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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07242
---------------------------------------------
The Cutler Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
3555 Lear Way Medford, Oregon 97504
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(Address of principal executive offices) (Zip code)
Erich M. Patten
Cutler Investment Counsel, LLC 3555 Lear Way Medford, Oregon 97504
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (541) 770-9000
---------------------------
Date of fiscal year end: June 30, 2006
-------------------------------------
Date of reporting period: June 30, 2006
-------------------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
CUTLER EQUITY FUND
================================================================================
[GRAPHIC OMITTED] THE
CUTLER
TRUST
ANNUAL REPORT
JUNE 30, 2006
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CUTLER EQUITY FUND
TABLE OF CONTENTS
JUNE 30, 2006
================================================================================
Page
Letter to Shareholders ................................................. 3
Management Discussion of Fund Performance .............................. 4
Performance Information (Unaudited) .................................... 6
Schedule of Investments ................................................ 8
Statement of Assets and Liabilities .................................... 10
Statement of Operations ................................................ 11
Statements of Changes in Net Assets .................................... 12
Financial Highlights ................................................... 13
Notes to Financial Statements .......................................... 14
Report of Independent Registered Public Accounting Firm ................ 18
About Your Fund's Expenses (Unaudited) ................................. 19
Trustees and Officers of the Trust (Unaudited) ......................... 21
Additional Information (Unaudited) ..................................... 23
2
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CUTLER EQUITY FUND
LETTER TO SHAREHOLDERS
================================================================================
To The Cutler Trust Shareholders:
We are pleased to include with this letter the annual report for the Cutler
Equity Fund (the "Fund") through June 30th, 2006. The Cutler Equity Fund has
performed well this past year, and we believe that our Equity Income strategy
has been favorably positioned in the recent turbulent market.
Today, the market appears to be in transition. For the past several years, we
have been in an increasing interest rate environment. Increasing rates often
lead to slower economic growth, and the Federal Reserve has been careful to
balance inflation pressures and the risks associated with slowing the economy.
The Federal Reserve recently paused for the first time in 17 meetings,
indicating to the market that inflation is appropriately controlled. The stock
market reacted to higher rates as it has in past cycles, with economically
sensitive and higher risk securities seeing some selling pressure due to fears
of an economic slowdown. We have primarily seen small capitalization stocks, as
well as stocks with high valuations impacted, with international securities also
having a price correction. Clearly, today's market has shifted toward higher
quality securities, the type of holdings that are the bedrock of our investment
philosophy. At Cutler, we believe in the long-term value of large-cap stocks and
the accumulative effect of dividends on total shareholder return. Our investment
discipline has been consistent, as we continue to own the type of blue-chip,
high quality dividend paying securities that have been the hallmark of Ken
Cutler's investment philosophy for over 30 years.
This has also been an exciting year for us at Cutler, as we continue to grow and
improve our money management services. We have expanded our wealth management
platform and now are able to conduct in-depth client level asset allocation
services. In addition, Chris Uhas has become a partner in Cutler Investment
Counsel, LLC, bringing a breadth of experience to our firm's management. He
continues to serve on the adviser's Investment Committee, in addition to leading
our client servicing team.
The enclosed report highlights the composition of the Fund's holdings. If you
have any questions regarding your holdings, performance, or any items pertaining
to your investments, please feel free to contact our office. We appreciate your
continued support,
Sincerely,
/s/ Kenneth R. Cutler /s/ Erich M. Patten
Kenneth R. Cutler Erich M. Patten
Chairman of the Board Portfolio Manager
The Cutler Trust Cutler Investment Counsel, LLC
The views in this report were those of the Fund's investment adviser as of
August 21, 2006 and may not reflect their views on the date this report is first
published or anytime thereafter. These views are intended to assist shareholders
in understanding their investment in the Fund and do not constitute investment
advice.
The Cutler Equity Fund is distributed by Ultimus Fund Distributors, LLC.
3
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CUTLER EQUITY FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
================================================================================
1) HOW DID THE FUND PERFORM LAST YEAR?
The Fund had a 1 Year total return of 8.86% for the year ended June 30,
2006. The Fund's five- and ten-year average annual returns as of June 30
were 1.69% and 7.60%, respectively.
(PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA QUOTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN ORIGINAL COST. FOR THE MOST RECENT MONTH END PERFORMANCE, PLEASE
CALL 1-800-228-8537.)
2) WHAT WERE THE MOST SIGNIFICANT MARKET FACTORS AFFECTING THE FUND'S
PERFORMANCE DURING THE PAST YEAR?
Market factors included:
1) Rising interest rates
2) Earnings growth of underlying companies
3) Global and domestic economic growth
4) Positive overall equity markets
3) WHY DID THE FUND OUTPERFORM RELATIVE TO THE BENCHMARK?
The adviser believes that the appropriate benchmark for the Fund is the S&P
500. The Fund outperformed the total return from the S&P 500 for the
twelve-month period ended June 30, 2006, which had a return of 8.63%. The
adviser believes this out-performance is due to the selection of securities
which had favorable fundamentals given today's economic climate. This
return is after all expenses are paid for the management of the fund. The
adviser caps these expenses at 1.35%, however they amounted to 1.26% during
the period discussed.
4) WHAT STRATEGIES DID YOU USE TO MANAGE THE FUND?
Management maintained a dividend income focused strategy, owning companies
that have a strong history of continuous dividend payments and a minimum
yield of 1.25% at the time of purchase. In addition, management attempted
to maintain a low amount of turnover to keep costs to shareholders low.
Finally, management attempted to own only companies whose management
maintained sound corporate governance and a high degree of ethics.
5) WHAT WERE THE PRIMARY STRATEGIC FACTORS THAT GUIDED YOUR MANAGEMENT OF THE
FUND?
The primary strategic factor guiding our management style was our belief
that companies paying income in the form of dividends provide greater
shareholder returns over time than companies that do not pay dividends.
4
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CUTLER EQUITY FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
(CONTINUED)
================================================================================
6) WHAT WERE SOME OF THE KEY TRENDS IN EACH OF THE REGIONS/SIGNIFICANT
INDUSTRIES THE FUND INVESTS IN?
The Fund does not have a regional focus, however, all of our holdings are
companies domiciled in the United States and traded on domestic stock
exchanges. The trends in the United States equity markets were generally
positive this past year. Rising interest rates was the primary trend
impacting market performance, however the Fund focused on holdings with
consistent earnings growth and dividend payments- a favorable segment in
the current low-risk environment. The high price of oil and commodities
continue to be a key trend impacting many of the companies held in the
Fund, however we believe that the holdings are diversified enough to spread
these cost pressures across the portfolio.
7) WHICH SECURITIES HELPED THE FUND'S PERFORMANCE?
Five holdings substantively contributing to positive performance were:
1) Caterpillar Inc.
2) Emerson Electric Co.
3) Hewlett Packard Co.
4) Alcoa Inc.
5) National Fuel Gas Co.
8) DID ANY SECURITIES HURT THE FUND'S PERFORMANCE?
1) Sysco Corp.
2) Pfizer Inc.
3) The Dow Chemical Co.
4) Johnson & Johnson
5) Pitney Bowes Inc.
BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND'S INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER INFORMATION IS IN
THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED BY CALLING 1-800-228-8537.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
The views in this report were those of Cutler Investment Counsel, LLC, as
of June 30, 2006 and may not reflect the firm's views on the date this
report is first published or anytime thereafter. These views are intended
to assist shareholders in understanding their investment in the Fund and do
not constitute investment advice.
5
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CUTLER EQUITY FUND
PERFORMANCE INFORMATION
JUNE 30, 2006 (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN
CUTLER EQUITY FUND AND THE S&P 500 Index
[GRAPHIC OMITTED]
Cutler Value Fund S&P 500 Index
----------------- -------------
06/30/96 $ 10,000 06/30/96 $ 10,000
09/30/96 10,277 09/30/96 10,309
12/31/96 10,889 12/31/96 10,309
03/31/97 11,283 03/31/97 11,468
06/30/97 13,118 06/30/97 13,470
09/30/97 13,770 09/30/97 14,479
12/31/97 14,509 12/31/97 14,895
03/31/98 16,279 03/31/98 16,972
06/30/98 16,385 06/30/98 17,533
09/30/98 14,832 09/30/98 15,789
12/31/98 17,116 12/31/98 19,151
03/31/99 17,221 03/31/99 20,105
06/30/99 19,350 06/30/99 21,522
09/30/99 17,543 09/30/99 20,179
12/31/99 17,679 12/31/99 23,181
03/31/00 17,862 03/31/00 23,712
06/30/00 17,560 06/30/00 23,083
09/30/00 17,929 09/30/00 22,859
12/31/00 19,210 12/31/00 21,070
03/31/01 18,480 03/31/01 18,572
06/30/01 19,135 06/30/01 19,659
09/30/01 17,252 09/30/01 16,774
12/31/01 18,598 12/31/01 18,566
03/31/02 18,970 03/31/02 18,617
06/30/02 16,443 06/30/02 16,123
09/30/02 12,867 09/30/02 13,337
12/31/02 14,395 12/31/02 14,463
03/31/03 13,552 03/31/03 14,007
06/30/03 15,663 06/30/03 16,164
09/30/03 15,688 09/30/03 16,591
12/31/03 17,946 12/31/03 18,611
03/31/04 17,905 03/31/04 18,927
06/30/04 18,074 06/30/04 19,252
09/30/04 18,215 09/30/04 18,892
12/31/04 19,264 12/31/04 20,636
03/31/05 19,155 03/31/05 20,192
06/30/05 19,116 06/30/05 20,469
09/30/05 19,822 09/30/05 21,208
12/31/05 19,931 12/31/05 21,651
03/31/06 20,553 03/31/06 22,563
06/30/06 20,810 06/30/06 22,238
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(a)
(FOR PERIODS ENDED JUNE 30, 2006)
1 Year 5 Years 10 Years
------ ------- --------
Cutler Equity Fund 8.86% 1.69% 7.60%
S&P 500 Index 8.63% 2.49% 8.32%
(a) Returns shown do not reflect the deduction of taxes a shareholder would pay
on Fund distributions or the redemption of Fund shares.
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The Cutler Equity Fund is managed pursuant to an equity income strategy. The
investment manager and Trustees believe the S&P 500 Index is the most
appropriate benchmark for the Fund due to its focus on large capitalization
securities, broad index membership, and the representation of multiple security
types that are used in the management of the Fund.
6
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CUTLER EQUITY FUND
PORTFOLIO INFORMATION
JUNE 30, 2006 (UNAUDITED)
================================================================================
SECTOR ALLOCATION (% OF NET ASSETS)
Consumer Discretionary - 8.7%
Consumer Staples - 15.6%
[GRAPHIC OMITTED] Energy - 11.5%
Financials - 21.0%
Health Care - 5.8%
Industrials - 15.4%
Information Technology - 5.5%
Materials - 6.2%
Telecommunication Services - 3.0%
Utilities - 6.7%
Other - 0.6%
7
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CUTLER EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2006
================================================================================
SHARES COMMON STOCKS -- 99.4% VALUE
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CONSUMER DISCRETIONARY -- 8.7%
27,200 Home Depot, Inc. (The) ............................ $ 973,488
33,770 McDonald's Corp. .................................. 1,134,672
23,800 McGraw-Hill Cos., Inc. (The) ...................... 1,195,474
------------
3,303,634
------------
CONSUMER STAPLES -- 15.6%
18,190 Kimberly-Clark Corp. .............................. 1,122,323
21,130 PepsiCo, Inc. ..................................... 1,268,645
19,780 Procter & Gamble Co. (The) ........................ 1,099,768
38,520 Sysco Corp. ....................................... 1,177,171
26,150 Wal-Mart Stores, Inc. ............................. 1,259,646
------------
5,927,553
------------
ENERGY -- 11.5%
23,300 Chevron Corp. ..................................... 1,445,998
22,290 ConocoPhillips .................................... 1,460,664
24,060 Exxon Mobil Corp. ................................. 1,476,081
------------
4,382,743
------------
FINANCIALS -- 21.0%
26,850 Citigroup, Inc. ................................... 1,295,244
30,050 JPMorgan Chase & Co. .............................. 1,262,100
25,050 Lincoln National Corp. ............................ 1,413,822
42,000 U.S. Bancorp ...................................... 1,296,960
30,750 Washington Mutual, Inc. ........................... 1,401,585
19,800 Wells Fargo & Co. ................................. 1,328,184
------------
7,997,895
------------
HEALTH CARE -- 5.8%
19,100 Johnson & Johnson ................................. 1,144,472
45,000 Pfizer, Inc. ...................................... 1,056,150
------------
2,200,622
INDUSTRIALS -- 15.4%
17,910 Caterpillar, Inc. ................................. 1,333,937
14,500 Emerson Electric Co. .............................. 1,215,245
33,150 General Electric Co. .............................. 1,092,624
23,750 Pitney Bowes, Inc. ................................ 980,875
19,800 United Technologies Corp. ......................... 1,255,716
------------
5,878,397
------------
INFORMATION TECHNOLOGY -- 5.5%
36,020 Hewlett-Packard Co. ............................... 1,141,114
50,130 Intel Corp. ....................................... 949,963
------------
2,091,077
------------
MATERIALS -- 6.2%
43,020 Alcoa, Inc. ....................................... 1,392,127
25,240 Dow Chemical Co. (The) ............................ 985,117
------------
2,377,244
------------
8
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CUTLER EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 99.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 3.0%
40,970 AT&T, Inc. ........................................ $ 1,142,653
------------
UTILITIES -- 6.7%
21,950 Exelon Corp. ...................................... 1,247,418
37,640 National Fuel Gas Co. ............................. 1,322,670
------------
2,570,088
------------
TOTAL COMMON STOCKS (Cost $30,266,236) ............ $ 37,871,906
------------
================================================================================
SHARES MONEY MARKET FUNDS -- 0.6% VALUE
- --------------------------------------------------------------------------------
213,020 Fidelity Institutional Money Market Portfolio
- Select Class .................................. $ 213,020
6,339 First American Prime Obligation Fund - Class Y .... 6,339
------------
TOTAL MONEY MARKET FUNDS (Cost $219,359) .......... $ 219,359
------------
TOTAL INVESTMENTS AT VALUE -- 100.0%
(Cost $30,485,595) .............................. $ 38,091,265
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.0%) (8,507)
------------
NET ASSETS -- 100.0% .............................. $ 38,082,758
============
See accompanying notes to financial statements.
9
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CUTLER EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006
================================================================================
ASSETS
Investments in securities:
At acquisition cost ......................................... $ 30,485,595
============
At value .................................................... $ 38,091,265
Dividends receivable ........................................ 55,470
Other assets ................................................ 7,786
------------
Total assets ................................................... 38,154,521
------------
LIABILITIES
Dividends payable ........................................... 5,785
Payable for capital shares redeemed ......................... 15,600
Accrued liabilities:
Investment advisory fees (Note 3) ........................ 23,164
Administration fees (Note 3) ............................. 6,000
Other accrued expenses and liabilities ................... 21,214
------------
Total liabilities .............................................. 71,763
------------
NET ASSETS ..................................................... $ 38,082,758
============
NET ASSETS CONSIST OF:
Paid-in capital ............................................. $ 47,780,059
Undistributed net investment income ......................... 5,280
Accumulated net realized losses from security
transactions .............................................. (17,308,251)
Net unrealized appreciation on investments .................. 7,605,670
------------
NET ASSETS ..................................................... $ 38,082,758
============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) .................. 3,640,781
============
Net asset value, offering price and redemption
price per share (Note 2) .................................... $ 10.46
============
See accompanying notes to financial statements.
10
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CUTLER EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2006
================================================================================
INVESTMENT INCOME
Dividend income ............................................. $ 1,075,040
------------
EXPENSES
Investment advisory fees (Note 3) ........................... 298,389
Administration fees (Note 3) ................................ 72,000
Professional fees ........................................... 41,630
Trustees' fees and expenses ................................. 20,154
Insurance expense ........................................... 16,307
Registration fees ........................................... 16,265
Custody fees ................................................ 11,593
Postage and supplies ........................................ 11,547
Printing of shareholder reports ............................. 5,983
Other expenses .............................................. 7,583
------------
Total expenses ................................................. 501,451
------------
NET INVESTMENT INCOME .......................................... 573,589
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from investments ........................ (172,878)
Net change in unrealized appreciation/
depreciation on investments .............................. 3,002,802
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ............... 2,829,924
------------
INCREASE IN NET ASSETS FROM OPERATIONS ......................... $ 3,403,513
============
See accompanying notes to financial statements.
11
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CUTLER EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
======================================================================================
Year Year
Ended Ended
June 30, 2006 June 30, 2005
- --------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income .......................... $ 573,589 $ 716,341
Net realized gains (losses) from investments ... (172,878) 1,355,939
Net change in unrealized appreciation/
depreciation of investments ................. 3,002,802 249,688
------------ ------------
Net increase in net assets from operations ........ 3,403,513 2,321,968
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ..................... (574,299) (706,876)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ...................... 586,967 3,303,293
Net asset value of shares issued in reinvestment
of distributions to shareholders ............ 542,538 670,761
Payments for shares redeemed ................... (5,983,368) (6,714,508)
------------ ------------
Net decrease from capital share transactions ...... (4,853,863) (2,740,454)
------------ ------------
Total decrease in net assets ...................... (2,024,649) (1,125,362)
NET ASSETS
Beginning of year ................................. 40,107,407 41,232,769
------------ ------------
End of year ....................................... $ 38,082,758 $ 40,107,407
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ............... $ 5,280 $ 5,990
============ ============
CAPITAL SHARE ACTIVITY
Sold .............................................. 56,795 352,139
Reinvested ........................................ 52,961 69,080
Redeemed .......................................... (583,090) (703,539)
------------ ------------
Net decrease in shares outstanding ................ (473,334) (282,320)
Shares outstanding at beginning of year ........... 4,114,115 4,396,435
------------ ------------
Shares outstanding at end of year ................. 3,640,781 4,114,115
============ ============
See accompanying notes to financial statements.
12
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CUTLER EQUITY FUND
FINANCIAL HIGHLIGHTS
=====================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
- ---------------------------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------
2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of year .... $ 9.75 $ 9.38 $ 8.29 $ 8.85 $ 10.38
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income ................. 0.15 0.17 0.18 0.13 0.08
Net realized and unrealized gains
(losses) on investments ............ 0.71 0.37 1.09 (0.56)(a) (1.53)
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ 0.86 0.54 1.27 (0.43) (1.45)
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ................. (0.15) (0.17) (0.18) (0.13) (0.08)
Net realized gains .................... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions ..................... (0.15) (0.17) (0.18) (0.13) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period ........ $ 10.46 $ 9.75 $ 9.38 $ 8.29 $ 8.85
========== ========== ========== ========== ==========
Total return(b) ......................... 8.86% 5.77% 15.39% (4.75%) (14.07%)
========== ========== ========== ========== ==========
Net assets at the end of year (000's) ... $ 38,083 $ 40,107 $ 41,233 $ 41,250 $ 22,963
========== ========== ========== ========== ==========
Ratios/supplementary data:
Ratio of net expenses to
average net assets .................... 1.26% 1.30% 1.25% 1.25% 1.25%
Ratio of gross expenses to
average net assets(c) ................. 1.26% 1.43% 1.43% 1.79% 1.50%
Ratio of net investment income
to average net assets ................. 1.44% 1.77% 1.95% 1.65% 0.76%
Portfolio turnover rate ................. 21% 14% 14% 61% 46%
(a) Per share amount does not reflect the actual net realized and unrealized
gain/loss for the period because of the timing of sales of the Fund shares
and the amount of per share realized and unrealized gains and losses at
such time (Note 1).
(b) Total return is a measure of the change in value of an investment in the
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. Returns shown do not
reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) The ratio of gross expenses to average net assets reflects the expense
ratio excluding any waivers and/or expense reimbursements by the Fund's
investment adviser.
See accompanying notes to financial statements.
13
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
================================================================================
1. ORGANIZATION
The Cutler Equity Fund (formerly the Cutler Value Fund) (the "Fund") is a
diversified series of The Cutler Trust (the "Trust"). The Trust is a
Delaware statutory trust that is registered as an open-end management
investment company under the Investment Company Act of 1940. The Fund is
the only series of the Trust. Under its Trust Instrument, the Trust is
authorized to issue an unlimited number of Fund shares of beneficial
interest without par value. The Fund commenced operations on October 2,
1992.
The Fund seeks current income and long-term capital appreciation.
2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Fund:
SECURITIES VALUATION -- Exchange traded securities for which market
quotations are readily available are valued using the last reported sales
price provided by independent pricing services as of the close of trading
on the New York Stock Exchange (normally 4:00 p.m. Eastern time), on each
Fund business day. In the absence of a sale, such securities are valued at
the mean of the last bid and asked price. Non-exchange traded securities
for which over-the-counter quotations are available are generally valued at
the mean between the closing bid and asked prices. Money market instruments
that mature in sixty days or less may be valued at amortized cost unless
the Fund's investment adviser believes another valuation is more
appropriate. Investments in other open-end regulated investment companies
are valued at net asset value.
The Fund values securities at fair value pursuant to procedures adopted by
the Board of Trustees if (1) market quotations are insufficient or not
readily available or (2) the Fund's investment adviser believes that the
prices or values available are unreliable due to, among other things, the
occurrence of events after the close of the securities markets on which the
Fund's securities primarily trade but before the time as of which the Fund
calculates its net asset value.
SHARE VALUATION -- The net asset value per share of the Fund is calculated
daily by dividing the total value of the Fund's assets, less liabilities,
by the number of shares outstanding. The offering price and redemption
price per share of the Fund is equal to the net asset value per share.
ESTIMATES -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND REALIZED GAINS AND LOSSES --
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded as earned.
Gains and losses on securities sold are determined on a specific
identification basis.
14
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CUTLER EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders of net
investment income, if any, are declared and paid quarterly. Capital gain
distributions, if any, are distributed to shareholders annually.
Distributions are based on amounts calculated in accordance with applicable
Federal income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. These differences are
due primarily to differing treatments of income and gains on various
investment securities held by the Fund, timing differences and differing
characterizations of distributions made by the Fund. The tax character of
distributions paid during the years ended June 30, 2006 and 2005 was
ordinary income.
FEDERAL INCOME TAXES -- The Fund intends to comply with the special
provisions of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies. As provided therein, in any fiscal year in
which the Fund so qualifies and distributes at least 90% of its taxable net
income, the Fund (but not the shareholders) will be relieved of federal
income tax on income distributed. Accordingly, no provision for income
taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare and pay as
dividends in each calendar year at least 98% of its investment income
(earned during the calendar year) and 98% of its net realized gains (earned
during the twelve months ended October 31) plus undistributed amounts from
prior years.
The following information is computed on a tax basis for each item as of
June 30, 2006:
Cost of portfolio investments ............................ $ 30,563,446
============
Gross unrealized appreciation ............................ $ 8,911,295
Gross unrealized depreciation ............................ (1,383,476)
------------
Net unrealized appreciation .............................. 7,527,819
Undistributed ordinary income ............................ 11,065
Capital loss carryforward ................................ (17,230,390)
Other temporary differences due to
timing of cash distributions ........................... (5,795)
------------
Accumulated deficit ...................................... $ (9,697,301)
============
The difference between the federal income tax cost of portfolio investments
and the financial statement cost is due to certain timing differences in
the recognition of capital gains or losses under income tax regulations and
accounting principles generally accepted in the United States of America.
These "book/tax" differences are temporary in nature and are primarily due
to losses deferred due to wash sales.
As of June 30, 2006, the Fund had capital loss carryforwards of
$17,230,390, of which $1,053,096 expires June 30, 2009, $7,402,392 expires
June 30, 2010, $5,747,725 expires June 30, 2011, $2,687,016 expires June
30, 2012 and $340,161 expires June 30, 2014. These capital loss
carryforwards may be utilized in the current and future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
15
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER -- Cutler Investment Counsel, LLC (the "Adviser") is the
investment adviser to the Fund. Pursuant to an Investment Advisory
Agreement, the Fund pays to the Adviser a fee, which is accrued daily and
paid monthly, at an annual rate of 0.75% of the Fund's average daily net
assets.
Certain officers of the Trust are also officers of the Adviser.
Effective January 1, 2005, the Adviser intends to voluntarily waive its
advisory fees and reimburse Fund operating expenses to the extent necessary
to limit the Fund's ordinary operating expenses to 1.35% of its average
daily net assets. This voluntary waiver may be reduced or eliminated at any
time.
ADMINISTRATION AND OTHER SERVICES -- Under the terms of a Mutual Fund
Services Agreement between the Trust and Ultimus Fund Solutions, LLC
("Ultimus"), Ultimus provides administrative, pricing, accounting, dividend
disbursing, shareholder servicing and transfer agent services for the Fund.
For these services, Ultimus receives a monthly fee from the Fund at an
annual rate of 0.15% of the Fund's average daily net assets up to $500
million; 0.125% on the next $500 million of such assets; and 0.10% on such
assets in excess of $1 billion, subject to a minimum monthly fee of $6,000.
During the year ended June 30, 2006, Ultimus received $72,000 for these
services. In addition, the Fund pays out-of-pocket expenses including, but
not limited to, postage, supplies and costs of pricing the Fund's portfolio
securities. Certain officers of the Trust are also officers of Ultimus, or
of Ultimus Fund Distributors, LLC, the principal underwriter of the Fund's
shares and an affiliate of Ultimus.
SHAREHOLDER SERVICE PLAN -- The Fund may pay shareholder servicing fees not
to exceed an annual rate of 0.25% of the Fund's average daily net assets.
These fees may be paid to various financial institutions that provide
shareholder services.
4. SECURITIES TRANSACTIONS
The cost of purchases and proceeds from sales of investment securities,
other than short-term investments, amounted to $8,196,718 and $12,247,432,
respectively, for the year ended June 30, 2006.
5. CONTINGENCIES AND COMMITMENTS
The Fund indemnifies the Trust's officers and trustees for certain
liabilities that might arise from their performance of their duties to the
Fund. Additionally, in the normal course of business the Fund enters into
contracts that contain a variety of representations and warranties and
which provide general indemnifications. The Fund's maximum exposure under
these arrangements is unknown, as this would involve future claims that may
be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be remote.
16
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. ACCOUNTING PRONOUNCEMENTS
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB Interpretation No. 48 (FIN 48) "Accounting for Uncertainty in Income
Taxes". FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements.
FIN 48 requires the evaluation of tax positions taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax benefits of positions not deemed to meet the more-likely-than-not
threshold would be booked as a tax expense in the current year and
recognized as: a liability for unrecognized tax benefits; a reduction of an
income tax refund receivable; a reduction of deferred tax asset; an
increase in deferred tax liability; or a combination thereof. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006. At
this time, management is evaluating the implications of FIN 48 and its
impact in the financial statements has not yet been determined.
17
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Trustees
of the Cutler Equity Fund of The Cutler Trust:
We have audited the accompanying statement of assets and liabilities of the
Cutler Equity Fund (the "Fund"), a series of The Cutler Trust, including
the schedule of investments, as of June 30, 2006, and the related statement
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. The Fund is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of June 30, 2006, by correspondence with the custodian
and brokers. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Cutler Equity Fund as of June 30, 2006, the results of its
operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
August 18, 2006
18
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on
your investment. As a shareholder of the Fund, you incur ongoing costs,
including management fees and other Fund expenses. These ongoing costs,
which are deducted from the Fund's gross income, directly reduce the
investment return of the Fund.
A fund's expenses are expressed as a percentage of its average net assets.
This figure is known as the expense ratio. The following examples are
intended to help you understand the ongoing costs (in dollars) of investing
in the Fund and to compare these costs with the ongoing costs of investing
in other mutual funds. The examples below are based on an investment of
$1,000 made at the beginning of the period shown and held for the entire
period.
The table below illustrates the Fund's costs in two ways:
ACTUAL FUND RETURN - This section helps you to estimate the actual expenses
that you paid over the period. The "Ending Account Value" shown is derived
from the Fund's actual return, and the third column shows the dollar amount
of operating expenses that would have been paid by an investor who started
with $1,000 in the Fund. You may use the information here, together with
the amount you invested, to estimate the expenses that you paid over the
period.
To do so, simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number given for the Fund under the heading "Expenses Paid During
Period."
HYPOTHETICAL 5% RETURN - This section is intended to help you compare the
Fund's costs with those of other mutual funds. It assumes that the Fund had
an annual return of 5% before expenses during the period shown, but that
the expense ratio is unchanged. In this case, because the return used is
not the Fund's actual return, the results do not apply to your investment.
The example is useful in making comparisons because the Securities and
Exchange Commission requires all mutual funds to calculate expenses based
on a 5% return. You can assess the Fund's costs by comparing this
hypothetical example with the hypothetical examples that appear in
shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you
compare ongoing costs only. The Fund does not charge transaction fees, such
as purchase or redemption fees, nor does it impose any sales load.
The calculations assume no shares were bought or sold during the period.
Your actual costs may have been higher or lower, depending on the amount of
your investment and the timing of any purchases or redemptions.
19
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED) (CONTINUED)
================================================================================
More information about the Fund's expenses, including annual expense ratios
over the past five years, can be found in this report. For additional
information on operating expenses and other shareholder costs, please refer
to the Fund's prospectus.
Beginning Ending
Account Value Account Value Expenses Paid
January 1, 2006 June 30, 2006 During Period*
--------------- ------------- -------------
Based on Actual Fund Return $ 1,000.00 $ 1,044.10 $ 6.34
Based on Hypothetical 5% Return
(before expenses) $ 1,000.00 $ 1,018.60 $ 6.26
* Expenses are equal to the Fund's annualized expense ratio of 1.25% for
the period, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
20
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)
================================================================================
The Board of Trustees is responsible for managing the Trust's business
affairs and exercising all the Trust's powers except those reserved for
shareholders. The following tables give information about each Board member
and the senior officers of the Fund. Each Trustee holds office until the
person resigns, is removed, or replaced. Officers are elected for an annual
term. Unless otherwise noted, the Trustees and officers have held their
principal occupations for more than five years. The Fund's Statement of
Additional Information includes additional information about the Trustees
and is available, without charge and upon request, by calling
1-888-CUTLER4.
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION LENGTH FUND COMPLEX DIRECTORSHIPS
DATE OF BIRTH WITH THE OF TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND ADDRESS TRUST SERVED DURING PAST 5 YEARS TRUSTEE TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
Kenneth R. Cutler(1) Trustee and Since 1992 Investment Committee Member and Portfolio 1 None
Born: March 1920 Chairman Manager of Cutler Investment Counsel, LLC
3555 Lear Way from 2003 to 2005; Investment Committe
Medford, OR 97504 Member and Portfolio Manager Emeritus since
July 2005; Investment Committee Member and
Portfolio Manager of Table Rock Asset
Management LLC ("Table Rock") (a registered
investment adviser) from 1977 until 2004.
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
Robert B. Watts, Jr. Trustee Since 1996 Counsel, Northhaven Associates since 1985 1 None
Born: December 1930
1710 Lake Village Drive
Medford, OR 97504
- -----------------------------------------------------------------------------------------------------------------------------------
Robert E. Clarke Trustee Since 2002 Retired 1 None
Born: May 1922
One Skyline Drive Apt. 3407
Medford, OR 97504
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Kenneth R. Cutler is an "Interested Person," as defined by the 1940 Act, because he is an affiliated person of the Adviser.
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------------
Erich M. Patten President Since 2004 Investment Committee Member, Portfolio
Born: October 1977 Manager and Corporate Secretary of Cutler
3555 Lear Way Investment Counsel, LLC since 2003; Member
Medford, OR 97504 of Cutler Venture Partners, LLC (private
equity firm) since 2003; Investment
Committee Member and Portfolio Manager of
Table Rock (a registered investment adviser)
from 2003 until 2004; Intern with the U.S.
Environmental Protection Agency in 2002;
Clerk with Sidley Austin Brown and Wood
(a law firm) in 2001; Investment Performance
Specialist with Ashland Partners, LLP from
1998 until 2003.
- -----------------------------------------------------------------------------------------------------------------------------------
21
- -----------------------------------------------------------------------------------------------------------------------------------
CUTLER EQUITY FUND
TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)
(CONTINUED)
===================================================================================================================================
NAME, POSITION
DATE OF BIRTH WITH LENGTH PRINCIPAL OCCUPATION(S)
AND ADDRESS THE TRUST OF TIME SERVED DURING PAST 5 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Brooke C. Ashland Vice President/ Since 2002 Investment Committee Member and Chief Executive Officer of
Born: December 1951 Chief Compliance Cutler Investment Counsel, LLC since 2003; Portfolio Manager,
3555 Lear Way Officer Member and Chief Executive Officer of Cutler Venture Partners,
Medford, OR 97504 LLC (a private equity firm) since 2003; Chief Executive Officer of
Centricity, LLC (an investment adviser) since 2003; General
Partner of The First America Asia Fund I, LP (a private equity
fund) since 1999; Chief Operating Officer, Chief Executive Officer
and Portfolio Manager of Cutler Asia, LLC (a private equity firm)
since 1998; Chief Executive Officer and/or Chairman of the Board
of Managers for Table Rock (a registered investment adviser) from
1995 to 2004; Chief Executive Officer and President of Trustee
Investment Services, Inc. (a Trustee education firm) since 1991;
President of Big Bear Timber, LLC (farming) since 1989.
- -----------------------------------------------------------------------------------------------------------------------------------
Carol S. Fischer Vice President/ Since 1996 Member and Chief Operating Officer of Cutler Investment Counsel,
Born: December 1955 Asst. Secretary/ LLC since 2003; Member and Chief Operating Officer of Table
3555 Lear Way Asst. Treasurer Rock (a registered investment adviser) from 1994 to 2004;
Medford, OR 97504 Secretary of P.S.&S., Inc. (a sales company) since 1990.
- -----------------------------------------------------------------------------------------------------------------------------------
Matthew C. Patten Treasurer Since 2004 President, Investment Committee Member and Portfolio Manager of
Born: December 1975 Cutler Investment Counsel, LLC since 2003; Portfolio Manager,
3555 Lear Way Member of President of Cutler Venture Partners, LLC (a private
Medford, OR 97504 equity firm) since 2003; Investment Committee Member of Table
Rock (a registered investment adviser) from 2002 until 2004;
Portfolio Manager - Private Equity and Public Equity of Table Rock
from 2000 until 2004; Chief Operating Officer and Portfolio
Manager of Cutler Asia, LLC (a private equity firm) since 2000;
Director of The First America Asia Fund I, L.P. (a private equity
fund) since 1999.
- -----------------------------------------------------------------------------------------------------------------------------------
Robert G. Dorsey Vice President Since 2005 Managing Director of Ultimus Fund Solutions, LLC and Ultimus
Born: April 1957 Fund Distributors, LLC
225 Pictoria Drive
Suite 450
Cincinnati, OH 45246
- -----------------------------------------------------------------------------------------------------------------------------------
John F. Splain Secretary Since 2005 Managing Director of Ultimus Fund Solutions, LLC and Ultimus
Born: September 1956 Fund Distributors, LLC
225 Pictoria Drive
Suite 450
Cincinnati, OH 45246
- -----------------------------------------------------------------------------------------------------------------------------------
22
- --------------------------------------------------------------------------------
CUTLER EQUITY FUND
ADDITIONAL INFORMATION (UNAUDITED)
================================================================================
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to securities held in the Fund's
portfolio is available, without charge upon request, by calling
1-800-228-8537 or on the Securities and Exchange Commissions's (SEC)
website http://www.sec.gov. Information regarding how the Fund voted
proxies relating to portfolio securities during the most recent 12-month
period ended June 30 is also available without charge upon request by
calling 1-800-228-8537 or on the SEC's website at http://www.sec.gov.
FORM N-Q INFORMATION
The Trust files a complete listing of portfolio holdings for the Fund with
the SEC as of the first and third quarters of each fiscal year on Form N-Q.
The filings are available upon request, by calling 1-800-228-8537.
Furthermore, you are able to obtain a copy of the filings on the SEC's
website at http://www.sec.gov. The Trust's Forms N-Q may also be reviewed
and copied at the SEC's Public Reference Room in Washington, DC, and
information on the operation of the Public Reference Room may be obtained
by calling 1-800-SEC-0330.
23
CUTLER INVESTMENT COUNSEL, LLC
INVESTMENT MANAGEMENT
INVESTMENT ADVISER TO THE TRUST
3555 Lear Way, Medford,OR 97504
(800)228-8537 o(541)770-9000
Fax:(541)779-0006
info@cutler.com
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals
are employed by the registrant or a third party. Pursuant to Item 12(a)(1), a
copy of registrant's code of ethics is filed as an exhibit to this Form N-CSR.
During the period covered by this report, the code of ethics has not been
amended, and the registrant has not granted any waivers, including implicit
waivers, from the provisions of the code of ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that the registrant does not
have an audit committee financial expert serving on its audit committee. The
audit committee determined that, although none of its members meet the technical
definition of an audit committee financial expert, the members have sufficient
financial expertise to address any issues that are likely to come before the
committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES. The aggregate fees billed for professional services
rendered by the principal accountant for the audit of the registrant's
annual financial statements or for services that are normally provided
by the accountant in connection with statutory and regulatory filings
or engagements were $20,500 and $19,675 with respect to the
registrant's fiscal years ended June 30, 2006 and 2005, respectively.
(b) AUDIT-RELATED FEES. No fees were billed in either of the last two
fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item.
(c) TAX FEES. The aggregate fees billed for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax
planning were $3,800 and $3,775 with respect to the registrant's
fiscal years ended June 30, 2006 and 2005, respectively. The services
comprising these fees are the preparation of the registrant's federal
income and excise tax returns.
(d) ALL OTHER FEES. No fees were billed in either of the last two fiscal
years for products and services provided by the principal accountant,
other than the services reported in paragraphs (a) through (c) of this
Item.
(e)(1) The audit committee has not adopted pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X.
(e)(2) None of the services described in paragraph (b) through (d) of this
Item were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50% of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year were attributed to work performed by persons other
than the principal accountant's full-time, permanent employees.
(g) With respect to the fiscal years ended June 30, 2006 and 2005,
aggregate non-audit fees of $3,800 and $3,775, respectively, were
billed by the registrant's accountant for services rendered to the
registrant. No non-audit fees were billed in either of the last two
fiscal years by the registrant's accountant for services rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
(h) The principal accountant has not provided any non-audit services to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable [schedule filed with Item 1]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
Not applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that such disclosure controls and procedures are reasonably designed
and are operating effectively to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the period in which this
report is being prepared, and that the information required in filings on Form
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Attached hereto
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act (17 CFR 270.23c-1) sent or given during the period covered by the report
by or on behalf of the registrant to 10 or more persons: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)): Attached hereto
Exhibit 99.CODE ETH Code of Ethics
Exhibit 99.CERT Certifications required by Rule 30a-2(a) under the Act
Exhibit 99.906CERT Certifications required by Rule 30a-2(b) under the Act
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Cutler Trust
-------------------------------------------------------------------
By (Signature and Title)* /s/ Erich M. Patten
-----------------------------------------------------
Erich M. Patten, President
Date September 6, 2006
------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Erich M. Patten
-----------------------------------------------------
Erich M. Patten, President
Date September 6, 2006
------------------------------------------
By (Signature and Title)* /s/ Matthew C. Patten
-----------------------------------------------------
Matthew C. Patten, Treasurer
Date September 6, 2006
------------------------------------------
* Print the name and title of each signing officer under his or her signature.