As filed with the Securities and Exchange Commission on October 29, 1998
File Nos. 33-52850 and 811-7242
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 8
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 10
THE CUTLER TRUST
Two Portland Square
Portland, Maine 04101
(207) 879-1900
D. Blaine Riggle, Esquire
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
Copies to:
Joseph R. Fleming, Esquire
Dechert Price & Rhoads
Ten Post Office Square-South
Boston, Massachusetts 02109
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to Rule 485, paragraph (b
[X] on October 30, 1998 pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(1)
[ ] on ____________ pursuant to Rule 485, paragraph (a)(1)
[ ] 75 days after filing pursuant to Rule 485, paragraph (a)(2)
[ ] on ____________ pursuant to Rule 485, paragraph (a)(2)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities Being Registered: Cutler Equity Income Fund and Cutler
Approved List Equity Fund.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Prospectus offering Shares of Cutler Equity Income Fund and
Cutler Approved List Equity Fund)
PART A
<TABLE>
<S> <C> <C>
Form N-1A
Item No.
- -------- Location in Prospectus (Caption)
--------------------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses of Investing in the Trust
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Investment Objectives and Policies; The Trust
and Its Shares
Item 5. Management of the Fund Management of the Trust
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Investment Objectives and Policies; Dividends and
Tax Matters; The Trust and Its Shares; Management
of the Trust - Shareholder Services
Item 7. Purchase of Securities Being Offered Purchases and Redemptions of Shares; Management
of the Trust
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(SAI offering Shares of Cutler Equity Income Fund and
Cutler Approved List Equity Fund)
PART B
<PAGE>
<TABLE>
<S> <C> <C>
Form N-1A
Item No. Location in Statement of Additional Information
- -------- (Caption)
-----------------------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page - Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Other Policies Investment Policies; Investment Limitations
Item 14. Management of the Fund Management of the Trust; The Trust and its
Shareholders
Item 15. Control Persons and Principal Holders of Management of the Trust; The Trust and its
Securities Shareholders
Item 16. Investment Advisory and Other Services Management of the Trust
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities Determination of Net Asset Value; The Trust and
its Shareholders
Item 19. Purchase, Redemption and Pricing of Determination of Net Asset Value; Additional
Securities Being Offered Purchase and Redemption Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management of the Trust -Administrator and
Distributor
Item 22. Calculation of Performance Data Performance Data
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE>
THE CUTLER TRUST
PROSPECTUS
OCTOBER 30, 1998
<TABLE>
<S><C> <C> <C> <C>
INVESTMENT ADVISER: ADMINISTRATOR: DISTRIBUTOR: SHAREHOLDER ACCOUNT
Cutler & Company, LLC Forum Administrative Forum Financial Services, INFORMATION:
503 Airport Road Services, LLCSM Inc. (R) Forum Shareholder Services,
LLCSM
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>
- --------------------------------------------------------------------------------
This Prospectus relates to
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
- --------------------------------------------------------------------------------
The Cutler Trust (the "Trust") is an open-end, management investment company (a
mutual fund). The Cutler Equity Income Fund and Cutler Approved List Equity Fund
(individually a "Fund" and collectively the "Funds") are each diversified
no-load portfolios of the Trust.
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.
As the future is unknown, obviously there can be no assurance that either 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 October 30, 1998. 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.
CONTENTS
Page
1. Expenses of Investing in the Trust..............................
2. Financial Highlights............................................
3. Investment Objectives and Policies..............................
4 Risk Considerations.............................................
5. Management of the Trust.........................................
6. Purchases and Redemptions of Shares............................
7. Dividends and Tax Matters......................................
8. Performance Information........................................
9. The Trust and Its Shares.......................................
PLEASE READ THIS PROSPECTUS BEFORE INVESTING IN EITHER OF THE
FUNDS, AND RETAIN IT FOR FUTURE REFERENCE.
It contains important information about the Funds, their investments
and the services available to shareholders.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
2
<PAGE>
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.
<TABLE>
<S> <C> <C>
Cutler Cutler
Equity Approved List
ANNUAL FUND OPERATING EXPENSES Income Equity
(as a percentage of average net assets) Fund Fund
---- ----
Investment Advisory Fee 0.75% 0.75%
Other Expenses 0.35% 0.49%
----- -----
Total Annual Fund Operating Expenses 1.10% 1.24%
</TABLE>
For a further description of the various expenses incurred in the operation of
the Fund, see "Management of the Trust - Expenses."
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:
<TABLE>
<S> <C> <C> <C> <C>
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Cutler Equity Income Fund $11 $35 $61 $134
Cutler Approved List Equity Fund $13 $39 $68 $150
</TABLE>
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, 1998 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.
3
<PAGE>
<TABLE>
<CAPTION>
CUTLER
EQUITY
INCOME
FUND
---------------------------------------------------------------------
Year Ended
June 30,
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993(a)
--------- -------- ---------- --------- ---------- ----------
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) 0.00 0.00
--------------------- ---------- --------- ---------- ----------
Total (1.70) (1.43) (0.49) (0.36) (0.26) (0.10)
Distributions
---------------------- ---------- --------- ---------- ----------
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)
Ratio/Supplementary Data:
Net Assets at End of Period (000's omitted) $77,482 $62,523 $46,285 $41,470 $19,706 $2,583
Ratios to Average Net Assets:
Expenses Including Reimbursement/Waiver 1.10% 1.17% 0.98% 0.97% 1.00% 0.98%(c)
Expenses Excluding Reimbursement/Waiver 1.10% 1.17% 0.98% 0.97% 1.45% 3.69%(c)
Net Investment Income
Including Reimbursement/Waiver 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(d) $0.0532 $0.0509 $0.0525 - -
</TABLE>
(a) The Fund commenced operations on December 30, 1992.
(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.
4
<PAGE>
<TABLE>
<CAPTION>
CUTLER
APPROVED LIST
EQUITY FUND
--------------------------------------------------------------------------
Year Ended
June 30,
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993(a)
--------------------- --------------- ------------ ---------- -----------
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) 0.00 0.00 0.00 0.00
--------------------- -------------- ------------ ---------- -----------
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 End of Period (000's omitted) $41,085 $35,277 $30,248 $21,890 $12,620 $3,618
Ratios to Average Net Assets:
Expenses Including Reimbursement/Waiver 1.24% 1.25% 1.05% 1.00% 1.00% 0.98%(c)
Expenses Excluding Reimbursement/Waiver 1.24% 1.25% 1.13% 1.23% 1.78% 4.53%(c)
Net Investment Income
Including Reimbursement/Waiver 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(d) $0.0565 $0.0600 $0.0569 - - -
</TABLE>
(a) The Fund commenced operations on December 30, 1992.
(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.
5
<PAGE>
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 at least 90%
of the common stocks within the Approved List.
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 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 (1) paid dividends continuously for at least 20 years, without any
reduction in the rate; (2) 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; (3) has annual sales, assets and market
value of at least $1 billion; and (4) in Cutler & Company's opinion has wide
ownership among major institutional investors and very liquid markets. In
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 Funds normally are made by Cutler & Company primarily to maintain
quality (adhering to the Approved List) and to rebalance the portfolio; the
Cutler Equity Income Fund will also trade within the Approved List to improve
its yield. The Funds normally 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 Funds will be rebalanced periodically to maintain holdings weighted
to reflect the anticipated total return of each Fund's portfolio securities.
Such rebalancing may result in substantial "tilts" (a heavier weighting on some
issues). 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 Fund will
invest at least 65% of its total assets in the income producing equity
securities in the Approved List.
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 Funds' 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: (1)
certificates of deposit and interest-bearing savings deposits of domestic
commercial banks, (2) money market mutual funds and (3) 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. An
annual portfolio turnover rate of 100% would occur if all of the securities in a
Fund were replaced once in a period of one year. Higher portfolio turnover rates
may result in increased brokerage costs to a Fund and a possible increase in
short-term capital gains or losses. For more details about the portfolio
turnover rate of each Fund, see "Financial Highlights".
6
<PAGE>
4. RISK CONSIDERATIONS
Cutler Equity Income Fund and Cutler Approved List Equity Fund invest only in
the equity securities of the companies on the 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 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 Fund
at an annual rate of 0.75% of each Fund's average daily net assets. Cutler &
Company has voluntarily agreed to waive its fees or reimburse expenses of the
Funds to the extent the Approved List or Equity Income Fund's expenses exceed
1.25% of its annual average daily net until June 30, 1999.
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 $1.3 billion, including the Funds.
Mr. Kenneth R. Cutler, the Portfolio Manager for the Cutler Equity Income Fund
and co-Portfolio Manager for the Cutler Approved List Fund, 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 Vice President of the Trust.
Mr. Robert W. Lamberti, CFA, co-Portfolio Manager for the Cutler Approved List
Fund, received his B.S. from Purdue University and his M.B.A. in Finance from
Temple University in 1995. From 1993 to 1995, Mr. Lamberti was an Economic
Analyst and Treasury Analyst for the Rohm and Haas Company. From 1995 to 1997,
Mr. Lamberti was a Senior Financial Analyst in the Emulsion Polymers Division at
Air Products and Chemicals, Inc. From 1997 to April, 1998, he was a Senior
Analyst at Value Research Corporation. In April, 1998, Mr. Lamberti joined
Cutler & Company as an assistant Portfolio Manager and was promoted to
co-Portfolio Manager for the Cutler Approved List Fund in August, 1998.
Effective December 31, 1995, Cutler & Company, Inc. reorganized as a California
limited liability company, Cutler & Company, LLC. The firm is now 100%
employee-owned, with the Chief Executive Officer, the Chief Operating Officer,
two Senior Portfolio Managers and the Director of Marketing all owners.
YEAR 2000. Like other mutual funds, financial and other business organizations
and individuals around the world, the Funds could be adversely affected if the
computer systems used by Cutler & Company and other service providers to the
Funds do not properly process and calculate date-related information and data
from and after January 2000. Cutler & Company and the administrator are taking
steps to address the Year 2000 issue with respect to the computer systems that
they use and to obtain reasonable assurances that comparable steps are being
taken by
7
<PAGE>
the Funds' other major service providers. There can be no assurance, however,
that these steps will be sufficient to avoid any adverse impact on the Funds
from this problem.
ADMINISTRATION AND DISTRIBUTION
ADMINISTRATOR. Pursuant to a management agreement with the Trust, Forum
Administrative Services, LLC ("FAdS") located at Two Portland Square, Portland,
Maine 04101, supervises the overall management of 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 administrative services, FAdS receives a fee from the Trust
with respect to each Fund at an annual rate of 0.10% of the 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 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 Shareholder Services, LLC ("FSS"), Two Portland Square,
Portland, Maine 04101, which acts as the Funds' transfer agent and dividend
disbursing agent. FSS 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. FSS 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 Cutler & Company and other qualified financial
institutions to act as shareholder servicing agents for their customers. Under
this plan, the Trust has authorized FAdS to enter into agreements pursuant to
which the shareholder servicing agents perform certain shareholder services not
otherwise provided by FAdS. 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 FAdS 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. Forum Accounting Services, LLCSM ("FAcS"), performs
portfolio accounting services for the Funds, including determination of each
Fund's net asset value per share.
FORUM FINANCIAL GROUP
FAdS, FFSI, FSS and FAcS are affiliates of Forum Financial Group, LLCSM ("FFG").
FFG, together with its affiliates, provides 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 $47 billion. John Y.
Keffer, a Trustee and President of the Trust, is the sole shareholder (directly
and indirectly) and director of FFG, which owns (directly or indirectly) FAdS,
FFSI, FSS, and FAcS.
8
<PAGE>
EXPENSES
The Trust is obligated to pay all of the Trust's expenses. For more details
about the expenses of each Fund, see "Financial Highlights".
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 except days when the New York Stock Exchange is
closed, normally, New Year's Day, Dr. Martin Luther King, Jr. 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 accepted by FSS. The
Trust reserves the right to reject any subscription for the purchase of its
shares and may, in Cutler & Company's discretion, accept portfolio securities in
lieu of cash as payment for Fund shares. Shares may not be available for
purchase in every state. Fund shares become entitled to receive dividends on the
same day 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 FSS of
the redemption order in proper form (and any supporting documentation which FSS
may require). Shares redeemed are not entitled to participate in dividends
declared on 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 FSS 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 of 1940.
MINIMUM INVESTMENTS. There is a $25,000 ($2,000 for IRA's) minimum for initial
investments in each Fund. There is no minimum for subsequent investments made by
check or bank wire and a $100 minimum for transfers under the Automatic
Investment Plan. The Trust and the Administrator each reserves 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. FSS 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.
9
<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 a Fund, Cutler & Company or FSS.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "The Cutler Trust" or
to one or more owners of that account and endorsed to The Cutler Trust. For
corporation, partnership, trust, 401(k) plan or other non-individual type
accounts, the check used to purchase shares of a Fund must be made payable on
its face to "The Cutler Trust." No other method of payment by check will be
accepted. All purchases must be paid in U.S. dollars; checks must be drawn on
U.S. banks. Payment by Traveler's Checks is prohibited.
BANK WIRE. To make an initial investment in a Fund using the fedwire system for
transmittal of money between banks, you should first telephone FSS 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:
BankBoston
Boston, Massachusetts
ABA # 011000390
For Credit to: Forum Shareholder Services, LLC
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
Funds' 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.
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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 FSS 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.
AUTOMATIC INVESTMENT PLAN. Shareholders may also purchase additional Fund shares
at regular, preselected invervals by authorizing the automatic transfer of funds
from a designated bank account maintained with a United States banking
institution which is an Automated Clearing House member. The minimum initial
investment is $25,000 and the minimum subsequent investment is $100. Under the
program, existing shareholders may authorize amounts to be debited from their
bank account and invested in the Fund monthly or quarterly. Shareholders
wishing to participate in this program may obtain the applicable forms from
FSS. Shareholders may terminate their automatic investments or change the amount
to be invested at any time by written notification to FSS.
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 FSS 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 FSS 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 FSS at
207-879-0001 or toll free at 888-CUTLER4. In response to the telephone
redemption instruction, a Fund will mail a check to the shareholder's record
address. If the shareholder has elected wire redemption privileges, FSS 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 FSS will employ reasonable procedures to confirm that
such instructions are genuine. Shareholders must provide FSS with the
shareholder's account number, the exact name in which the shares are registered
and some additional form of identification. The Trust or FSS may employ other
procedures such as recording certain transactions. If such procedures are
followed, neither FSS 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 FSS by telephone, you may mail or
hand-deliver your request to FSS at Two Portland Square, Portland, Maine 04101.
OTHER REDEMPTION MATTERS. A signature guarantee is required for any written
redemption. 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 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 as undeliverable, 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
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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, a 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 the other Fund,
the Daily Assets Government Fund, a money market fund managed by FAdS and a
separate series of Forum Funds (R) or the Investors Bond Fund, also a separate
series of Forum Funds managed by FAdS. You may receive a copy of the prospectus
for the Daily Assets Government Fund or the Investors Bond Fund by writing FSS
or calling toll free at 888-CUTLER4. No sales charges are imposed on exchanges
between a Fund and the Daily Assets Government Fund. Exchanges into the
Investors Bond Fund are subject to the fees charged by that fund as set forth in
the Investor Bond Fund's prospectus.
EXCHANGE PROCEDURES. You may request an exchange by writing to FSS at Two
Portland Square, Portland, Maine 04101. The minimum amount for an exchange to
open an account in the Daily Assets Government Fund or the Investors Bond 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 a 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
Government Fund or the Investors Bond Fund, as applicable, may legally be sold.
TELEPHONE EXCHANGES. If you have elected telephone exchange privileges, you may
request an exchange by calling FSS toll free at 888-CUTLER4. Neither the Trust
nor FSS 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.
RETIREMENT ACCOUNTS
The Funds may be a suitable investment vehicle for part or all of the assets
held in Traditional or Roth individual retirement accounts (collectively
"IRAs"). An IRA account application form may be obtained by contacting the Trust
at 888-CUTLER4. Generally, all contributions and investment earnings in an IRA
will be tax-deferred until withdrawn. In the case of a Roth IRA, if certain
requirements are met, investment earnings will not be taxed even when withdrawn.
Individuals may make IRA contributions of up to a maximum of $2,000 annually.
Only contributions to Traditional IRAs may be tax-deductible. However, the
deduction will be reduced if the individual or, in the case of a married
individual, either the individual or the individual's spouse is an active
participant in an employer-sponsored retirement plan and has adjusted gross
income above certain levels. The ability of an individual to make contributions
to a Roth IRA is restricted if the individual (or, the individual and spouse, if
married) has adjusted gross income above certain levels.
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The foregoing discussion regarding IRAs is based on regulations in effect as of
January 1, 1998 and summarizes only some of the important Federal tax
considerations generally affecting IRA contributions made by individuals or
their employers. It is not intended as a substitute for tax planning. Investors
should consult their tax advisors with respect to their specific tax situations
as well as with respect to state and local taxes.
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 (normally 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 Fund's net investment income are declared and paid quarterly.
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
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 a Fund's net asset
value as of the last day of the quarter with respect to which the dividends are
paid. Capital gain distributions are reinvested at the net asset value of a Fund
on the payment date for the distribution. Unless a shareholder elects otherwise,
all dividends and distributions are reinvested.
TAXES
Dividends paid by a Fund out of its net investment income and 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 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 a 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 a 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 Fund's dividends to shareholders will
qualify for the dividends received deduction for corporations.
Upon a sale or other disposition of Fund shares, a shareholder may realize a
capital gain or loss which may be long-term or short-term, depending on the
shareholder's holding period for the shares.
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
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provided to a 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 refer to ratings and rankings among similar funds
by independent evaluators such as Lipper Analytical Services, Inc.,
CDA/Wiesenberger or Morningstar. 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.
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.
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THE CUTLER TRUST
CUTLER EQUITY INCOME FUND
CUTLER APPROVED LIST EQUITY FUND
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INVESTMENT ADVISER: ADMINISTRATOR: DISTRIBUTOR: SHAREHOLDER ACCOUNT
Cutler & Company, LLC Forum Administrative Forum Financial Services, INFORMATION:
503 Airport Road Services, LLCSM Inc.(R) Forum Shareholder Services, LLCSM
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
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STATEMENT OF ADDITIONAL INFORMATION
October 30, 1998
This Statement of Additional Information supplements the Prospectus offering
shares of the Cutler Equity Income Fund and the Cutler Approved List Equity Fund
(each a "Fund" and collectively the "Funds"), two 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. Investment Limitations.....................................
3. Management of the Trust....................................
Cutler & Company
Administrator and Distributor
Transfer Agent and Fund Accountant
Custodian and Auditor
Expenses
4. Determination of Net Asset Value...........................
5. Portfolio Transactions.....................................
6. Additional Purchase and Redemption Information............
Exchanges Between Funds
Additional Redemption Matters
7. Taxation..................................................
8. The Trust and its Shareholders............................
9. Performance Data..........................................
Yield Calculations
Total Return Calculations
10. Financial Statements......................................
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 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 Investment Company Act of 1940 (the "1940
Act"), in which case a Fund would bear its pro rata portion of the other
investment company'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."
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 (1) more than 50% of
the outstanding shares of the Fund or (2) 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.
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(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 C. ASHLAND, Trustee (age 47).
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 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, Trustee, Chairman of the Board and Vice President (age 78).
Principal Portfolio Manager of the Funds and Investment Committee
Member, Cutler & Company, LLC (registered investment adviser). His
address is 503 Airport Road, Medford, Oregon 97504.
* JOHN Y. KEFFER, Trustee and President (age 56).
John Y. Keffer is the sole shareholder (directly and indirectly) and
director of Forum Financial Group, LLC, which owns (directly or
indirectly) Forum Financial Services, Inc. (registered broker-dealer),
Forum Shareholder Services, LLC (registered transfer agent), Forum
Accounting Services, LLC (registered fund accountant), and Forum
Investment Advisors, LLCSM (registered investment adviser). Mr. Keffer
is also a director and/or officer of various registered investment
companies for which Forum Administrative Services, LLC serves as
manager or administrator. His address is Two Portland Square,
Portland, Maine 04101.
DR. HATTEN S. YODER, JR., Trustee (age 77).
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., Trustee (age 67).
Counsel, Northhaven Associates (private legal practice) since 1990.
His address is 2230 Brownsboro Highway Eagle Point, Oregon 97524.
CAROL FISCHER, Vice President, Assistant Secretary and Assistant Treasurer
(age 42).
Chief Operating Officer of Cutler & Company, LLC (registered
investment adviser). Prior thereto, Ms. Fischer was associated with
Cutler & Company in various capacities. Her address is 503 Airport
Road, Medford, Oregon 97504.
STEPHEN J. BARRETT, Vice President (age 31)
Manager of Client Services, Forum Financial Services, Inc., with which
he has been associated since September 1996. Prior to joining Forum,
Mr. Barrett spent two and a half years at Fidelity Investments where
he served as a Senior Product Manager. Prior to that, he was a
Securities Analyst for two and a half years with Bingham, Dana & Gould
in Boston, Massachusetts. Mr. Barrett also is an officer of various
registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. His address is Two Portland Square,
Portland, Maine 04101.
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D. BLAINE RIGGLE, Secretary (age 31)
Assistant Counsel, Forum Financial Services, Inc., with which he has
been associated since 1998. Prior thereto, Mr. Riggle was Associate
Counsel for Wright Express Corporation from 1997 to 1998 and for three
years thereto was an associate with the law firm of Friedman, Babcock
& Gaythwaite in Portland, Maine. Mr. Riggle also is an officer of
various registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. His address is Two Portland Square,
Portland, Maine 04101.
SARA M. MORRIS, Treasurer (age 35),
Managing Director, Forum Financial Services, Inc., with which she has
been associated since 1994. Prior thereto, from 1991 to 1994, Ms.
Morris was Controller of Wright Express Corporation and for six years
prior thereto was employed at Deloitte & Touche LLP as an accountant.
Ms. Morris is also an officer of various registered investment
companies for which Forum Administrative Services, LLC or Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. Her address is Two Portland Square, Portland, Maine
04101.
DAWN TAYLOR, Assistant Treasurer (age 34),
Tax Manager, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, from 1986-1994, Ms. Taylor was a
Tax Consultant for The New England Mutual Life Insurance Company,
Boston, Massachusetts. Ms. Taylor is also an officer of various
registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Her address is Two Portland Square,
Portland, Maine 04101.
MARCELLA A. COTE, Assistant Secretary (age 51)
Fund Administrator, Forum Financial Services, Inc., with which she has
been associated since 1998. Prior thereto, from 1997 to 1998, Ms. Cote
was a budget analyst for the Maine Automated Child Welfare Information
System, a federally funded project of the Maine Department of Human
Services. From 1991 to 1997, Ms. Cote acted as staff to the Maine
Inter-departmental Committee on Transition. Ms. Cote is also an
officer of various registered investment companies for which Forum
Administrative Services, LLC or Forum Financial Services, Inc. serves
as manager, administrator and/or distributor. Her address is Two
Portland Square, Portland, Maine 04101.
* John Y. Keffer, Brooke C. 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 C. Ashland's father.
For the fiscal year ended June 30, 1998, the aggregate compensation paid to the
Trustees of the Trust by the Funds is as follows: Dr. Hatten S. Yoder, Jr.,
$10,684.18; Mr. Robert B. Watts, Jr., $12,897.51. Messrs. Cutler, Keffer and Ms.
Ashland received no compensation for their services as a 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.
4
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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 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.
As compensation for the services rendered and related expenses borne by Cutler &
Company under the Investment Advisory Agreement, the Trust pays Cutler & Company
a fee, computed daily and payable monthly, equal to 0.75% per annum of each
Fund's average daily net assets. 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.
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Advisory Fee Advisory Fee Advisory Fee
Payable Waived Retained
------- ------ --------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1998 $520,630 $0 $520,630
Year Ended June 30, 1997 385,655 0 385,655
Year Ended June 30, 1996 244,542 0 244,542
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1998 $279,760 $0 $279,760
Year Ended June 30, 1997 230,877 0 230,877
Year Ended June 30, 1996 147,509 4,351 143,158
</TABLE>
ADMINISTRATOR AND DISTRIBUTOR
Forum Administrative Services, LLC ("FAdS") 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.
5
<PAGE>
The Management Agreement also provides that FAdS 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 FAdS' duties or by reason of
reckless disregard of its obligations and duties under the Management Agreement.
At the request of the Board, FAdS 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
FAdS, Cutler & Company or their affiliates.
For its services under the Management Agreement, FAdS receives with respect to
each Fund an annual fee, computed daily and payable monthly, equal to 0.10% of
the average daily net assets of each Fund. The following table shows the dollar
amount of fees payable under the Management Agreements between FAdS and the
Trust with respect to each Fund.
Management Fee
Payable
-------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1998 $69,417
Year Ended June 30, 1997 51,421
Year Ended June 30, 1996 45,027
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1998 $37,301
Year Ended June 30, 1997 30,783
Year Ended June 30, 1996 26,997
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
Effective September 28, 1998, Forum Shareholder Services, LLC ("FSS") acts as
transfer agent and dividend disbursing agent for the Trust pursuant to a
Transfer Agency and Services Agreement. The Transfer Agency Agreement provides
for an initial term of twelve months from its effective date with respect to a
Fund and for its automatic renewal for successive twelve month periods
thereafter. Cutler & Company may act as a sub-transfer agent or processing
agent. For its services, FSS is paid a 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. Prior to September 28, 1998, Forum
6
<PAGE>
Financial Corp. ("FFC") acted as transfer agent for the Trust pursuant to a
Transfer Agency and Services Agreement with the Trust.
The following table shows the dollar amount of fees payable under the Transfer
Agency and Services Agreement between FFC and the Trust with respect to each
Fund.
Transfer Agent Fee
Payable
-------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1998 $16,912
Year Ended June 30, 1997 15,479
Year Ended June 30, 1996 17,422
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1998 $14,938
Year Ended June 30, 1997 14,317
Year Ended June 30, 1996 15,471
FUND ACCOUNTANT
Effective September 10, 1997, Forum Accounting Services, LLC ("FAcS") serves as
the fund accountant for the Trust pursuant to a Fund Accounting Agreement. 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.
Prior to September 10, 1997, FFC acted as fund accountant for the Trust pursuant
to a Fund Accounting Agreement with the Trust.
The following table shows the dollar amount of fees payable under the Fund
Accounting Agreements between FAcS, FFC and the Trust with respect to each Fund,
the amount of fee that was waived by FAcS and FCC, if any, and the actual fee
received by FAcS and FFC. The data are for the past three fiscal years.
<TABLE>
<S> <C> <C> <C>
Accounting Fee Accounting Fee Accounting Fee
Payable Waived Retained
------- ------ --------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1998 $39,000 $0 $39,000
Year Ended June 30, 1997 37,000 0 37,000
Year Ended June 30, 1996 37,000 0 37,000
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1998 $39,000 $0 $39,000
Year Ended June 30, 1997 44,000 0 44,000
Year Ended June 30, 1996 48,000 12,000 36,000
</TABLE>
CUSTODIAN AND AUDITOR
Pursuant to a Custodian Agreement with the Trust, Investors Bank & Trust
Company, 200 Clarendon Street, Boston, Massachusetts 02116, 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. Prior to October 1, 1998,
BankBoston, 100 Federal Street, Boston, Massachusetts 02106 acted as custodian
of the Trust's assets.
7
<PAGE>
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts 02110,
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 the 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 June 30, 1999. 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.
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, FSS, 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, Martin Luther King, Jr. 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 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. 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, Cutler & Company 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. Cutler & Company may also take into
account payments made by brokers effecting transactions for the Fund (1) to the
Fund or (2) to other persons on behalf of the Fund for services provided to it
for which it would be obligated to pay.
8
<PAGE>
Consistent with section 28(e) of the Securities and Exchange Act of 1934, the
exercise of Cutler & Company's fiduciary duties under its Investment Advisory
agreement with the Trust, and any other applicable law, Cutler & Company 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 Cutler & Company in connection with services to clients other than
the Fund, and Cutler & Company's fee is not reduced by reason of Cutler &
Company'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.
Aggregate
Commissions Paid
----------------
CUTLER EQUITY INCOME FUND
Year Ended June 30, 1998 $124,242
Year Ended June 30, 1997 25,417
Year Ended June 30, 1996 47,307
CUTLER APPROVED LIST EQUITY FUND
Year Ended June 30, 1998 $38,272
Year Ended June 30, 1997 9,110
Year Ended June 30, 1996 7,501
The increase in the aggregate brokerage commissions paid during the fiscal year
ended June 30, 1998 was based upon the increase in the portfolio turnover rate
for both Funds. During the fiscal year ended June 30, 1998, the Cutler Approved
List Equity Fund and Cutler Equity Income Fund acquired securities of its
regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or
their parents; the value of the aggregate holdings were as follows: $774,900 and
$2,767,500, respectively, in Merrill Lynch & Company, Inc.
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 FSS's offices
located at Two Portland Square, Portland, Maine 04101.
9
<PAGE>
EXCHANGES BETWEEN FUNDS
Shareholders of a Fund may exchange their shares for shares of the other Fund or
for shares of the Daily Assets Government Fund, a money market fund managed by
FAdS and a separate series of Forum Funds(R), or the Investors Bond Fund, also a
separate series of Forum Funds managed by FAdS. 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 (1) 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, (2) 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 (3)
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 Cutler & Company'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 (1) are not restricted as to transfer either by law
or liquidity of market and (2) have a value which is readily ascertainable (and
not established only by valuation procedures).
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 investment company taxable income (which
10
<PAGE>
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) 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 (3) 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 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 October 1, 1998, the officers and trustees of the Trust owned as a group
less than 1% of the outstanding shares of each Fund. Also as of that date, the
following persons owned of record 5% or more of the outstanding shares of each
Fund:
11
<PAGE>
<TABLE>
<CAPTION>
<S><C> <C>
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 6.46%
9.45%
CUTLER APPROVED LIST EQUITY FUND
- --------------------------------
THE KARL KIRCHGESSNER FOUNDATION LORRAINE Y. PERRIN TESTAMENTARY TRUST
1278 Glenneyre, Suite 311 500 Eastgate Lane
Laguna Beach, CA 92651 Santa Barbara, CA 93108
6.53% 6.39%
</TABLE>
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.
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 one year period ended June 30, 1998, the average annual total returns of
the Cutler Equity Income Fund and Cutler Approved List Equity Fund were 21.60%
and 24.90%, respectively. Since commencement of operations on December 30, 1992,
the average annual total returns of the Cutler Equity Income Fund and Cutler
Approved List Equity Fund were 17.40% and 17.94%, 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.
12
<PAGE>
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 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:
P(1+T)n = 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, 1998
(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.
13
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Prospectus: Financial Highlights.
Statement of Additional Information: Audited
financial statements for the fiscal year ended June
30, 1998 which include 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 were filed with the
Securities and Exchange Commission via EDGAR on
September 4, 1998, accession number
0001047469-98-033624 pursuant to Rule 30b2-1 under
the Investment Company Act of 1940, as amended, and
incorporated herein by reference.
(b) Exhibits
(1) Registrant's Trust Instrument dated October 2, 1992
(see Note).
(2) Registrant's By-Laws dated October 2, 1992 (see
Note).
(3) None.
(4) None.
(5) Investment Advisory Agreement between Registrant and
Cutler & Company, LLC dated December 31, 1992, and
restated May 1, 1996 (filed herewith).
(6) Distribution Agreement between Registrant and Forum
Financial Services, Inc. dated December 31, 1992, and
restated September 11, 1996 (filed herewith).
(7) None.
(8) Custodian Agreement between Registrant and BankBoston
dated December 30, 1992 (see Note).
(9) (a) Management Agreement between Registrant
and Forum Administrative Services, LLC dated
September 11, 1996 (filed herewith).
(b) Transfer Agency and Services Agreement between
Registrant and Forum Shareholder Services, LLC
dated September 28, 1998 (filed herewith).
(c) Fund Accounting Agreement between Registrant
and Forum Accounting Services, LLC dated
October 1, 1997 (filed herewith).
(d) Shareholder Service Plan adopted by the
Registrant dated January 3, 1996 as amended
November 25, 1997 (filed herewith).
(e) Shareholder Service Agreement between Forum
Administrative Services, LLC and Bidwell & Co.
dated December 17, 1997 (filed herewith).
(10) Opinion of counsel (see Note).
<PAGE>
(11) Consent of independent auditors (filed herewith).
(12) None.
(13) Investment Representation letter (see Note).
(14) None.
(15) None.
(16) None.
(17) Financial Data Schedules (filed herewith).
(18) None.
---------------
Note: Exhibit incorporated by reference as filed in PEA No. 4 via EDGAR on
March 8, 1996, accession number 0000912057-96-004156.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<S> <C>
--------------------------------------------------------------------------- --------------------------------
Title of Class Number of Recordholders
as of 10/1/98
--------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------- --------------------------------
Cutler Equity Income Fund 260
--------------------------------------------------------------------------- --------------------------------
Cutler Approved List Equity Fund 185
--------------------------------------------------------------------------- --------------------------------
</TABLE>
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.
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
<PAGE>
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.
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.
<TABLE>
<S> <C> <C>
- --------------------------------------- ---------------------------------------- -------------------------------------
Name Title Business Connection
- --------------------------------------- ---------------------------------------- -------------------------------------
- --------------------------------------- ---------------------------------------- -------------------------------------
Brooke Cutler Ashland Chief Executive Officer and Manager Cutler & Company, LLC
- --------------------------------------- ---------------------------------------- -------------------------------------
- --------------------------------------- ---------------------------------------- -------------------------------------
- --------------------------------------- ---------------------------------------- -------------------------------------
Geoffrey W. Cutler Senior Portfolio Manager, Investment Cutler & Company, LLC
Committee Member and Manager
- --------------------------------------- ---------------------------------------- -------------------------------------
- --------------------------------------- ---------------------------------------- -------------------------------------
---------------------------------------- -------------------------------------
Stephen F. Brennan Director of Marketing and Manager Cutler & Company, LLC
- --------------------------------------- ---------------------------------------- -------------------------------------
- --------------------------------------- ---------------------------------------- -------------------------------------
---------------------------------------- -------------------------------------
William G. Gossard Director of Fixed Income, Investment Cutler & Company, LLC
Committee Member and Manager
- --------------------------------------- ---------------------------------------- -------------------------------------
- --------------------------------------- ---------------------------------------- -------------------------------------
---------------------------------------- -------------------------------------
Carol Fischer Chief Operating Officer Cutler & Company, LLC
- --------------------------------------- ---------------------------------------- -------------------------------------
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Forum Financial Services, Inc., Registrant's underwriter, serves as
underwriter for the following investment companies registered under the
Investment Company Act of 1940, as amended:
The CRM Funds
The Cutler Trust
Forum Funds
Memorial Funds
Monarch Funds
Norwest Advantage Funds
Norwest Select Funds
Sound Shore Fund, Inc.
(b) The following directors and officers of Forum Financial Services,
Inc. hold the following positions with Registrant. Their business
address is Two Portland Square, Portland, Maine 04101.
<TABLE>
<S> <C> <C>
----------------------------- ------------------------------- -----------------------------
Name Position with Underwriter Position with Registrant
----------------------------- ------------------------------- -----------------------------
----------------------------- ------------------------------- -----------------------------
John Y. Keffer President President and Trustee
----------------------------- ------------------------------- -----------------------------
Sara M. Morris Treasurer Treasurer
----------------------------- ------------------------------- -----------------------------
</TABLE>
(c) Not Applicable.
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts and records required to be maintained by Section 31(a) of the
1940 Act and the Rules thereunder, are maintained at the offices of
Forum Administrative Services, LLC, Two Portland Square, Portland,
Maine 04101, and Forum Shareholder Services, LLC, Two Portland Square,
Portland, Maine 04101. Accounts and 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. Accounts and
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 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, as amended, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized in the
City of Portland, and State of Maine on the 29th day of October, 1998.
THE CUTLER TRUST
By:/s/ John Y. Keffer
--------------------------
John Y. Keffer
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons on the 29th day of
October, 1998.
(a) Principle Executive Officer
/s/ John Y. Keffer
----------------------------
John Y. Keffer, President
(b) Principal Financial and Accounting Officer
/s/ Sara M. Morris
----------------------------
Sara M. Morris, Treasurer
(c) All of the Trustees
/s/ John Y. Keffer
----------------------------
John Y. Keffer, Trustee
Brooke R. Ashland, Trustee
Kenneth R. Cutler, Trustee
Hatten S. Yoder, Jr., Trustee
Robert B. Watts, Jr., Trustee
By: /s/ John Y. Keffer
----------------------------
John Y. Keffer
Attorney in Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
(5) Investment Advisory Agreement between Registrant and Cutler & Company,
LLC dated December 31, 1992, and restated May 1, 1996.
(6) Distribution Agreement between Registrant and Forum Financial Services,
Inc. dated December 31, 1992, and restated September 11, 1996.
(9)(a) Management Agreement between Registrant and Forum Administrative
Services, LLC dated September 11, 1996.
(9)(b) Transfer Agency and Services Agreement between Registrant and Forum
Shareholder Services, LLC. dated September 28, 1998.
(9)(c) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated October 1, 1997.
(9)(d) Shareholder Service Plan adopted by the Registrant dated January 3,
1996 as amended November 25, 1997.
(9)(e) Shareholder Service Agreement between Forum Administrative Services,
LLC and Bidwell & Co. dated December 17, 1997.
(11) Consent of independent auditors.
(17) Financial Data Schedules.
Exhibit (5)
THE CUTLER TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 31st day of December, 1992, and restated May 1,
1996, between The Cutler Trust (the "Trust"), a business trust organized under
the laws of the State of Delaware with its principal place of business at Two
Portland Square, Portland, Maine 04101, and Cutler & Company, LLC (the
"Adviser"), a corporation organized under the laws of the State of California
with its principal place of business at 503 Airport Road, Medford, Oregon 97504.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
is authorized to issue its shares in separate series and classes; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each separate investment portfolio of the Trust listed in Schedule
A hereto as it may be amended from time to time (each a "Fund" and,
collectively, the "Funds"), and the Adviser is willing to provide those services
on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Adviser, and the Adviser hereby agrees,
to act as investment adviser to each Fund for the period and on the terms set
forth in this Agreement. In connection therewith, (i) the Trust has delivered to
the Adviser copies of its Trust Instrument and Bylaws, the Trust's Registration
Statement and all amendments thereto filed pursuant to the Act or the Securities
Act of 1933, as amended, with the Securities and Exchange Commission (the
"Registration Statement") and the current Prospectus and Statement of Additional
Information of the Funds (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and shall promptly furnish the Adviser with all
amendments of or supplements to the foregoing and (ii) the Adviser has delivered
to the Trust's secretary copies of its entire Form ADV and all amendments
thereto as amended to date and will from time to time furnish the Trust's
secretary with all amendments of or supplements to the Adviser's Form ADV.
SECTION 2. INVESTMENT ADVISORY DUTIES
Subject to the direction and control of the Trust's Board of Trustees
(the "Board"), the Adviser shall manage the investment and reinvestment of the
assets of the Funds, and, without limiting the generality of the foregoing,
shall provide the management and other services specified below, all in such
manner and to such extent as may be authorized by the Board.
<PAGE>
(a) The Adviser shall make decisions with respect to all purchases,
sales and other transactions of securities and other investment assets of the
Funds, including the selection of brokers, dealers and other persons to
introduce or execute those transactions. To carry out such decisions, the
Adviser is authorized, as agent and attorney-in-fact for the Trust, for the
account of, at the risk of and in the name of the Trust, to place orders and
issue instructions with respect to those transactions of the Funds. In all
purchases, sales and other transactions in securities or other investment assets
for the Funds, the Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions, subject
to paragraph (b) below.
(b) In making decisions with respect to all purchases, sales and other
transactions of securities and other investment assets of the Funds the Adviser
shall follow and comply with the investment objectives of the Funds, the
policies set forth from time to time by the Board (to the extent communicated to
the Adviser in writing or at a Board meeting attended by a representative of the
Adviser), the limitations imposed by the Trust's Trust Instrument and Bylaws,
the Trust's Registration Statement and the Funds' Prospectuses (in each case, to
the extent copies thereof are furnished to the Adviser as provided for in
Section 1(i) above), the limitations set forth in the Act, and the requirements
of subchapter M of the Internal Revenue Code of 1986, as amended, in respect of
investment companies.
(c) The Adviser shall monitor the performance of brokers, dealers and
other persons who introduce or execute purchases, sales and other transactions
of securities and other investment assets of the Funds.
(d) The Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act, including those required by
paragraphs (b)(5), (6) and (9) of Rule 31a-1 promulgated under the Act. The
Adviser shall prepare and maintain, or cause to be prepared and maintained, in
such form, for such periods and in such locations as may be required by
applicable law, all documents and records relating to the services provided by
the Adviser pursuant to this Agreement required to be prepared and maintained by
the Trust pursuant to the rules and regulations of any national, state, or local
government entity with jurisdiction over the Trust, including the Securities and
Exchange Commission and the Internal Revenue Service. The books and records
pertaining to the Trust that are in possession of the Adviser shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during the Adviser's
normal business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided promptly by the Adviser to the Trust or
the Trust's authorized representatives.
(e) The Adviser shall determine in its sole discretion the propriety of
(i) honoring requests for orders to purchase Fund shares "in kind" for
consideration consisting of securities determined to be suitable to purchase,
(ii) honoring requests by shareholders for proceeds upon
<PAGE>
redemption of Fund shares to be paid "in kind" by delivery of portfolio
securities, and (iii) paying redemption proceeds "in kind" even though not
requested by a Fund shareholder.
(f) The Adviser shall provide to the Board at each regularly scheduled
meeting thereof (or such other meetings as may be requested by the Trust) a
report containing an appropriate summary of all changes in the Funds' investment
portfolios since the prior report, will inform the Board of important
developments affecting the Funds, and on its own initiative will furnish the
Board from time to time with such information as it believes appropriate for
this purpose, whether concerning the individual issuers whose securities are
included in the Funds' investment portfolios, the industries in which these
issuers engage, or the economic, social or political conditions prevailing in
each country in which the Funds' maintain investments. The Adviser also shall
provide the Board with such statistical and analytical information with respect
to securities in the Funds' investment portfolios as the Adviser believes
appropriate or as the Board reasonably may request. The Adviser shall provide
other persons, in such forms and at such times as the Trust's authorized
representatives shall reasonably request, information about portfolio
transactions and prices or yield quotations of portfolio securities.
(g) The Adviser shall from time to time employ or associate with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement, the cost of performance of such duties to be
borne and paid by the Adviser. No obligation may be incurred on behalf of the
Trust in any such respect.
SECTION 3. EXPENSES
(a) The Adviser shall be responsible for the portion of the net
expenses of each Fund (except interest, taxes, brokerage fees, distribution fees
and organization and extraordinary expenses, all to the extent such exclusions
are permitted by applicable state law) during any fiscal year (or portion
thereof) in which this Agreement is in effect which, as to a Fund, in any such
year exceeds the limits applicable to the Fund under the laws of any state in
which the Fund's shares are qualified for sale (reduced pro rata for any portion
less than a year). The Adviser is not, however, required to bear expenses of the
Trust or any Fund to an extent that would result in a Fund not qualifying under
provisions of the Internal Revenue Code of 1986, as amended, as a regulated
investment company.
(b) Subject to the above and to any other agreement by the Adviser or
other person to reimburse any expenses of the Trust that relate to the Funds,
the Trust shall be responsible for and assumes the obligation for payment of all
of its other expenses, including: (i) the fee payable under Section 5 hereof;
(ii) the fees payable to Forum Financial Services, Inc. ("Forum") under an
agreement between Forum and the Trust; (iii) expenses of issue, repurchase and
redemption of Shares; (iv) interest charges, taxes and brokerage fees and
commissions; (v) premiums of insurance for the Trust, its trustees and officers
and fidelity bond premiums; (vi) fees, interest charges and expenses of third
parties, including the Trust's custodian, transfer agent, dividend disbursing
agent and fund accountant; (vii) fees of pricing, interest, dividend, credit and
other reporting services; (viii) costs of membership in trade associations; (ix)
telecommunications expenses; (x) funds transmission expenses; (xi) auditing,
legal and compliance expenses; (xii)
<PAGE>
costs of maintaining the Trust's existence; (xiii) costs of preparing and
printing the Fund's Prospectuses, subscription application forms and shareholder
reports and delivering them to existing shareholders; (xiv) expenses of meetings
of shareholders and proxy solicitations therefor; (xv) costs of maintaining
books of original entry for portfolio and fund accounting and other required
books and accounts, of calculating the net asset value of shares of the Trust
and of preparing tax returns; (xvi) costs of reproduction, stationery and
supplies; (xvii) fees and expenses of the Trust's trustees; (xviii) compensation
of the Trust's officers and employees who are not officers of the Adviser or
Forum or their respective affiliated persons; (xix) costs of other personnel who
may be employees of the Adviser, Forum or their respective affiliated persons
performing services for the Trust; (xx) costs of Trustee meetings; (xxi)
Securities and Exchange Commission registration fees and related expenses; and
(xxii) state or foreign securities laws registration fees and related expenses.
SECTION 4. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment
and efforts in rendering its services to the Trust and shall not be liable for
error of judgment or mistake of law, for any loss arising out of any investment,
or in any event whatsoever, provided that nothing herein shall be deemed to
protect, or purport to protect, the Adviser against any liability to the Trust
or to the security holders of the Trust to which it would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder.
(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss is not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and
shall be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 5. COMPENSATION
(a) For the services provided by the Adviser pursuant to this
Agreement, the Trust shall pay the Adviser, with respect to each of the Funds, a
fee at an annual rate equal to the amount set forth in Schedule A hereto. Such
fees shall be accrued by the Trust daily and shall be payable monthly in arrears
on the first day of each calendar month for services performed under this
Agreement during the prior calendar month. Upon the termination of this
Agreement, the Trust shall pay to the Adviser such compensation as shall be
payable prior to the effective date of such termination.
(b) Notwithstanding anything in this Agreement to the contrary, the
Adviser and its affiliated persons, if any, may receive compensation or
reimbursement from the Trust with
<PAGE>
respect to (i) the provision of shareholder support or other services or (ii)
service as a Trustee or officer of the Trust.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
latter of the date on which the Trust's Registration Statement relating to the
shares of the Fund becomes effective and date of its approval by a vote of a
majority of the outstanding voting securities of the Fund. Upon the
effectiveness of this Agreement, it shall supersede all previous agreements
between the Trust and the Adviser covering the subject matter hereof.
(b) This Agreement shall continue in effect with respect to a Fund for
twelve months and, thereafter, shall continue in effect for successive
twelve-month periods, provided that such continuance is specifically approved at
least annually (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Fund and (ii) by a vote of a majority of Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval. If the continuation of this Agreement is not approved as to a Fund,
the Adviser may continue to render to the Fund the services described herein in
the manner and to the extent permitted by the Act.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This Agreement shall automatically terminate in the event of its
assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations under
this Agreement, nothing herein shall be deemed to limit or restrict the
Adviser's right, or the right of any of its officers, directors or employees
(whether or not they are a trustee, officer, employee or other affiliated person
of the Trust) to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
(b) The Adviser represents that it is currently registered, and during
the entire period this Agreement is in effect will be registered, as an
investment adviser under the Investment Advisers Act of 1940.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property
<PAGE>
of the Trust or the Fund to which the Adviser's rights or claims relate in
settlement of such rights or claims, and not to the Trustees of the Trust or the
shareholders of the Funds.
SECTION 9. "CUTLER" NAME
If the Adviser ceases to act as investment adviser to the Trust or any
Fund whose name includes the word "Cutler," or if the Adviser requests in
writing, the Trust shall take prompt action to change the name of the Trust or
any such Fund to a name that does not include the word "Cutler." The Adviser may
from time to time make available without charge to the Trust for the Trust's use
any marks or symbols owned by the Adviser, including marks or symbols containing
the word "Cutler" or any variation thereof, as the Adviser deems appropriate.
Upon the Adviser's request in writing, the Trust shall cease to use any such
mark or symbol at any time. The Trust acknowledges that any rights in or to the
word "Cutler" and any such marks or symbols which may exist on the date of this
Agreement or arise hereafter are, and under any and all circumstances shall
continue to be, the sole property of the Adviser. The Adviser may permit other
parties, including other investment companies, to use the word "Cutler" in their
names without the consent of the Trust. The Trust shall not use the word
"Cutler" in conducting any business other than that of an investment company
registered under the Act without the permission of the Adviser.
SECTION 10. [RESERVED]
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
<PAGE>
(f) The terms "vote of a majority of the outstanding voting
securities," "interested person," "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this restated
Agreement to be duly executed as of May 1, 1996.
THE CUTLER TRUST
By: /s/ John Y. Keffer
-----------------------------
John Y. Keffer
President
CUTLER & COMPANY, LLC
By: /s/ Brooke R. Ashland
-----------------------------
Brooke R. Ashland
Chief Executive Officer
and Manager
<PAGE>
THE CUTLER TRUST
INVESTMENT ADVISORY AGREEMENT
SCHEDULE A
ADVISORY FEES
Fee as a % of
the Annual Average Daily
Fund Net Assets of the Fund
---- ----------------------
Cutler Equity Income Fund 0.75%
Cutler Approved List Equity Fund 0.75%
Cutler Government Securities Fund 0.25%
Exhibit (6)
THE CUTLER TRUST
DISTRIBUTION AGREEMENT
AGREEMENT made this 31st day of December, 1992, and restated September
11, 1996, between The Cutler Trust (the "Trust"), a business trust organized
under the laws of the State of Delaware with its principal place of business at
Two Portland Square, Portland, Maine 04101, and Forum Financial Services, Inc.
(the "Distributor"), a corporation organized under the laws of State of Delaware
with its principal place of business at Two Portland Square, Portland, Maine
04101.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end management investment company and
may issue its shares of beneficial interest, no par value (the "Shares") in
separate series and classes; and
WHEREAS, the Trust desires that the Distributor offer the Shares of the
Trust representing interests in each of the separate investment portfolios of
the Trust as listed on Schedule A hereto (each a "Fund" and, collectively, the
"Funds") as the Trust's principal underwriter, and Distributor is willing to act
as principal underwriter on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, the Trust and Distributor agree as follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints Distributor, and
Distributor hereby agrees, to act as distributor of the Shares for the period
and on the terms set forth in this Agreement. In connection therewith, the Trust
has delivered to the Distributor copies of its Trust Instrument and Bylaws, the
Trust's Registration Statement and all amendments thereto filed pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Act (the
"Registration Statement") and the current Prospectus and Statement of Additional
Information of each Fund (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and, shall promptly furnish the Distributor with
all amendments of or supplements to the foregoing.
SECTION 2. DISTRIBUTION SERVICES. Subject to the direction and control of
the Trust's Board of Trustees (the "Board"), the Distributor shall serve as
distributor of the Shares.
(a) As agent of and sole distributor for the Trust, Distributor shall
offer, and solicit offers to subscribe to, the unsold balance of Shares as shall
then be effectively registered under the Securities Act and applicable state
securities laws. All subscriptions for Shares obtained by Distributor shall be
directed to the Trust for acceptance and shall not be binding on the Trust until
accepted by it. Distributor shall have no authority to make binding
subscriptions on behalf of the Trust. The Trust reserves the right to sell
Shares directly to investors through subscriptions received by the Trust.
Distributor's rights hereunder shall not apply to Shares issued in connection
with (a) the merger or consolidation of the Trust or its series or classes with
any other investment company or series or class thereof, (b) the Trust's
acquisition by purchase or otherwise of all or substantially all of the assets
or stock of any other investment company, or (c) the reinvestment in Shares by
the Trust's shareholders of dividends or other distributions or any other
offering by the Trust of securities to its shareholders.
<PAGE>
(b) Distributor shall use its best efforts to obtain subscriptions to
Shares upon the terms and conditions contained herein and in the Prospectus,
including the offering price. Distributor shall send to the Trust promptly all
subscriptions placed with Distributor. The Trust shall advise Distributor in its
capacity as distributor of the approximate net asset value per Share at any time
requested by Distributor that is a net asset value determination time as
disclosed in the Prospectus and at such other times as it shall have been
determined. The Trust shall furnish Distributor from time to time, for use in
connection with the offering of Shares, such other information with respect to
the Trust and Shares as Distributor may reasonably request. The Trust shall
supply Distributor with such copies of the Prospectus as Distributor may
reasonably request. Distributor may use its employees, agents and other persons
who need not be its employees, at its cost and expense, to assist it in carrying
out its obligations hereunder, but no such employee, agent or other person shall
be deemed to be an agent of the Trust or have any rights under this Agreement.
(c) The Trust reserves the right to suspend the offering of Shares at
any time, in the absolute discretion of the Board, and upon notice of such
suspension Distributor shall cease to offer shares of stock.
(d) The Trust and Distributor will cooperate with each other in taking
such action as may be necessary to qualify Shares for sale under the securities
laws of such states as the Trust may designate, provided, that Distributor shall
not be required to register as a broker-dealer or file a consent to service of
process in any such state. Subject to any agreement by the Trust's investment
adviser to reimburse expenses of the Trust that relate to the Funds, the Trust
shall be responsible for payment of all fees and expenses of registering Shares
under the Securities Act and of registering or qualifying Shares and the Trust's
qualification under applicable state securities laws. Distributor shall pay all
expenses relating to its broker-dealer qualification.
(e) The Trust represents that its Registration Statement and Prospectus
under the Securities Act have been or will be, as the case may be, carefully
prepared in conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission (the "Commission")
thereunder. The Trust represents and warrants that its Registration Statement
and Prospectus contain or will contain all statements required to be stated
therein in accordance with the Securities Act and the rules and regulations of
the Commission thereunder, and that all statements of fact contained or to be
contained therein are or will be true and correct at the time indicated or on
the effective date as the case may be; that the Trust's Registration Statement
and Prospectus, when they shall become effective or be authorized for use, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Shares. The Trust will from time to time file
such amendment or amendments to its Registration Statement and Prospectus as, in
the light of future developments, shall, in the opinion of the Trust's counsel,
be necessary in order to have such Registration Statement and Prospectus at all
times contain all material facts required to be stated therein or necessary to
make any statements therein not misleading to a purchaser of Shares, but, if the
Trust shall not file such amendment or amendments within fifteen days after
receipt of a written request from Distributor to do so, Distributor may, at its
option, terminate this Agreement immediately. The Trust shall not file any
amendment to its Registration Statement and Prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendments to its Registration Statement and Prospectus,
of whatever character, as it deems advisable, such right being in all respects
absolute and unconditional. The Trust represents and warrants that any amendment
to its Registration Statement and Prospectus hereafter filed will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the Securities Act and the rules and regulations of the
Commission thereunder, that all statements of fact
<PAGE>
contained therein will, when the same shall become effective, be true and
correct and that no such amendment, when it becomes effective, will include an
untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading to a purchaser of Shares.
(f) The Trust will indemnify, defend and hold Distributor, its several
officers and directors, and any person who controls Distributor within the
meaning of Section 15 of the Securities Act (collectively, the "Distributor
Indemnitees"), free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) that any Distributor Indemnitee may incur, under the Securities Act,
or under common law or otherwise, arising out of or based upon any alleged
untrue statement of a material fact contained in the Trust's Registration
Statement and Prospectus under the Securities Act or arising out of or based
upon any alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that in no event shall anything contained in this paragraph (f) be so construed
as to protect Distributor against any liability to the Trust or its security
holders to which Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations and duties under this
Section 2. This agreement to indemnify Distributor Indemnitees is expressly
conditioned upon the Trust being notified of any action brought against any
Distributor Indemnitee, such notification to be given by letter, facsimile
transmission or telegram to the Trust and referring to the person against whom
such action is brought within ten days after the summons or other first legal
process shall have been served on such person. The failure so to notify the
Trust of any such action shall not relieve the Trust from any liability which it
may have to any Distributor Indemnitee otherwise than on account of the
indemnification provided for in this paragraph (f). The Trust will be entitled
to assume the defense of any suit brought to enforce any such claim, and to
retain counsel of good standing chosen by it and approved by Distributor. In the
event the Trust elects to assume the defense of any such suit and retain counsel
of good standing approved by Distributor, the defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of them. In the
event the Trust does not elect to assume the defense of any such suit, or in
case Distributor does not approve of counsel chosen by the Trust or has been
advised that it may have available defenses or claims which are not available to
or conflict with those available to the Trust, the Trust will reimburse any
Distributor Indemnitee named as defendant in such suit for the fees and expenses
of any counsel retained by any such person. The indemnification provisions
contained in this paragraph (f) and the Trust's representations and warranties
in this Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Distributor Indemnitee and
shall survive the sale of any Shares made pursuant to subscriptions obtained by
Distributor. The indemnification provisions of this paragraph (f) will inure
exclusively to the benefit of the Distributor Indemnitees and their respective
successors and assigns. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceeding against the Trust or any of its
trustees or officers in connection with the issue or sale of Shares.
(g) Distributor agrees to indemnify, defend and hold the Trust, its
several officers and directors, and any person who controls the Trust within the
meaning of Section 15 of the Securities Act (collectively, the "Trust
Indemnitees"), free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which any Trust Indemnitee may incur under the Act, or
under common law or otherwise, but only to the extent that such liability, or
expense incurred by the Trust Indemnitees resulting from such claims or demands
shall arise out of or be based upon any alleged untrue statement of a material
fact contained in information furnished in writing by
<PAGE>
Distributor in its capacity as distributor to the Trust for use in the Trust's
Registration Statement or Prospectus under the Securities Act, or shall arise
out of or be based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement or Prospectus or necessary to make such information not misleading.
Distributor's agreement to indemnify the Trust Indemnitees is expressly
conditioned upon Distributor being notified of any action brought against a
Trust Indemnitee, such notification to be given by letter, facsimile
transmission or telegram addressed and referring to the person against whom such
action is brought within ten days after the summons or other first legal process
shall have been served on such person. Distributor shall have a right to control
the defense of such action, with counsel of its own choosing, satisfactory to
the Trust, if such action is based solely upon such alleged misstatement or
omission on Distributor's part, and in any other event Distributor and the Trust
Indemnitees named shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure so to notify
Distributor of any such action shall not relieve Distributor from any liability
which it may have to any Trust Indemnitee otherwise than on account of the
indemnification provisions in this paragraph (g).
(h) The Trust shall advise Distributor immediately: (i) of any
request by the Commission for amendments to the Trust's Registration Statement
or Prospectus or for additional information; (ii) in the event of the issuance
by the Commission of any stop order suspending the effectiveness of the Trust's
Registration Statement or Prospectus or the initiation of any proceedings for
that purpose; (iii) of the happening of any material event which makes untrue
any statement made in the Trust's Registration Statement or Prospectus or which
requires the making of a change in either thereof in order to make the
statements therein not misleading; and (iv) of all action of the Commission with
respect to any amendments to the Trust's Registration Statement or Prospectus
which may from time to time be filed with Commission under the Act or the
Securities Act.
SECTION 3. STANDARD OF CARE. The Distributor shall give the Trust the
benefit of its best judgment and efforts in rendering its services to the Trust
and shall not be liable for error of judgment or mistake of law, or in any event
whatsoever, provided that nothing herein shall be deemed to protect, or purports
to protect, the Distributor against any liability to the Trust or to the
security holders of the Trust to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of reckless disregard of its obligations and
duties hereunder.
SECTION 4. EXPENSES; COMPENSATION.
(a) Subject to any agreement by the Trust's investment adviser to
reimburse or pay expenses of the Trust, the Trust shall be responsible and
assumes the obligation for payment of all its expenses.
(b) The Distributor shall be entitled to no compensation or
reimbursement of expenses for the distribution services provided by the
Distributor pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, the
Distributor and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of shareholder support or other
services, (ii) the provision of management services or (iii) service as a
Trustee or officer of the Trust.
<PAGE>
SECTION 5. EFFECTIVENESS, DURATION AND TERMINATION.
(a) This Agreement shall become effective on the date on which the
Trust's Registration Statement relating to the shares of the Cutler Equity
Income Fund, the Cutler Approved List Equity Fund and the Cutler Government
Securities Fund becomes effective and shall relate to every other Fund as of the
date on which the Trust's Registration Statement relating to the shares of such
Fund becomes effective. Upon the effectiveness of this Agreement, it shall
supersede all previous agreements between the Trust and the Distributor covering
the subject matter hereof.
(b) Unless otherwise terminated pursuant to its terms, this Agreement
shall continue in effect for twelve months and, thereafter, shall continue in
effect for successive twelve month periods, provided that such continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Trust and (ii) by a vote of
a majority of Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval. If the continuation of this Agreement is not
approved, the Distributor may continue to render the services described herein
in the manner and to the extent permitted by the Act.
(c) This Agreement may be terminated at any time, without the payment
of any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Trust on 60 days' written notice to the Distributor or
(ii) by the Distributor on 60 days' written notice to the Trust. This Agreement
shall automatically terminate in the event of its assignment.
SECTION 6. ACTIVITIES OF DISTRIBUTOR. Except to the extent necessary to
perform its obligations under this Agreement, nothing herein shall be deemed to
limit or restrict the Distributor's right, or the right of any of its officers,
directors or employees (whether or not they are a director, officer, employee or
other affiliated person of the Trust) to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, trust, firm, individual or association.
SECTION 7. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY. The
Trustees of the Trust and the shareholders of each Fund shall not be liable for
any obligations of the Trust or of the Funds under this Agreement, and the
Distributor agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
the Distributor's rights or claims relate in settlement of such rights or
claims, and not to the Trustees of the Trust or the shareholders of the Funds.
SECTION 8. MISCELLANEOUS.
(a) Except for Schedule A, no provision of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of the Trust.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did no contain the particular part, term or provision held to be illegal or
invalid.
<PAGE>
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) The terms "vote of a majority of the outstanding voting
securities," "interested person," "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this restated
Agreement to be duly executed as of September 11, 1996.
THE CUTLER TRUST
By: /s/ Kenneth R. Cutler
--------------------------------
Kenneth R. Cutler
Chairman and Vice President
FORUM FINANCIAL SERVICES, INC.
By: /s/ John Y. Keffer
--------------------------------
John Y. Keffer
President
<PAGE>
THE CUTLER TRUST
DISTRIBUTION AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
Cutler Equity Income Fund
Cutler Approved List Equity Fund
Cutler Government Securities Fund
Exhibit (9)(a)
THE CUTLER TRUST
MANAGEMENT AGREEMENT
AGREEMENT made this 11th day of September, 1996, between The Cutler
Trust (the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at Two Portland Square, Portland,
Maine 04101, and Forum Administrative Services, LLC (the "Manager"), a
corporation organized under the laws of State of Delaware with its principal
place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value (the "Shares") in
separate series and classes; and
WHEREAS, the Trust desires to employ the Manager to perform
administrative services for certain investment portfolios of the Trust as listed
on Schedule A hereto (each a "Fund" and, collectively, the "Funds") and the
Manager is willing to provide those services on the terms and conditions set
forth in this Agreement;
NOW THEREFORE, the Trust and Manager agree as follows:
SECTION 1. EMPLOYMENT. The Trust hereby employs the Manager, and the
Manager agrees, to act as manager of the Trust for the period and on the terms
set forth in this Agreement. In connection therewith, the Trust has delivered to
the Manager copies of its Trust Instrument and Bylaws, the Trust's Registration
Statement and all amendments thereto filed pursuant to the Securities Act of
1933, as amended (the "Securities Act") or the Act (the "Registration
Statement") and the current Prospectus and Statement of Additional Information
of each Fund (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and, shall promptly furnish the Manager with all
amendments of or supplements to the foregoing.
SECTION 2. ADMINISTRATIVE DUTIES.
(a) Subject to the direction and control of the Trust's Board of
Directors (the "Board"), the Manager shall manage all aspects of the Trust's
operations with respect to the Funds except those that are the responsibility of
Cutler & Company, LLC or any other investment adviser to a Fund (the "Adviser"),
all in such manner and to such extent as may be authorized by the Board.
(b) With respect to the Trust or each Fund, as applicable, the Manager
shall:
(i) oversee (A) the preparation and maintenance by the Adviser and
the Trust's custodian, transfer agent, dividend disbursing agent
and fund accountant (or if appropriate, prepare and maintain) in
such form, for such periods and in such locations as may be
required by applicable law, of all documents and records relating
to the operation of the Trust required to be prepared or
maintained by the Trust or its agents pursuant to applicable law;
(B) the reconciliation of account information and balances among
the Adviser and the Trust's custodian, transfer agent, dividend
disbursing agent and fund accountant; (C) the transmission of
purchase and redemption orders for Shares; (D) the notification
<PAGE>
to the Adviser of available funds for investment; and (E) the
performance of fund accounting, including the calculation of the
net asset value of the Shares;
(ii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its
custodian, transfer agent and dividend disbursing agent as
well as legal, auditing and shareholder servicing and other
services performed for the Funds;
(iii) be responsible for the preparation and the printing of the
periodic updating of the Registration Statement and
Prospectus, tax returns, and reports to shareholders, the
Securities and Exchange Commission and state securities
commissions;
(iv) be responsible for the preparation of proxy and information
statements and any other communications to shareholders;
(v) at the request of the Board, provide the Trust with adequate
general office space and facilities and provide persons
suitable to the Board to serve as officers of the Trust;
(vi) provide the Trust with the services of persons, who may be
officers of the Trust, competent to perform such supervisory,
administrative and clerical functions as are necessary to
provide effective operations of the Trust;
(vii) prepare, file and maintain the Trust's governing documents,
including the Trust Instrument, the Bylaws and minutes of
meetings of Trustees and shareholders;
(viii) with the approval of the Trust's counsel and cooperation from
the Adviser and other relevant parties, prepare and
disseminate materials for meetings of the Board of Trustees;
(ix) monitor sales of shares and ensure that such shares are
properly and duly registered with the Securities and Exchange
Commission and applicable state securities commissions;
(x) oversee the calculation of performance data for dissemination
to information services covering the investment company
industry, for sales literature of the Trust and other
appropriate purposes;
(xi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to
shareholders as necessary to, among other things, maintain the
qualification of each Fund as a regulated investment company
under the Internal Revenue Code of 1986, as amended, and
prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other
distributions to shareholders;
(xii) oversee the payment of the Trust's expenses; and
(xiii) advise the Trust and the Board on matters concerning the Trust
and its affairs.
<PAGE>
(c) The books and records pertaining to the Trust which are in
possession of the Manager shall be the property of the Trust. The Trust, the
Adviser or the authorized representatives of either of them shall have access to
such books and records at all times during the Manager's normal business hours.
Upon the reasonable request of the Trust or the Adviser, copies of any such
books and records shall be provided promptly by the Manager to the Trust, the
Adviser or the authorized representatives of either of them. In the event the
Trust designates a successor to any of the Manager's obligations hereunder, the
Manager shall, at the expense and direction of the Trust, transfer to such
successor all relevant books, records and other data established or maintained
by the Manager under this Agreement.
SECTION 3. STANDARD OF CARE. The Manager shall give the Trust the
benefit of its best judgment and efforts in rendering its services to the Trust
and shall not be liable for error of judgment or mistake of law, for any loss
arising out of any investment, or in any event whatsoever, provided that nothing
herein shall be deemed to protect, or purports to protect, the Manager against
any liability to the Trust or to the security holders of the Trust to which it
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of reckless
disregard of its obligations and duties hereunder.
SECTION 4. EXPENSES. Subject to any expense reimbursement arrangements
between the Adviser or others and the Trust, the Trust shall be responsible and
assumes the obligation for payment of all its expenses.
SECTION 5. COMPENSATION.
(a) For the services provided by the Manager pursuant to this
Agreement, the Trust shall pay the Manager, with respect to each of the Funds, a
fee at an annual rate equal to the amount set forth in Schedule B hereto. Such
fees shall be accrued by the Trust daily and shall be payable monthly in arrears
on the first day of each calendar month for services performed under this
Agreement during the prior calendar month. Upon the termination of this
Agreement, the Trust shall pay to the Manager such compensation as shall be
payable prior to the effective date of such termination.
(b) Notwithstanding anything in this Agreement to the contrary, the
Manager and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of shareholder support or other
services or (ii) service as a Trustee or officer of the Trust.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION.
(a) This Agreement shall become effective on the date on which the
Trust's Registration Statement relating to the shares of the Cutler Equity
Income Fund, the Cutler Approved List Equity Fund and the Cutler Government
Securities Fund becomes effective and shall relate to every other Fund as of the
date on which the Trust's Registration Statement relating to the shares of such
Fund becomes effective. Upon the effectiveness of this Agreement, it shall
supersede all previous agreements among the Adviser, the Trust and the Manager,
or between any of them, covering the subject matter hereof.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be automatically renewed each year for an additional term of
one year.
<PAGE>
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Trust on 60 days' written
notice to the Adviser and the Manager or (ii) by the Manager on 60 days' written
notice to the Adviser and the Trust.
(d) This Agreement shall terminate automatically in the event of its
assignment.
SECTION 7. ACTIVITIES OF MANAGER. Except to the extent necessary to
perform its obligations under this Agreement, nothing herein shall be deemed to
limit or restrict the Manager's right, or the right of any of its officers,
directors or employees (whether or not they are a trustee, officer, employee or
other affiliated person of the Trust) to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, trust, firm, individual or association.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY. The
Trustees of the Trust and the shareholders of each Fund shall not be liable for
any obligation of the Trust or of the Funds under this Agreement, and the
Manager and the Adviser agree that, in asserting any rights or claims in
connection with any obligation of the Trust or of the Funds under this
Agreement, they shall look only to the assets and property of the Trust or the
Fund to which the Manager's or Adviser's rights or claims relate in settlement
of such rights or claims, and not to the Trustees of the Trust or the
shareholders of the Funds.
SECTION 9. MISCELLANEOUS.
(a) No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of the Trust.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
<PAGE>
(f) The terms "vote of a majority of the outstanding voting
securities," "interested person," and "affiliated person" shall have the
meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CUTLER TRUST
By: /s/ Kenneth R. Cutler
-----------------------------------
Kenneth R. Cutler
Chairman and Vice President
FORUM ADMINISTRATIVE SERVICES, LLC
By: /s/ John Y. Keffer
-----------------------------------
John Y. Keffer
President
<PAGE>
THE CUTLER TRUST
MANAGEMENT AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
Cutler Equity Income Fund
Cutler Approved List Equity Fund
Cutler Government Securities Fund
SCHEDULE B
FEES
Fee as a % of
the Annual Average Daily
Fund Net Assets of the Fund
---- ----------------------
Cutler Equity Income Fund 0.10%
Cutler Approved List Equity Fund 0.10%
Cutler Government Securities Fund 0.10%
Exhibit (9)(b)
THE CUTLER TRUST
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the 28th day of September, 1998, by and between
The Cutler Trust, a Delaware business trust, with its principal office and place
of business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and
Forum Shareholder Services, LLC, a Delaware limited liability company with its
principal office and place of business at Two Portland Square, Portland, Maine
04101 ("Forum").
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets, and is authorized to divide those series into
separate classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 13, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes"); and
WHEREAS, the Trust on behalf of the Funds desires to appoint Forum as
its transfer agent and dividend disbursing agent and Forum desires to accept
such appointment;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) Appointment. The Trust, on behalf of the Funds, hereby appoints
Forum to act as, and Forum agrees to act as, (i) transfer agent for the
authorized and issued shares of beneficial interest of the Trust representing
interests in each of the respective Funds and Classes thereof ("Shares"), (ii)
dividend disbursing agent and (iii) agent in connection with any accumulation,
open-account or similar plans provided to the registered owners of shares of any
of the Funds ("Shareholders") and set out in the currently effective
prospectuses and statements of additional information (collectively
"prospectus") of the applicable Fund, including, without limitation, any
periodic investment plan or periodic withdrawal program.
(b) Document Delivery. The Trust has delivered to Forum copies of (i)
the Trust's Trust Instrument and Bylaws (collectively, as amended from time to
time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as
<PAGE>
amended (the "Securities Act"), or the Investment Company Act of 1940, as
amended ("1940 Act")(the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus"), (iv)
each current plan of distribution or similar document adopted by the Trust under
Rule 12b-1 under the 1940 Act ("Plan") and each current shareholder service plan
or similar document adopted by the Trust ("Service Plan"), and (v) all
procedures adopted by the Trust with respect to the Funds (i.e., repurchase
agreement procedures), and shall promptly furnish Forum with all amendments of
or supplements to the foregoing. The Trust shall deliver to Forum a certified
copy of the resolution of the Board of Trustees of the Trust (the "Board")
appointing Forum and authorizing the execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) Services. Forum agrees that in accordance with procedures
established from time to time by agreement between the Trust on behalf of each
of the Funds, as applicable, and Forum, Forum will perform the following
services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account
or similar plans (including without limitation any periodic investment
plan or periodic withdrawal program) that are customary for open-end
management investment companies including: (A) maintaining all
Shareholder accounts, (B) preparing Shareholder meeting lists, (C)
mailing proxies to Shareholders, (D) mailing Shareholder reports and
prospectuses to current Shareholders, (E) withholding taxes on U.S.
resident and non-resident alien accounts, (F) preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required by
federal authorities with respect to distributions for Shareholders, (G)
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, (H) preparing and
mailing activity statements for Shareholders, and (I) providing
Shareholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian") or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
<PAGE>
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Shares were offered and
as instructed by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the
Trust with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or
destroyed upon receipt by Forum of indemnification satisfactory to
Forum and protecting Forum and the Trust and, at the option of Forum,
issue replacement certificates in place of mutilated share certificates
upon presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Trust and provide periodic reporting to
the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements
to the Trust and Shareholders as to the foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as
amended ("1934 Act") a record of the total number of Shares of the
Trust, each Fund and each Class thereof, that are authorized, based
upon data provided to it by the Trust, and are issued and outstanding
and provide the Trust on a regular basis a report of the total number
of Shares that are authorized and the total number of Shares that are
issued and outstanding; and
(xiii) provide a system which will enable the Trust to calculate the
total number of Shares of each Fund and Class thereof sold in each
State.
(b) Other Services. Forum shall provide the following additional
services on behalf of the Trust and such other services agreed to in writing by
the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States; and
<PAGE>
(ii) receive and tabulate proxy votes/oversee the activities of proxy
solicitation firms and coordinate the tabulation of proxy and
shareholder meeting votes.
(c) Blue Sky Matters. The Trust or its administrator or other agent (i)
shall identify to Forum in writing those transactions and assets to be treated
as exempt from reporting for each state and territory of the United States and
for each foreign jurisdiction (collectively "States") and (ii) shall monitor the
sales activity with respect to Shareholders domiciled or resident in each State.
The responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Trust or
its administrator or other agent.
(d) Safekeeping. Forum shall establish and maintain facilities and
procedures reasonably acceptable to the Trust for the safekeeping, control,
preparation and use of share certificates, check forms, and facsimile signature
imprinting devices. Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of all records maintained by
Forum pursuant to this Agreement.
(e) Cooperation With Accountants. Forum shall cooperate with each
Fund's independent public accountants and shall take reasonable action to make
all necessary information available to the accountants for the performance of
the accountants' duties.
(f) Responsibility for Compliance With Law. Except with respect to
Forum's duties as set forth in this Section 2 and except as otherwise
specifically provided herein, the Trust assumes all responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act,
the 1940 Act and any laws, rules and regulations of governmental authorities
with jurisdiction over the Trust. All references to any law in this Agreement
shall be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 3. RECORDKEEPING
(a) Predecessor Records. Prior to the commencement of Forum's
responsibilities under this Agreement, if applicable, the Trust shall deliver or
cause to be delivered over to Forum (i) an accurate list of Shareholders of the
Trust, showing each Shareholder's address of record, number of Shares owned and
whether such Shares are represented by outstanding share certificates and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by Forum under this Agreement
(collectively referred to as the "Materials"). The Trust shall on behalf of each
applicable Fund or Class indemnify and hold Forum harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any error, omission, inaccuracy or
other deficiency of the Materials, or out of the failure of the Trust to provide
any portion of the Materials or to provide any information in the Trust's
possession or control reasonably needed by Forum to perform the services
described in this Agreement.
<PAGE>
(b) Recordkeeping. Forum shall keep records relating to the services to
be performed under this Agreement, in the form and manner as it may deem
advisable and as required by applicable law. To the extent required by Section
31 of the 1940 Act, and the rules thereunder, Forum agrees that all such records
prepared or maintained by Forum relating to the services to be performed by
Forum under this Agreement are the property of the Trust and will be preserved,
maintained and made available in accordance with Section 31 of the 1940 Act and
the rules thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Trust's request. The Trust and the Trust's authorized
representatives shall have access to Forum's records relating to the services to
be performed under this Agreement at all times during Forum's normal business
hours. Upon the reasonable request of the Trust, copies of any such records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives.
(c) Confidentiality of Records. Forum and the Trust agree that all
books, records, information, and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law.
(d) Inspection of Records by Others. In case of any requests or demands
for the inspection of the Shareholder records of the Trust, Forum will endeavor
to notify the Trust and to secure instructions from an authorized officer of the
Trust as to such inspection. Forum shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that Forum may grant the
inspection without instructions if Forum is advised by counsel to Forum that
failure to do so will result in liability to Forum.
SECTION 4. ISSUANCE AND TRANSFER OF SHARES
(a) Issuance of Shares. Forum shall make original issues of Shares of
each Fund and Class thereof in accordance with the Trust's then current
prospectus only upon receipt of (i) instructions requesting the issuance, (ii) a
certified copy of a resolution of the Board authorizing the issuance, (iii)
necessary funds for the payment of any original issue tax applicable to such
Shares, and (iv) an opinion of the Trust's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Trust of an appropriate notice with the SEC, as required by
Section 24 of the 1940 Act or the rules thereunder. If the opinion described in
(iv) above is contingent upon a filing under Section 24 of the 1940 Act, the
Trust shall indemnify Forum for any liability arising from the failure of the
Trust to comply with that section or the rules thereunder.
(b) Transfer of Shares. Transfers of Shares of each Fund and Class
thereof shall be registered on the Shareholder records maintained by Forum. In
registering transfers of Shares, Forum may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of Forum's counsel, protect Forum and the Trust from liability arising from (i)
not requiring complete documentation, (ii) registering a transfer without an
adverse claim inquiry, (iii) delaying registration for purposes of such inquiry
or (iv) refusing
<PAGE>
registration whenever an adverse claim requires such refusal. As Transfer Agent,
Forum will be responsible for delivery to the transferor and transferee of such
documentation as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) Certificates. The Trust shall furnish to Forum a supply of blank
share certificates of each Fund and Class thereof and, from time to time, will
renew such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
by the Organic Documents of the Trust and, if required by the Organic Documents,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) Endorsement; Transportation. New Share certificates shall be issued
by Forum upon surrender of outstanding Share certificates in the form deemed by
Forum to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. Forum shall forward Share certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means Forum deems equally
reliable and expeditious. Forum shall not mail Share certificates in
"negotiable" form unless requested in writing by the Trust and fully indemnified
by the Trust to Forum's satisfaction.
(c) Non-Issuance of Certificates. In the event that the Trust informs
Forum that any Fund or Class thereof does not issue share certificates, Forum
shall not issue any such share certificates and the provisions of this Agreement
relating to share certificates shall not be applicable with respect to those
Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) Purchase Orders. Shares shall be issued in accordance with the
terms of a Fund's or Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic
payment in the amount designated in the instruction and (C), in the
case of an initial purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar
contract with a financial intermediary.
(b) Distribution Eligibility. Shares issued in a Fund after receipt of
a completed purchase order shall be eligible to receive distributions of the
Fund at the time specified in the prospectus pursuant to which the Shares are
offered.
<PAGE>
(c) Determination of Federal Funds. Shareholder payments shall be
considered Federal Funds no later than on the day indicated below unless other
times are noted in the prospectus of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System,
on the second Fund Business Day following receipt of the check; and
(iv) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as Forum is credited with Federal
Funds with respect to that check.
SECTION 7. FEES AND EXPENSES
(a) Fees. For the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to pay Forum the fees set
forth in Clauses (i) and (ii) of Appendix B hereto. Fees will begin to accrue
for each Fund on the latter of the date of this Agreement or the date of
commencement of operations of the Fund. If fees begin to accrue in the middle of
a month or if this Agreement terminates before the end of any month, all fees
for the period from that date to the end of that month or from the beginning of
that month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) Expenses. In connection with the services provided by Forum
pursuant to this Agreement, the Trust, on behalf of each Fund, agrees to
reimburse Forum for the expenses set forth in Appendix B hereto. In addition,
the Trust, on behalf of the applicable Fund, shall reimburse Forum for all
expenses and employee time (at 150% of salary) attributable to any review of the
Trust's accounts and records by the Trust's independent accountants or any
regulatory body outside of routine and normal periodic reviews. Should the Trust
exercise its right to terminate this Agreement, the Trust, on behalf of the
applicable Fund, shall reimburse Forum for all out-of-pocket expenses and
employee time (at 150% of salary) associated with the copying and movement of
records and material to any successor person and providing assistance to any
successor person in the establishment of the accounts and records necessary to
carry out the successor's responsibilities.
(c) Payment. All fees and reimbursements are payable in arrears on a
monthly basis and the Trust, on behalf of the applicable Fund, agrees to pay all
fees and reimbursable expenses within five (5) business days following receipt`
of the respective billing notice.
<PAGE>
SECTION 8. REPRESENTATIONS AND WARRANTIES
(a) Representations and Warranties of Forum. Forum represents and
warrants to the Trust that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware.
(ii) It is duly qualified to carry on its business in the State of
Maine.
(iii) It is empowered under applicable laws and by its Operating
Agreement to enter into this Agreement and perform its duties under
this Agreement.
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(v) It has access to the necessary facilities, equipment, and personnel
to perform its duties and obligations under this Agreement.
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
(vii) It is registered as a transfer agent under Section 17A of the
1934 Act.
(b) Representations and Warranties of the Trust. The Trust represents
and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into this Agreement and perform its duties under this
Agreement.
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(iv) It is an open-end management investment company registered under
the 1940 Act.
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
<PAGE>
(vi) A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate State securities
law filings have been made and will continue to be made, with respect
to all Shares of the Funds and Classes of the Trust being offered for
sale.
SECTION 9. PROPRIETARY INFORMATION
(a) Proprietary Information of Forum. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust agrees
to treat all Proprietary Information as proprietary to Forum and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(b) Proprietary Information of the Trust. Forum acknowledges that the
Shareholder list and all information related to Shareholders furnished to Forum
by the Trust or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Trust. In no event shall Proprietary Information be
deemed Customer Data. Forum agrees to treat all Customer Data as proprietary to
the Trust and further agrees that it shall not divulge any Customer Data to any
person or organization except as may be provided under this Agreement or as may
be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) Indemnification of Forum. Forum shall not be responsible for, and
the Trust shall on behalf of each applicable Fund or Class thereof indemnify and
hold Forum harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without gross negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's gross negligence or
willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors
of information, records, documents or services which have been
prepared, maintained or performed by the Trust or any other person or
firm on behalf of the Trust, including but not limited to any previous
transfer agent or registrar;
<PAGE>
(iv) the reasonable reliance on, or the carrying out by Forum or its
agents or subcontractors of, any instructions or requests of the Trust
on behalf of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or
regulations of any State that such Shares be registered in such State
or in violation of any stop order or other determination or ruling by
any federal agency or any State with respect to the offer or sale of
such Shares in such State.
(b) Indemnification of Trust. Forum shall indemnify and hold the Trust
and each Fund or Class thereof harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by Forum as a result of Forum's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(c) Reliance. At any time Forum may apply to any officer of the Trust
for instructions, and may consult with legal counsel to the Trust or to Forum
with respect to any matter arising in connection with the services to be
performed by Forum under this Agreement, and Forum and its agents or
subcontractors shall not be liable and shall be indemnified by the Trust on
behalf of the applicable Fund for any action taken or omitted by it in
reasonable reliance upon such instructions or upon the advice of such counsel.
Forum, its agents and subcontractors shall be protected and indemnified in
acting upon (i) any paper or document furnished by or on behalf of the Trust,
reasonably believed by Forum to be genuine and to have been signed by the proper
person or persons, (ii) any instruction, information, data, records or documents
provided Forum or its agents or subcontractors by machine readable input, telex,
CRT data entry or other similar means authorized by the Trust, and (iii) any
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) Reliance on Electronic Instructions. If the Trust has the ability
to originate electronic instructions to Forum in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event Forum shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by Forum from time to time.
<PAGE>
(e) Use of Fund/SERV and Networking. The Trust has authorized or in the
future may authorize Forum to act as a "Mutual Fund Services Member" for the
Trust or various Funds. Fund/SERV and Networking are services sponsored by the
National Securities Clearing Corporation ("NSCC") and as used herein have the
meanings as set forth in the then current edition of NSCC Rules and Procedures
published by NSCC or such other similar publication as may exist from time to
time. The Trust shall indemnify and hold Forum harmless from and against any and
all losses, damages, costs, charges, reasonable counsel fees, payments, expenses
and liability arising directly or indirectly out of or attributed to any action
or failure or omission to act by NSCC.
(f) Notification of Claims. In order that the indemnification
provisions contained in this Section shall apply, upon the assertion of a claim
for which either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim
or to defend against said claim in its own name or in the name of the other
party. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION
(a) Effectiveness. This Agreement shall become effective with respect
to each Fund or Class on September 28, 1998. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds.
(b) Duration. This Agreement shall continue in effect with respect to a
Fund until terminated; provided, that continuance is specifically approved at
least annually (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Fund and (ii) by a vote of a majority of Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party (other than as Trustees of the Trust).
(c) Termination. This Agreement may be terminated with respect to a
Fund at any time, without the payment of any penalty (i) by the Board on 60
days' written notice to Forum or (ii) by Forum on 60 days' written notice to the
Trust. Any termination shall be effective as of the date specified in the
notice. Upon notice of termination of this Agreement by either party, Forum
shall promptly transfer to the successor transfer agent the original or copies
of all books and records maintained by Forum under this Agreement including, in
the case of records maintained on computer systems, copies of such records in
machine-readable form, and shall cooperate with, and provide reasonable
assistance to, the successor transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
<PAGE>
(d) Survival. The obligations of Sections 7, 9 and 10 shall survive any
termination of this Agreement.
SECTION 12. ADDITIONAL FUNDS AND CLASSES. In the event that the Trust
establishes one or more series of Shares or one or more classes of Shares after
the effectiveness of this Agreement, such series of Shares or classes of Shares,
as the case may be, shall become Funds and Classes under this Agreement. Forum
or the Trust may elect not to make and such series or classes subject to this
Agreement.
SECTION 13. ASSIGNMENT. Except as otherwise provided in this Agreement,
neither this Agreement nor any rights or obligations under this Agreement may be
assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns. Forum may, without further
consent on the part of the Trust, subcontract for the performance hereof with
any entity, including affiliated persons of Forum; provided however, that Forum
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as Forum is for its own acts and omissions.
SECTION 14. FORCE MAJEURE. Forum shall not be responsible or liable for
any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control including, without limitation, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical
breakdowns, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails or any transportation medium, communication system or power
supply.
SECTION 15. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS. The trustees of the Trust and the shareholders
of each Fund shall not be liable for any obligations of the Trust or of the
Funds under this Agreement, and Forum agrees that, in asserting any rights or
claims under this Agreement, it shall look only to the assets and property of
the Trust or the Fund to which Forum's rights or claims relate in settlement of
such rights or claims, and not to the trustees of the Trust or the shareholders
of the Funds.
SECTION 16. TAXES. Forum shall not be liable for any taxes, assessments
or governmental charges that may be levied or assessed on any basis whatsoever
in connection with the Trust or any Shareholder or any purchase of Shares,
excluding taxes assessed against Forum for compensation received by it under
this Agreement.
SECTION 17. MISCELLANEOUS
(a) No Consequential Damages. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement.
<PAGE>
(b) Amendments. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by both parties hereto.
(c) Choice of Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Delaware.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
(e) Counterparts. This Agreement may be executed by the parties hereto
on any number of counterparts, and all of the counterparts taken together shall
be deemed to constitute one and the same instrument.
(f) Severability. If any part, term or provision of this Agreement is
held to be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected, and the
rights and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(g) Headings. Section and paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
(h) Notices. Notices, requests, instructions and communications
received by the parties at their respective principal addresses, or at such
other address as a party may have designated in writing, shall be deemed to have
been properly given.
(i) Business Days. Nothing contained in this Agreement is intended to
or shall require Forum, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.
(j) Distinction of Funds. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each Fund of the
Trust are separate and distinct from the assets and liabilities of each other
Fund and that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement
or otherwise.
(k) Nonliability of Affiliates. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
<PAGE>
(l) Representation of Signatories. Each of the undersigned expressly
warrants and represents that they have full power and authority to sign this
Agreement on behalf of the party indicated and that their signature will bind
the party indicated to the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
THE CUTLER TRUST
By: /s/Kenneth R. Cutler
------------------------------
Kenneth R. Cutler
Chairman and Vice President
FORUM SHAREHOLDER SERVICES, LLC
By: /s/Lisa J. Weymouth
------------------------------
Lisa J. Weymouth
Managing Director
<PAGE>
THE CUTLER TRUST
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX A
FUNDS AND CLASSES
AS OF SEPTEMBER 28, 1998
Cutler Equity Income Fund
Cutler Approved List Equity Fund
<PAGE>
THE CUTLER TRUST
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE:
Fee per Fund: $1,000/month plus $500/month for each Class over one.
The rates set forth above shall remain fixed through December 31, 1998.
On January 1, 1999, and on each successive January 1, the rates may be
adjusted automatically by Forum without action of the Trust to reflect
changes in the Consumer Price Index for the preceding calendar year, as
published by the U.S. Department of Labor, Bureau of Labor Statistics.
Forum shall notify the Trust each year of the new rates, if applicable.
(II) SHAREHOLDER ACCOUNT FEES:
$12.00 per Shareholder account per year. Shareholder account fees are
based upon the number of Shareholder accounts as of the last Fund
Business Day of the prior month.
(III) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) statement, confirmation,
envelope and stationery stock, (ii) share certificates, (iii) printing
of checks and drafts, (iv) postage, (v) telecommunications, (vi)
banking services (DDA account, wire and ACH, check and draft clearing
and lock box fees and charges), (vii) NSCC Fund/SERV and Networking
fees and expenses, (viii) outside proxy solicitors and tabulators, (ix)
proxy solicitation fees and (x) microfilm and microfiche. In addition,
any other expenses incurred by Forum at the request or with the consent
of the Trust, will be reimbursed by the Trust on behalf of the
applicable Fund.
Exhibit (9)(c)
THE CUTLER TRUST
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of the 1st day of October, 1997, by and between The
Cutler Trust, a Delaware business trust, with its principal office and place of
business at Two Portland Square (the "Trust"), and Forum Accounting Services,
Limited Liability Company, a Delaware limited liability company with its
principal office and place of business at Two Portland Square, Portland, Maine
04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust may in the future offer shares of various classes of each
Fund as listed in Appendix A hereto (each such class together with all other
classes subsequently established by the Trust in a Fund being herein referred to
as a "Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and Bylaws (collectively, as amended from time
to time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as
<PAGE>
currently in effect and as amended or supplemented, the "Prospectus") and (iv)
all procedures adopted by the Trust with respect to the Funds (i.e., repurchase
agreement procedures), and shall promptly furnish Forum with all amendments of
or supplements to the foregoing. The Trust shall deliver to Forum a certified
copy of the resolution of the Board of Trustees of the Trust (the "Board")
appointing Forum and authorizing the execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) Forum and the Trust's administrator, Forum Administrative Services, LLC
(the "Administrator"), may from time to time adopt such procedures as they agree
upon to implement the terms of this Section. With respect to each Fund, Forum
shall perform the following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (unless otherwise specified in or
in accordance with this Agreement, based upon the use of outside
services normally used and contracted for this purpose by Forum in the
case of securities for which information and market price or yield
quotations are readily available and based upon evaluations conducted
in accordance with the Trust's instructions in the case of all other
assets) or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of those
assets by more than a specified percentage;
<PAGE>
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers,
as applicable;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that is required to update the Trust's registration
statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers, as
applicable, to the Trust and the Board and provide information to the
Administrator, investment advisers to the Trust and other appropriate
persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xivv) periodically reconcile all appropriate data with each Fund's
custodian;
<PAGE>
(xvv) verify investment trade tickets when received from an investment
adviser, as applicable, and maintain individual ledgers and historical
tax lots for each security; and
(xvvi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. The books and records pertaining to the Trust
that are in possession of Forum shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during Forum's normal business hours. Upon the reasonable
request of the Trust or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations
<PAGE>
hereunder, Forum shall, at the expense and direction of the Trust, transfer to
such successor all relevant books, records and other data established or
maintained by Forum under this Agreement.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(c)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
<PAGE>
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(d) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
(g) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Portfolio to act in
<PAGE>
contravention of a Portfolio's Offering Document or any provision of the 1940
Act. Except as otherwise specifically provided herein, the Trust assumes all
responsibility for ensuring that the Trust complies with all applicable
requirements of the Securities Act, the 1940 Act and any laws, rules and
regulations of governmental authorities with jurisdiction over the Trust. All
references to any law in this Agreement shall be deemed to include reference to
the applicable rules and regulations promulgated under authority of the law and
all official interpretations of such law or rules or regulations.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix B hereto. In addition, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all expenses and
employee time (at 150% of salary) attributable to any review of the Trust's
accounts and records by the Trust's independent accountants or any regulatory
body outside of routine and normal periodic reviews. Should the Trust exercise
its right to terminate this Agreement, the Trust, on behalf of the applicable
Fund, shall reimburse Forum for all out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance
<PAGE>
to any successor person in the establishment of the accounts and records
necessary to carry out the successor's responsibilities.
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the Shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and and 4 shall survive any termination of this
Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY. Forum agrees to treat all records and other
information related to the Trust as proprietary information of the Trust and, on
behalf of itself and its employees, to keep confidential all such information,
except that Forum may
<PAGE>
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
<PAGE>
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and
<PAGE>
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
THE CUTLER TRUST
By: /s/ Kenneth R. Cutler
----------------------------
Kenneth R. Cutler
Chairman and Vice President
FORUM ACCOUNTING SERVICES,
LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/ John Y. Keffer
----------------------------
John Y. Keffer
President
<PAGE>
THE CUTLER TRUST
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF SEPTEMBER 10, 1997
Cutler Equity Income Fund
Cutler Approved List Equity Fund
<PAGE>
THE CUTLER TRUST
FUND ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
<TABLE>
<S> <C> <C>
(I) BASE FEE
A. Standard Fee
Fee per Fund................................................................... $3,000/month
Fee for each additional Class of the Fund above one............................ $1,000/month
B. Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million................... $500/month
Portfolios with asset levels exceeding $250 million................... $1000/month
Portfolios with asset levels exceeding $500 million................... $1,500/month
Portfolios with asset levels exceeding $1,000 million................. $2,000/month
(ii) Portfolios requiring international custody............................ $1,000/month
(iii) Portfolios with more than 30 international positions ................. $1,000/month
(iv) Tax free money market Funds........................................... $1,000/month
(v) Portfolios with more than 25% of net assets invested in
asset backed securities............................................... $1,000/month
Portfolios with more than 50% of net assets invested in
asset backed securities............................................... $2,000/month
(vii) Portfolios with more than 100 security positions...................... $1,000/month
(viii) Portfolios with a monthly portfolio turnover rate of 10%
or greater............................................................ $1,000/month
C. Standard Fee per Gateway Fund (a Fund operating pursuant to Section
12(d)(1)(E) of the 1940 Act)
Standard Fee per Fund.......................................................... $1,000/month
Standard Fee per Fund that invests in one or more instruments
in addition to the fund in which it invests.................................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Additional surcharges listed above do not apply
D. Standard Fee per Gateway Fund (a Fund operating pursuant to Section
12(d)(1)(G) of the 1940 Act or in a similar structure)
Standard Fee per Fund.......................................................... $1,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Plus additional surcharges listed above if the Fund invests in
securities other than investment companies (calculated as if
the securities were the Fund's only assets)
</TABLE>
<PAGE>
Note 1: Surcharges are determined based upon the total assets, security
positions or other factors as of the end of the prior month and on the
portfolio turnover rate for the prior month. Portfolio turnover rate
shall have the meaning ascribed thereto in SEC Form N--1A.
Note 2: The rates set forth above shall remain fixed through December
31, 1998. On January 1, 1999, and on each successive January 1, the
rates may be adjusted automatically by Forum without action of the
Trust to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of
Labor Statistics. Forum shall notify the Trust each year of the new
rates, if applicable.
(II) START-UP FEE
<TABLE>
<S> <C>
Fund Start-Up Fee ......................................................................$2,000
</TABLE>
(III) OTHER SERVICES (payable in equal installments monthly)
TAX SERVICES. Preparation of Federal income and excise tax
returns and preparation, execution and filing of state income
tax returns, including any extensions or amendments
<TABLE>
<S> <C>
Standard Fee.................................................. $3,000/fiscal period
Fee per Gateway Fund (a Fund described
in (i)(C) or (D) above)....................................... $1,500/fiscal period
Fee per Gateway Fund (a Fund described in (i)(C) or (D) above)
that invests in more than one instrument in addition to the
fund(s) in which
it invests.................................................... $3,000/fiscal period
</TABLE>
(IV) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements, (xiii) microfilm and microfiche and
(ix) Trust record storage and retention fees. In addition, any other
expenses incurred by Forum at the request or with the consent of the
Trust, will be reimbursed by the Trust on behalf of the applicable
Fund.
Exhibit (9)(d)
THE CUTLER TRUST
SHAREHOLDER SERVICE PLAN
January 3, 1996
as amended November 25, 1997
This Shareholder Service Plan (the "Plan") is adopted by The Cutler
Trust (the "Trust") with respect to the shares of beneficial interest of each of
the series of the Trust identified in Appendix A hereto (individually a "Fund"
and collectively the "Funds").
SECTION 1. ADMINISTRATOR
The Trust has entered into an Administration Agreement with Forum
Administrative Services, LLC ("Forum") whereby Forum provides certain
administrative services for the Trust and for each Fund.
SECTION 2. SERVICE AGREEMENTS; PAYMENTS
(a) Forum is authorized to enter into Shareholder Service Agreements
(the "Agreements"), the form of which shall be approved by the Board of Trustees
of the Trust (the "Board"), with financial institutions and other persons who
provide services for and maintain shareholder accounts ("Service Providers") as
set forth in this Plan.
(b) Pursuant to the Agreements, as compensation for the services
described in Section 4 below, Forum may pay the Service Provider, on behalf of
the Trust, a fee at an annual rate of up to 0.25% of the average daily net
assets of each Fund represented by the shareholder accounts for which the
Service Provider maintains a service relationship.
PROVIDED, however, that no Fund shall directly or indirectly pay any
amounts, whether Payments (as defined in the Agreements) or otherwise, that
exceed any applicable limits imposed by law or the National Association of
Securities Dealers, Inc.
(c) Each Agreement shall contain a representation by the Service
Provider that any compensation payable to the Service Provider in connection
with an investment in a Fund of the assets of its customers (i) will be
disclosed by the Service Provider to its customers, (ii) will be authorized by
its customers, and (iii) will not result in an excessive fee to the Service
Provider.
SECTION 3. SHAREHOLDER SERVICE FEE.
Pursuant to this Plan, the Trust shall daily accrue and monthly pay
Forum a Shareholder Service Fee not to exceed (i) 0.25% per annum of the average
daily net assets of each Fund or (ii) the combined Payments made by Forum with
respect to each Fund for the month.
<PAGE>
SECTION 4. SERVICE ACTIVITIES
Service activities include (a) establishing and maintaining accounts
and records relating to clients of Service Provider; (b) answering shareholder
inquiries regarding the manner in which purchases, exchanges and redemptions of
shares of the Trust may be effected and other matters pertaining to the Trust's
services; (c) providing necessary personnel and facilities to establish and
maintain shareholder accounts and records; (d) assisting shareholders in
arranging for processing purchase, exchange and redemption transactions; (e)
arranging for the wiring of funds; (f) guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; (g) integrating periodic statements with other
shareholder transactions; and (h) providing such other related services as the
shareholder may request.
SECTION 5. AMENDMENT AND TERMINATION
(a) Any material amendment to the Plan shall be effective only upon
approval of the Board, including a majority of the trustees who are not
interested persons of the Trust as defined in the Investment Company Act of 1940
(the "Disinterested Trustees"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the amendment to the Plan.
(b) The Plan may be terminated without penalty at any time by a vote of
a majority of the Disinterested Trustees.
SECTION 6. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under the Plan, and
Forum agrees that, in asserting any rights or claims under this Plan, it shall
look only to the assets and property of the Trust or the Fund to which Forum's
rights or claims relate in settlement of such rights or claims, and not to the
Trustees of the Trust or the shareholders of the Funds.
<PAGE>
THE CUTLER TRUST
SHAREHOLDER SERVICE PLAN
APPENDIX A:
FUNDS TO WHICH SHAREHOLDER SERVICE PLAN APPLIES
January 3, 1996
as amended November 25, 1997
Cutler Equity Income Fund
Cutler Approved List Equity Fund
Exhibit (9)(e)
THE CUTLER TRUST
SHAREHOLDER SERVICE AGREEMENT
AGREEMENT made this 17th day of December, 1997, between Forum
Administrative Services, LLC ("Forum"), a corporation organized under the laws
of State of Delaware with its principal place of business at Two Portland
Square, Portland, ME 04101 and the institution executing this document below
(the "Institution").
WHEREAS, Forum acts as administrator of The Cutler Trust (the "Trust"),
a Delaware business trust registered under the Investment Company Act of 1940,
as amended (the "Act") as an open-end management investment company, which may
issue its shares of beneficial interest in separate series; and
WHEREAS, the Trust has adopted a Shareholder Service Plan with respect
to each series of the Trust (the "Service Plan") that authorizes Forum to pay
fees to qualified financial institutions for maintaining and providing services
to shareholder accounts of each series of the Trust; and
WHEREAS, Forum desires that Institution perform certain service
activities on behalf of Forum and the Trust with respect to each series of the
Trust listed in Schedule A to this Agreement (each a "Fund," and collectively,
the "Funds") and Institution is willing to perform those services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the representations,
covenants and agreements contained herein and other valuable consideration, the
undersigned parties do hereby agree as follows:
SECTION 1. SERVICE ACTIVITIES
In connection with providing services and maintaining shareholder
accounts of each Fund with respect to its various customers, Institution may
provide services including: (a) establishing and maintaining accounts and
records relating to clients of Institution; (b) answering shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Trust may be effected and other matters pertaining to the Trust's services;
(c) providing necessary personnel and facilities to establish and maintain
shareholder accounts and records; (d) assisting shareholders in arranging for
processing purchase, exchange and redemption transactions; (e) arranging for the
wiring of funds; (f) guaranteeing shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(g) integrating periodic statements with other shareholder transactions; and (h)
providing such other related services as the shareholder may request.
Institution shall not be obligated to perform any specific service for its
clients. Institution's appointment shall be nonexclusive and Forum may enter
into similar agreements with other persons.
<PAGE>
SECTION 2. COMPENSATION
(a) As compensation for Institution's service activities with respect
to each Fund, Forum shall pay Institution fees in the amounts listed on Schedule
B to this Agreement (the "Payments"); provided, however, that in no event will
Forum be required to make any payments for service activities in an amount
greater than that which Forum is paid by the respective Fund for such services.
(b) The Payments shall be accrued daily and paid monthly or at such
other interval as Forum and Institution shall agree.
(c) On behalf of each Fund, Institution may spend such amounts and
incur such expenses as it deems appropriate or necessary on any service
activities. Such expenses may include compensation to employees and expenses,
including overhead and telephone and other communication expenses, of
Institution. Institution shall be solely liable for any expenses it incurs.
SECTION 3. REPRESENTATIONS OF INSTITUTION
Institution represents that:
(a) the compensation payable to it under this Agreement in connection
with the investment in any Fund of the assets of its customers (i) will be
disclosed by the Institution to its customers, (ii) will be authorized by its
customers, and (iii) will not result in an excessive fee to Institution;
(b) if it is a member of the National Association of Securities
Dealers, Inc. ("NASD"), it shall abide by the Rules of Fair Practice of the
NASD;
(c) it will, in connection with sales and offers to sell shares,
furnish to or otherwise insure that each person to whom any such sale or offer
is made receives a copy of the appropriate Fund's or Funds' then current
prospectus, as applicable;
(d) it will purchase shares only from Forum as agent of the Trust and
that it will purchase shares only for the purpose of covering purchase orders
already received or for its own bona fide investment purposes;
(e) the performance of all its obligations hereunder will comply with
all applicable laws and regulations, including any applicable Federal securities
laws and any requirements to deliver confirmations to its customers, the
provisions of its charter documents and bylaws and all material contractual
obligations binding upon the Institution; and
<PAGE>
(f) it will promptly inform the Trust of any change in applicable laws
or regulations (or interpretations thereof) or in its charter or bylaws or
material contracts which would prevent or impair full performance of any of its
obligations hereunder.
SECTION 4. TRUST LITERATURE
Institution is not authorized to make any representations concerning
shares of any Fund except those contained in the Fund's then current prospectus
and statement of additional information ("SAI") and printed information issued
by the Trust or by Forum as information supplemental to the prospectus. Forum
will supply Institution upon its request with prospectuses, SAIs, reasonable
quantities of supplemental sales literature and additional information.
Institution agrees not to use other advertising or sales material relating to a
Fund unless approved in writing by Forum in advance of such use. Any printed
information furnished by Forum other than the then current prospectus and SAI,
periodic reports and proxy solicitation materials are Forum's sole
responsibility and are not the responsibility of the Trust and the Trust shall
have no liability or responsibility to Institution in these respects unless
expressly assumed in connection therewith. Institution shall have no
responsibility with regard to the accuracy or completeness of any of the printed
information furnished by Forum and shall be held harmless by Forum from and
against any cost or loss arising therefrom.
SECTION 5. REPORTS
Institution shall prepare and furnish to Forum, at Forum's request,
written reports setting forth all amounts expended by Institution and
identifying the activities for which the expenditures were made.
SECTION 6. INDEMNIFICATION
Institution agrees to indemnify and hold harmless Forum and the Trust
from any claims, expenses, or liabilities incurred by Forum or the Trust as a
result of any act or omission of the Institution in connection with its services
under this Agreement.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date hereof and, upon
its effectiveness, shall supersede all previous agreements between the parties
covering the subject matter hereof.
(b) This Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty,
by the vote of a majority of the Trustees of the Trust;
(ii) automatically in the event of the termination of the
Administration or Distribution agreements between the Trust and Forum
or the Service Plan;
<PAGE>
(iii) automatically in the event of the assignment of this
Agreement as defined in the Act; and
(iv) by either party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.
SECTION 8. NOTICES
Any notice under this Agreement shall be in writing and shall be
addressed and delivered, or mailed postage prepaid, to the other party's
principal place of business, or to such other place as shall have been
previously specified by written notice given to the other party.
SECTION 9. AMENDMENTS
Subject to approval of material amendments to the form of this
Agreement by the Trust's Board of Trustees, this Agreement may be amended by the
parties at any time. In addition, this Agreement may be amended by Forum from
time to time by the following procedure: Forum will mail a copy of the amendment
to Institution at its principal place of business or such other address as
Institution shall in writing provide to Forum. If Institution does not object to
the amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Institution's objection must be in writing and
be received by Forum within the thirty days.
SECTION 10. USE OF THE TRUST'S NAME
Institution shall not use the name of the Trust on any checks, bank
drafts, bank statements or forms for other than internal use in a manner not
approved by the Trust prior thereto in writing; provided however, that the
approval of the Trust shall not be required for the use of the Trust's name
which merely refers in accurate and factual terms to the Trust in connection
with the Institution's role hereunder or which is required by any appropriate
regulatory, governmental or judicial authority; and further provided that in no
event shall such approval be unreasonably withheld or delayed.
SECTION 11. MISCELLANEOUS
(a) This Agreement shall be construed in accordance with the laws of
the State of New York.
(b) If any provision of this Agreement shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall not
be affected thereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
INSTITUTION:
Bidwell & Co.
Name of Institution
By:/s/ Gordon Knutson
--------------------------
Name:Gordon Knutson
Title:Vice President
FORUM ADMINISTRATIVE
SERVICES, LLC
By:/s/ John Y. Keffer
--------------------------
John Y. Keffer
President
<PAGE>
THE CUTLER TRUST
SHAREHOLDER SERVICE AGREEMENT
SCHEDULE A
SERIES OF THE CUTLER TRUST
Cutler Income Equity Fund
Cutler Approved List Equity Fund
<PAGE>
THE CUTLER TRUST
SHAREHOLDER SERVICE AGREEMENT
SCHEDULE B
PAYMENTS PURSUANT TO THE SERVICE PLAN
0.25% of the average annual daily net assets of each Fund represented
by shares owned by investors for which Institution provides services
pursuant to this Agreement.
Exhibit (11)
DELOITTE & TOUCHE LLP
- ---------------------
[Logo]
125 Summer Street Telephone: (617) 261-8000
Boston, Massachusetts 02110-1617 Facsimile: (617) 261-8111
Independent Auditors' Consent
We consent to the use of our report dated August 7, 1998 on behalf of The Cutler
Trust, consisting of the Cutler Equity Income Fund and the Cutler Approved List
Equity Fund incorporated by reference in the Statement of Additional
Information, which is a part of the Registration Statement, and the references
to us under the headings "Custodian and Auditor" in the Statement of Additional
Information and "Financial Highlights" appearing in the Prospectus, which is
also a part of the Registration Statement.
Boston, Massachusetts
October 28, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000892568
<NAME> THE CUTLER TRUST
<SERIES>
<NUMBER>020
<NAME>CUTLER APPROVED LIST EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 26,743,693
<INVESTMENTS-AT-VALUE> 41,064,253
<RECEIVABLES> 218,282
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41,282,535
<PAYABLE-FOR-SECURITIES> 130,715
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<SHARES-COMMON-PRIOR> 1,924,574
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,320,560
<NET-ASSETS> 41,085,239
<DIVIDEND-INCOME> 644,264
<INTEREST-INCOME> 61,432
<OTHER-INCOME> 0
<EXPENSES-NET> 461,667
<NET-INVESTMENT-INCOME> 244,029
<REALIZED-GAINS-CURRENT> 8,668,411
<APPREC-INCREASE-CURRENT> (674,549)
<NET-CHANGE-FROM-OPS> 8,237,891
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 246,131
<DISTRIBUTIONS-OF-GAINS> 2,695,053
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<NUMBER-OF-SHARES-SOLD> 193,037
<NUMBER-OF-SHARES-REDEEMED> 318,283
<SHARES-REINVESTED> 155,031
<NET-CHANGE-IN-ASSETS> 5,807,858
<ACCUMULATED-NII-PRIOR> 2,749
<ACCUMULATED-GAINS-PRIOR> 798,583
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<GROSS-ADVISORY-FEES> 279,760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461,667
<AVERAGE-NET-ASSETS> 37,301,365
<PER-SHARE-NAV-BEGIN> 18.33
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 4.19
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 1.50
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.02
<EXPENSE-RATIO> 1.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000892568
<NAME> THE CUTLER TRUST
<SERIES>
<NUMBER>010
<NAME>CUTLER EQUITY INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 63,628,819
<INVESTMENTS-AT-VALUE> 77,693,944
<RECEIVABLES> 601,911
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78,295,855
<PAYABLE-FOR-SECURITIES> 695,226
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118,302
<TOTAL-LIABILITIES> 813,528
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47,707,003
<SHARES-COMMON-STOCK> 4,401,364
<SHARES-COMMON-PRIOR> 3,893,863
<ACCUMULATED-NII-CURRENT> 731
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<NET-INVESTMENT-INCOME> 788,340
<REALIZED-GAINS-CURRENT> 19,653,954
<APPREC-INCREASE-CURRENT> (6,744,979)
<NET-CHANGE-FROM-OPS> 13,697,315
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 802,587
<DISTRIBUTIONS-OF-GAINS> 5,707,467
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 882,203
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<SHARES-REINVESTED> 406,537
<NET-CHANGE-IN-ASSETS> 14,959,393
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<ACCUMULATED-GAINS-PRIOR> 1,762,981
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<PER-SHARE-NII> 0.19
<PER-SHARE-GAIN-APPREC> 3.05
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