, Inc. 2,608,500
35,000 Schering-Plough Corp. 3,206,875
------------
9,183,045
------------
DRUGSTORES (3.7%)
70,000 Walgreen Co. 2,891,875
------------
ELECTRIC MACHINERY (2.9%)
25,000 General Electric Co. 2,275,000
------------
FABRICATED METAL PRODUCTS (4.6%)
30,000 Gillette Co. 1,700,625
28,000 Illinois Tool Works, Inc. 1,867,250
------------
3,567,875
------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD & SOFT DRINKS (4.1%)
21,000 Coca-Cola Co. $ 1,795,500
24,900 Sara Lee Corp. 1,392,845
------------
3,188,345
------------
GENERAL MERCHANDISE TRADE (6.6%)
20,100 J.C. Penney Co., Inc. 1,453,481
60,000 Wal-Mart Stores, Inc. 3,645,000
------------
5,098,481
------------
GROCERY STORES (2.7%)
40,000 Albertson's, Inc. 2,072,500
------------
INSTRUMENTS & RELATED PRODUCTS (3.7%)
37,000 Becton, Dickinson & Co. 2,872,125
------------
LIFE INSURANCE (2.9%)
25,000 Lincoln National Corp. 2,284,375
------------
PRINTING & PUBLISHING (6.0%)
35,000 Gannett Co., Inc. 2,487,188
32,000 Tribune Co. 2,202,000
------------
4,689,188
------------
PROPERTY & CASUALTY INSURANCE (2.8%)
15,000 American International Group, Inc. 2,190,000
------------
RESTAURANTS (2.3%)
26,000 McDonald's Corp. 1,794,000
------------
SECURITIES, BROKERS, DEALERS, & ADVISORS (3.6%)
30,000 Merrill Lynch & Co., Inc. 2,767,500
------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (concluded)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SOAPS (3.5%)
31,000 Colgate-Palmolive Co. $ 2,728,000
------------
VOICE & DATA TRANSMISSION (10.7%)
45,000 AT&T Corp. 2,570,625
51,200 BellSouth Corp. 3,436,800
57,800 SBC Communications, Inc. 2,312,000
------------
8,319,425
------------
WHOLESALE TRADE-NONDURABLE GOODS (2.0%)
60,000 Sysco Corp. 1,537,500
------------
TOTAL COMMON STOCK (COST $53,268,543) 67,333,109
------------
U.S. GOVERNMENT OBLIGATIONS (11.6%)
U.S. TREASURY BILLS
9,000,000 5.04% yield, 7/9/98 8,990,739
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $8,990,180) 8,990,739
------------
SHORT TERM HOLDINGS (1.8%)
951,550 Forum Daily Assets Cash Institutional 951,550
418,546 Forum Daily Assets Treasury Fund 418,546
------------
TOTAL SHORT TERM HOLDINGS (COST $1,370,096) 1,370,096
------------
TOTAL INVESTMENTS (100.0%) (COST $63,628,819) $ 77,693,944
------------
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (96.1%)
BANKS (7.8%)
7,000 Banc One Corp. $ 390,688
3,500 Bankers Trust Corp. 406,219
6,500 First Union Corp. 378,625
1,700 J.P. Morgan & Co., Inc. 199,113
4,000 NationsBank Corp. 306,000
10,000 Norwest Corp. 373,750
10,000 State Street Corp. 695,000
5,500 Wachovia Corp. 464,750
-----------
3,214,145
-----------
BUSINESS SERVICES (2.1%)
9,000 Automatic Data Processing, Inc. 655,875
5,000 Electronic Data Systems Corp. 200,000
-----------
855,875
-----------
CHEMICALS (4.1%)
5,000 Air Products & Chemicals, Inc. 200,000
4,500 Clorox Co. 429,188
1,500 Dow Chemical Co. 145,031
7,000 E.I. du Pont de Nemours & Co. 522,375
3,500 Rohm & Haas Co. 363,781
-----------
1,660,375
-----------
COMMUNICATIONS EQUIPMENT (3.1%)
13,800 Lucent Technologies, Inc. 1,147,988
2,500 Motorola, Inc. 131,406
-----------
1,279,394
-----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMPUTER & OFFICE EQUIPMENT (1.9%)
4,000 Hewlett-Packard Co. $ 239,500
8,000 Pitney Bowes, Inc. 385,000
3,000 Rockwell International Corp. 144,188
-----------
768,688
-----------
DRUGS & PHARMACEUTICALS (13.6%)
10,000 Abbott Laboratories 408,750
11,000 American Home Products Corp. 569,250
6,000 Bristol-Myers Squibb Co. 689,625
6,000 Eli Lilly & Co. 396,375
5,700 Johnson & Johnson 420,375
4,500 Merck & Co., Inc. 601,875
7,500 Pfizer, Inc. 815,155
9,000 Schering-Plough Corp. 824,625
12,600 Warner-Lambert Co. 874,125
-----------
5,600,155
-----------
DRUGSTORES (1.7%)
16,500 Walgreen Co. 681,656
-----------
DURABLE GOODS-WHOLESALE (0.9%)
7,000 W.W. Grainger, Inc. 348,688
-----------
ELECTRIC, GAS & UTILITY COMPANIES (0.9%)
2,500 Consolidated Natural Gas Co. 147,188
4,000 Duke Energy Corp. 237,000
-----------
384,188
-----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRICAL MACHINERY (2.9%)
3,000 AMP, Inc. $ 103,125
3,000 Emerson Electric Co. 181,125
5,000 General Electric Co. 455,000
8,000 Texas Instruments, Inc. 466,500
-----------
1,205,750
-----------
FABRICATED METAL PRODUCTS (2.9%)
10,000 Gillette Co. 566,875
7,000 Illinois Tool Works, Inc. 466,812
4,000 Stanley Works 166,250
-----------
1,199,937
-----------
FINANCIAL SERVICES (0.9%)
6,000 Marsh & McLennan Cos., Inc. 362,625
-----------
FOOD & SOFT DRINKS (7.3%)
8,001 Archer Daniels Midland Co. 155,000
7,000 Bestfoods, Inc. 406,438
7,000 Coca-Cola Co. 598,500
2,500 General Mills, Inc. 170,938
6,000 H.J. Heinz Co. 336,750
6,000 Hershey Foods Corp. 414,000
4,000 Kellogg Co. 150,250
5,000 PepsiCo, Inc. 205,937
10,000 Sara Lee Corp. 559,375
-----------
2,997,188
-----------
FOREST PRODUCTS (0.3%)
3,000 Kimberly-Clark Corp. 137,625
-----------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
GENERAL MERCHANDISE TRADE (4.3%)
7,500 J.C. Penney Co., Inc. $ 542,343
6,000 May Department Stores Co. 393,000
14,000 Wal-Mart Stores, Inc. 850,500
-----------
1,785,843
-----------
GLASS, OTHER BUILDING MATERIALS (0.9%)
5,500 PPG Industries, Inc. 382,594
-----------
GROCERY STORES (1.9%)
11,000 Albertson's, Inc. 569,938
4,000 Winn-Dixie Stores, Inc. 204,750
-----------
774,688
-----------
INDUSTRIAL & COMMERCIAL MACHINERY (0.7%)
8,000 Dover Corp. 274,000
-----------
INSTRUMENTS & RELATED PRODUCTS (3.4%)
9,000 Becton, Dickinson & Co. 698,625
2,000 Eastman Kodak Co. 146,125
5,500 Xerox Corp. 558,938
-----------
1,403,688
-----------
LIFE INSURANCE (2.1%)
6,000 Aon Corp. 421,500
5,000 Lincoln National Corp. 456,875
-----------
878,375
-----------
NONDEPOSITORY CREDIT INSTITUTIONS (1.0%)
8,000 Household International, Inc. 398,000
-----------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
OIL & GAS EXTRACTION (0.4%)
2,000 Atlantic Richfield Co. $ 156,250
-----------
PETROLEUM PRODUCTS (2.4%)
3,200 Amoco Corp. 133,200
3,500 Chevron Corp. 290,718
4,000 Exxon Corp. 285,250
3,500 Mobil Corp. 268,187
-----------
977,355
-----------
PRINTING & PUBLISHING (5.9%)
4,000 Dow Jones & Co., Inc. 223,000
8,000 Gannett Co., Inc. 568,500
4,000 Knight-Ridder, Inc. 220,250
5,500 McGraw-Hill Cos., Inc. 448,593
9,000 R.R. Donnelley & Sons Co. 411,750
8,000 Tribune Co. 550,500
-----------
2,422,593
-----------
PROPERTY & CASUALTY INSURANCE (4.5%)
4,000 Allstate Corp. 366,250
4,000 American International Group, Inc. 584,000
3,500 Chubb Corp. 281,313
1,600 General Re Corp. 405,600
5,000 St. Paul Cos., Inc. 210,313
-----------
1,847,476
-----------
RESTAURANTS (1.5%)
9,000 McDonald's Corp. 621,000
-----------
SECURITIES, BROKERS, DEALERS & ADVISORS (1.9%)
8,400 Merrill Lynch & Co., Inc. 774,900
-----------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER APPROVED LIST EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SOAPS (2.5%)
7,000 Colgate-Palmolive Co. $ 616,000
4,500 Procter & Gamble Co. 409,781
-----------
1,025,781
-----------
SPECIALITY CHEMICAL PRODUCTS (0.3%)
1,500 Minnesota Mining & Manufacturing Co. 123,281
-----------
TRANSPORTATION EQUIPMENT (3.1%)
2,500 Boeing Co. 111,405
4,500 Honeywell, Inc. 376,031
8,000 Johnson Controls, Inc. 457,500
3,500 United Technologies Corp. 323,750
-----------
1,268,686
-----------
VOICE & DATA TRANSMISSION (7.5%)
10,500 AT&T Corp. 599,813
11,000 Ameritech Corp. 493,625
9,000 Bell Atlantic Corp. 410,625
8,900 BellSouth Corp. 597,413
7,500 GTE Corp. 417,188
14,000 SBC Communications, Inc. 560,000
-----------
3,078,664
-----------
WHOLESALE TRADE-NONDURABLE GOODS (1.4%)
22,000 Sysco Corp. 563,750
-----------
TOTAL COMMON STOCK (COST $25,132,653) 39,453,213
-----------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (concluded)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SHORT TERM HOLDINGS (3.9%)
96,170 Dreyfus Government Cash Management Fund $ 96,170
953,570 Forum Daily Assets Cash Fund 953,570
561,300 Forum Daily Assets Government Fund 561,300
-----------
TOTAL SHORT TERM HOLDINGS (COST $1,611,040) 1,611,040
-----------
TOTAL INVESTMENTS (100.0%) (COST $26,743,693) $41,064,253
-----------
-----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER
EQUITY APPROVED
INCOME LIST EQUITY
FUND FUND
---------------- ----------------
<S> <C> <C>
ASSETS:
Investments (Note 2)
Investments at cost $63,628,819 $26,743,693
Net unrealized appreciation 14,065,125 14,320,560
---------------- ----------------
Total investments at value 77,693,944 41,064,253
Interest, dividends and other receivables 76,224 50,708
Receivable for securities sold 519,381 158,682
Receivable for Fund shares sold 6,306 8,892
---------------- ----------------
Total Assets 78,295,855 41,282,535
---------------- ----------------
LIABILITIES:
Dividends payable 7,654 4,363
Payable for securities purchased 695,226 130,715
Payable to administrator 6,343 3,327
Payable for Fund shares redeemed 1,450 1,600
Payable to investment adviser 47,571 24,956
Accrued expenses and other liabilities 55,284 32,335
---------------- ----------------
Total Liabilities 813,528 197,296
---------------- ----------------
NET ASSETS $77,482,327 $41,085,239
---------------- ----------------
---------------- ----------------
COMPONENTS OF NET ASSETS:
Paid in capital $47,707,003 $19,992,091
Undistributed net investment income 731 647
Net unrealized appreciation on investments 14,065,125 14,320,560
Accumulated net realized gain on investments 15,709,468 6,771,941
---------------- ----------------
NET ASSETS $77,482,327 $41,085,239
---------------- ----------------
---------------- ----------------
Shares of Beneficial Interest, No Par Value 4,401,364 1,954,359
NET ASSET VALUE, offering price and redemption
price per share $17.60 $21.02
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER
EQUITY APPROVED
INCOME LIST EQUITY
FUND FUND
---------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $1,036,018 $644,264
Interest income 516,479 61,432
---------------- ----------------
Total Investment Income 1,552,497 705,696
---------------- ----------------
EXPENSES:
Advisory fees (Note 3) 520,630 279,760
Management fees (Note 3) 69,417 37,301
Transfer agent fees (Note 3) 16,912 14,938
Shareholder services fees 2,684 677
Custodian fees 20,979 17,591
Accounting fee (Note 3) 39,000 39,000
Legal fees 7,448 4,080
Audit fee 17,584 16,616
Trustees fee 15,802 8,583
Miscellaneous 53,701 43,121
---------------- ----------------
Total Expenses 764,157 461,667
---------------- ----------------
NET INVESTMENT INCOME 788,340 244,029
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments sold 19,653,954 8,668,411
Net change in unrealized appreciation (depreciation) on
investments (6,744,979) (674,549)
---------------- ----------------
NET GAIN ON INVESTMENTS 12,908,975 7,993,862
---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $13,697,315 $8,237,891
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER
EQUITY APPROVED
INCOME LIST EQUITY
FUND FUND
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSETS -- BEGINNING OF PERIOD $62,522,934 $46,285,366 $35,277,381 $30,247,807
----------- ----------- ----------- -----------
OPERATIONS:
Net investment income 788,340 858,359 244,029 352,960
Net realized gain on investments sold 19,653,954 2,878,813 8,668,411 817,421
Net change in unrealized appreciation
(depreciation) on investments (6,744,979) 13,036,026 (674,549) 7,342,804
----------- ----------- ----------- -----------
Net increase in net assets resulting from
operations 13,697,315 16,773,198 8,237,891 8,513,185
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income (802,587) (869,845) (246,131) (361,715)
Net realized capital gain on investments (5,707,467) (4,115,498) (2,695,053) (94,208)
----------- ----------- ----------- -----------
Total distributions to shareholders (6,510,054) (4,985,343) (2,941,184) (455,923)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares 14,469,495 5,928,772 3,823,631 2,668,009
Reinvestment of distributions 6,390,831 4,927,163 2,857,295 448,402
Redemption of shares (13,088,194) (6,406,222) (6,169,775) (6,144,099)
----------- ----------- ----------- -----------
Net increase (decrease) from capital share
transactions 7,772,132 4,449,713 511,151 (3,027,688)
----------- ----------- ----------- -----------
Net increase in net assets 14,959,393 16,237,568 5,807,858 5,029,574
----------- ----------- ----------- -----------
NET ASSETS -- END OF PERIOD
(Including line (A)) $77,482,327 $62,522,934 $41,085,239 $35,277,381
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(A) Accumulated undistributed net investment
income $ 731 $ 14,978 $ 647 $ 2,749
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SHARE ACTIVITY
Sale of shares 882,203 409,218 193,037 163,153
Reinvestment of distributions 406,537 373,516 155,031 28,801
Redemption of shares (781,239) (462,361) (318,283) (399,951)
----------- ----------- ----------- -----------
Net increase (decrease) in shares 507,501 320,373 29,785 (207,997)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
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.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
of the Funds:
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
(currently 4:00 P.M., Eastern time) on each Fund Business Day, as defined in
the Funds' prospectus. 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.
INVESTMENT INCOME -- Dividend income is recorded on the ex-dividend date.
Interest income is recorded on an accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income, if any,
are declared and paid quarterly on the Funds. Capital gain distributions, if
any, are distributed to shareholders at least annually. Distributions are
based on amounts calculated in accordance with applicable federal income tax
regulations, which may differ from generally accepted accounting principles.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
17
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 1998
- --------------------------------------------------------------------------------
FEDERAL TAXES -- The Funds intend to qualify, and continue to qualify, each
year as regulated investment companies and distribute all their taxable
income. In addition, by distributing in each calendar year substantially all
their net investment income, capital gain and certain other amounts, if any,
the Funds will not be subject to a federal excise tax. Therefore, no federal
income or excise tax provision is required.
EXPENSE ALLOCATION -- The Trust accounts separately for the assets and
liabilities and operations of each Fund. Expenses that are directly
attributable to more than one Fund are allocated among the respective Funds.
REALIZED GAIN AND LOSS -- Security transactions are recorded on a trade date
basis. Realized gain and loss on investments sold are recorded on the basis of
identified cost.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER -- The investment adviser to the Funds is Cutler & Company,
LLC ("Adviser"). Pursuant to an Investment Advisory Agreement, 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 each Funds' average daily net
assets.
MANAGER -- The Trust has entered into a Management Agreement with Forum
Administrative Services, LLC ("FAdS"). For its services, FAdS is entitled to
receive compensation at an annual rate of 0.10% of each Funds' average daily
net assets.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT -- Forum Financial Corp. ("FFC"),
an affiliate of FAdS, provides services as the Trust's transfer agent and
dividend disbursing agent to each Fund pursuant to a separate agreement. For
these services, FFC receives a fee of $1,000 per month, per Fund, plus certain
other fees and expenses.
OTHER SERVICE PROVIDERS -- Forum Accounting Services, LLC ("FAcS"), an
affiliate of FAdS, serves as the fund accountant for the Trust. FAcS is paid a
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.
Forum Financial Services, Inc. ("FFSI"), a registered broker-dealer, acts as
the Trust's distributor pursuant to a separate Distribution Agreement with the
Trust for which it receives no compensation.
18
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (concluded)
JUNE 30, 1998
- --------------------------------------------------------------------------------
NOTE 4. TRANSACTIONS OF SECURITIES
The cost of securities purchased and the proceeds from sales of securities
(excluding short term securities) for the year ended June 30, 1998, were as
follows:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
------------------ -------------------
<S> <C> <C>
Cutler Equity Income Fund $72,301,867 $74,036,324
Cutler Approved List Equity Fund 17,773,177 20,051,749
</TABLE>
For federal income tax purposes, the tax basis of investment securities owned,
the aggregate gross unrealized appreciation and the aggregate gross unrealized
depreciation as of June 30, 1998, were as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized Net
Tax Cost Appreciation Depreciation Appreciation
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cutler Equity Income Fund $63,659,185 $14,735,688 $ 700,929 $14,034,759
Cutler Approved List Equity Fund 26,762,357 14,776,288 474,392 14,301,896
</TABLE>
------------------------------------------------------------------------------
OTHER INFORMATION (unaudited)
JUNE 30, 1998
------------------------------------------------------------------------------
FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
Income Dividends -- All the income and any short term capital gain dividends
paid by each Fund were ordinary income for federal income tax purposes. The
percentage of qualifying dividends eligible for the corporate dividends
received deduction was 100.0% for both Cutler Equity Income Fund and Cutler
Approved List Equity Fund.
Capital Gain Dividends -- Cutler Equity Income Fund and Cutler Approved List
Equity Fund declared long term capital gain dividends of $4,226,609 and
$1,971,370, respectively, and mid term capital gain dividends of $1,400,751
and $723,683, respectively, for the fiscal year ended June 30, 1998.
19
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected per share data and
ratios for a share outstanding
throughout the period.
<TABLE>
<CAPTION>
CUTLER EQUITY INCOME FUND
-------------------------------------------------------------------
Year Ended June 30,
-------------------------------------------------------------------
1998 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.06 $12.95 $10.96 $ 9.56 $ 9.95 $10.00
-------- -------- -------- ---------- -------- ----------
Investment Operations
Net Investment Income 0.19 0.24 0.35 0.36(b) 0.27 0.10
Net Realized and Unrealized Gain
(Loss) on Investments 3.05 4.30 2.13 1.40 (0.40) (0.05)
-------- -------- -------- ---------- -------- ----------
Total from Investment Operations 3.24 4.54 2.48 1.76 (0.13) 0.05
-------- -------- -------- ---------- -------- ----------
Distributions From
Net Investment Income (0.19) (0.24) (0.35) (0.34) (0.26) (0.10)
Net Realized Gain on Investments (1.51) (1.19) (0.14) (0.02) -- --
-------- -------- -------- ---------- -------- ----------
Total Distributions (1.70) (1.43) (0.49) (0.36) (0.26) (0.10)
-------- -------- -------- ---------- -------- ----------
Net Asset Value, End of Period $17.60 $16.06 $12.95 $10.96 $ 9.56 $ 9.95
-------- -------- -------- ---------- -------- ----------
-------- -------- -------- ---------- -------- ----------
Total Return 21.60% 37.65% 22.93% 18.63% (1.37%) 0.90%(c)
Ratios/Supplementary Data
Net assets at the end of year (in
thousands) $77,482 $62,523 $46,285 $41,470 $19,706 $2,853
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver of fees 1.10% 1.17% 0.98% 0.97% 1.00% 0.98%(c)
Expenses excluding
reimbursement/waiver of fees 1.10% 1.17% 0.98% 0.97% 1.45% 3.69%(c)
Net investment income 1.14% 1.67% 2.81% 3.49% 3.49% 2.23%(c)
Portfolio Turnover Rate 118.59% 23.22% 57.08% 43.37% 42.83% 32.04%
Average Commission Rate Per Share (d) $0.0532 $0.0509 $0.0525 N/A N/A N/A
</TABLE>
(a) See Note 1 for applicable date of inception.
(b) Calculated using the weighted average number of shares outstanding.
(c) Annualized.
(d) For the fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid to brokers on the
purchase or sale of equity securities on which commissions were paid.
20
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
FINANCIAL HIGHLIGHTS (concluded)
- --------------------------------------------------------------------------------
Selected per share data and
ratios for a share outstanding
throughout the period.
<TABLE>
<CAPTION>
CUTLER APPROVED LIST EQUITY FUND
-------------------------------------------------------------------
Year Ended June 30,
-------------------------------------------------------------------
1998 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.33 $14.18 $11.71 $ 9.78 $10.09 $10.00
-------- -------- -------- ---------- -------- ----------
Investment Operations
Net Investment Income 0.13 0.18 0.21 0.24(b) 0.21 0.08
Net Realized and Unrealized Gain
(Loss) on Investments 4.19 4.20 2.47 1.92 (0.31) 0.09
-------- -------- -------- ---------- -------- ----------
Total from Investment Operations 4.32 4.38 2.68 2.16 (0.10) 0.17
-------- -------- -------- ---------- -------- ----------
Distributions From
Net Investment Income (0.13) (0.18) (0.21) (0.23) (0.21) (0.08)
Net Realized Gain on Investments (1.50) (0.05) -- -- -- --
-------- -------- -------- ---------- -------- ----------
Total Distributions (1.63) (0.23) (0.21) (0.23) (0.21) (0.08)
-------- -------- -------- ---------- -------- ----------
Net Asset Value, End of Period $21.02 $18.33 $14.18 $11.71 $ 9.78 $10.09
-------- -------- -------- ---------- -------- ----------
-------- -------- -------- ---------- -------- ----------
Total Return 24.90% 31.18% 23.01% 22.33% (1.07%) 3.31%(c)
Ratio/Supplementary Data
Net assets at the end of year (in
thousands) $41,085 $35,277 $30,248 $21,890 $12,620 $3,618
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver of fees 1.24% 1.25% 1.05% 1.00% 1.00% 0.98%(c)
Expenses excluding
reimbursement/waiver of fees 1.24% 1.25% 1.13% 1.23% 1.78% 4.53%(c)
Net investment income 0.65% 1.15% 1.65% 2.20% 2.43% 2.27%(c)
Portfolio Turnover Rate 49.61% 3.86% 8.97% 23.42% 22.27% 10.88%
Average Commission Rate Per Share (d) $0.0565 $0.0600 $0.0569 N/A N/A N/A
</TABLE>
(a) See Note 1 for applicable date of inception.
(b) Calculated using the weighted average number of shares outstanding.
(c) Annualized.
(d) For the fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose average commission per share paid to brokers on the
purchase or sale of equity securities on which commissions were paid.
21
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees
The Cutler Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of The Cutler Trust, consisting of the Cutler
Equity Income Fund and the Cutler Approved List Equity Fund, as of June 30,
1998, the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended and for the period December 30, 1992 (commencement of investment
operations) to June 30, 1993. These financial statements and financial
highlights are the responsibility of The Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
June 30, 1998 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
portfolios constituting The Cutler Trust as of June 30, 1998, the results of
their operations, the changes in their net assets, and their financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 7, 1998
22
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
TRUSTEES OF THE CUTLER TRUST
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
KENNETH R. CUTLER
[PHOTO] Principal portfolio manager of the Equity Income Fund and Approved List Equity
Fund, and of institutional equity portfolios managed separately by Cutler &
Company LLC with objectives similar to the Funds.
JOHN Y. KEFFER
[PHOTO] Chairman, Forum Financial Corp., Transfer Agent, Forum Financial Services,
Inc., Distributor and Forum Administrative Services, LLC, Manager for both
Funds.
BROOKE R. ASHLAND
[PHOTO] Chief Executive Officer, Cutler & Company LLC, Investment Adviser to the
trust.
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.
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>
23
<PAGE>
THE CUTLER TRUST
- ------------------------------------------------------------------------
TABLE OF CONTENTS
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Chairman's Letter to the Shareholders....... 1
Investment Adviser's Report................. 2
Comparison of Change in Value of $10,000
Investment................................ 3
Cutler Equity Income Fund Portfolio......... 4
Cutler Approved List Equity Fund
Portfolio................................. 7
Statements of Assets and Liabilities........ 14
Statements of Operations.................... 15
Statements of Changes in Net Assets......... 16
Notes to Financial Statements............... 17
Other Information (unaudited)............... 19
Financial Highlights (Per Share Data)....... 20
Report of Independent Auditors.............. 22
Trustees of the Cutler Trust................ 23
</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
ANNUAL REPORT
---------------
June 30, 1998
