THE CUTLER TRUST
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
December 31,
2012
(Unaudited)
|
|
|
Three Months
Ended
December 31,
2012
(a)
(Unaudited)
|
|
|
Year
Ended
September 30,
2012
|
|
|
INVESTMENT INCOME
|
|
|
|
|
|
|
|
|
|
|
Dividend income (net of foreign tax withheld of
$0, $38 and $1,305, respectively)
|
|
$
|
1,011,440
|
|
|
$
|
7,026
|
|
|
$
|
110,721
|
|
|
Interest
|
|
|
—
|
|
|
|
125,043
|
|
|
|
624,919
|
|
|
Securities lending (Note 2)
|
|
|
—
|
|
|
|
—
|
|
|
|
4,737
|
|
|
Total investment income
|
|
|
1,011,440
|
|
|
|
132,069
|
|
|
|
740,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory fees (Note 3)
|
|
|
268,514
|
|
|
|
23,556
|
|
|
|
145,526
|
|
|
Administration fees (Note 3)
|
|
|
54,077
|
|
|
|
18,000
|
|
|
|
—
|
|
|
Transfer agent fees
|
|
|
—
|
|
|
|
—
|
|
|
|
49,535
|
|
|
Professional fees
|
|
|
20,449
|
|
|
|
7,897
|
|
|
|
20,654
|
|
|
Fund accounting fees
|
|
|
—
|
|
|
|
—
|
|
|
|
42,302
|
|
|
Custody and bank service fees
|
|
|
14,156
|
|
|
|
1,802
|
|
|
|
14,615
|
|
|
Trustees’ fees and expenses
|
|
|
12,727
|
|
|
|
1,648
|
|
|
|
10,080
|
|
|
Shareholder servicing fees (Note 3)
|
|
|
20,304
|
|
|
|
531
|
|
|
|
—
|
|
|
Compliance service fees
|
|
|
—
|
|
|
|
—
|
|
|
|
18,898
|
|
|
Registration and filing fees
|
|
|
13,021
|
|
|
|
4,264
|
|
|
|
1,134
|
|
|
Insurance expense
|
|
|
9,432
|
|
|
|
221
|
|
|
|
6,825
|
|
|
Printing of shareholder reports
|
|
|
3,869
|
|
|
|
2,751
|
|
|
|
2,629
|
|
|
Other expenses
|
|
|
8,833
|
|
|
|
902
|
|
|
|
4,749
|
|
|
Total expenses
|
|
|
425,382
|
|
|
|
61,572
|
|
|
|
316,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
|
|
|
586,058
|
|
|
|
70,497
|
|
|
|
423,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gains from
investment transactions
|
|
|
3,360,788
|
|
|
|
224,544
|
|
|
|
48,861
|
|
|
Net change in unrealized appreciation/
depreciation on investments
|
|
|
(2,649,734
|
)
|
|
|
(284,083
|
)
|
|
|
564,710
|
|
|
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
|
|
|
711,054
|
|
|
|
(59,539
|
)
|
|
|
613,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN NET ASSETS
FROM OPERATIONS
|
|
$
|
1,297,112
|
|
|
$
|
10,958
|
|
|
$
|
1,037,001
|
|
|
(a)
|
Fund changed fiscal year end to June 30.
|
See accompanying notes to financial statements.
CUTLER EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
|
|
|
Six Months
Ended
December 31, 2012
(Unaudited)
|
|
|
|
|
|
FROM OPERATIONS
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
586,058
|
|
|
$
|
720,242
|
|
|
Net realized gains from investment transactions
|
|
|
3,360,788
|
|
|
|
1,887,458
|
|
|
Net change in unrealized appreciation/
depreciation on investments
|
|
|
(2,649,734
|
)
|
|
|
283,247
|
|
|
Net increase in net assets from operations
|
|
|
1,297,112
|
|
|
|
2,890,947
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS TO SHAREHOLDERS
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(585,865
|
)
|
|
|
(720,038
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE TRANSACTIONS
|
|
|
|
|
|
|
|
|
|
Net assets received in conjunction with fund merger (Note 1)
|
|
|
39,854,719
|
|
|
|
—
|
|
|
Proceeds from shares sold
|
|
|
5,970,194
|
|
|
|
5,049,061
|
|
|
Net asset value of shares issued in reinvestment
of distributions to shareholders
|
|
|
579,945
|
|
|
|
717,866
|
|
|
Payments for shares redeemed
|
|
|
(7,708,306
|
)
|
|
|
(3,907,611
|
)
|
|
Net increase from capital share transactions
|
|
|
38,696,552
|
|
|
|
1,859,316
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INCREASE IN NET ASSETS
|
|
|
39,407,799
|
|
|
|
4,030,225
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
49,415,756
|
|
|
|
45,385,531
|
|
|
End of period
|
|
$
|
88,823,555
|
|
|
$
|
49,415,756
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME
|
|
$
|
4,933
|
|
|
$
|
1,970
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE ACTIVITY
|
|
|
|
|
|
|
|
|
|
Shares issued in conjunction with fund merger (Note 1)
|
|
|
3,000,712
|
|
|
|
—
|
|
|
Shares sold
|
|
|
461,370
|
|
|
|
424,545
|
|
|
Shares reinvested
|
|
|
44,297
|
|
|
|
59,331
|
|
|
Shares redeemed
|
|
|
(586,905
|
)
|
|
|
(321,734
|
)
|
|
Net increase in shares outstanding
|
|
|
2,919,474
|
|
|
|
162,142
|
|
|
Shares outstanding at beginning of period
|
|
|
3,889,693
|
|
|
|
3,727,551
|
|
|
Shares outstanding at end of period
|
|
|
6,809,167
|
|
|
|
3,889,693
|
|
See accompanying notes to financial statements.
CUTLER INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
|
|
|
Three Months Ended
December 31, 2012
(Unaudited)
(a)
|
|
|
Year
Ended
September 30,
2012
|
|
|
Year
Ended
September 30,
2011
|
|
|
FROM OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
70,497
|
|
|
$
|
423,430
|
|
|
$
|
546,592
|
|
|
Net realized gains from investment transactions
|
|
|
224,544
|
|
|
|
48,861
|
|
|
|
605,901
|
|
|
Net change in unrealized appreciation/
depreciation on investments
|
|
|
(284,083
|
)
|
|
|
564,710
|
|
|
|
(727,573
|
)
|
|
Net increase in net assets from operations
|
|
|
10,958
|
|
|
|
1,037,001
|
|
|
|
424,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS TO SHAREHOLDERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(161,959
|
)
|
|
|
(759,169
|
)
|
|
|
(920,496
|
)
|
|
From net realized gains
|
|
|
—
|
|
|
|
—
|
|
|
|
(500,999
|
)
|
|
Decrease in net assets from
distributions to shareholders
|
|
|
(161,959
|
)
|
|
|
(759,169
|
)
|
|
|
(1,421,495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE TRANSACTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from shares sold
|
|
|
885,672
|
|
|
|
1,315,387
|
|
|
|
4,077,055
|
|
|
Net asset value of shares issued in reinvestment
of distributions to shareholders
|
|
|
159,356
|
|
|
|
748,299
|
|
|
|
1,402,466
|
|
|
Payments for shares redeemed
|
|
|
(2,657,689
|
)
|
|
|
(3,890,718
|
)
|
|
|
(4,560,424
|
)
|
|
Net increase (decrease) from
capital share transactions
|
|
|
(1,612,661
|
)
|
|
|
(1,827,032
|
)
|
|
|
919,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL DECREASE IN NET ASSETS
|
|
|
(1,763,662
|
)
|
|
|
(1,549,200
|
)
|
|
|
(77,478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
19,692,942
|
|
|
|
21,242,142
|
|
|
|
21,319,620
|
|
|
End of period
|
|
$
|
17,929,280
|
|
|
$
|
19,692,942
|
|
|
$
|
21,242,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS IN EXCESS OF NET
INVESTMENT INCOME
|
|
$
|
(279,013
|
)
|
|
$
|
(187,551
|
)
|
|
$
|
(60,990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
84,930
|
|
|
|
125,933
|
|
|
|
383,651
|
|
|
Shares reinvested
|
|
|
15,457
|
|
|
|
72,122
|
|
|
|
135,025
|
|
|
Shares redeemed
|
|
|
(254,957
|
)
|
|
|
(372,758
|
)
|
|
|
(427,488
|
)
|
|
Net increase (decrease) in shares outstanding
|
|
|
(154,570
|
)
|
|
|
(174,703
|
)
|
|
|
91,188
|
|
|
Shares outstanding at beginning of period
|
|
|
1,892,828
|
|
|
|
2,067,531
|
|
|
|
1,976,343
|
|
|
Shares outstanding at end of period
|
|
|
1,738,258
|
|
|
|
1,892,828
|
|
|
|
2,067,531
|
|
|
(a)
|
Fund changed fiscal year end to June 30.
|
See accompanying notes to financial statements.
CUTLER EQUITY FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
|
|
|
Six Months
Ended
Dec. 31,
2012
|
|
|
Years Ended June 30,
|
|
|
|
|
(Unaudited)
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Net asset value at
beginning of period
|
|
$
|
12.70
|
|
|
$
|
12.18
|
|
|
$
|
9.18
|
|
|
$
|
8.00
|
|
|
$
|
10.80
|
|
|
$
|
12.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.09
|
|
|
|
0.19
|
|
|
|
0.18
|
|
|
|
0.17
|
|
|
|
0.21
|
|
|
|
0.18
|
|
|
Net realized and unrealized
gains (losses) on
investments
|
|
|
0.34
|
|
|
|
0.52
|
|
|
|
3.00
|
|
|
|
1.18
|
|
|
|
(2.80
|
)
|
|
|
(1.54
|
)
|
|
Total from investment operations
|
|
|
0.43
|
|
|
|
0.71
|
|
|
|
3.18
|
|
|
|
1.35
|
|
|
|
(2.59
|
)
|
|
|
(1.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.09
|
)
|
|
|
(0.19
|
)
|
|
|
(0.18
|
)
|
|
|
(0.17
|
)
|
|
|
(0.21
|
)
|
|
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value at end of period
|
|
$
|
13.04
|
|
|
$
|
12.70
|
|
|
$
|
12.18
|
|
|
$
|
9.18
|
|
|
$
|
8.00
|
|
|
$
|
10.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total return
(a)
|
|
|
3.35%
|
(b)
|
|
|
5.90%
|
|
|
|
34.73%
|
|
|
|
16.82%
|
|
|
|
(24.06%
|
)
|
|
|
(11.13%
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at end of period (000’s)
|
$
|
88,824
|
|
|
$
|
49,416
|
|
|
$
|
45,386
|
|
|
$
|
31,115
|
|
|
$
|
27,590
|
|
|
$
|
34,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios/supplementary data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of net expenses to
average net assets
(c)
|
|
|
1.18%
|
(d)
|
|
|
1.27%
|
|
|
|
1.33%
|
|
|
|
1.40%
|
|
|
|
1.40%
|
|
|
|
1.31%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of net investment income
to average net assets
|
|
|
1.63%
|
(d)
|
|
|
1.57%
|
|
|
|
1.59%
|
|
|
|
1.76%
|
|
|
|
2.45%
|
|
|
|
1.48%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
38%
|
(b)
|
|
|
9%
|
|
|
|
15%
|
|
|
|
13%
|
|
|
|
21%
|
|
|
|
13%
|
|
|
(a)
|
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.
|
|
|
|
|
(b)
|
Not annualized.
|
|
|
|
|
(c)
|
Absent voluntary fee waivers by the Fund’s investment adviser, the ratio of total expenses to average net assets would have been 1.42% and 1.50% for the years ended June 30, 2010 and 2009, respectively.
|
|
|
|
|
(d)
|
Annualized.
|
See accompanying notes to financial statements.
CUTLER INCOME FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
|
|
|
|
|
|
Years Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value at
beginning of period
|
|
$
|
10.40
|
|
|
$
|
10.27
|
|
|
$
|
10.79
|
|
|
$
|
10.33
|
|
|
$
|
9.20
|
|
|
$
|
9.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.03
|
|
|
|
0.21
|
|
|
|
0.28
|
|
|
|
0.33
|
|
|
|
0.39
|
|
|
|
0.42
|
|
|
Net realized and unrealized
gains (losses) on
investments
|
|
|
(0.03
|
)
|
|
|
0.31
|
|
|
|
(0.09
|
)
|
|
|
0.55
|
|
|
|
1.09
|
|
|
|
(0.50
|
)
|
|
Total from investment operations
|
|
|
0.00
|
(b)
|
|
|
0.52
|
|
|
|
0.19
|
|
|
|
0.88
|
|
|
|
1.48
|
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.09
|
)
|
|
|
(0.39
|
)
|
|
|
(0.46
|
)
|
|
|
(0.38
|
)
|
|
|
(0.35
|
)
|
|
|
(0.45
|
)
|
|
Net realized gains
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.25
|
)
|
|
|
(0.04
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Total distributions
|
|
|
(0.09
|
)
|
|
|
(0.39
|
)
|
|
|
(0.71
|
)
|
|
|
(0.42
|
)
|
|
|
(0.35
|
)
|
|
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value at end of period
|
|
$
|
10.31
|
|
|
$
|
10.40
|
|
|
$
|
10.27
|
|
|
$
|
10.79
|
|
|
$
|
10.33
|
|
|
$
|
9.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total return
(c)
|
|
|
0.04%
|
(d)
|
|
|
5.07%
|
|
|
|
1.87%
|
|
|
|
8.74%
|
|
|
|
16.53%
|
|
|
|
(0.90%
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at end of period (000’s)
|
$
|
17,929
|
|
|
$
|
19,693
|
|
|
$
|
21,242
|
|
|
$
|
21,320
|
|
|
$
|
17,199
|
|
|
$
|
15,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios/supplementary data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of net expenses to
average net assets
(e)
|
|
|
1.31%
|
(f)
|
|
|
1.52%
|
|
|
|
1.28%
|
|
|
|
1.33%
|
|
|
|
1.48%
|
|
|
|
1.05%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of net investment income
to average net assets
|
|
|
1.50%
|
(f)
|
|
|
2.03%
|
|
|
|
2.51%
|
|
|
|
3.20%
|
|
|
|
4.11%
|
|
|
|
4.30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
16%
|
(d)
|
|
|
53%
|
|
|
|
83%
|
|
|
|
75%
|
|
|
|
100%
|
|
|
|
106%
|
|
|
(a)
|
Fund changed fiscal year end to June 30.
|
|
|
|
|
(b)
|
Amount rounds to less than a penny per share.
|
|
|
|
|
(c)
|
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.
|
|
|
|
|
(d)
|
Not annualized.
|
|
|
|
|
(e)
|
Absent voluntary fee waivers by the Fund’s investment adviser, the ratio of total expenses to average net assets would have been 1.56% and 1.24% for the years ended September 30, 2009 and 2008, respectively.
|
|
|
|
|
(f)
|
Annualized.
|
See accompanying notes to financial statements.
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 2012 (Unaudited)
Cutler Equity Fund and Cutler Income Fund (the “Funds”) are each 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 “1940 Act”). Under its Trust Instrument, the Trust is authorized to issue an unlimited number of Fund shares of beneficial interest without par value.
The Cutler Equity Fund commenced operations on October 2, 1992. On September 28, 2012, Cutler Equity Fund consummated a tax-free merger with The Elite Growth & Income Fund, previously a series of The Elite Group of Mutual Funds. Pursuant to the terms of the agreement governing the merger, each share of The Elite Growth & Income Fund was converted into an equivalent dollar amount of shares of Cutler Equity Fund, based on the net asset value of Cutler Equity Fund and The Elite Growth & Income Fund as of September 27, 2012 ($13.28 and $15.66, respectively), resulting in a conversion ratio of 1.17897958 shares of Cutler Equity Fund for each share of The Elite Growth & Income Fund. Cutler Equity Fund issued 3,000,712 shares to shareholders of The Elite Growth & Income Fund. Net assets of Cutler Equity Fund and The Elite Growth & Income Fund as of the merger date were $53,639,332 and $39,854,719, including unrealized appreciation on investments of $14,347,666 and $4,099,684, respectively. In addition, The Elite Growth & Income Fund’s net assets included undistributed net investment income of $2,770 and accumulated realized losses of $6,906,206. Total net assets immediately after the merger were $93,494,051.
The Elite Income Fund (the “Predecessor Fund”), a series of The Elite Group of Mutual Funds, was reorganized into Cutler Income Fund (the “Reorganization”) effective September 28, 2012, pursuant to an Agreement and Plan of Reorganization dated August 27, 2012. The Reorganization was approved by the shareholders of the Predecessor Fund at a meeting held on September 27, 2012. The Predecessor Fund transferred all its assets to Cutler Income Fund in exchange for shares of Cutler Income Fund and the assumption by Cutler Income Fund of all the known liabilities of the Predecessor Fund. Cutler Income Fund did not have any significant assets or liabilities immediately prior to the consummation of the Reorganization.
Cutler Equity Fund seeks current income and long-term capital appreciation.
Cutler Income Fund seeks to achieve high income over the long-term.
|
2.
|
Significant Accounting Policies
|
The following summarizes the significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
Securities Valuation
— Portfolio securities are valued as of the close of business of the regular session of the principal exchange where the security is traded. 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 (“NYSE”) (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. Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Non-exchange traded securities for which over-the-counter quotations are available are generally valued at the closing bid price. Money market instruments that mature in sixty days or less may be valued at amortized cost unless the Funds’ investment adviser believes another valuation is more appropriate. Investments in shares of other open-end investment companies are valued at NAV per share.
The Funds value 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 Funds’ 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 Funds’ securities primarily trade but before the time as of which the Funds calculate their net asset values. Fair valued securities will be classified as Level 2 or 3 within the fair value hierarchy (see below), depending on the inputs used.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:
• Level 1 – quoted prices in active markets for identical securities
• Level 2 – other significant observable inputs
• Level 3 – significant unobservable inputs
For example, fixed income securities held by Cutler Income Fund are classified as Level 2 since the values for the fixed income securities are based on prices provided by an independent pricing service that utilizes various “other significant observable inputs” including bid and ask quotations, prices of similar securities and interest rates, among other factors.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
The following is a summary of the inputs used to value each Fund’s investments as of December 31, 2012 by security type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
$
|
86,116,908
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
86,116,908
|
|
|
Money Market Funds
|
|
|
2,611,664
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,611,664
|
|
|
Total
|
|
$
|
88,728,572
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
88,728,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Obligations
|
|
$
|
—
|
|
|
$
|
3,014,195
|
|
|
$
|
—
|
|
|
$
|
3,014,195
|
|
|
U.S. Government Agency Obligations
|
|
|
—
|
|
|
|
3,338,200
|
|
|
|
—
|
|
|
|
3,338,200
|
|
|
Other Government Obligations
|
|
|
—
|
|
|
|
874,172
|
|
|
|
—
|
|
|
|
874,172
|
|
|
Mortgage-Backed Securities
|
|
|
—
|
|
|
|
787,450
|
|
|
|
—
|
|
|
|
787,450
|
|
|
Asset-Backed Securities
|
|
|
—
|
|
|
|
1,329,185
|
|
|
|
—
|
|
|
|
1,329,185
|
|
|
Corporate Bonds
|
|
|
—
|
|
|
|
7,675,134
|
|
|
|
—
|
|
|
|
7,675,134
|
|
|
Preferred Stocks
|
|
|
223,200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
223,200
|
|
|
Money Market Funds
|
|
|
544,070
|
|
|
|
—
|
|
|
|
—
|
|
|
|
544,070
|
|
|
Total
|
|
$
|
767,270
|
|
|
$
|
17,018,336
|
|
|
$
|
—
|
|
|
$
|
17,785,606
|
|
Refer to each Fund’s Schedule of Investments for a listing of the securities valued using Level 1 and Level 2 inputs by security type and sector or industry type. As of December 31, 2012, the Funds did not have any transfers in and out of any Level. There were no Level 3 securities or derivative instruments held by the Funds as of December 31, 2012. It is the Funds’ policy to recognize transfers into and out of any Level at the end of the reporting period.
Share valuation
— The net asset value per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to its net asset value per share.
Estimates
— The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent 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.
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
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. Discounts and premiums on fixed income securities are amortized using the interest method. Gains and losses on securities sold are determined on a specific identification basis.
Distributions to Shareholders
— Distributions to shareholders of net investment income, if any, are 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 GAAP. These differences are due primarily to differing treatments of income and gains on various investment securities held by the Funds, timing differences and differing characterizations of distributions made by the Funds. Dividends and distributions are recorded on the ex-dividend date. The tax character of distributions paid by Cutler Equity Fund during the periods ended December 31, 2012 and June 30, 2012 was ordinary income. The tax character of distributions paid by Cutler Income Fund during the periods ended December 31, 2012, September 30, 2012 and September 30, 2011 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2012
|
|
$
|
161,959
|
|
|
$
|
—
|
|
|
$
|
161,959
|
|
|
9/30/2012
|
|
$
|
759,169
|
|
|
$
|
—
|
|
|
$
|
759,169
|
|
|
9/30/2011
|
|
$
|
1,164,984
|
|
|
$
|
256,511
|
|
|
$
|
1,421,495
|
|
Securities Lending
— Cutler Income Fund may lend portfolio securities to banks and member firms of the New York Stock Exchange that meet capital and other credit requirements or other criteria established by the Board of Trustees. These loans may not exceed 33 1/3% of the total assets of the Fund (including loan collateral). The Fund will not lend portfolio securities to its investment adviser or its affiliates unless it has applied for and received specific authority to do so from the Securities and Exchange Commission (the “SEC”). Loans of portfolio securities will be fully collateralized by cash, Government securities or letters of credit. Loans of portfolio securities must be secured by collateral at least equal to the market value of the securities loaned. If the market value of the loaned securities increases over the value of the collateral, the borrower must promptly put up additional collateral; if the market value declines, the borrower is entitled to a return of the excess collateral. Income from lending activity is determined by the amount of interest earned on collateral, less any amounts payable to the borrowers of the securities and the lending agent. Lending securities involves certain risks, including the risk that the Fund may be delayed or prevented from recovering the collateral if the borrower fails to return the securities. Prior to September 28, 2012, cash collateral received in connection with securities lending was invested in an institutional money market vehicle sponsored by BNY Mellon, the Predecessor Fund’s securities lending agent. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than that required under the lending contract. As of December 31, 2012, the Fund had no securities on loan.
Federal income tax
— It is each Fund’s policy 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 a 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 the 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 each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital 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 December 31, 2012:
|
|
|
|
|
|
|
|
|
Tax cost of portfolio investments
|
|
$
|
75,087,112
|
|
|
$
|
17,347,082
|
|
|
Gross unrealized appreciation
|
|
$
|
15,105,969
|
|
|
$
|
555,061
|
|
|
Gross unrealized depreciation
|
|
|
(1,464,509
|
)
|
|
|
(116,537
|
)
|
|
Net unrealized appreciation on investments
|
|
|
13,641,460
|
|
|
|
438,524
|
|
|
Accumulated ordinary income
|
|
|
8,760
|
|
|
|
3,141
|
|
|
Capital loss carryforwards
|
|
|
(10,985,374
|
)
|
|
|
(173,967
|
)
|
|
Other gains
|
|
|
3,360,788
|
|
|
|
125,351
|
|
|
Other temporary differences
|
|
|
(3,827
|
)
|
|
|
(2,604
|
)
|
|
Accumulated earnings
|
|
$
|
6,021,807
|
|
|
$
|
390,445
|
|
The difference between the federal income tax cost of portfolio investments and the financial statement cost for the Funds is due to certain differences in the recognition of capital gains and losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are related to amortization of bond premiums and discounts and losses deferred due to wash sales.
As of June 30, 2012, Cutler Equity Fund had short-term capital loss carryforwards of $4,079,168, of which $340,161 expires on June 30, 2014 and $3,739,007 expires on June 30, 2018. Additionally, Cutler Equity Fund assumed short-term capital loss carryforwards of $6,906,206 from The Elite Growth & Income Fund of which $4,635,458 expires on September 30, 2018 and $2,270,748 expires on September 28, 2019. As of September 30, 2012, Cutler Income Fund had a short-term capital loss carryforward of $173,967, which does not expire. 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.
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after June 30, 2011 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Under the law in effect prior to the Act, pre-enactment net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses. Therefore, there may be a greater likelihood that all or a portion of Cutler Equity Fund’s pre-enactment capital loss carryovers may expire without being utilized.
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more-likely-than-not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken on Federal income tax returns for all open tax years (tax years ended June 30, 2009 through September 30, 2012) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.
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3.
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Transactions with Affiliates
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Investment Adviser
— Cutler Investment Counsel, LLC (the “Adviser”) is the investment adviser to the Funds. Pursuant to an Investment Advisory Agreement, Cutler Equity Fund and Cutler Income Fund pay the Adviser a fee, which is accrued daily and paid monthly, at an annual rate of 0.75% and 0.50%, respectively, of average daily net assets.
Prior to September 28, 2012, McCormick Capital Management, Inc. (the “Prior Adviser”) served as the investment adviser to the Predecessor Fund. The Prior Adviser received compensation for investment advisory services at an annual rate of 0.70% of average daily net assets of the Fund up to $250 million, 0.625% of such assets from $250 million to $500 million and 0.500% of such assets over $500 million.
Effective November 1, 2012, the Adviser has entered into an Expense Limitation Agreement under which it has agreed to reduce its investment advisory fees from Cutler Equity Fund and to pay such Fund’s expenses until at least November 1, 2013 to the extent necessary to limit annual ordinary operating expenses to 1.15% of average daily net assets. Any such fee reductions by the Adviser, or payments by the Adviser of expenses which are Cutler Equity Fund’s obligation, are subject to repayment by the Fund, provided that the repayment does not cause the Fund’s ordinary operating expenses to exceed the annual expense limit of 1.15%, and provided further that the fees and expenses which are the subject of the repayment were incurred within three years of the repayment. No advisory fee reductions were required during the six months ended December 31, 2012.
Certain officers of the Trust are also officers of the Adviser.
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
THE CUTLER TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
Funds. For these services, Ultimus receives a monthly fee from each Fund at an annual rate of 0.15% of its average daily net assets up to $500 million; 0.125% of the next $500 million of such assets; and 0.10% of such assets in excess of $1 billion, subject to a minimum monthly fee of $6,000. In addition, each Fund pays out-of-pocket expenses including, but not limited to, postage, supplies and costs of pricing the Funds’ 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
— Each Fund may pay shareholder servicing fees not to exceed an annual rate of 0.25% of its average daily net assets. These fees may be paid to various financial institutions that provide shareholder and account maintenance services. During the periods ended December 31, 2012, Cutler Equity Fund and Cutler Income Fund paid $20,304 and $531, respectively, for such services.
During the periods ended December 31, 2012, cost of purchases and proceeds from sales and maturities of investment securities, other than short-term investments and U.S. Government securities, totaled $30,935,466 and $26,760,403, respectively, for Cutler Equity Fund and $509,015 and $4,299,234, respectively, for Cutler Income Fund.
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5.
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Contingencies and Commitments
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The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events except as reflected in the following paragraph.
Effective February 1, 2013, Cutler Income Fund changed its name to Cutler Fixed Income Fund.
THE CUTLER TRUST
ABOUT YOUR FUND’S EXPENSES (Unaudited)
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Funds, you incur ongoing costs, including management fees and other operating expenses. These ongoing costs, which are deducted from each Fund’s gross income, directly reduce the investment return of the Funds.
A mutual fund’s ongoing costs 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 Funds 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 (July 1, 2012 through December 31, 2012).
The table below illustrates each Fund’s ongoing 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 each 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 Funds. 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 $1,000 = 8.6), then multiply the result by the number given for the Funds under the heading “Expenses Paid During Period.”
Hypothetical 5% return
– This section is intended to help you compare the Funds’ ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the returns used are not the Funds’ actual returns, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge transaction fees, such as purchase or redemption fees, nor does it impose any sales loads.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
THE CUTLER TRUST
ABOUT YOUR FUND’S EXPENSES (Unaudited) (Continued)
More information about the Funds’ expenses, including annual expense ratios for the past five fiscal years, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Funds’ prospectus.
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Beginning
Account Value
July 1, 2012
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Ending
Account Value
December 31, 2012
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Expenses Paid
During Period*
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Based on Actual Fund Return
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$ 1,000.00
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$ 1,033.50
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$ 6.03
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Based on Hypothetical 5% Return (before expenses)
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$ 1,000.00
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$ 1,019.20
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$ 5.99
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*
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Expenses are equal to the Cutler Equity Fund’s annualized expense ratio of 1.18% for the period, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
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Beginning
Account Value
July 1, 2012
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Ending
Account Value
December 31, 2012
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Expenses Paid
During Period*
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Based on Actual Fund Return
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$ 1,000.00
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$ 1,011.90
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$ 8.60
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Based on Hypothetical 5% Return (before expenses)
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$ 1,000.00
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$ 1,016.59
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$ 8.62
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*
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Expenses are equal to the Cutler Income Fund’s annualized expense ratio of 1.70% for the period, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
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THE CUTLER TRUST
ADDITIONAL INFORMATION (Unaudited)
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to securities held in the Funds’ portfolios is available without charge, upon request, by calling 1-800-228-8537 or on the SEC’s website at http://www.sec.gov. Information regarding how the Funds 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.
The Trust files a complete listing of the Funds’ portfolio holdings with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. The filings are available without charge, upon request, by calling 1-800-228-8537. Furthermore, you may 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.
Rev. August 2010
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FACTS
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WHAT DOES THE CUTLER TRUST DO WITH YOUR PERSONAL INFORMATION?
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Why?
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Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
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What?
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The types of personal information we collect and share depend on the product or service you have with us. This information can include:
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Social Security number
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Assets
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Retirement Assets
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Transaction History
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Checking Account Information
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Purchase History
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Account Balances
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Account Transactions
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Wire Transfer Instructions
When you are
no longer
our customer, we continue to share your information as described in this notice.
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How?
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All financial companies need to share your personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons The Cutler Trust chooses to share; and whether you can limit this sharing.
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Reasons we can share your personal information
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Does The Cutler
Trust share?
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Can you limit
this sharing?
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For our everyday business purposes –
Such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
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Yes
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No
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For our marketing purposes –
to offer our products and services to you
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No
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We don’t share
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For joint marketing with other financial companies
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No
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We don’t share
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For our affiliates’ everyday business purposes –
information about your transactions and experiences
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No
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We don’t share
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For our affiliates’ everyday business purposes –
information about your creditworthiness
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No
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We don’t share
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For nonaffiliates to market to you
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No
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We don’t share
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Questions?
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Call 1-888-288-5374
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Who we are
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Who is providing this notice?
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The Cutler Trust
Ultimus Fund Distributors, LLC (Distributor)
Ultimus Fund Solutions, LLC (Administrator)
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What we do
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How does The Cutler Trust protect my personal information?
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To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.
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How does The Cutler Trust collect my personal information?
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We collect your personal information, for example, when you
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Open an account
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Provide account information
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Give us your contact information
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Make deposits or withdrawals from your account
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Make a wire transfer
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Tell us where to send the money
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Tell us who receives the money
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Show your government-issued ID
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Show your driver’s license
We also collect your personal information from other companies.
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Why can’t I limit all sharing?
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Federal law gives you the right to limit only
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Sharing for affiliates’ everyday business purposes – information about your creditworthiness
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Affiliates from using your information to market to you
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Sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing.
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Definitions
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Affiliates
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Companies related by common ownership or control. They can be financial and nonfinancial companies.
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Cutler Investment Counsel, LLC, the investment adviser to The Cutler Trust, could be deemed to be an affiliate.
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Nonaffiliates
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Companies not related by common ownership or control. They can be financial and nonfinancial companies
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The Cutler Trust does not share with nonaffiliates so they can market to you.
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Joint marketing
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A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
§
The Cutler Trust does not jointly market.
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CUTLER INVESTMENT COUNSEL, LLC
INVESTMENT ADVISER TO THE TRUST
525 Bigham Knoll
Jacksonville, OR
97530
(800)228-8537 • (541)770-9000
Fax:(541)779-0006
info@cutler.com
