<PAGE>
SEMI-ANNUAL REPORT DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CUTLER CORE FUND Cutler & Company, LLC Forum Shareholder Services, LLC
CUTLER VALUE FUND 503 Airport Road Two Portland Square
Medford, Oregon 97504 Portland, Maine 04101
</TABLE>
- --------------------------------------------------------------------------------
To The Cutler Trust Shareholders:
We are pleased to present this semi-annual report and our thoughts on the recent
changes that have taken place during the six months ending December 31, 1999.
THE CUTLER CORE FUND (formerly the Cutler Equity Income Fund)
During this period, we completed the restructuring of the criteria and changed
the name of the Fund to more closely reflect market definitions for performance
measurement purposes. Lipper (a national rating service) will no longer offer an
"Equity Income" category for comparison. We will now be measured against a
"Core" benchmark. We maintain an income oriented investment approach, and will
continue to select a majority of dividend paying issues from both the growth and
value segments of the market. Performance for the period was 8.42%, and the Fund
ended its five calendar year performance with double-digit percentage gains.*
THE CUTLER VALUE FUND
During this period, the Fund underwent substantial restructuring to more closely
align the holdings with a pure "value" strategy. Performance was -8.64% for the
period, lagging the general stock market, which performed with a strong growth
basis. We believe this underperformance will prove to be short term, as value
stocks have outperformed growth stocks in longer-term performance measurement
periods. It is important to note that asset classes do not move up and down
together. In any given year, one segment might achieve a return far in excess of
the long-term expectation while another might deliver a very disappointing
return. This has been the case the past few years with value stocks. However, in
a powerful force in investing known as "reversion to the mean," those asset
classes which have underperformed for a given period of time have a much higher
potential to outperform in the future. In periods of economic uncertainty, value
investors are often rewarded when a "flight to quality" returns to the market.
As the millennium closed, the fears of Y2K meltdown faded and worldwide markets
and economics were rebounding. Our greatest concerns lay in the areas of the
market experiencing unprecedented, often exuberant attention.
We look forward to another successful year, and hope that the changes we have
made during this period will add thrust to our performance in the years ahead.
On behalf of everyone at The Cutler Trust, we thank you for your continued
support.
<TABLE>
<S> <C>
/s/ Kenneth R. Cutler /s/ Brooke R. Ashland
Kenneth R. Cutler Brooke R. Ashland
Chairman of the Board Chief Executive Officer
The Cutler Trust Cutler & Company, LLC
</TABLE>
* Past performance is no guarantee of future results. The Fund's 1-year, 5-year
and since inception (December 30, 1992) average annual total returns for the
period ending December 31, 1999 were 15.19%, 24.30% and 17.14%, respectively.
Returns assume reinvestment of all dividend and capital gain distributions.
Investment return and principal value will fluctuate so that, when redeemed,
an investor's shares may be worth more or less than their original cost. For
the period reported, some of the Fund's fees were waived or expenses
reimbursed, otherwise total return would have been lower.
1
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER CORE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (93.8%)
BANKS (2.9%)
24,300 Bank of America Corp. $ 1,219,556
7,200 J.P. Morgan & Co., Inc. 911,700
-----------
2,131,256
-----------
BUSINESS SERVICES (5.2%)
35,000 Automatic Data Processing, Inc. 1,885,625
30,000 Electronic Data Systems Corp. 2,008,125
-----------
3,893,750
-----------
CHEMICALS (2.4%)
13,500 Dow Chemical Co. 1,803,938
-----------
COMMUNICATIONS EQUIPMENT (11.7%)
40,300 Lucent Technologies, Inc. 3,014,944
28,700 Motorola, Inc. 4,226,075
23,500 Tellabs, Inc.* 1,508,406
-----------
8,749,425
-----------
COMPUTER & OFFICE EQUIPMENT (5.7%)
31,100 Hewlett-Packard Co. 3,543,456
15,000 Pitney Bowes, Inc. 724,688
-----------
4,268,144
-----------
DRUGS & PHARMACEUTICALS (7.2%)
27,400 Abbott Laboratories 994,962
34,000 Bristol-Myers Squibb Co. 2,182,375
28,300 Eli Lilly & Co. 1,881,950
5,000 Merck & Co., Inc. 335,313
-----------
5,394,600
-----------
DRUGSTORES (1.0%)
24,400 Walgreen Co. 713,700
-----------
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER CORE FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRIC MACHINERY (10.0%)
22,300 Emerson Electric Co. $ 1,279,462
9,500 General Electric Co. 1,470,125
26,500 Rockwell International Corp. 1,268,687
36,000 Texas Instruments, Inc. 3,487,500
-----------
7,505,774
-----------
ELECTRIC, GAS & UTILITY COMPANIES (0.9%)
32,800 Northern States Power Co. 639,600
-----------
FABRICATED METAL PRODUCTS (1.4%)
15,000 Illinois Tool Works, Inc. 1,013,438
-----------
FOREST PRODUCTS (3.9%)
20,000 Kimberly-Clark Corp. 1,305,000
22,900 Weyerhaeuser Co. 1,644,506
-----------
2,949,506
-----------
GENERAL MERCHANDISE TRADE (6.3%)
67,800 Wal-Mart Stores, Inc. 4,686,675
-----------
GLASS, & OTHER BUILDING MATERIALS (4.9%)
28,600 Corning, Inc. 3,687,613
-----------
INSTRUMENTS & RELATED PRODUCTS (2.4%)
30,937 Honeywell, Inc. 1,784,678
-----------
INSURANCE CARRIERS (1.9%)
15,000 Marsh & McLennan Cos., Inc. 1,435,313
-----------
NONDEPOSITORY CREDIT INSTITUTIONS (1.2%)
25,000 Household International, Inc. 931,250
-----------
PETROLEUM PRODUCTS (1.0%)
8,300 Atlantic Richfield Co. 717,950
-----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER CORE FUND
SCHEDULE OF INVESTMENTS (concluded)
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PRINTING & PUBLISHING (1.5%)
20,000 Tribune Co. $ 1,101,250
-----------
PROPERTY & CASUALTY INSURANCE (3.2%)
15,200 Allstate Corp. 364,800
18,750 American International Group, Inc. 2,027,343
-----------
2,392,143
-----------
RESTAURANTS (3.8%)
70,000 McDonald's Corp. 2,821,875
-----------
SECURITIES, BROKERS, DEALERS & ADVISORS (2.2%)
20,000 Merrill Lynch & Co., Inc. 1,670,000
-----------
TRANSPORTATION EQUIPMENT (1.9%)
22,000 United Technologies Corp. 1,430,000
-----------
VOICE & DATA TRANSMISSION (11.2%)
45,000 AT&T Corp. 2,283,750
70,000 BellSouth Corp. 3,276,875
57,800 SBC Communications, Inc. 2,817,750
-----------
8,378,375
-----------
TOTAL COMMON STOCK (COST $48,864,254) 70,100,253
-----------
SHORT-TERM HOLDINGS (6.2%)
3,010,679 Daily Assets Cash Fund 3,010,679
1,589,015 Daily Assets Government Obligations Fund 1,589,015
-----------
TOTAL SHORT-TERM HOLDINGS (COST $4,599,694) 4,599,694
-----------
TOTAL INVESTMENTS (100.0%) (COST $53,463,948) $74,699,947
===========
</TABLE>
- ------------------------
* Non-income producing security.
See Notes to Financial Statements.
4
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK (99.9%)
BANKS (15.0%)
22,300 Bank of America Corp. $ 1,119,181
24,950 Bank One Corp. 799,959
5,900 Chase Manhattan Corp. 458,356
11,800 First Union Corp. 387,188
7,600 Suntrust Banks, Inc. 522,975
31,100 Wells Fargo Co. 1,257,605
-----------
4,545,264
-----------
CHEMICALS (4.0%)
5,300 E.I. Du Pont de Nemours & Co. 349,137
21,400 Rohm & Haas Co. 870,712
-----------
1,219,849
-----------
COMPUTER & OFFICE EQUIPMENT (9.3%)
13,600 Apple Computer, Inc.* 1,398,250
12,500 Hewlett-Packard Co. 1,424,219
-----------
2,822,469
-----------
DRUGS & PHARMACEUTICALS (3.0%)
25,900 ALZA Corp.* 896,788
-----------
ELECTRIC MACHINERY (2.5%)
10,600 Emerson Electric Co. 608,175
3,500 Rockwell International Corp. 167,563
-----------
775,738
-----------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRIC, GAS & UTILITY COMPANIES (5.7%)
7,700 CMS Energy Corp. $ 240,144
42,700 Peco Energy Co. 1,483,825
-----------
1,723,969
-----------
FABRICATED METAL PRODUCTS (1.7%)
7,500 Illinois Tool Works, Inc. 506,719
-----------
FOOD & SOFT DRINKS (17.0%)
12,500 Bestfoods, Inc. 657,031
58,200 ConAgra, Inc. 1,313,138
33,800 General Mills, Inc. 1,208,350
13,200 H. J. Heinz Co. 525,525
4,500 Hershey Foods Corp. 213,750
56,100 Sara Lee Corp. 1,237,706
-----------
5,155,500
-----------
FOREST PRODUCTS (2.3%)
9,900 Weyerhaeuser Co. 710,944
-----------
GAMES & TOYS (4.2%)
96,600 Mattel, Inc. 1,267,875
-----------
GROCERY STORES (2.7%)
43,300 Kroger Co.* 817,288
-----------
INDUSTRIAL & COMMERICAL MACHINERY (0.9%)
6,200 Dover Corp. 281,325
-----------
INSTRUMENTS & RELATED PRODUCTS (3.2%)
16,800 Honeywell, Inc. 969,150
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
INSURANCE AGENTS, BROKERS & SERVICES (0.8%)
2,600 Marsh & McLennan Cos., Inc. $ 248,788
-----------
PETROLEUM PRODUCTS (6.3%)
7,800 Atlantic Richfield Co. 674,700
7,250 Chevron Corp. 628,031
11,201 Conoco, Inc. -- Class B 278,625
9,700 Unocal Corp. 325,556
-----------
1,906,912
-----------
PRINTING & PUBLISHING (4.0%)
1,800 Dow Jones & Co., Inc. 122,400
2,600 Gannett Co., Inc. 212,063
14,700 Knight-Ridder, Inc. 874,650
-----------
1,209,113
-----------
PROPERTY & CASUALTY INSURANCE (3.1%)
19,000 Ace Ltd. 317,063
12,200 Allstate Corp. 292,800
13,000 Safeco Corp. 323,375
-----------
933,238
-----------
SECURITIES, BROKERS, DEALERS & ADVISORS (1.4%)
5,300 Merrill Lynch & Co., Inc. 442,550
-----------
TRANSPORTATION (1.1%)
8,000 Union Pacific Corp. 349,000
-----------
TRANSPORTATION EQUIPMENT (0.5%)
3,500 Boeing Co. 145,469
-----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS (concluded)
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
VOICE & DATA TRANSMISSION (11.2%)
8,400 AT&T Corp. $ 426,300
22,300 GTE Corp. 1,573,544
10,700 SBC Communications, Inc. 521,625
6,900 Telecomunicacoes Brasileiras S.A., ADR 886,650
-----------
3,408,119
-----------
TOTAL COMMON STOCK (COST $29,526,745) 30,336,067
-----------
SHORT-TERM HOLDINGS (0.1%)
18,644 Daily Assets Cash Fund (cost $18,644) 18,644
-----------
TOTAL INVESTMENTS (100.0%) (COST $29,545,389) $30,354,711
===========
</TABLE>
- ------------------------
* Non-income producing security.
ADR--American Depository Receipt
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER
CORE VALUE
FUND FUND
-------------------- --------------------
<S> <C> <C>
ASSETS
Investments (Note 2)
Investments at cost $53,463,948 $29,545,389
Net unrealized appreciation 21,235,999 809,322
-------------------- --------------------
Total investments at value 74,699,947 30,354,711
Interest, dividends and other receivables 103,391 67,892
Receivable for securities sold 868,543 702,564
Receivable for Fund shares sold 6,158 967,347
Prepaid expenses 6,503 3,377
-------------------- --------------------
Total Assets 75,684,542 32,095,891
-------------------- --------------------
LIABILITIES
Payable for Fund shares redeemed 3,423 14,803
Payable to administrator (Note 3) 6,405 2,756
Payable to investment adviser (Note 3) 48,040 20,666
Payable to custodian 1,008 755
Payable to other related parties (Note 3) 511 76
Accrued expenses and other liabilities 58,106 29,360
-------------------- --------------------
Total Liabilities 117,493 68,416
-------------------- --------------------
NET ASSETS $75,567,049 $32,027,475
==================== ====================
COMPONENTS OF NET ASSETS
Paid-in capital $50,899,552 $31,502,423
Undistributed net investment income 3,850 540
Net unrealized appreciation on investments 21,235,999 809,322
Accumulated net realized gain (loss) on investments 3,427,648 (284,810)
-------------------- --------------------
NET ASSETS $75,567,049 $32,027,475
==================== ====================
Shares of Beneficial Interest, No Par Value 4,722,955 3,234,655
NET ASSET VALUE, offering price and redemption price per
share $16.00 $9.90
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CUTLER
CORE VALUE
FUND FUND
-------------------- --------------------
<S> <C> <C>
INVESTMENT INCOME
Dividend income $373,264 $376,263
Interest income 242,808 16,225
-------------------- --------------------
Total Investment Income 616,072 392,488
-------------------- --------------------
EXPENSES
Investment advisory (Note 3) 276,007 134,616
Management (Note 3) 36,801 17,949
Transfer agent (Note 3) 8,497 7,687
Shareholder services 3,132 529
Custodian 5,953 4,706
Accounting (Note 3) 18,000 18,000
Legal 12,703 4,645
Audit 9,447 8,953
Trustees 7,575 3,890
Miscellaneous 31,953 21,165
-------------------- --------------------
Total Expenses 410,068 222,140
-------------------- --------------------
NET INVESTMENT INCOME 206,004 170,348
-------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain from investments 3,550,019 654,034
Net change in unrealized appreciation (depreciation) of
investments 2,257,964 (4,080,909)
-------------------- --------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 5,807,983 (3,426,875)
-------------------- --------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $6,013,987 $(3,256,527)
==================== ====================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUTLER CORE CUTLER VALUE
FUND FUND
----------------------------------- -----------------------------------
Six Months Year Six Months Year
Ended (unaudited) Ended Ended (unaudited) Ended
December 31, 1999 June 30, 1999 December 31, 1999 June 30, 1999
------------------ -------------- ------------------ --------------
<S> <C> <C> <C> <C>
NET ASSETS -- BEGINNING OF PERIOD $74,499,099 $ 77,482,327 $ 40,124,966 $41,085,239
----------- ------------ ------------ -----------
OPERATIONS
Net investment income 206,004 571,785 170,348 304,518
Net realized gain from investments 3,550,019 5,346,419 654,034 15,455,769
Net change in unrealized appreciation
(depreciation) of investments 2,257,964 4,912,910 (4,080,909) (9,430,329)
----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations 6,013,987 10,831,114 (3,256,527) 6,329,958
----------- ------------ ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (202,401) (572,269) (168,759) (305,165)
In excess of net investment income -- -- -- (1,049)
Net realized capital gain from
investments (4,398,786) (16,779,472) (14,068,788) (9,097,766)
----------- ------------ ------------ -----------
Total distributions to shareholders (4,601,187) (17,351,741) (14,237,547) (9,403,980)
----------- ------------ ------------ -----------
CAPITAL SHARE TRANSACTIONS
Sale of shares 2,507,558 9,146,759 3,563,993 5,658,822
Reinvestment of distributions 4,547,636 16,703,765 13,247,841 8,745,547
Redemption of shares (7,400,044) (22,313,125) (7,415,251) (12,290,620)
----------- ------------ ------------ -----------
Net increase (decrease) from capital
share transactions (344,850) 3,537,399 9,396,583 2,113,749
----------- ------------ ------------ -----------
Net increase (decrease) in net assets 1,067,950 (2,983,228) (8,097,491) (960,273)
----------- ------------ ------------ -----------
NET ASSETS -- END OF PERIOD (Including
line (A)) $75,567,049 $ 74,499,099 $ 32,027,475 $40,124,966
=========== ============ ============ ===========
(A) Accumulated undistributed
(distributions in excess of) net
investment income $ 3,850 $ 247 $ 540 $ (1,049)
=========== ============ ============ ===========
SHARE ACTIVITY
Sale of shares 164,744 587,072 267,444 313,236
Reinvestment of distributions 283,695 1,196,788 1,358,053 544,005
Redemption of shares (469,137) (1,441,571) (510,312) (692,130)
----------- ------------ ------------ -----------
Net increase (decrease) in shares (20,698) 342,289 1,115,185 165,111
=========== ============ ============ ===========
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected per share data and
ratios for a share outstanding
throughout each period.
<TABLE>
<CAPTION>
CUTLER CORE FUND
---------------------------------------------------------------
Six Months
Ended
December 31,
(unaudited) Years Ended June 30,
------------- -----------------------------------------------
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.71 $17.60 $16.06 $12.95 $10.96 $ 9.56
------- ------- ------- ------- ------- -------
Investment Operations
Net investment income 0.04 0.12 0.19 0.24 0.35 0.36(a)
Net realized and unrealized gain on
investments 1.25 2.06 3.05 4.30 2.13 1.40
------- ------- ------- ------- ------- -------
Total from Investment Operations 1.29 2.18 3.24 4.54 2.48 1.76
------- ------- ------- ------- ------- -------
Distributions From
Net investment income (0.04) (0.12) (0.19) (0.24) (0.35) (0.34)
Net realized gain on investments (0.96) (3.95) (1.51) (1.19) (0.14) (0.02)
------- ------- ------- ------- ------- -------
Total Distributions (1.00) (4.07) (1.70) (1.43) (0.49) (0.36)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 16.00 $15.71 $17.60 $16.06 $12.95 $ 10.96
======= ======= ======= ======= ======= =======
Total Return 8.42% 15.48% 21.60% 37.65% 22.93% 18.63%
Ratio/Supplementary Data
Net assets at the end of period (in
thousands) $75,567 $74,499 $77,482 $62,523 $46,285 $41,470
Ratios to Average Net Assets
Expenses including
reimbursement/waiver of fees 1.11%(b) 1.07% 1.10% 1.17% 0.98% 0.97%
Expenses excluding
reimbursement/waiver of fees 1.11%(b) 1.07% 1.10% 1.17% 0.98% 0.97%
Net investment income 0.56%(b) 0.76% 1.14% 1.67% 2.81% 3.49%
Portfolio Turnover Rate 17% 59% 119% 23% 57% 43%
</TABLE>
- ------------------------------
(a) Calculated using the weighted average number of shares outstanding.
(b) Annualized.
12
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
FINANCIAL HIGHLIGHTS (concluded)
- --------------------------------------------------------------------------------
Selected per share data and
ratios for a share outstanding
throughout each period.
<TABLE>
<CAPTION>
CUTLER VALUE FUND
---------------------------------------------------------------
Six Months
Ended
December 31,
(unaudited) Years Ended June 30,
------------- -----------------------------------------------
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.93 $21.02 $18.33 $14.18 $11.71 $ 9.78
------- ------- ------- ------- ------- -------
Investment Operations
Net investment income 0.07 0.14 0.13 0.18 0.21 0.24(a)
Net realized and unrealized gain
(loss) on investments (1.85) 2.73 4.19 4.20 2.47 1.92
------- ------- ------- ------- ------- -------
Total from Investment Operations (1.78) 2.87 4.32 4.38 2.68 2.16
------- ------- ------- ------- ------- -------
Distributions From
Net investment income (0.07) (0.14) (0.13) (0.18) (0.21) (0.23)
In excess of net investment income -- * -- -- -- --
Net realized gain on investments (7.18) (4.82) (1.50) (0.05) -- --
------- ------- ------- ------- ------- -------
Total Distributions (7.25) (4.96) (1.63) (0.23) (0.21) (0.23)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 9.90 $18.93 $21.02 $18.33 $14.18 $ 11.71
======= ======= ======= ======= ======= =======
Total Return (8.64%) 18.10% 24.90% 31.18% 23.01% 22.33%
Ratio/Supplementary Data
Net assets at the end of period (in
thousands) $32,027 $40,125 $41,085 $35,277 $30,248 $21,890
Ratios to Average Net Assets
Expenses including
reimbursement/waiver of fees 1.24%(b) 1.20% 1.24% 1.25% 1.05% 1.00%
Expenses excluding
reimbursement/waiver of fees 1.24%(b) 1.20% 1.24% 1.25% 1.13% 1.23%
Net investment income 0.95%(b) 0.80% 0.65% 1.15% 1.65% 2.20%
Portfolio Turnover Rate 29% 110% 50% 4% 9% 23%
</TABLE>
- ------------------------------
(a) Calculated using the weighted average number of shares outstanding.
(b) Annualized.
* Per share data was less than $0.01.
13
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
The Cutler Trust (the "Trust") was organized on October 2, 1992, as an
open-end management investment company under the Investment Company Act of
1940. The Trust currently has two diversified investment portfolios: Cutler
Core Fund and Cutler Value Fund (individually, a "Fund" and, collectively, the
"Funds"). The Funds commenced operations on December 30, 1992. On April 26,
1999, Cutler Approved List Equity Fund was renamed Cutler Value Fund. On
December 20, 1999, Cutler Equity Income Fund was renamed Cutler Core Fund.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates.
The following summarizes the significant accounting policies of the Funds:
SECURITY VALUATION -- The Trust determines the net asset value per share of
each Fund as of the close of regular trading on the New York Stock Exchange
(currently 4:00 P.M., Eastern time) on each Fund Business Day, as defined in
the Funds' prospectus. Securities with a maturity of 60 days or less are
valued at amortized cost. Securities for which market quotations are readily
available are valued using the last reported sales price provided by
independent pricing services. If no sale is reported, the mean of the last bid
and ask price is used. In the absence of readily available market quotations,
securities are valued at fair value using procedures approved by the Trust's
Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Dividend income is recorded on
the ex-dividend date. Interest income is recorded as earned. Security
transactions are recorded on a trade date basis. Realized gain and loss on
investments sold is recorded on the basis of identified cost.
DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income, if any,
are declared and paid quarterly on the Funds. Capital gain distributions, if
any, are distributed to shareholders at least annually. Distributions are
based on amounts calculated in accordance with applicable federal income tax
regulations, which may differ from generally accepted accounting principles.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
FEDERAL TAXES -- The Funds intend to qualify each year as regulated investment
companies and distribute all their taxable income. In addition, by
distributing in each calendar year substantially all their net investment
14
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
income, capital gain and certain other amounts, if any, the Funds will not be
subject to a federal excise tax. Therefore, no federal income or excise tax
provision is required.
EXPENSE ALLOCATION -- The Trust accounts separately for the assets and
liabilities and operations of each Fund. Expenses that are directly
attributable to more than one Fund are allocated among the respective Funds.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser to the Funds is Cutler & Company, LLC ("Adviser").
Pursuant to an Investment Advisory Agreement, the Adviser receives an advisory
fee from Cutler Core Fund and Cutler Value Fund at an annual rate of 0.75% of
each Fund's average daily net assets.
On behalf of each Fund, the Trust has entered into a Management Agreement with
Forum Administrative Services, LLC ("FAdS"). For its services, FAdS is
entitled to receive compensation at an annual rate of 0.10% of each Fund's
average daily net assets.
Forum Shareholder Services, LLC ("FSS"), an affiliate of FAdS, serves as each
Fund's transfer agent and dividend disbursing agent, for which it receives a
fee of $12,000 per year, per Fund, plus certain other fees and expenses.
Forum Accounting Services, LLC ("FAcS"), an affiliate of FAdS, serves as the
fund accountant for each Fund, for which it receives a fee of $36,000 per
year, per Fund, subject to adjustments for the number and type of portfolio
transactions.
Forum Fund Services, LLC, a registered broker-dealer, acts as the distributor
for each Fund for which it receives no compensation. Prior to October 31,
1999, Forum Financial Services, Inc. served as each Fund's distributor.
NOTE 4. SECURITIES TRANSACTIONS
The cost of securities purchased and the proceeds from sales of securities
(excluding short-term securities) for the six months ended December 31, 1999,
were as follows:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
----------------- -------------------
<S> <C> <C>
Cutler Core Fund $13,819,148 $10,757,000
Cutler Value Fund 10,228,350 15,636,718
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
For federal income tax purposes, the tax basis of investment securities owned,
the aggregate gross unrealized appreciation and the aggregate gross unrealized
depreciation as of December 31, 1999, were as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized Net
Tax Cost Appreciation Depreciation Appreciation
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cutler Core Fund $53,463,948 $22,480,983 $1,244,984 $21,235,999
Cutler Value Fund 29,545,389 3,884,194 3,074,872 809,322
</TABLE>
NOTE 5. MISCELLANEOUS
Prior to December 20, 1999, Cutler Core Fund was called "Cutler Equity Income
Fund" (the "Fund"). On December 20, 1999, a special meeting of the
shareholders of the Fund was held to vote on a proposal to amend the Fund's
investment objective (and corresponding investment policies) from to "seek
current income and long-term capital appreciation" by investing within the
Adviser's "Approved List" to "seek current income and long-term capital
appreciation by investing in stocks that it considers undervalued with respect
to their growth prospects relative to the general market." Only shareholders
of record on November 19, 1999, were entitled to vote. The proposal was
approved by 92.62% of the shareholders present at the meeting.
Correspondingly, the Fund's name was changed to Cutler Core Fund.
16
<PAGE>
- --------------------------------------------------------------------------------
THE CUTLER TRUST
TRUSTEES OF THE CUTLER TRUST
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
KENNETH R. CUTLER
[PHOTO] Chairman of The Cutler Trust and member of Investment
Committee of Cutler & Company, LLC, Investment Adviser to
both Funds.
JOHN Y. KEFFER
[PHOTO] Sole shareholder and director of Forum Financial
Group, LLC, which owns Forum Shareholder Services, LLC,
Transfer Agent, Forum Fund Services, LLC, Distributor and
Forum Administrative Services, LLC, Manager for both Funds.
BROOKE R. ASHLAND
[PHOTO] Chief Executive Officer, Cutler & Company, LLC, Investment
Adviser to both Funds.
DR. HATTEN S. YODER, JR.
[PHOTO] Chairman Emeritus, Geophysical Laboratory, Carnegie
Institute of Washington, and consultant to the Los Alamos
National Laboratory. A member of the National Academy of
Sciences, and many national and international scientific
bodies.
ROBERT B. WATTS, JR.
[PHOTO] Attorney in private practice. Formerly a senior level
officer, counsel and corporate secretary with over 25 years
of corporate, divisional and board level experience with two
Fortune 100 companies.
</TABLE>
17
<PAGE>
THE CUTLER TRUST
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Chairman's Letter to the Shareholders....... 1
Cutler Core Fund Portfolio.................. 2
Cutler Value Fund Portfolio................. 5
Statements of Assets and Liabilities........ 9
Statements of Operations.................... 10
Statements of Changes in Net Assets......... 11
Financial Highlights (Per Share Data)....... 12
Notes to Financial Statements............... 14
Trustees of The Cutler Trust................ 17
</TABLE>
Distributor
Forum Fund Services, LLC
CUTLER & COMPANY, LLC
INVESTMENT MANAGEMENT
INVESTMENT ADVISER TO THE TRUST
503 Airport Road, Medford, OR 97504
(800) 228-8537 - (541) 770-9000
Fax: (541) 779-0006
info @ cutler.com
- ------------------------------------------------
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective prospectus, which includes
information regarding the Funds' objectives and policies, management experience,
and other information.
- -------------------------------------------
CUTLER CORE FUND
CUTLER VALUE FUND
SEMI-ANNUAL REPORT
---------------
December 31, 1999
