<PAGE>
- --------------------------------------------------------------------------------
CORTLAND 600 Fifth Avenue
TRUST, INC. New York, NY 10020
212-830-5200
================================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Cortland Trust, Inc. for the
period April 1, 1996 through September 30, 1996.
Cortland Trust, Inc.'s Money Market Fund had 87,422 shareholder accounts and net
assets of $1,248,461,580 as of September 30, 1996.
As of September 30, 1996, the U.S. Government Fund had 6,636 shareholder
accounts and net assets of $211,701,837.
As of September 30, 1996, the Municipal Money Market Fund had 5,133 shareholder
accounts and net assets of $193,185,678.
We thank you for your support of Cortland Trust, Inc., and look forward to
continuing to serve your cash management needs.
Sincerely,
\s\ Steven W. Duff
Steven W. Duff
President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Commercial Paper (31.83%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$20,000,000 Abbey National North America 03/10/97 5.82% $ 19,497,778 P1 A1+
15,000,000 American Home Food Products (b) 10/09/96 5.36 14,982,167 P1
15,000,000 Bank of America, First Savings Bank 10/22/96 5.33 14,953,800 P1 A1+
25,000,000 Bank of America, First Savings Bank 10/30/96 5.35 24,893,264 P1 A1+
25,000,000 Banque International A Luxembourg 10/23/96 5.49 24,917,194 P1 A1+
15,000,000 Banque International A Luxenbourg 10/31/96 5.50 14,932,250 P1 A1+
16,750,000 Banque International A Luxenbourg 11/22/96 5.37 16,621,769 P1 A1+
15,000,000 Cheltenham & Gloucester 12/20/96 5.50 14,819,333 P1 A1+
25,000,000 First Chicago/NBD Corp. 10/15/96 5.36 24,948,375 P1 A1
27,000,000 GTE Corporation (b) 10/02/96 5.38 26,995,988
15,000,000 GTE Corporation (b) 10/24/96 5.38 14,948,633
10,000,000 GTE Corporation (b) 10/24/96 5.40 9,965,692
10,000,000 GTE Corporation (b) 10/29/96 5.41 9,958,156
20,000,000 International Lease Finance Corporation 10/28/96 5.32 19,920,950 P1 A1
25,000,000 Kingdom of Sweden 12/17/96 5.40 24,716,597 P1 A1+
10,580,000 Merrill Lynch Australia 10/28/96 5.39 10,537,468 P1 A1+
20,000,000 Morgan Stanley Group, Incorporated 10/08/96 5.37 19,979,311 P1 A1+
20,000,000 National Rural Utilities Cooperative Finance Corporation 11/19/96 5.42 19,854,906 P1 A1+
10,000,000 Svenska Handelsbanken 11/22/96 5.39 9,922,867 P1 A1
60,000,000 UBS Finance, Delaware 10/01/96 5.85 60,000,000 P1 A1+
- ----------- -----------
399,330,000 Total Commercial Paper 397,366,498
- ----------- -----------
<CAPTION>
Domestic Certificates of Deposit (1.20%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$15,000,000 Union Bank of California 12/18/96 5.43% $ 15,000,000 P1 A1
- ----------- -----------
15,000,000 Total Domestic Certificates of Deposit 15,000,000
- ----------- -----------
<CAPTION>
Letter of Credit Commercial Paper (23.07%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 7,000000 Banco Mercantil Del Norte, S.A.
LOC Bayerische Vereinsbank, A.G. 11/15/96 5.42% $ 6,953,188 P1 A1+
15,000,000 Banco National de Comerico Exterior, S.N.C.
LOC Societe Generale 12/06/96 5.47 14,852,325 P1 A1
20,000,000 Banco Rio de La Plata
LOC Bayerische Vereinsbank, A.G. 01/21/97 5.53 19,664,000 P1 A1+
</TABLE>
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See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Letter of Credit Commercial Paper (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 Bancomer S.A.
LOC Bank of Montreal 10/04/96 5.34% $ 9,995,583 P1 A1+
17,000,000 Bancomer S.A.
LOC Bank of Montreal 10/10/96 5.58 16,976,625 P1 A1+
20,000,000 Beal Caynam Limited
LOC Westdeutsche Landesbank Girozentrale 12/06/96 5.44 19,802,733 P1 A1+
10,000,000 Galicia Buenos Aires Funding Corporation
LOC Dresdner Bank A.G. 02/18/97 5.68 9,784,167 P1 A1+
10,000,000 Garanti Funding Corporation II
LOC Bayerische Vereinsbank, A.G. 02/04/97 5.55 9,811,000 P1 A1+
15,000,000 Garanti Funding Corporation II
LOC Bayerische Vereinsbank, A.G. 02/05/97 5.55 14,714,250 P1 A1+
5,000,000 Guangdong Enterprise Limited
LOC Credit Suisse 11/25/96 5.45 4,959,438 P1 A1
15,000,000 Guangdong Enterprise Limited
LOC Credit Suisse 02/11/97 5.61 14,696,871 P1 A1
15,000,000 Louis Dreyfus Corporation
LOC Caisse Nationale de Credit Agricole 10/09/96 5.31 14,982,333 P1 A1+
10,000,000 Louis Dreyfus Corporation
LOC Caisse Nationale de Credit Agricole 10/09/96 5.37 9,988,111 P1 A1+
10,000,000 Minmetal Capital & Securities, Inc.
(Owned by China National
Metals & Minerals Import & Export)
LOC Credit Suisse 02/25/97 5.66 9,775,417 P1 A1+
15,000,000 National Bank of Pakistan
LOC Credit Suisse 12/02/96 5.60 14,859,208 P1 A1+
10,000,000 North Limited
LOC Credit Suisse 10/03/96 5.37 9,997,028 P1 A1+
10,000,000 Omnicom Finance, Incorporated
LOC ABN AMRO Bank N.V. 10/16/96 5.34 9,977,833 P1 A1+
11,446,000 Petroleo Brasileiro S.A.
LOC Barclays Bank PLC 10/11/96 5.40 11,428,895 P1 A1+
10,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank PLC 10/17/96 5.47 9,976,356 P1 A1+
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Letter of Credit Commercial Paper (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$10,000,000 Unibanco Brasilieros
LOC Westdeutsche Landesbank Girozentrale 10/07/96 5.57% $ 9,990,833 P1 A1+
10,000,000 Unibanco Brasilieros
LOC Westdeutsche Landesbank Girozentrale 12/10/96 5.56 9,893,444 P1 A1+
10,000,000 Unibanco Brasilieros
LOC Westdeutsche Landesbank Girozentrale 12/17/96 5.51 9,883,644 P1 A1+
25,000,000 Western Financial Savings Bank
LOC Federal Home Loan Bank 10/02/96 5.68 24,996,056 P1 A1+
- ----------- -----------
290,446,000 Total Letter of Credit Commercial Paper 287,959,338
- ----------- -----------
<CAPTION>
Master Notes (2.40%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$30,000,000 Morgan (J.P.) Securities Incorporated (c) 10/11/96 5.41% $ 30,000,000
- ----------- ----------
30,000,000 Total Master Notes 30,000,000
- ------------ ----------
<CAPTION>
Medium Term Notes (4.00%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$50,000,000 First U.S.A. Credit Master Trust - Series 1995-96
Class A (Steers)(d) 12/10/96 5.51% $ 50,000,000 Aaa AAA
- ----------- ----------
50,000,000 Total Medium Term Notes 50,000,000
- ----------- ----------
<CAPTION>
Other Notes (17.80%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$10,000,000 City of New York GO Municipal, NY (Fiscal 1996) - Series A-2
LOC Societe Generale 02/14/97 5.70% $ 10,000,000 VMIG-1 A1+
23,000,000 General Electric Engine Receivables 1995-1
Trust VR Guaranteed Notes (e)
LOC General Electric Capital Corporation 02/14/00 5.54 23,000,000 P1 A1+
10,000,000 General Electric Engine Receivables 1995-1
Trust VR Guaranteed Notes (e)
LOC General Electric Capital Corporation 02/14/01 5.46 10,000,000
60,000,000 General Motors Acceptance Corporation
Mortgage Company of Pennslyvania (f) 10/31/96 5.43 60,000,000
7,500,000 Mississippi Business Finance Corporation IDRB
(Howard Industries, Inc.) - Series 1995 (g)
LOC National Bank of Detroit 06/01/10 5.70 7,500,000 P1
25,000,000 SSM Trust 1996-1 (h) 05/29/97 5.49 25,000,000 P1 A1+
19,000,000 State of Missouri HEFA
(SSM Health Care System) 1995 - Series D (g)
MBIA Insured 06/01/24 5.40 19,000,000 Aaa AAA
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Notes (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$26,000,000 State of Oregon Taxable EDRB
(Georgia Pacific Corporation 1995 B) - Series 169
LOC Commerzbank A.G. 10/10/96 5.70% $ 26,000,000
7,800,000 Stone Creek, L.L.C.
Taxable Variable Rate Securities - Series 1995 (g)
LOC Columbus Bank & Trust Company 08/01/20 5.70 7,800,000 P1
33,900,000 The City of New York
Taxable Municipal Fiscal 1996 - Series A-2
LOC Societe Generale 02/10/97 5.70 33,900,000 A1+
- ----------- -----------
222,200,000 Total Other Notes 222,200,000
- ----------- -----------
<CAPTION>
Repurchase Agreements, Overnight (9.37%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$117,000,000 Donaldson Lufkin & Jenrette Securities Corporation
(Collateralized by:
$140,179,000 U.S. Treasury Strips, 0.00%, due 11/15/96 to 05/15/20
$ 863,000 U.S. Treasury Note, 6.750%, due 06/30/99
$ 2,229,000 U.S. Treasury Bonds, 9.000% to 12.500%, due 08/15/14 to 11/15/18
$ 3,800,000 Resolution Funding Corporation, 0.000%, due 10/15/05
$ 51,205,000 Fannie Mae Discount Notes, 0.000%, due 10/10/96
$ 7,050,000 Federal Farm Credit Medium Term Bond, 5.240%, due 02/24/99)
10/01/96 5.73% $ 117,000,000
- ----------- ------------
117,000,000 Total Repurchase Agreements, Overnight 117,000,000
- ----------- ------------
<CAPTION>
Yankee Certificates of Deposits (10.01%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$25,000,000 ABN AMRO 11/15/96 5.45% $ 24,999,367 P1 A1+
20,000,000 ABN AMRO 11/15/96 5.43 19,999,860 P1 A1+
25,000,000 Bank of Nova Scotia 10/15/96 5.34 24,999,977 P1 A1+
10,000,000 Banque Nationale 10/15/96 5.35 10,000,767 P1 A1+
25,000,000 Canadian Imperial Bank of Commerce 11/06/96 5.40 25,000,000 P1 A1+
20,000,000 Dresdner Bank A.G. 11/22/96 5.15 19,999,426 P1 A1+
- ----------- ----------------
125,000,000 Total Yankee Certificates of Deposit 124,999,397
- ------------- ----------------
Total Investments (99.68%)(Cost $ 1,244,525,233+) 1,244,525,233
Cash and Other Assets, Net of Liabilities (.32%) 3,936,347
----------------
Net Assets (100.00%) $1,248,461,580
================
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
FOOTNOTES:
(a) The ratings noted for instruments secured by a letter of credit are those
of the holding company of the bank whose letter of credit secures such
instruments. P1 & A1+ are the highest ratings for commercial paper.
Securities that are not rated have been determined by the Fund's Board of
Directors to be of comparable quality to those rated securities in which
the Fund may invest.
(b) This is a split rated security, given the highest ratings by at least two
of the four nationally recognized rating agencies.
(c) This is a Master Note. The interest rate is adjusted monthly based upon the
one month LIBOR flat, daily put option.
(d) This is a Medium Term Note. The interest rate is reset monthly based upon
the one month LIBOR plus 2 basis points.
(e) This security has a 7-day put feature exercisable by the Fund at par value.
Rate changes monthly.
(f) This is a Loan Participation; guaranteed by GMAC which is split rated,
given the highest ratings by at least two of four nationally recognized
ratings agencies.
(g) This security has a 7-day put feature exercisable by the Fund at par value.
Rate changes weekly.
(h) The interest rate is adjusted monthly based upon one month LIBOR rate plus
5 basis points.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
GO = General Obligations IDRB = Industrial Development Revenue Bond
EDRB = Educational Development Revenue Bond LOC = Letter of Credit
HEFA = Health and Education Facilities Authority VR = Variable Rate
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 2)
------ ---- ----- ------
U.S. Government Agencies (90.23%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,000,000 Federal Farm Credit Bank 12/02/96 5.36% $ 4,955,135
10,000,000 Federal Farm Credit Bank 03/14/97 5.30 10,000,000
39,100,000 Federal Home Loan Bank 10/01/96 5.70 39,100,000
5,000,000 Federal Home Loan Bank 11/06/96 5.33 4,974,000
5,000,000 Federal Home Loan Bank 12/03/96 5.40 4,953,975
5,000,000 Federal Home Loan Bank 12/31/96 5.32 4,934,151
5,000,000 Federal Home Loan Bank 02/07/97 5.18 4,999,725
5,000,000 Federal Home Loan Mortgage Corporation 10/01/96 5.17 5,000,000
5,000,000 Federal Home Loan Mortgage Corporation 10/17/96 5.29 4,988,300
5,000,000 Federal Home Loan Mortgage Corporation 11/06/96 5.30 4,973,850
5,000,000 Federal Home Loan Mortgage Corporation 11/18/96 5.29 4,965,200
5,000,000 Federal Home Loan Mortgage Corporation 12/04/96 5.47 4,952,000
5,000,000 Federal Home Loan Mortgage Corporation 12/20/96 5.23 5,025,223
5,000,000 Federal National Mortgage Association 10/10/96 5.32 4,993,525
10,000,000 Federal National Mortgage Association 10/23/96 5.22 9,968,406
5,000,000 Federal National Mortgage Association 11/07/96 5.35 4,973,175
5,000,000 Federal National Mortgage Association 11/19/96 5.30 4,964,407
7,500,000 Federal National Mortgage Association 11/21/96 5.35 7,444,644
5,000,000 Federal National Mortgage Association 11/27/96 5.37 4,958,596
5,000,000 Federal National Mortgage Association 11/27/96 5.35 4,958,200
5,000,000 Federal National Mortgage Association 12/06/96 5.49 4,950,408
5,000,000 Federal National Mortgage Association 12/13/96 5.45 4,945,453
5,000,000 Federal National Mortgage Association 02/06/97 5.39 4,906,489
5,000,000 Federal National Mortgage Association 02/27/97 5.45 4,890,320
5,000,000 Federal National Mortgage Association 04/04/97 5.35 4,998,284
5,000,000 Student Loan Marketing Association (a) 10/04/96 5.31 5,000,000
5,000,000 Student Loan Marketing Association (a) 10/10/96 5.37 4,999,950
5,250,000 Student Loan Marketing Association (a) 11/14/96 5.43 5,250,000
5,000,000 Student Loan Marketing Association (a) 03/13/97 5.41 5,000,000
- ----------- -----------
191,850,000 Total U.S. Government Agencies 191,023,416
- ----------- -----------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 2)
------ ---- ----- ------
U.S. Treasury Bills (4.70%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10,000,000 U.S. Treasury Bills 11/14/96 5.03% $ 9,940,722
- ----------- -----------
10,000,000 Total U.S. Treasury Bills 9,940,722
- ----------- -----------
<CAPTION>
Repurchase Agreement, Overnight (4.25%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 9,000,000 Morgan (J.P.) Securities, Inc.
(Collateralized by:
$3,155,000 Federal Farm Credit Bank Discount Note, 0.00%,
due 12/04/96
$8,580,000 Resolution Funding Corporation, 0.00% to 9.375%,
due 10/15/99 to 01/15/30); proceeds - $9,182,248 10/01/96 5.58% $ 9,000,000
- ----------- ------------
9,000,000 Total Repurchase Agreement, Overnight 9,000,000
- ----------- ------------
Total Investments (99.18%)(Cost $209,964,138+) 209,964,138
Cash and Other Assets, Net of Liabilities (0.82%) 1,737,699
------------
Net Assets (100.00%) $ 211,701,837
============
+ Aggregate cost for federal income tax purposes is identical.
FOOTNOTE:
(a) This is a variable rate Student Loan Marketing Association Short Term Note.
The interest rate is adjusted weekly based upon the 3-month Treasury Bill
Auction.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Tax Exempt Investments (17.73%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,415,000 Commonwealth of Kentucky
State Property & Building Commission RRB Project #59 11/01/96 3.85% $ 4,416,981 A+
2,000,000 County of Stark, OH GO 10/18/96 3.86 2,000,196
5,000,000 Cranston Rhode Island BAN
LOC State Street Bank & Trust Co. 03/03/97 3.76 5,016,787
4,000,000 Dorchester County SC Waterworks & Sewer System RB BAN 02/06/97 3.69 4,004,714
1,000,000 Evanston IL, GO 12/01/96 3.17 1,000,886
5,000,000 Pierce County, WA TAN 12/27/96 3.24 5,002,304
2,750,000 South Gibson School Corporation Indiana General Fund TAW 12/31/96 3.84 2,752,342
5,000,000 State of Texas TRAN 08/29/97 3.90 5,034,978 VMIG-1 SP-1+
5,000,000 Suffolk County, NY Brentwood UFSD TAN 06/30/97 4.04 5,014,079
- ----------- -----------
34,165,000 Total Tax Exempt Investments 34,243,267
- ----------- -----------
<CAPTION>
Variable Rate Demand Instruments (b) (56.25%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,900,000 Alleghany County, PA HDA RB
(Alleghany General Hospital)- Series B
LOC Morgan Guaranty Trust Company 09/01/10 3.70% $ 1,900,000 VMIG-1 A1+
4,580,000 Arlington County, VA IDA (Air Force Association Project)
LOC Central Fidelity Bank 07/01/98 3.95 4,580,000
1,000,000 Carthage, MO IDA IDRB (Leggett & Platt, Inc.)
LOC Union Bank of Switzerland 09/01/30 3.95 1,000,000
2,300,000 Charlotte, NC Airport RB
MBIA Insured 07/01/16 3.80 2,300,000 VMIG-1 A1
3,800,000 Chicago O'Hare International Airport
(American Airlines) - Series 1993C
LOC Royal Bank of Canada 12/01/17 4.00 3,800,000 P1
3,700,000 Clark County, NV IDR
(Cogeneration Association I Project)
LOC Bank of California 11/01/21 3.90 3,700,000 VMIG-1 A1
2,800,000 Daviess County, KY Solid Waste Disposal Facilities Revenue
(Scott Paper Co.) Project A 12/01/23 4.10 2,800,000 P1 A1+
2,000,000 Daviess County, KY Solid Waste Disposal Facilities Revenue
(Scott Paper Co.) - Series A 05/01/24 4.10 2,000,000 P1 A1+
1,970,000 Durham NC Public Improvement 02/01/09 3.80 1,970,000 VMIG-1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,640,000 Elkhart County, IN EDRB (Burger Diary Corporation Project)
LOC Old Kent Bank & Trust Co. 12/01/11 4.00% $ 1,640,000 A1
6,100,000 Forsyth, MT PCRB (Portland General Electric Company)
LOC Banque Nationale de Paris 12/01/16 3.95 6,100,000 VMIG-1
1,380,000 Fulton County, GA RDA (Darby Printing Company)
LOC Wachovia Bank & Trust Co., N.A. 04/01/11 4.25 1,380,000
1,750,000 Greensboro, NC Public Improvement - Series B 04/01/11 3.80 1,750,000 VMIG-1 A1+
1,550,000 Greensboro, NC Public Improvement - Series B 04/01/09 3.80 1,550,000 VMIG-1 A1+
1,900,000 Gulf Coast IDA Solid Waste Disposal RB
(Citgo Petroleum Corporation Project) - Series 1995
LOC NCNB 05/01/25 4.15 1,900,000 VMIG-1
1,600,000 Gulf Coast Waste Disposal Authority
Solid Waste Disposal Revenue Bonds (AMOCO Oil Co.) 08/01/23 4.05 1,600,000 VMIG-1 A1+
2,480,000 Haleyville, AL IDA IDRB (Cusseta Wood Inc. Project)
LOC Columbus Bank & Trust Company 11/01/04 4.05 2,480,000 P1
3,735,000 Hamilton County, OH EDRB (Berman Printing Company)
LOC Fifth Third Bank 12/01/08 3.95 3,735,000
2,000,000 Indiana State EDC
(Fischer Enterprise Limited Project) - Series 1989
LOC PNC Bank 12/01/04 4.00 2,000,000
530,000 Jefferson County, KY IDRB (Belknap Incorporation)
LOC Chase Manhattan Bank, N.A. 12/01/14 3.75 530,000 A1
4,600,000 Jefferson Parish LA Industrial Development Board IDRB
(Sara Lee Corporation Project) 04/01/24 3.95 4,600,000 A1+
1,000,000 Lewisville IDA Incorporate Adjustable Rate Demand IDRB
(Benedict Optical Incorporate Projects)
LOC Comerica Bank 05/01/08 4.15 1,000,000
5,300,000 Lexington - Fayette Urban County Airport Corporation
LOC Credit Locale De France 04/01/24 4.10 5,300,000 P1 A1+
3,600,000 Massachusetts IFA
(890 Commonwealth Realty Trust)
LOC Bank Of New York 12/01/11 4.05 3,600,000
400,000 Meridian, MI EDC
(Hannah Research & Technology Center)
LOC Barclays Bank PLC 11/15/14 3.75 400,000 A1+
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Michigan Highered Student Loan Series XII-F
AMBAC Insured 10/01/20 3.90% $ 2,000,000 VMIG-1
870,000 Michigan State Strategic Fund (260 Brown Street)
LOC Comerica Bank 10/01/15 3.50 870,000 VMIG-1
2,000,000 Michigan State Strategic Fund Long Term Obligation RB
(B & G Realty Incorporate Project)
LOC Bank One Milwaukee, N.A. 10/01/01 3.88 2,000,000
3,000,000 Michigan Strategic Fund
(National Rubber Michigan Incorporated Project)
LOC National Bank of Canada 09/01/11 4.00 3,000,000 P1
3,500,000 Michigan Strategic Fund PCRB
(Consumers Power Company Project) - Series 1993A
LOC Canadian Imperial Bank Of Commerce 06/15/10 3.80 3,500,000 A1+
2,000,000 Montgomery County, PA Redevelopment Authority MHRB
(Glenmore Associates Project)
FNMA Mae Collateralized 11/15/25 3.85 2,000,000 A1+
2,700,000 NC Medical Care Commission Hospital RB
(Moses H. Cone Memorial Hospital) 09/01/02 3.80 2,700,000 A1+
2,800,000 North Carolina Medical Care Commission (Carol Woods)
LOC Bank of Scotland 04/01/21 4.00 2,800,000 VMIG-1
1,200,000 Orange County, FL IDRB
LOC PNC Bank 12/01/03 3.65 1,200,000
300,000 Orange County, FL IDRB
LOC PNC Bank 12/01/03 3.65 300,000
2,700,000 Parish of Calcasieu IDB RB
(Citgo Petroleum Corporation) - Series 95
LOC Banque Nationale de Paris 03/01/25 4.15 2,700,000 VMIG-1
1,000,000 Philadelphia, PA HEFA Hospital RB
(Children's Hospital of Philadelphia) - Series A 03/01/27 4.00 1,000,000 VMIG-1 A1+
1,700,000 Philadelphia, PA HEFA Hospital RB
(Children's Hospital of Philadelphia) - Series 1992B 03/01/27 4.00 1,700,000 VMIG-1 A1+
2,200,000 Portland, OR IDRB (Oregon Transfer Company)
LOC US National Bank of Oregon 11/01/01 4.43 2,200,000 A1
2,340,000 Portsmouth, VA Redevelopment & Housing Authority
(Chowan Partners)
LOC Central Fidelity Bank 11/01/05 3.95 2,340,000
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Richmond, VA Redevelopment & Housing Authority (Tobacco Row)
LOC Westdeutsche Landesbank Girozentrale 10/01/24 4.00% $ 4,000,000 VMIG-1
2,500,000 Rosebud County, Forsyth, MT PCRB (Pacificorp)
LOC Deutsche Bank A.G. 12/01/16 4.10 2,500,000
1,350,000 Sewickley Valley Hospital Authority, PA RN
(D.T. Watson Rehabilitation Hospital)
LOC PNC Bank 10/01/97 4.13 1,350,000
500,000 Shelby County, TN Health Educational & Housing
(Rhodes College)
LOC National Westminster Bank PLC 08/01/10 3.60 500,000 A1+
1,800,000 West Side Calhoun County,
Nav District Sewer & Solid Waste Disposal
(BP Chemicals Inc. Project) 04/01/31 4.10 1,800,000 A1+
4,600,000 Yakima County Public Corp. Revenue Bonds
(Michelson Packaging Project)
LOC Bank Of America 08/01/06 3.90 4,600,000
- ----------- -----------
108,675,000 Total Variable Rate Demand Instruments 108,675,000
- ----------- -----------
<CAPTION>
Put Bonds (c) (11.33%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,855,000 City of Dayton, KY Industrial Building RB
(RADAC Corporation) - Series 1994
LOC Fifth Third Bank 10/01/96 3.80% $ 1,855,000
2,500,000 Greater East, TX Higher Education
Student Loan Authority - Series 1993B
LOC Student Loan Marketing Association 06/01/97 3.85 2,500,000 VMIG-1
6,500,000 Hartford County, MD IDRB (A.O. Smith)
LOC Bank One Milwaukee, N.A. 03/03/97 3.85 6,500,000
4,000,000 New Mexico Mortgage Finance Authority
Single Family Mortgage Program - Series 1996A
LOC Westdeutsche Landesbank Girozentrale 12/31/96 3.25 4,000,000 SP-1+
1,980,000 New Mexico Mortgage Finance Authority
Single Family Mortgage Program -Series 1996B-2
FGIC Insured 02/28/97 3.25 1,980,000 SP-1+
2,000,000 Pierce County, WA EDC
(Sea-Land Corporation Project) - Series 1984
LOC Deutsche Bank A.G. 11/01/96 3.90 2,000,000
3,060,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College) 11/01/96 3.80 3,060,000 A1+
- ----------- ----------
21,895,000 Total Put Bonds 21,895,000
- ----------- ----------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Tax Exempt Commercial Paper (7.14%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,800,000 Burlington County, KS PCRB
(Kansas City Power & Light Company)
LOC Deutsche Bank A.G. 10/23/96 3.55% $ 3,800,000 P1 A1+
3,000,000 Cook County, IL Health County Hospital 10/01/96 3.55 3,000,000 VMIG-1 SP-1
1,500,000 Mashantucket (Western) Pequot Tribe - Series 1996
LOC Bank Of America 10/24/96 3.40 1,500,000 P1 A1+
1,700,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank Of Switzerland 10/10/96 3.35 1,700,000 A1+
2,800,000 Venango IDA PA Resource Recovery RB
(Scrubgrass Project) - Series A
LOC National Westminster Bank PLC 11/13/96 3.55 2,800,000 P1 A1+
1,000,000 West Virginia Public Energy Authority
(Morgantown Assoc. Proj.)
LOC Swiss Bank Corp. 10/09/96 3.65 1,000,000 A1+
- ----------- -----------
13,800,000 Total Tax Exempt Commercial Paper 13,800,000
- ----------- -----------
<CAPTION>
Variable Rate Demand Instruments - Participations (b) (6.82%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,185,000 El Paso Housing Finance Corporation MHRB
(Viva Apartment Projet) - Series 1993
LOC GE Capital Corp. 09/01/23 4.10% $ 5,185,000 A1+
990,000 Jefferson County, MO IDA IDRB (Holley Partnership)
LOC Chase Manhattan Bank, N.A. 12/01/04 5.36 990,000 P1 A1
1,000,000 New Jersey State EDA IDRB (Harrison Riverside Project)
LOC Chase Manhattan Bank, N.A. 01/01/02 5.36 1,000,000 P1 A1
1,000,000 New Jersey State EDA IDRB
(Hartz Mountain Industries Project)
LOC Chase Manhattan Bank, N.A. 01/01/02 5.36 1,000,000 P1 A1
881,323 New Jersey State EDA IDRB
(Heary Modelle & Company)
LOC Chase Manhattan Bank, N.A. 09/01/00 5.36 881,323 P1 A1
333,380 Northhampton County, PA IDA IDRB
(East Industrial Affiliates)
LOC Chase Manhattan Bank, N.A. 01/01/00 5.36 333,380 P1 A1
1,400,000 Tyler House Certificate Trust
Variable Rate Certificates of Participation - Series 1995A
LOC PNC Bank 08/01/25 4.10 1,400,000 VMIG-1
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Variable Rate Demand Instruments - Participations (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,375,000 York County, PA IDA IDRB
(Manor Care of Kingston Court Incorporated)
LOC Chase Manhattan Bank, N.A. 12/01/08 5.36% $ 2,375,000 P1 A1
- ----------- ------------
13,164,703 Total Variable Rate Demand Instruments - Participations 13,164,703
- ----------- ------------
Total Investments (99.27%)(Cost $191,777,970+) 191,777,970
Cash and Other Assets, Net of Liabilities (.73%) 1,407,708
------------
Net Assets (100.00%) $193,185,678
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
FOOTNOTES:
(a) The ratings noted for instruments secured by a letter of credit are those
of the holding company of the bank whose letter of credit secures such
instruments. P1 & A1+ are the highest ratings for commercial paper.
Securities that are not rated have been determined by the Fund's Board of
Directors to be of comparable quality to those rated securities in which
the Fund may invest.
(b) Securities payable on demand at par including accrued interest (usually
with seven days notice) and where indicated are unconditionally secured as
to principal and interest by a bank letter of credit. The interest rates
are adjustable and are based on bank prime rates or other interest rate
adjustment indices. The rate shown is the rate in effect at the date of
this statement.
(c) Maturity dates of these securities are the next available put dates.
Interest rates adjust periodically.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note IFA = Industrial Financing Authority
EDA = Economic Development Authority LOC = Letter of Credit
EDC = Economic Development Corporation MHRB = Multi-Family Housing Revenue Bond
EDRB = Economic Development Revenue Bond PCRB = Pollution Control Revenue Bond
FGIC = Financial Guaranteed Insurance Company RB = Revenue Bond
GO = General Obligation RDA = Revenue Development Authority
HDA = Health Development Authority RRB = Resource Recovery Bonds
HRB = Hospital Revenue Bond RN = Revenue Note
HEFA = Health and Education Facilities Authority TAN = Tax Anticipation Note
IDA = Industrial Development Authority TAW = Tax Anticipation Warrant
IDR = Industrial Development Rate TRAN = Tax and Revenue Anticipation Note
IDRB = Industrial Development Revenue Bond
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments in securities*............ $1,244,525,233 $ 209,964,138 $ 191,777,970
Cash.................................. 1,498,571 1,105,156 316,780
Interest receivable................... 3,625,726 906,772 1,346,115
----------------- --------------- ---------------
Total Assets...................... 1,249,649,530 211,976,066 193,440,865
LIABILITIES:
Dividends payable..................... 156,076 25,561 15,344
Management fee payable................ 780,844 131,598 122,904
Other accounts payable................ 251,030 117,070 116,939
----------------- --------------- ---------------
Total Liabilities................. 1,187,950 274,229 255,187
----------------- --------------- ---------------
NET ASSETS.............................. $ 1,248,461,580 $ 211,701,837 $ 193,185,678
================= =============== ===============
NET ASSET VALUE:
Cortland Shares
($ 893,908,120 / 895,754,261 shares) $ 1.00
========
($ 164,453,723 / 164,991,988 shares) $ 1.00
=======
($ 140,121,538 / 140,147,823 shares) $ 1.00
=======
Live Oak Shares
($ 354,553,460 / 355,044,391 shares) $ 1.00
========
($ 47,248,114 / 47,357,775 shares) $ 1.00
======
($ 53,064,140 / 53,071,282 shares) $ 1.00
=======
* Including repurchase agreements amounting to $117,000,000 and $9,000,000
for the Cortland General Money Market Fund and U.S. Government Fund,
respectively.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest Income......................... $ 37,971,386 $ 6,969,761 $ 4,265,588
---------------- --------------- ----------------
Expenses:
Management fee--Note 3(a)............ 5,388,061 1,000,708 886,949
Distribution support and services
----Note 3(c):
Cortland shares.................. 1,322,995 269,361 225,634
Live Oak shares.................. 351,085 48,408 51,566
Directors' fees and expenses
----Note 3(b)...................... 9,114 9,114 9,114
Other expenses....................... 26,121 18,245 5,431
---------------- --------------- ----------------
Total Expenses................... 7,097,376 1,345,836 1,178,694
Expenses waived by
Manager--Note 3(a) and (c)......... ( 44,088) ( 75,780) ( 9,593)
---------------- --------------- ----------------
Net Expenses..................... 7,053,288 1,270,056 1,169,101
---------------- --------------- ----------------
Net Investment Income................... 30,918,098 5,699,705 3,096,487
<CAPTION>
<S> <C> <C> <C>
REALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments. 24,344 1,179 -0-
---------------- --------------- ----------------
Increase in net assets from operations.. $ 30,942,442 $ 5,700,884 $ 3,096,487
================ =============== ================
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
For the Six For the For the Six For the For the Six For the
Months Ended Year Months Ended Year Months Ended Year
September 30, Ended September 30, Ended September 31, Ended
1996 March 31, 1996 March 31, 1996 March 31,
(Unaudited) 1996 (Unaudited) 1996 (Unaudited) 1996
------------- --------- ------------ -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income... $30,918,098 $62,409,651 $ 5,699,705 $ 12,079,237 $ 3,096,487 $ 7,789,068
Net realized gain (loss) on
investments......... 24,344 182,364 1,179 ( 22,060) -0- 2,754
----------- ----------- ----------- ---------- ----------- -----------
Increase in net assets
from operations..... 30,942,442 62,592,015 5,700,884 12,057,177 3,096,487 7,791,822
Distributions
to shareholders from:
Net investment income:
Cortland shares....... ( 23,214,053) ( 56,739,267) ( 4,609,299) ( 11,281,834) ( 2,408,704)+ ( 7,250,573)+
Live Oak shares....... ( 7,826,020) ( 5,536,157) ( 1,071,418) ( 766,391) ( 711,020)+ ( 524,001)+
Capital share
transactions net (Note 4):
Cortland shares....... (265,703,735) 165,048,002 ( 90,901,057) 36,908,866 ( 76,321,440) ( 7,599,135)
Live Oak shares....... 4,059,752 350,984,640 32,480 47,325,294 3,410,988 49,660,294
----------- ----------- ----------- ----------- ----------- -----------
Total increase (decrease) (261,741,614) 516,349,233 ( 90,848,410) 84,243,112 ( 72,933,689) 42,078,407
Net assets:
Beginning of year....... 1,510,203,194 993,853,961 302,550,247 218,307,135 266,119,367 224,040,960
------------- ------------- ----------- ----------- ----------- -----------
End of year*........... $1,248,461,580 $1,510,203,194 $211,701,837 $302,550,247 $193,185,678 $266,119,367
============= ============= =========== =========== =========== ===========
* Includes undistributed net investment income of $28,199 and $150,174 in
Cortland General Money Market Fund at September 30, 1996 and March 31,
1996, respectively. Includes undistributed net investment income of $50,000
and $31,012 at September 30, 1996 and March 31, 1996 for the U.S.
Government Fund. Includes undistributed net investment income of $14,494 at
March 31, 1996 for the Municipal Money Market Fund.
+ Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
Note 1-General:
Cortland Trust, Inc. (the "Company") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a no-load, diversified, open-end
management company. The Company consists of three money market funds: the
Cortland General Money Market Fund ("Cortland General Fund"), the U.S.
Government Fund, and the Municipal Money Market Fund ("Municipal Fund"). Each
Fund has two classes of stock authorized, Cortland shares and Live Oak shares.
The Cortland shares are subject to a service fee of .25% of its average net
assets pursuant to the Distribution Plan. The Live Oak shares are subject to a
service fee of .20% of its average net assets. In all other respects, the
Cortland shares and Live Oak shares represent the same interest in the income
and assets of the Fund. Each class of shares has identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. Distribution of Live Oak shares commenced November 16, 1995.
The Company accounts separately for the assets, liabilities and operations of
each Fund. Each Fund's fiscal year ends on March 31.
It is the Company's policy to maintain a continuous net asset value per share of
$1.00 for each Fund; the Company has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so.
The Cortland General Fund includes the Pilgrim Money Market Class of Shares (
the "Pilgrim Shares"). Pilgrim Shares are identical to the other shares of the
Cortland General Fund with respect to investment objectives, voting rights and
yield, but differ with respect to certain other matters relating primarily to
exchange privileges. At September 30, 1996, there were 6,565,479 Pilgrim Shares
outstanding.
Note 2-Significant Accounting Policies:
(a) Valuation of investments: Investments are valued at amortized cost,
which approximates market value and has been determined by the Company's
Board of Directors to represent the fair value of each Fund's investments.
(b)Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis.
The Cortland General and U.S. Government Funds may enter into repurchase
agreements for securities held by these Funds with financial institutions
deemed to be creditworthy by the Funds' Advisor, subject to the seller's
agreement to repurchase and the Funds' agreement to resell such securities
at a mutually agreed upon price. Securities purchased subject to repurchase
agreements are deposited with the Funds' custodian and must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. In the event that the seller of the
agreement defaults on its repurchase obligation, the Fund maintains the
right to sell the underlying securities at market value.
(c) Dividends to Shareholders: It is the policy of the Company, with
respect to each Fund, to declare dividends from the net investment income
earned by each Fund daily; such dividends are distributed to each Fund's
shareholders on the subsequent business day. Dividends from net realized
capital gains, offset by capital loss carryovers, if any, are generally
declared and paid when realized.
(d) Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Note 2-Significant Accounting Policies: (Continued)
(e) Federal income taxes: It is the policy of each Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders by complying with the applicable sections of the
Internal Revenue Code, and to make distributions of income (including net
realized capital gains) sufficient to relieve it from all Federal income taxes.
Accordingly, no provision for Federal income taxes is required. At September 30,
1996, Cortland General Fund, U.S. Government Fund and Municipal Fund had unused
capital loss carryforwards of approximately $2,389,615, $699,105 and $24,684,
respectively, available for Federal income tax purposes to be applied against
future securities profit, if any.
Note 3-Management Fee and Other Transactions With Affiliates:
(a) Reich & Tang Asset Management, L.P. (the "Manager") serves as the manager of
the Company and its three Funds pursuant to agreements with the Funds dated
September 14, 1993 ("Agreements"). Under the Agreements, the Manager provides
directly, or indirectly through contracts with others, all services required for
the management of the Company. The Manager bears all ordinary operating expenses
associated with the Company's operation except: (a) the fees of the directors
who are not "interested persons" of the Company, as defined by the Act, and the
travel and related expenses of the directors incident to their attending
shareholder's, director's and committee meetings, (b) interest, taxes and
brokerage commissions, (c) extraordinary expenses, (d) shareholder service or
distribution fees which together can represent up to 0.25% with respect to the
Cortland shares and up to 0.20% with respect to the Live Oak shares of the net
assets of each Fund on an annualized basis, and (e) membership dues of any
industry association. Additionally, the Manager has assumed all expenses
associated with organizing the Company and all expenses of registering or
qualifying the Company's shares under Federal and state securities laws. The
Funds pay the Manager an annual fee, calculated daily and paid monthly, of .80%
of the first $500 million of the Company's average daily net assets, plus .775%
of the next $500 million of the Company's average daily net assets, plus .75% of
the next $500 million of the Company's average daily net assets, plus .725% of
the Company's average daily net assets in excess of $1.5 billion. The management
fees are allocated pro-rata to each Fund based on their average daily net
assets.
The Manager has agreed to reduce its aggregate fees for any fiscal year, or
reimburse each of the Funds, to the extent required, so that the amount of the
ordinary expenses incurred by each of the Funds (excluding brokerage
commissions, interest, taxes, distribution support and service expenses and
extraordinary expenses) do not exceed the expense limitations imposed by the
securities laws or regulations of those states or jurisdictions in which the
Funds' shares are registered or qualified for sale. Currently, the only such
expense limitation requires that ordinary Fund expenses (excluding brokerage
commissions, interest, taxes, distribution support and service expenses and
extraordinary expenses) for any fiscal year do not exceed 2.5% of the first $30
million of each Fund's average daily net assets, plus 2% of the next $70 million
of each Fund's average daily net assets, plus 1.5% of each Fund's average daily
net assets in excess of $100 million. No reimbursement was required pursuant to
the expense limitation for the year ended September 30, 1996.
(b) Certain officers and directors of the Company are "affiliated persons", as
defined in the Act, of the Manager. Each director who is not an "affiliated
person" receives from the Company an annual fee of $5,000 for services as a
director and a fee of $1,250 for each Board of Directors' meeting attended. All
directors fees and expenses are allocated equally to each Fund.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
Note 3-Management Fee and Other Transactions With Affiliates: (Continued)
(c) Pursuant to a Distribution Plan ("Plan") dated July 31, 1989, each Fund can
make payments of up to 0.25% per annum of its average daily net assets with
respect to Cortland shares of the Fund for assistance in distributing its
shares. The Manager and/or its affiliates have the ability to make additional
payments for distribution assistance. The Manager and/or its affiliates bear all
other expenses related to the distribution of the company's shares.
Pursuant to a Distribution Plan approved by the Company's Board on November 9,
1995, each Fund can make payments of up to 0.20% per annum of it's average daily
net assets with respect to the Live Oak shares of the Fund for assistance in
distributing its shares.
During the period ended September 30, 1996, the Distributor waived Distribution
support and services fees of $44,088, $25,780 and $9,593 for the Live Oak shares
of the Cortland General Fund, U.S. Government Fund and Municipal Fund,
respectively. In addition the Manager waived Management fees of $50,000 for the
U.S. Government Fund.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
===============================================================================
Note 4-Capital Share Transactions:
At September 30, 1996, 3 billion shares of $.001 par value shares of the Company
were authorized. Transactions in the shares of each Fund were all at $1.00 per
share and are summarized for the period as follows:
<TABLE>
<CAPTION>
Cortland General Money Municipal Money
Market Fund U.S. Government Fund Market Fund
------------------------------ --------------------------- -----------------------------
For the Six For the Year For the Six For the Year For the Six For the Year
Months Ended Ended Months Ended Ended Months Ended Ended
September 30, March 31, September 30, March 31, September 30, March 31,
1996 1996 1996 1996 1996 1996
------------- ------------ ------------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Cortland Shares
Shares sold........... 1,889,806,855 5,692,461,972 316,087,660 1,147,151,347 367,595,754 1,118,581,921
Dividends reinvested.. 23,537,223 56,469,119 4,680,997 11,224,107 2,447,325 7,224,068
-------------- -------------- ----------- ------------- ----------- -------------
1,913,344,078 5,748,931,091 320,768,657 1,158,375,454 370,043,079 1,125,805,989
Shares redeemed....... (2,179,047,813) (5,583,883,089) (411,669,714) (1,121,466,588) ( 446,364,519) (1,133,405,124)
-------------- -------------- ----------- ------------- ------------ --------------
Net increase (decrease) ( 265,703,735) 165,048,002 ( 90,901,057) 36,908,866 ( 76,321,440) ( 7,599,135)
============== ============== =========== ============= ============ ==============
Live Oak Shares
Shares sold........... 749,756,376 803,496,773 87,893,295 107,188,689 100,558,037 108,031,220
Dividends reinvested.. 7,895,001 5,399,043 1,081,067 747,543 716,259 512,060
-------------- -------------- ----------- ------------ ----------- -----------
757,651,377 808,895,816 88,974,362 107,936,232 101,274,296 108,543,280
Shares redeemed....... ( 753,591,625) ( 457,911,177) ( 88,941,882) ( 60,610,937) ( 97,863,308) ( 58,882,986)
--------------- -------------- ------------ ------------ ----------- -----------
Net increase.......... 4,059,752 350,984,639 32,480 47,325,295 3,410,988 49,660,294
=============== ============== ============ ============ =========== ===========
</TABLE>
The components of net assets are as follows:
<TABLE>
<CAPTION>
Cortland General Money Municipal Money
Market Fund U.S. Government Fund Market Fund
---------------------------- --------------------------- ---------------------------
For the Six For the For the Six For the For the Six For the
Months Ended Year Months Ended Year Months Ended Year
September 30, Ended September 30, Ended September 30, Ended
1996 March 31, 1996 March 31, 1996 March 31,
(Unaudited) 1996 (Unaudited) 1996 (Unaudited) 1996
------------- -------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Paid-in capital.... $1,250,798,652 $1,512,442,635 $ 212,349,763 $303,218,340 $193,219,105 $266,129,557
Accumulated net
realized losses. ( 2,365,271) ( 2,389,615) ( 697,926) ( 699,105) ( 24,684) ( 24,684)
Undistributed net
investment income 28,199 150,174 50,000 31,012 (8,743) 14,494
------------- ------------- ------------- ------------ ------------- ------------
Total net assets... $1,248,461,580 $1,510,203,194 $ 211,701,837 $ 302,550,247 $193,185,678 $266,119,367
============= ============= ============= ============ ============= =============
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
5. Selected Financial Information.
General Money Market Fund
----------------------------------------------------------------------------------------------
Live Oak Shares Cortland Shares
----------------------------- For the Year Ended March 31,
November 16, 1995 ------------------------------------------------
Six Months (Commencement Six Months
Ended of distribution) Ended
September 30, to March 31, September 30,
1996 1996 1996 1996 1995 1994 1993 1992
-------- -------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding
throughout the period)
Net asset value,
beginning of period.......... $ .9987 $ .9982 $ .9985 $ .9974 $1.0000 $1.0000 $1.0000 $1.0000
------- -------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............. .0223 .0175 .0219 .0485 .0384 .0250 .0284 .0470
Net realized and unrealized
gain/(loss) on investments...... -- .0005 ( .0005) .0010 ( .0026)+ .0001 -- --
------- -------- ------- ------- ------- ------- ------- -------
Total from investment operations .0223 .0180 .0214 .0495 .0358 .0251 .0284 .0470
Less distributions:
Dividends from net investment
income......................... ( .0224) ( .0175) ( .0220) ( .0484) ( .0384) ( .0250) ( .0284) ( .0470)
Dividends from net realized
gain on investments............. -- -- -- -- -- ( .0001) -- --
------- -------- ------- ------- ------- ------- ------- -------
Total distributions............... ( .0224) ( .0175) ( .0220) ( .0484) ( .0384) ( .0251) ( .0284) ( .0470)
------- -------- ------- ------- ------- ------- ------- --------
Net asset value, end of period $ .9986 $ .9987 $ .9979 $ .9985 $ .9974 $1.0000 $1.0000 $1.0000
======= ======== ======= ======= ======= ======= ======= ========
Total Return...................... 4.56%++ 4.78%++ 4.48%++ 4.95% 3.91%+ 2.53% 2.88% 4.81%
Ratios/Supplemental Data
Net assets,
end of period (000 "s omitted) $354,553 $351,030 $893,908 $1,159,173 $993,854 $926,400 $904,735 $906,662
Ratios to average net assets:
Expenses........................ .94%++* 0.97%++* 1.02%++ 1.03% 1.03%* 1.02%* 1.00%* 1.01%*
Net investment income........... 4.44%++ 4.68%++ 4.37%++ 4.86% 3.85% 2.48% 2.84% 4.67%
* Management and distribution support and services fees of .02%, .02%, .04% and
.04% of average net assets, respectively, were waived during the years ended
1995, 1994, 1993 and 1992 for Cortland shares. Distribution support and
service fee of .03%, and .02% of average net assets were waived during the
period ended September 30, 1996 and March 31, 1996, respectively, for Live Oak
shares.
+ Includes the effect of a capital contribution from the Manager of $.0044 per
share. Without a capital contribution the net realized and unrealized loss on
investments would have been $.0070 per share and the total return would have
been 2.89%.
++Annualized
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
5. Selected Financial Information. (Continued)
U. S. Government Fund
----------------------------------------------------------------------------------------------
Live Oak Shares Cortland Shares
----------------------------- For the Year Ended March 31,
November 16, 1995 ------------------------------------------------
Six Months (Commencement Six Months
Ended of distribution) Ended
September 30, to March 31, September 30,
1996 1996 1996 1996 1995 1994 1993 1992
-------- -------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding
throughout the period)
Net asset value,
beginning of period.......... $ .9976 $ .9974 $ .9978 $ .9969 $1.0000 $1.0000 $1.0000 $1.0000
------- -------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............. .0222 .0174 .0216 .0471 .0377 .0250 .0290 .0466
Net realized and unrealized
gain/(loss) on investments...... -- .0002 ( .0012) .0008 ( .0031)+ .0002 -- .0004
------- -------- ------- ------- ------- ------- ------- -------
Total from investment operations .0222 .0176 .0204 .0479 .0346 .0252 .0290 .0470
Less distributions:
Dividends from net investment
income......................... ( .0222) ( .0174) ( .0214) ( .0470) ( .0377) ( .0250) ( .0290) ( .0466)
Dividends from net realized
gain on investments............. -- -- -- -- -- ( .0002) -- ( .0004)
------- -------- ------- ------- ------- ------- ------- -------
Total distributions............... ( .0222) ( .0174) ( .0214) ( .0470) ( .0377) ( .0252) ( .0290) ( .0470)
------- -------- ------- ------- ------- ------- ------- --------
Net asset value, end of period $ .9976 $ .9976 $ .9968 $ .9978 $ .9969 $1.0000 $1.0000 $1.0000
======= ======== ======= ======= ======= ======= ======= ========
Total Return...................... 4.52%++ 4.74%++ 4.36%++ 4.80% 3.84%+ 2.55% 2.94% 4.77%
Ratios/Supplemental Data
Net assets,
end of period (000 "s omitted) $47,248 $47,328 $164,454 $255,222 $218,307 $234,082 $242,199 $230,778
Ratios to average net assets:
Expenses.......................... .84%++* .89%++* .99%++* 1.04% 1.04%* 1.04%* 1.01%* 1.00%*
Net investment income............. 4.43%++ 4.64%++ 4.29%++ 4.72% 3.74% 2.47% 2.89% 4.63%
* Management and distribution support and services fees of .04% of average net
assets for six months ended September 30, 1996 and .01%, .01%, .04% and .045%
of average net assets, respectively, were waived during the years ended 1995,
1994, 1993 and 1992 for Cortland shares. Management and Distribution support
and service fee of .14%, and .11% of average net assets were waived during the
period ended September 30, 1996 and March 31, 1996, respectively, for Live Oak
shares.
+ Includes the effect of a capital contribution from the Manager of $.0063 per
share. Without a capital contribution the net realized and unrealized loss on
investments would have been $.0094 per share and the total return would have
been 2.81%.
++Annualized
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
5. Selected Financial Information. (Continued)
Municipal Money Market Fund
----------------------------------------------------------------------------------------------
Live Oak Shares Cortland Shares
----------------------------- For the Year Ended March 31,
November 16, 1995 ------------------------------------------------
Six Months (Commencement Six Months
Ended of distribution) Ended
September 30, to March 31, September 30,
1996 1996 1996 1996 1995 1994 1993 1992
-------- -------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding
throughout the period)
Net asset value,
beginning of period.......... $1.0000 $ .9999 $1.0000 $ .9999 $ .9999 $ .9999 $1.0000 $.9999
------- -------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............. .0136 .0110 .0133 .0303 .0255 .0180 .0224 .0374
Net realized and unrealized
gain/(loss) on investments...... -- -- -- -- -- -- (.0001) .0001
------- -------- ------- ------- ------- ------- ------- -------
Total from investment operations .0136 .0110 .0133 .0303 .0255 .0180 .0223 0.0375
Less distributions:
Dividends from net investment
income......................... ( .0138) ( .0109) ( .0134) ( .0302) ( .0255) ( .0180) ( .0224) (.0374)
Dividends from net realized
gain on investments............. -- -- -- -- -- -- -- --
------- -------- ------- ------- ------- ------- ------- -------
Total distributions............... ( .0138) ( .0109) ( .0134) ( .0302) ( .0255) ( .0180) ( .0224) (.0374)
------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ .9998 $1.0000 $ .9999 $1.0000 $0.9999 $0.9999 $0.9999 $1.0000
======= ======== ======= ======= ======= ======= ======= ========
Total Return...................... 2.80%++ 2.96%++ 2.71%++ 3.06% 2.58% 1.82% 2.26% 3.81%
Ratios/Supplemental Data
Net assets,
end of period (000 "s omitted) $53,064 $49,663 $140,122 $216,456 $224,041 $240,570 $210,521 $210,948
Ratios to average net assets:
Expenses.......................... .94%++* .96%++* 1.03%++ 1.03% .99%* .98%* .92%* .92%*
Net investment income............. 2.74%++ 2.91%++ 2.65%++ 3.02% 2.54% 1.79% 2.22% 3.70%
* Management and distribution support and services fees of .06%, .07%, .13% and
.13% of average net assets, respectively, were waived during the years ended
1995, 1994, 1993 and 1992 for Cortland shares. Distribution support and service
fee of .04% and .03% of average net assets were waived during the period ended
September 30, 1996 and March 31, 1996, respectively, for Live Oak shares.
++Annualized
</TABLE>
<PAGE>
_____________________
CORTLAND
TRUST, INC
_____________________
CORTLAND GENERAL
MONEY MARKET
FUND
_____________________
U.S. GOVERNMENT
FUND
_____________________
MUNICIPAL MONEY
MARKET FUND
_____________________
Semi-annual Report
September 30, 1996
CORTLAND
600 Fifth Avenue
New York, NY 10020
212-830-5200
<PAGE>
