As filed with the Securities and Exchange Commission on February 22, 2005
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 811-7242
CUTLER TRUST
Two Portland Square
Portland, Maine 04101
207-879-1900
Erich M. Patten, President
Cutler Investment Counsel, LLC
3555 Lear Way
Medford, OR 97504-9759
Date of fiscal year end: June 30, 2004
Date of reporting period: December 31, 2004
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. REPORT TO STOCKHOLDERS.
SEMI-ANNUAL REPORT DECEMBER 31, 2004
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CUTLER VALUE FUND Cutler Investment Forum Shareholder
Counsel, LLC Services, LLC
3555 Lear Way Two Portland Square
Medford, Oregon 97504 Portland, Maine 04101
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To The Cutler Trust Shareholders:
The enclosed materials constitute the semi-annual report for the Cutler Value
Fund through December 31, 2004.
The recent quarter reflected strong gains in the markets, after what management
viewed a rather lackluster beginning of the year. We are pleased with the
year-end result, and feel comfortable with our Equity Income strategy going
forward.
Following the Presidential election, the markets had a very strong November and
December. Higher volatility securities such as technology and small-caps
typically had an especially strong run. The Fund invests primarily in large
capitalization stocks, so we are pleased with the performance of the Cutler
Value Fund in the face of such an investing environment. Looking forward, we
see slowing economic growth on the horizon. This may mark a shift toward higher
quality companies with dividends comprising a substantial portion of the total
return- companies that are a hallmark of the Cutler Value Fund holdings. In our
experience, a "flight to quality" often occurs during periods of economic
uncertainty.
The Cutler Value Fund seeks to increase the dividend income received by
shareholders by focusing on companies that have both a history of, and capacity
to, raise their dividend rates and achieve long-term capital appreciation.
While there can be no assurances that company dividends will increase over
time, in the past quarter alone, seven of our companies declared dividend
increases. At year-end, the Cutler Value Fund reflected a net yield higher than
the S&P 500 Index.
The industry has undergone many changes in the past year, as increased
regulation has imposed additional costs on mutual funds. To help alleviate
these costs, the Trustees have voted to transfer fund administration
responsibilities from Citigroup to Ultimas Fund Solutions. (You may recall that
Forum Financial Group, which had performed these services over many years, was
purchased by Citigroup last year.) After much due diligence, Cutler is
confident in Ultimas' comprehensive and outstanding services. In addition,
Cutler Investment Counsel CEO, Brooke Cutler Ashland, assumed the position of
Chief Compliance Officer for the Fund.
Please find a detailed description of the Fund's holdings in the enclosed
report. As always, you are welcome to contact our office with any on-going
questions. We appreciate your continued support, and look forward to striving
for a successful 2005.
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
Past performance is no guarantee of future returns. The views in this report
were those of the Cutler Fund's investment advisor as of December 31, 2004 and
may not reflect their views on the date the Cutler Fund's semi-
1
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annual report is first published or anytime thereafter. These views are
intended to assist shareholders in understanding their investment in the Fund
and does not constitute investment advice.
The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock
market conditions based on the average of 500 widely held common stocks. One
cannot invest directly in an index.
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 (888) 288-5374. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST. FORUM FUND SERVICES, LLC,
DISTRIBUTOR. (02/05).
2
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CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
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SHARES SECURITY DESCRIPTION VALUE
COMMON STOCK -- 98.3%
CONSUMER DISCRETIONARY -- 3.0%
29,900 General Motors Corp. $ 1,197,794
------------
CONSUMER STAPLES -- 9.8%
45,850 ConAgra Foods, Inc. 1,350,282
22,350 Kimberly-Clark Corp. 1,470,854
20,900 Procter & Gamble Co. 1,151,172
------------
3,972,308
------------
ENERGY -- 11.3%
29,900 ChevronTexaco Corp. 1,570,049
17,050 ConocoPhillips 1,480,451
29,510 Exxon Mobil Corp. 1,512,683
------------
4,563,183
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FINANCIALS -- 19.3%
41,000 Bank of New York Co., Inc. 1,370,220
26,850 Citigroup, Inc. 1,293,633
32,950 J.P. Morgan Chase & Co. 1,285,379
27,250 Lincoln National Corp. 1,272,030
46,300 U.S. Bancorp 1,450,116
18,550 Wells Fargo & Co. 1,152,883
------------
7,824,261
------------
HEALTH CARE -- 8.5%
56,550 Bristol-Myers Squibb Co. 1,448,811
24,700 Merck & Co., Inc. 793,858
45,000 Pfizer, Inc. 1,210,050
------------
3,452,719
------------
INDUSTRIALS -- 18.3%
15,050 3M Co. 1,235,154
16,250 Caterpillar, Inc. 1,584,537
See Notes to Financial Statements.
3
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CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
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SHARES SECURITY DESCRIPTION VALUE
INDUSTRIALS -- 18.3% (CONTINUED)
18,950 Emerson Electric Co. $ 1,328,395
37,100 General Electric Co. 1,354,150
20,000 Pitney Bowes, Inc. 925,600
9,700 United Technologies Corp. 1,002,495
------------
7,430,331
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INFORMATION TECHNOLOGY -- 2.9%
56,300 Hewlett-Packard Co. 1,180,611
------------
MATERIALS -- 8.7%
39,650 Alcoa, Inc. 1,245,803
30,750 Dow Chemical Co. 1,522,432
11,550 Weyerhaeuser Co. 776,391
------------
3,544,626
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TELECOMMUNICATION SERVICES -- 3.4%
54,000 SBC Communications, Inc. 1,391,580
------------
UTILITIES -- 13.1%
27,900 Consolidated Edison, Inc. 1,220,625
36,100 Exelon Corp. 1,590,927
56,650 National Fuel Gas Co. 1,605,461
20,950 Peoples Energy Corp. 920,753
------------
5,337,766
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TOTAL COMMON STOCK (COST $33,905,066) 39,895,179
------------
See Notes to Financial Statements.
4
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CUTLER VALUE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
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SHARES SECURITY DESCRIPTION VALUE
MONEY MARKET FUND -- 2.3%
944,672 Monarch Daily Assets Cash Fund
(COST $944,672) $ 944,672
-----------
TOTAL INVESTMENTS IN SECURITIES -- 100.6%
(COST $34,849,738)* $40,839,851
Other Assets and Liabilities, Net -- (0.6%) (226,460)
-----------
TOTAL NET ASSETS -- 100.0% $40,613,391
===========
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* Cost for Federal income tax purposes is substantially the same as for
financial statement purposes and net unrealized appreciation (depreciation)
consists of:
Gross Unrealized Appreciation $ 8,253,712
Gross Unrealized Depreciation (2,263,599)
-----------
Net Unrealized Appreciation (Depreciation) $ 5,990,113
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Consumer Discretionary 2.9%
Consumer Staples 9.7%
Energy 11.2%
Financials 19.2%
Health Care 8.4%
Industrials 18.2%
Information Technology 2.9%
Materials 8.7%
Telecommunication Services 3.4%
Utilities 13.1%
Money Market Fund 2.3%
See Notes to Financial Statements.
5
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CUTLER VALUE FUND
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 2004
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ASSETS
Total investments, at value (Cost $34,849,738) $ 40,839,851
Receivables:
Investment securities sold 537,662
Interest and dividends 82,551
Prepaid expenses 15,330
------------
Total Assets 41,475,394
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LIABILITIES
Payables:
Fund shares redeemed 104,300
Investment securities purchased 542,544
Dividends 171,387
Accrued Liabilities:
Investment adviser fees 17,141
Trustees' fees and expenses 3,303
Other accrued expenses 23,328
------------
Total Liabilities 862,003
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NET ASSETS $ 40,613,391
============
COMPONENTS OF NET ASSETS
Paid-in capital $ 52,492,216
Accumulated undistributed (distributions in excess of) net investment income (4,801)
Accumulated net realized gain (loss) on investments (17,864,137)
Net unrealized appreciation (depreciation) on investments 5,990,113
------------
NET ASSETS $ 40,613,391
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
Based on net assets of $40,613,391 and 4,099,193 shares outstanding (unlimited shares
authorized) $ 9.91
============
See Notes to Financial Statements.
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CUTLER VALUE FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2004
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INVESTMENT INCOME
Dividend income $ 615,257
----------
Total Investment Income 615,257
----------
EXPENSES
Investment adviser fees 153,353
Administrator fees 23,782
Shareholder servicing fees 508
Transfer agency fees 13,532
Custodian fees 5,410
Accountant fees 25,602
Registration fees 6,591
Professional fees 34,328
Trustees' fees and expenses 15,558
Miscellaneous expenses 19,743
----------
Total Expenses 298,407
Fees waived (42,819)
----------
Net Expenses 255,588
----------
NET INVESTMENT INCOME (LOSS) 359,669
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments 627,175
Net change in unrealized appreciation (depreciation) of investments 1,636,933
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 2,264,108
----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $2,623,777
==========
See Notes to Financial Statements.
7
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CUTLER VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
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Six Months Year
Ended Ended
December 31, 2004 June 30, 2004
----------------- -------------
OPERATIONS
Net investment income (loss) $ 359,669 $ 832,365
Net realized gain (loss) from investments 627,175 265,567
Net change in unrealized appreciation (depreciation) of investments 1,636,933 4,958,134
----------- -----------
Increase (decrease) in net assets resulting from operations 2,623,777 6,056,066
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (360,995) (832,370)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Sale of shares 2,539,747 3,554,537
Reinvestment of distributions 179,506 785,984
Redemption of shares (5,601,413) (9,581,659)
----------- -----------
Increase (decrease) from capital share transactions (2,882,160) (5,241,138)
----------- -----------
Increase (decrease) in net assets (619,378) (17,442)
NET ASSETS
Beginning of Period 41,232,769 41,250,211
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End of Period(a) $40,613,391 $41,232,769
=========== ===========
SHARE ACTIVITY
Sale of shares 273,776 395,144
Reinvestment of distributions 19,076 86,699
Redemption of shares (590,094) (1,062,632)
----------- -----------
Increase (decrease) in shares (297,242) (580,789)
=========== ===========
(a)Accumulated undistributed (distributions in excess of) net investment
income $ (4,801) $ (3,475)
=========== ===========
See Notes to Financial Statements.
8
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CUTLER VALUE FUND
FINANCIAL HIGHLIGHTS
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Selected per share data and ratios for a share outstanding throughout each
period.
Six Months
Ended Year Ended June 30,
December 31, 2004 -----------------------------------------------
----------------- 2004 2003 2002 2001 2000
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.38 $ 8.29 $ 8.85 $ 10.38 $ 9.78 $ 18.93
------- ------- ------- -------- ------- -------
INVESTMENT OPERATIONS
Net investment income (loss) 0.09 0.18 0.13 0.08 0.08 0.12
Net realized and unrealized gain (loss)
on investments 0.53 1.09 (0.56)(a) (1.53) 0.79 (1.97)
------- ------- ------- -------- ------- -------
Total from Investment Operations 0.62 1.27 (0.43) (1.45) 0.87 (1.85)
------- ------- ------- -------- ------- -------
DISTRIBUTIONS FROM
Net investment income (0.09) (0.18) (0.13) (0.08) (0.08) (0.12)
Net realized gain on investments -- -- -- -- (0.19) (7.18)
------- ------- ------- -------- ------- -------
Total Distributions to shareholders (0.09) (0.18) (0.13) (0.08) (0.27) (7.30)
------- ------- ------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 9.91 $ 9.38 $ 8.29 $ 8.85 $ 10.38 $ 9.78
======= ======= ======= ======== ======= =======
TOTAL RETURN(B) 6.59% 15.39% (4.75%) (14.07%) 8.97% (9.25%)
RATIOS/SUPPLEMENTARY DATA
Net assets at the end of year (in
thousands) $40,613 $41,233 $41,250 $ 22,963 $25,744 $27,615
Ratios to Average Net Assets
Net Expenses 1.25%(d) 1.25% 1.25% 1.25% 1.25% 1.25%
Gross Expenses(c) 1.46%(d) 1.43% 1.79% 1.50% 1.45% 1.28%
Net investment income (loss) 1.76%(d) 1.95% 1.65% 0.76% 0.56% 1.01%
PORTFOLIO TURNOVER RATE 1% 14% 61% 46% 60% 66%
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(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. See Note 1.
(b)Total return for periods less than one year is not annualized.
(c)The ratio of gross expenses to average net assets reflects the expense ratio
excluding any waivers and/or reimbursements.
(d)Annualized.
See Notes to Financial Statements.
9
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CUTLER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
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NOTE 1. ORGANIZATION
This report relates to the Cutler Value Fund (the "Fund"), 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. On April 15, 2003, the
Board approved the reorganization of the Cutler Core Fund (the "Core Fund")
with and into Cutler Value Fund pursuant to an Agreement and Plan of
Reorganization executed by the Trust on behalf of each series. On April 17,
2003, Core Fund exchanged its assets and liabilities for ownership in the
Fund. Immediately prior to its reorganization with and into the Fund, Core
Fund's net assets were $20,681,496. Each shareholder of Core Fund received
0.9227 shares of the Fund for each share of Core Fund held. The acquisition
of net assets and unrealized gain/loss from this transaction was as follows:
CONTRIBUTING ENTITY DATE OF CONTRIBUTION NET ASSETS SHARES ISSUED UNREALIZED GAIN
- ------------------- -------------------- ----------- ------------- ---------------
Cutler Core Fund April 17, 2003 $20,681,496 2,744,243 $2,508,485
The Fund seeks current income and long-term capital appreciation.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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 Fund:
SECURITY 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-ended regulated investment companies are valued at
net asset value.
The Fund values securities at fair value pursuant to procedures adopted by
the Board if (1) market quotations are insufficient or not readily available
or (2) the 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.
10
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CUTLER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
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SECURITY TRANSACTIONS, INVESTMENT INCOME, AND REALIZED GAIN AND LOSS --
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded as earned.
Identified cost of investments sold is used to determine realized gain and
loss for both financial statement and federal income tax purposes.
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 gain on various
investment securities held by the Fund, timing differences and differing
characterizations of distributions made by the Fund.
FEDERAL TAXES -- The Fund intends to qualify each year as a registered
investment company and distribute all its taxable income. In addition, by
distributing in each calendar year substantially all its net investment
income, capital gain and certain other amounts, if any, the Fund will not be
subject to a federal excise tax. Therefore, no federal income or excise tax
provision is required.
NOTE 3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS WITH RELATED
PARTIES
INVESTMENT ADVISER -- Cutler Investment Counsel, LLC (the "Adviser") is the
investment adviser to the Fund. Pursuant to an Investment Advisory
Agreement, the Adviser receives an advisory fee at an annual rate of 0.75%
of the Fund's average daily net assets.
ADMINISTRATION AND OTHER SERVICES -- Citigroup Global Transaction Services,
through its various affiliates (collectively "Citigroup"), provides
administration, portfolio accounting and transfer agency services to the
Fund.
SHAREHOLDER SERVICE AGENT -- The Fund pays a shareholder servicing fee at an
annual rate of 0.25% of the Fund's average daily net assets. These fees are
paid to various financial institutions that provide shareholder services.
DISTRIBUTOR -- Forum Fund Services, LLC is the Fund's distributor (the
"Distributor"). The Distributor is not affiliated with the Adviser or with
Citigroup or its affiliated companies. The Distributor receives no
compensation from the Fund for its distribution services. Effective March 1,
2005, the Distributor will change its name to Foreside Fund Services, LLC.
Certain Trustees and Officers of the Trust are Directors, Officers or
employees of the aforementioned companies. These persons are not paid by the
Fund for serving in these capacities.
NOTE 4. WAIVER OF FEES
For the period November 1, 2004 through December 31, 2004, the Adviser was
contractually obligated to waive a portion of its fees so as to limit the
Fund's Total Annual Operating Expenses to 1.25% of the Fund's total assets.
This contractual waiver was terminated on December 31, 2004. For the six
months ended
11
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CUTLER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
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December 31, 2004, the Adviser waived fees of $42,819. Effective January 1,
2005, the Adviser agreed to voluntarily waive fees and/or reimburse the
Fund's expenses to the extent necessary to limit the Fund's Total Annual
Operating expenses to 1.35% of the Fund's average daily net assets. This
voluntary waiver may be reduced or eliminated at any time.
NOTE 5. SECURITIES TRANSACTIONS
The cost of purchases and the proceeds from sales of investment securities,
other than short-term investments, were $542,543 and $3,554,934,
respectively, for the period ended December 31, 2004.
NOTE 6. PROXY VOTING GUIDELINES
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 and upon request, by calling (888) 288-5374 and on
the SEC's website at http://www.sec.gov. The Fund's proxy voting record for
the twelve-month period ended June 30, 2004 is available, without charge and
upon request, by calling (888) 288-5374 and on the SEC's website at
http://www.sec.gov.
NOTE 7. AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
Effective June 30, 2004, the Fund files its complete schedule of portfolio
holdings with the SEC for the first and third quarters of each fiscal year
on Form N-Q. The Fund's Form N-Q is available, without charge and upon
request, on the SEC's website at http://www.sec.gov or may be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. Information on
the operation of the Public Reference Room may be obtained by calling (800)
SEC-0330.
NOTE 8. SHAREHOLDER EXPENSES EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including redemption fees; and (2) ongoing costs, including
management fees and other Fund expenses. This example is intended to help
you understand your 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 following example is based on $1,000 invested at the beginning of the
period and held for the entire period from July 1, 2004, through December
31, 2004.
ACTUAL EXPENSES -- The first line of the table below provides information
about actual account values and actual expenses. You may use the information
in this line, together with the amount you invested, to estimate the
expenses that you paid over the period. 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 in the first line under the heading
entitled "Expenses Paid During Period" to estimate the expenses you paid on
your account during the period.
12
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CUTLER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
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HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES -- The second line of the table
below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore,
the second line of the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different
funds. In addition, if these transaction costs were included, your costs
would have been higher.
BEGINNING ACCOUNT
VALUE ENDING ACCOUNT VALUE EXPENSES PAID
JULY 1, 2004 DECEMBER 31, 2004 DURING PERIOD*
----------------- -------------------- --------------
Actual Return $1,000.00 $1,065.86 $6.51
Hypothetical Return $1,000.00 $1,018.90 $6.36
- ---------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.25%,
multiplied by the average account value over the period, multiplied by the
number of days in most recent fiscal half-year divided by 365 to reflect the
half-year period.
13
CUTLER VALUE FUND
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TABLE OF CONTENTS
DECEMBER 31, 2004
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PAGE
----
Chairman's Letter to the Shareholders 1
Schedule of Investments.............. 3
Statement of Assets and Liabilities.. 6
Statement of Operations.............. 7 CUTLER VALUE FUND
Statements of Changes in Net Assets.. 8
Financial Highlights (Per Share Data) 9
Notes to Financial Statements........ 10
CUTLER INVESTMENT COUNSEL, LLC
INVESTMENT MANAGEMENT
INVESTMENT ADVISER TO THE TRUST SEMI-ANNUAL REPORT
3555 Lear Way, Medford, OR 97504
(800) 228-8537 . (541) 770-9000
Fax: (541) 779-0006 DECEMBER 31, 2004
info@cutler.com (UNAUDITED)
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
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
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES
(a) The registrant's President and Treasurer have concluded that the
registrant's disclosure controls and procedures (as defined in rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")) are effective, based on
their evaluation of these disclosure controls and procedures required by Rule
30a-3(b) as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in rule 30a-3(d) under the Act) that occurred during the
registrant's last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
(a)(3) Not applicable
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
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
/s/ Erich M. Patten
By ----------------------------
Erich M. Patten, President
Date February 17, 2005
---------------------------
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 /s/ Erich M. Patten
-----------------------------------
Erich M. Patten, President
Date February 17, 2005
-----------------------------------
By /s/ Matthew C. Patten
-----------------------------------
Matthew C. Patten, Treasurer
Date February 16, 2005
-----------------------------------