<PAGE>
- --------------------------------------------------------------------------------
CORTLAND 600 Fifth Avenue
TRUST, INC. New York, NY 10020
212-830-5200
================================================================================
Dear Shareholder:
We are pleased to present the annual report of Cortland Trust, Inc. for the year
ended March 31, 1997.
Cortland Trust, Inc.'s General Money Market Fund had 87,532 shareholder accounts
and net assets of $1,600,809,593 as of March 31, 1997.
As of March 31, 1997, the U.S. Government Fund had 6,809 shareholder accounts
and net assets of $219,521,016.
As of March 31, 1997, the Municipal Money Market Fund had 4,648 shareholder
accounts and net assets of $212,116,366.
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
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Ratings
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Commercial Paper (27.00%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 Asset Securities Corporations 05/28/97 5.35% $ 9,916,558 P1 A1+
13,000,000 Asset Securities Corporations 05/28/97 5.42 12,890,291 P1 A1+
15,000,000 Banque International A Luxembourg 05/21/97 5.34 14,890,208 P1 A1+
20,000,000 Compagnie Bancaire 04/14/97 5.36 19,961,650 P1 A1
20,000,000 Compagnie Bancaire 04/24/97 5.43 19,931,511 P1 A1
7,000,000 Compagnie Bancaire 05/19/97 5.47 6,950,347 P1 A1
20,000,000 Compagnie Bancaire 08/18/97 5.45 19,590,722 P1 A1
10,000,000 Compagnie Bancaire 09/23/97 5.82 9,724,861 P1 A1
10,000,000 Cosmair, Inc.
Guaranteed By L'oreal 04/16/97 5.42 9,977,708 P1
50,000,000 Dresdner U.S. Finance 04/01/97 6.25 50,000,000 P1 A1+
20,000,000 GTE Corporation(a) 04/10/97 5.37 19,973,300
20,000,000 GTE Corporation(a) 04/10/97 5.36 19,973,300
10,000,000 Goldman Sachs & Co. 04/04/97 5.91 9,995,084
10,000,000 Kingdom of Sweden 06/27/97 5.57 9,870,708 P1 A1+
15,000,000 Merrill Lynch & Company, Incorporated 04/09/97 5.36 14,982,233 P1 A1+
25,000,000 Morgan Stanley, Inc. 05/15/97 5.38 24,837,750 P1 A1+
10,000,000 National Bank of Canada 05/15/97 5.37 9,935,222 P1 A1
10,000,000 Receivable Capital Corporation 04/11/97 5.37 9,985,167 P1 A1
10,000,000 Receivable Capital Corporation 04/15/97 5.39 9,979,156 P1 A1
20,000,000 Receivable Capital Corporation 05/12/97 5.64 19,872,444 P1 A1
10,000,000 Receivable Capital Corporation 04/28/97 5.43 9,959,500 P1 A1
15,000,000 Sigma Finance Corporation 05/01/97 5.46 14,932,750 P1 A1+
20,000,000 Sigma Finance Corporation 05/06/97 5.42 19,895,972 P1 A1+
20,000,000 Sigma Finance Corporation 07/07/97 5.52 19,710,617 P1 A1+
20,000,000 Sigma Finance Corporation 07/25/97 5.57 19,653,722 P1 A1+
15,000,000 Unifunding 04/10/97 5.43 14,979,900 P1 A1
10,000,000 Unifunding 07/29/97 5.54 9,821,831 P1 A1
- --------------- -------------
435,000,000 Total Commercial Paper 432,192,512
- --------------- -------------
<CAPTION>
Domestic Certificates of Deposit (2.81%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000,000 Union Bank of California 07/22/97 5.56% $ 25,000,000 P1 A1
20,000,000 Union Bank of California 04/09/97 5.50 20,000,000 P1 A1
- --------------- -------------
45,000,000 Total Domestic Certificates of Deposit 45,000,000
- --------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statments.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Eurodollar Certificate of Deposit (1.25%)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000,000 Abbey National PLC 08/21/97 5.50% $ 19,994,239 P1 A1+
-------------- -------------
20,000,000 Total Eurodollar Certificate of Deposit 19,994,239
-------------- -------------
<CAPTION>
Japanese Eurodollar Certificates of Deposit (2.00%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000,000 Norinchukin Bank Ltd. 04/03/97 5.48% $ 25,000,014 P1 A1+
7,000,000 Sumitomo Bank 04/25/97 5.80 6,999,434 P1 A1
-------------- -------------
32,000,000 Total Japanese Eurodollar Certificates of Deposit 31,999,448
-------------- -------------
<CAPTION>
Japanese Yankee Certificates of Deposit (6.56%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000,000 Bank of Tokyo - Mitsubishi 04/16/97 5.59% $ 20,000,129 P1 A1
20,000,000 Bank of Tokyo - Mitsubishi 05/13/97 5.51 20,000,230 P1 A1
20,000,000 Fuji Bank, Ltd.(a) 04/14/97 5.55 20,000,072 P1
25,000,000 Fuji Bank, Ltd.(a) 04/07/97 5.55 25,000,041 P1
20,000,000 Norinchukin Bank, Ltd. 04/28/97 5.75 20,000,149 P1 A1+
-------------- -------------
105,000,000 Total Japanese Yankee Certificates of Deposit 105,000,621
-------------- -------------
<CAPTION>
Letter of Credit Commercial Paper (18.90%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 Banco Bradesco (S.A.) Grand Cayman
LOC Barclays Bank PLC 06/06/97 5.42% $ 9,902,283 P1 A1+
10,000,000 Banco Bradesco (S.A.) Grand Cayman
LOC Barclays Bank PLC 04/28/97 5.50 9,959,875 P1 A1+
20,000,000 Banco Rio de La Plata
LOC Bayerische Vereinsbank, A.G. 10/30/97 5.62 19,364,000 P1 A1+
22,000,000 Banco Rio de La Plata
LOC Bayerische Vereinsbank, A.G. 10/29/97 5.59 21,307,568 P1 A1+
10,000,000 Bancomer S.A.
LOC Bank of Montreal 09/24/97 5.72 9,728,667 P1 A1+
20,000,000 Beal Cayman Limited
LOC Westdeutsche Landesbank Girozentrale 06/13/97 5.40 19,785,056 P1 A1+
20,000,000 Beal Cayman Limited
LOC Westdeutsche Landesbank Girozentrale 07/14/97 5.42 19,693,778 P1 A1+
10,000,000 Beal Cayman Limited
LOC Westdeutsche Landesbank Girozentrale 07/07/97 5.40 9,857,464 P1 A1+
10,000,000 Galicia, Buenos Aires Funding Corporation
LOC Dresdner Bank A.G. 09/16/97 5.46 9,753,133 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Ratings
-----------------
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>
$ 15,000,000 Garanti Funding Corporation II
LOC Bayerische Vereinsbank, A.G. 06/05/97 5.46% $ 14,854,833 P1 A1+
15,000,000 Garanti Funding Corporation II
LOC Bayerische Vereinsbank, A.G. 06/04/97 5.46 14,857,067 P1 A1+
5,000,000 Guangdong Enterprise Limited
LOC Credit Suisse 05/21/97 5.45 4,963,125 P1 A1+
15,000,000 Guangdong Enterprise Limited
LOC Credit Suisse 08/11/97 5.48 14,706,850 P1 A1+
10,000,000 Guangdong Enterprise Limited
LOC Credit Suisse 05/19/97 5.47 9,929,067 P1 A1+
15,000,000 Hyundai Motor Finance Company
LOC Bank of America 04/25/97 5.50 14,946,500 P1 A1+
10,000,000 Minmetals Capital & Securities, Incorporated
LOC Credit Suisse 05/01/97 5.50 9,955,417 P1 A1+
10,000,000 Minmetals Capital & Securities, Incorporated
LOC Credit Suisse 05/29/97 5.45 9,914,611 P1 A1+
10,000,000 Minmetals Capital & Securities, Incorporated
LOC Credit Suisse 08/12/97 5.43 9,804,194 P1 A1+
15,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank PLC 05/08/97 5.45 14,918,292 P1 A1+
10,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank PLC 05/12/97 5.44 9,939,639 P1 A1+
20,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank PLC 08/15/97 5.50 19,601,067 P1 A1+
15,000,000 Unibanco Brasileiros S.A.
LOC Westdeutsche Landesbank Girozentrale 06/11/97 5.47 14,842,469 P1 A1+
10,000,000 Unibanco Brasileiros S.A.
LOC Westdeutsche Landesbank Girozentrale 04/17/97 5.44 9,975,911 P1 A1+
-------------- -------------
307,000,000 Total Letter of Credit Commercial Paper 302,560,866
-------------- -------------
<CAPTION>
Master Notes (6.87%)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000,000 Donaldson, Lufkin & Jenrette, Inc.(e) 02/05/98 5.49% $ 50,000,000
25,000,000 Goldman Sachs & Co. (f) 08/01/97 6.85 25,000,000
35,000,000 Morgan (J.P.) Securities Inc.(b) 07/08/97 5.44 35,000,000
-------------- -------------
110,000,000 Total Master Notes 110,000,000
-------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Medium Term Notes (4.37%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000,000 First U.S.A. Credit Master Trust - Series 1995-96
Class A (Steers)(c) 12/10/97 5.44% $ 50,000,000 Aaa AAA
20,000,000 Royal Bank of Canada 01/07/98 5.75 19,998,525 P1 A1+
-------------- -------------
70,000,000 Total Medium Term Notes 69,998,525
-------------- -------------
<CAPTION>
Other Notes (13.28%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,300,000 2150 Investment Company Floating Rate Demand
Taxable Notes - Series 1997(d)
LOC Fifth Third Bank 02/01/17 5.75% $ 1,300,000
5,000,000 California Department of Water Resources
(Control Valley Project) Water System RB - Series R-V(d)
LOC Canadian Imperial Bank of Commerce 12/01/24 5.35 5,000,000
6,000,000 Cheney Brothers Inc.(d)
LOC First Union National Bank of North Carolina 12/01/16 5.70 6,000,000
24,400,000 Cleveland, OH Taxable RB
LOC Credit Suisse/Union Bank of Switzerland 04/07/97 5.39 24,400,000 Aaa AAA
2,075,000 Consolidated Equities, L.L.C.
Taxable VRDN - Series 1995(d)
LOC Old Kent Bank & Trust Co. 12/01/25 5.75 2,075,000
2,600,000 G&J Land Management Variable Tare
Taxable Demand Notes - Series 1996(d)
LOC Fifth Third Bank 12/01/17 5.75 2,600,000
20,900,000 General Electric Engine Receivables 1995-1 Trust
VR Guaranteed Notes(g)
LOC General Electric Capital Corporation 02/14/00 5.74 20,900,000 P1 A1+
9,900,000 General Electric Engine Receivables 1996-1 Trust
VR Guaranteed Notes(h)
LOC General Electric Capital Corporation 02/14/01 5.67 9,900,000
1,000,000 KBL Capital Fund, Inc Taxable VRDN - Series 1995 G(d)
LOC Old Kent Bank & Trust Co. 07/01/17 5.75 1,000,000 A
2,325,000 KBL Capital Fund, Inc. Taxable VRDN - Series 1995 A(d)
LOC Old Kent Bank & Trust Co. 07/01/05 5.75 2,325,000 A
4,400,000 Maryland Health & Higher Educational Facilities
Authority RB (North Arundale Hospital)(d)
LOC Mellon Bank, N.A. 07/01/27 5.75 4,400,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Ratings
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Notes (Continued)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,945,000 Michigan HEFA(d)
LOC Old Kent Bank & Trust Co. 10/01/16 5.75% $ 1,945,000
7,500,000 Mississippi Business Finance Corporation IDRB
(Howard Industries, Inc.) - Series 1995(d)
LOC National Bank of Detroit 06/01/10 5.85 7,500,000 P1
4,500,000 New Federal Cold Storage,
Incorporated Project - Series 199C(d)
LOC National City Bank, Northwest 08/01/11 5.75 4,500,000
10,000,000 New York City General Obligation Bonds - Series B-11
FGIC Insured 05/23/97 5.52 10,000,000
16,800,000 Oakland Alameda County Coliseum Authority Lease RB
(Oakland Coliseum Project) - Series B-2
LOC Canadian Imperial Bank of Commerce 04/03/97 5.34 16,800,000
4,000,000 Prince William County, VA Taxable Notes - Series A(d)
LOC Wachovia Bank & Trust Co., N.A. 03/01/17 5.68 4,000,000 VMIG-1
25,000,000 SSM Trust 1996-1(e) 05/29/97 5.74 25,000,000 P1 A1+
19,000,000 State of Missouri HEFA
(SSM Health Care System) 1995 - Series D(d)
MBIA Insured 06/01/24 5.65 19,000,000 Aaa AAA
11,000,000 State of Oregon Taxable Economic Development RB
(Georgia Pacific Corp.) - Series 1995 B
LOC Commerzbank A.G. 05/09/97 5.55 11,000,000 P1 A1+
7,800,000 Stone Creek, L.L.C.
Taxable Variable Rate Securities - Series 1995(d)
LOC Columbus Bank & Trust Company 08/01/20 5.85 7,800,000 P1
17,500,000 The Medical Clinic Board of The City Mobile, AL
(Spring Hill Medical Complex) Taxable RB(d)
LOC Amsouth Bank N.A. 09/01/11 5.70 17,500,000 P1
1,675,000 Walt Sweeney Ford
Floating Rate Demand Notes - Series 1996(d)
LOC Fifth Third Bank 01/01/12 5.75 1,675,000
6,000,000 Winston - Salem, NC COP 04/02/97 5.38 6,000,000 VMIG-1
-------------- -------------
212,620,000 Total Other Notes 212,620,000
-------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Repurchase Agreement, Overnight (3.19%)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 51,000,000 Donaldson, Lufkin & Jenrette, Inc., dated 03/31/97
(Collateralized by:
$11,087,000 U.S. Treasury Notes,
5.000% to 5.500%, due 01/31/98 to 04/15/00
$9,041,000 U.S. Treasury Bonds, 10.625% to 13.875%,
due 05/15/03 to 08/15/15
$9,400,000 Fannie Mae Medium Term Debentures,
5.910% to 7.590%, due 02/25/00 to 10/04/06
$1,995,000 Fannie Mae Debentures, 5.875% to 6.950%,
due 02/02/06 to 11/13/06
$675,000 Federal Home Loan Medium Term Notes,
5.625% due 02/12/98
$645,000 Freddie Mac Discount Notes, 0.000%, due 04/10/97
$9,500,000 Federal Home Loan Consol Bond,
5.490% to 6.850%, due 10/03/97 to 01/02/98
$5,570,000 Federal Home Loan Discount Note, 0.000%, due 09/08/97
$1,000,000 Farm Credit Systemwide Bond, 5.600%,
due 11/03/97 proceeds $51,009,223) 04/01/97 6.51% $ 51,000,000
-------------- -------------
51,000,000 Total Repurchase Agreement, Overnight 51,000,000
-------------- -------------
<CAPTION>
Short Term Bank Notes (3.12%)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 30,000,000 Bank of America 04/18/97 5.47% $ 30,000,000 P1 A1+
20,000,000 Bank of America, San Francisco Bank Notes 07/07/97 5.45 20,000,000 P1 A1+
-------------- -------------
50,000,000 Total Short Term Bank Notes 50,000,000
-------------- -------------
<CAPTION>
Time Deposit (4.06%)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 65,000,000 PNC Capital Markets, Inc. 04/01/97 6.75% $ 65,000,000 P1 A1
-------------- -------------
65,000,000 Total Time Deposit 65,000,000
-------------- -------------
<CAPTION>
Yankee Certificates of Deposit (6.25%)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000,000 Canadian Imperial Bank of Commerce 04/15/97 5.33% $ 20,000,000 P1 A1+
20,000,000 Canadian Imperial Bank of Commerce 05/21/97 5.56 20,000,000 P1 A1+
15,000,000 National Westminster Bank 04/14/97 5.42 15,000,205 P1 A1+
20,000,000 Rabobank Nederland 04/18/97 5.49 20,000,092 P1 A1+
25,000,000 Societe Generale 07/14/97 5.45 25,000,000 P1 A1+
-------------- -------------
100,000,000 Total Yankee Certificates of Deposit 100,000,297
-------------- -------------
Total Investments (99.66%) (Cost $1,595,366,508+) 1,595,366,508
Cash and Other Assets, Net of Liabilities (0.34%) 5,443,085
-------------
Net Assets (100.00%) $1,600,809,593
==============
+ 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 NET ASSETS (CONTINUED)
MARCH 31, 1997
================================================================================
FOOTNOTES:
(a) These are split rated securities, given the highest ratings by at least two
nationally recognized rating agencies.
(b) The interest rate is adjusted monthly based upon the one month LIBOR flat,
daily put option.
(c) The interest rate is reset monthly based upon the one month LIBOR.
(d) These securities have a 7 day put feature exercisable by the Fund at par
value. Rate changes weekly.
(e) The interest rate is adjusted monthly based upon the one month LIBOR rate
plus 5 basis points.
(f) The interest rate is adjusted daily based upon the opening of Federal Funds
plus ten basis points, daily put option.
(g) The interest rate is adjusted weekly based upon the commercial paper
composite plus five basis points, weekly put option.
(h) The interest rate is adjusted weekly based upon one month LIBOR minus one
basis point, weekly put option.
<TABLE>
<CAPTION>
KEY:
<S> <C>
COP = Certificate of Participation RB = Revenue Bond
HEFA = Health and Education Facilities Authority VR = Variable Rate
IDRB = Industrial Development Revenue Bond VRDN = Variable Rate Demand Note
LOC = Letter of Credit
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 2)
------ ---- ----- ------
U. S. Government Agencies (78.10%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 5,000,000 Federal Farm Credit Bank 05/01/97 5.24% $ 5,000,000
9,000,000 Federal Farm Credit Bank 03/03/98 5.35 9,000,000
3,500,000 Federal Home Loan Bank 07/07/97 5.39 3,450,348
5,000,000 Federal Home Loan Bank 07/10/97 5.37 4,927,292
5,000,000 Federal Home Loan Bank 07/25/97 5.41 4,915,826
5,000,000 Federal Home Loan Bank 08/18/97 5.33 4,899,611
5,000,000 Federal Home Loan Bank 09/16/97 5.66 4,871,550
5,000,000 Federal Home Loan Bank 09/30/97 5.43 4,867,545
5,000,000 Federal Home Loan Mortgage Corporation 04/16/97 5.31 4,989,083
5,000,000 Federal Home Loan Mortgage Corporation 05/02/97 5.32 4,977,396
5,000,000 Federal Home Loan Mortgage Corporation 05/12/97 5.30 4,970,247
5,000,000 Federal Home Loan Mortgage Corporation 05/28/97 5.30 4,958,556
10,000,000 Federal Home Loan Mortgage Corporation 06/13/97 5.40 9,891,919
5,000,000 Federal National Mortgage Association 04/04/97 5.68 4,999,972
5,000,000 Federal National Mortgage Association 04/15/97 5.32 4,989,792
5,000,000 Federal National Mortgage Association 04/28/97 5.38 4,980,350
5,000,000 Federal National Mortgage Association 05/02/97 5.33 4,977,353
7,090,000 Federal National Mortgage Association 05/13/97 5.25 7,047,070
10,000,000 Federal National Mortgage Association 05/16/97 5.38 9,934,125
10,000,000 Federal National Mortgage Association 05/23/97 5.23 9,925,394
5,000,000 Federal National Mortgage Association 07/17/97 5.48 4,921,831
5,000,000 Federal National Mortgage Association 07/21/97 5.41 4,918,754
10,000,000 Federal National Mortgage Association 08/25/97 5.31 9,790,125
3,326,000 Kirksville College of Osteopathic Medicare, Inc.
Educational Loan Revenue Notes - Series A
LOC Student Loan Marketing Association 06/25/97 5.63 3,282,415
5,000,000 Student Loan Marketing Association (a) 04/10/97 5.55 5,000,000
5,000,000 Student Loan Marketing Association (a) 05/08/97 5.56 5,000,000
5,000,000 Student Loan Marketing Association (a) 08/21/97 5.59 5,000,000
5,000,000 Student Loan Marketing Association (a) 09/18/97 5.54 5,000,000
5,000,000 Student Loan Marketing Association (a) 10/03/97 5.45 5,005,237
5,000,000 Tennessee Valley Authority 05/29/97 5.28 4,958,031
-------------- -------------
172,916,000 Total U. S. Government Agencies 171,449,822
-------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Note to Financial Statments.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 2)
------ ---- ----- ------
Repurchase Agreement, Overnight (21.41%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 47,000,000 Morgan (J.P.) Securities, Inc., dated 03/31/97
(Collateralized by:
$25,945,000 Resolution Funding Corporation
Strip Interest 0.000%, due 04/15/18,
$10,000,000 Resolution Funding Corporation Bond
8.625%, due 01/15/21,
$11,870,000 Fannie Mae Medium Term Debentures
0.000%, due 01/28/00,
$5,450,000 Fannie Mae Commercial Paper
7.900%, due 04/10/97,
$13,325,000 Federal Home Loan Discount Note
0.000%, due 04/01/97) proceeds $47,008,225 04/01/97 6.30% $ 47,000,000
-------------- -------------
47,000,000 Total Repurchase Agreement, Overnight 47,000,000
-------------- -------------
Total Investments (99.51%) (Cost $218,449,822+) 218,449,822
Cash and Other Assets, Net of Liabilities (0.49%) 1,071,194
-------------
Net Assets (100.00%) $ 219,521,016
=============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Tax Exempt Investments (17.26%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,028,000 Borough of Somerville, NJ (County of Somerset) BAN 02/19/98 3.67% $ 4,036,260
5,000,000 East Allen, Indiana School Corporation TAW 12/31/97 3.78 5,000,000
5,000,000 Jersey City, NJ BAN 02/05/98 3.74 5,002,421 SP-1
2,500,000 Kanawha County, WV Commercial Development
Revenue Refunding Bonds (May Dept. Stores Project) 06/01/97 3.72 2,507,970 A
5,000,000 School District of Greenville County,
SC GO Bonds - Series 1997 03/01/98 3.64 5,037,696
5,000,000 State of Texas TRAN 08/29/97 3.90 5,015,804 VMIG-1 SP-1+
5,000,000 Strafford County, NH TAN 12/30/97 3.75 5,018,228
5,000,000 Suffolk County, NY Brentwood UFSD TAN 06/30/97 4.04 5,004,658
-------------- -------------
36,528,000 Total Other Tax Exempt Investments 36,623,037
-------------- -------------
<CAPTION>
Other Variable Rate Demand Instruments (b) (47.63%)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,900,000 Allegheny County, PA HDA RB
(Allegheny General Hospital) - Series B
LOC Morgan Guaranty Trust Company 09/01/10 3.45% $ 1,900,000 VMIG-1 A1+
4,580,000 Arlington County, VA IDA (Air Force Association Project)
LOC Central Fidelity Bank 07/01/98 3.55 4,580,000
1,000,000 Carthage, MO IDA IDRB (Leggett & Platt, Inc.)
LOC Union Bank of Switzerland 09/01/30 3.60 1,000,000
2,300,000 Charlotte, NC Airport RB
MBIA Insured 07/01/16 3.35 2,300,000 VMIG-1 A1
3,400,000 Daviess County, KY Solid Waste Disposal Facilities RB
(Scott Paper Co. Project) - Series A 12/01/23 3.90 3,400,000 P1 A1+
1,000,000 Delaware County, PA IDA (Scott Paper Company)-Series A 12/01/18 3.45 1,000,000 P1 A1+
1,540,000 Elkhart County, IN EDRB (Burger Diary Corporation Project)
LOC Old Kent Bank & Trust Co. 12/01/11 3.45 1,540,000 A1
1,300,000 Florida HFA MHRB (Falls of Venice Project)
LOC PNC Bank 12/01/11 3.75 1,300,000 P1 A1
1,380,000 Fulton County, GA RDA (Darby Printing Company)
LOC Wachovia Bank & Trust Co., N.A. 04/01/11 3.90 1,380,000
9,400,000 Gulf Coast IDA Solid Waste Disposal RB
(Citgo Petroleum Corporation Project) - Series 1995
LOC NCNB 05/01/25 3.95 9,400,000 VMIG-1
2,480,000 Haleyville, AL IDA IDRB (Cusseta Wood Inc. Project)
LOC Columbus Bank & Trust Company 11/01/04 3.65 2,480,000 P1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (b) (Continued)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,325,000 Hamilton County, OH EDRB (Berman Printing Company)
LOC Fifth Third Bank 12/01/08 3.60% $ 3,325,000
1,900,000 Indiana State EDC
(Fischer Enterprise Limited Project) - Series 1989
LOC PNC Bank 12/01/04 3.75 1,900,000
2,000,000 Jackson County, MS PCRB
(Chevron USA Incorporated Project) 12/15/24 3.90 2,000,000 P1
502,000 Jefferson County, KY IDRB (Belknap Incorporation)
LOC Chase Manhattan Bank, N.A. 12/01/14 3.60 502,000 A1
2,600,000 King George County, VA (Birchwood Power Project) - Series A
Credit Suisse 04/01/26 3.90 2,600,000 A1+
1,000,000 Lewisville, IDA Incorporated IDRB
(Benedict Optical Incorporated Project)
LOC Comerica Bank 05/01/08 3.85 1,000,000
5,200,000 Lexington - Fayette Urban County Airport Corporation
LOC Credit Locale de France 04/01/24 3.95 5,200,000 P1 A1+
2,000,000 Massachusetts IDA IDRB (Performance Corregated Project)
LOC National City Bank 03/01/09 3.70 2,000,000
3,300,000 Massachusetts IFA (890 Commonwealth Realty Trust)
LOC The Bank of New York 12/01/11 3.65 3,300,000
400,000 Meridian, MI EDC (Hannah Research & Technology Center)
LOC Barclays Bank PLC 11/15/14 3.45 400,000 A1+
2,000,000 Michigan Higher Education Student Loan - Series XII F
AMBAC Insured 10/01/20 3.45 2,000,000 VMIG-1
1,400,000 Michigan State (Allied Signal) 04/01/99 3.60 1,400,000 A1
870,000 Michigan State Strategic Fund (260 Brown Street)
LOC Comerica Bank 10/01/15 3.40 870,000 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 3.55 2,000,000
4,000,000 Michigan Strategic Fund
(National Rubber Michigan Incorporated Project)
LOC National Bank of Canada 09/01/11 3.65 4,000,000 P1
2,000,000 Montgomery County, PA Redevelopment Authority MHRB
(Glenmore Associates Project)
Fannie Mae Collateralized 11/15/25 3.60 2,000,000 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
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (b) (Continued)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 North Carolina Medical Care
Commission Retirement Community RB - Series B
LOC Lasalle National Bank 11/15/09 3.50% $ 1,000,000 A1+
1,500,000 North Carolina Medical Care Commission (Carol Woods)
LOC Bank of Scotland 04/01/21 4.00 1,500,000 VMIG-1 A1
2,220,000 Northport, AL Multi Family RB (River Run) - Series A
LOC Amsouth Bank N.A. 09/03/15 3.60 2,220,000
2,700,000 Parish of Calcasieu IDRB
(Citgo Petroleum Corporation) - Series 1995
LOC Banque Nationale de Paris 03/01/25 3.95 2,700,000 VMIG-1
1,900,000 Portland, OR IDRB (Oregon Transfer Company)
LOC U.S. National Bank of Oregon 11/01/01 4.03 1,900,000 A1
2,275,000 Portsmouth, VA Redevelopment & Housing Authority
(Chowan Partners)
LOC Central Fidelity Bank 11/01/05 3.55 2,275,000
2,000,000 Richmond, VA Redevelopment & Housing Authority
(Tobacco Row)
LOC Westdeutsche Landesbank Girozentrale 10/01/24 3.60 2,000,000 VMIG-1
2,000,000 Richmond, VA Redevelopment & Housing Authority
(Tobacco Row)
LOC Westdeutsche Landesbank Girozentrale 10/01/24 3.60 2,000,000 VMIG-1
7,000,000 Rosebud County, Forsyth, MT PCRB (Pacificorp)
LOC Deutsche Bank A.G. 12/01/16 3.95 7,000,000
1,350,000 Sewickley Valley Hospital Authority, PA RN
(D.T. Watson Rehabilitation Hospital)
LOC PNC Bank 10/01/97 4.25 1,350,000
500,000 Shelby County, TN Health Educational & Housing
(Rhodes College)
LOC National Westminster Bank PLC 08/01/10 3.45 500,000 A1+
4,000,000 Washington State HFC RB
(Meridian Court Apartments Project) - Series 1996
LOC Bank of America 12/01/28 3.50 4,000,000 Aa3
3,200,000 West Side Calhoun County,
Navigation District Sewer & Solid Waste Disposal
(BP Chemicals Inc.) 04/01/31 3.90 3,200,000 A1+
4,600,000 Yakima County Public Corporation RB
(Michelson Packaging Project)
LOC Bank of America 08/01/06 3.50 4,600,000
-------------- -------------
101,022,000 Total Other Variable Rate Demand Instruments 101,022,000
-------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- ------
Put Bonds (c) (9.54%)
- --------------------------------------------------------------------------------------------------------------------------------
<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 04/01/97 4.00% $ 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 A1+
6,500,000 Hartford County, MD IDRB (A.O. Smith)
LOC Bank One Milwaukee, N.A. 03/03/98 3.75 6,500,000
3,340,000 Illinois Housing Development Authority
(Homeowners Mortgage) RB - Series - F2 12/18/97 3.70 3,340,000
3,000,000 Tennessee Housing Development Agency
(Home Ownership Program) 02/19/98 3.75 3,000,000 VMIG-1 A1+
3,040,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College) 11/01/97 3.75 3,040,000 A1+
-------------- -------------
20,235,000 Total Put Bonds 20,235,000
-------------- -------------
<CAPTION>
Tax Exempt Commercial Paper (18.13%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,300,000 City of Burlington, KS PCRB (Kansas City Power and Light)
LOC Deutsche Bank A.G. 05/21/97 3.45% $ 4,300,000 P1 A1+
1,000,000 Indiana Development Finance Authority
Solid Waste Disposal RB
(Pure Air on the Lake Partner)
LOC Fuji Bank, Ltd. 04/03/97 3.35 1,000,000 P1 A1
5,000,000 Mashantucket, CT
(Western) Pequot Tribe Tax Exempt CP - Series 1996
LOC Bank of America 04/10/97 3.50 5,000,000 P1 A1+
5,950,000 Michigan State Building Authority - Series 1
LOC Canadian Imperial Bank of Commerce 05/01/97 3.55 5,950,000 P1 A1+
7,500,000 Ohio Air Quality Development Authority, OH
PCRB - Series 1988 (Duquesne Light Co.)
LOC Toronto-Dominion Bank 06/18/97 3.50 7,500,000 A1+
4,000,000 Ohio Water Development Authority Solid Waste Disposal
RB - Series 1991A (Pure Air on the Lake)
LOC Toronto-Dominion Bank 04/03/97 3.35 4,000,000 A1+
1,100,000 Sarasota County, FL Public Hospital District HRB
(Sarasota Memorial Hospital) 06/25/97 3.55 1,100,000 VMIG-1
2,600,000 Sarasota County, FL Public Hospital District HRB
(Sarasota Memorial Hospital) 06/25/97 3.55 2,600,000 VMIG-1
</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 (Continued)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 7,000,000 Southern Minnesota Municipal Power Agency
(Power Supply System) CP - Series B
LOC Credit Suisse 04/03/97 3.20% $ 7,000,000 P1 A1
-------------- -------------
38,450,000 Total Tax Exempt Commercial Paper 38,450,000
-------------- -------------
<CAPTION>
Variable Rate Demand Instruments - Participations (b) (0.94%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 New Jersey State EDA IDRB
(Hartz Mountain Industries Project)
LOC Chase Manhattan Bank, N.A. 01/01/02 5.53% $ 1,000,000 P1 A1
1,000,000 New Jersey State EDA IDRB
(Harrison Riverside Project))
LOC Chase Manhattan Bank, N.A. 01/01/02 5.53 1,000,000 P1 A1
-------------- -------------
2,000,000 Total Variable Rate Demand Instruments - Participations 2,000,000
-------------- -------------
<CAPTION>
Variable Rate Demand Instruments - Private Placements (b) (6.12%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,185,000 El Paso Housing Finance Corporation MHRB
(Viva Apartment Project) - Series 1993
LOC General Electric Capital Corporation 09/01/23 3.65% $ 5,185,000 A1+
930,000 Jefferson County, MO IDA IDRB (Holley Partnership)
LOC Chase Manhattan Bank, N.A. 02/01/04 5.53 930,000 P1 A1
771,154 New Jersey State EDA IDRB (Henry Modelle & Company)
LOC Chase Manhattan Bank, N.A. 09/01/00 5.53 771,154 P1 A1
2,420,000 Phoenix, AZ IDA Multi-Family Housing RB
(Marines Mointe Apartments Project) - Series A
LOC General Electric Capital Corporation 10/01/23 3.65 2,420,000 A1+
1,400,000 Tyler House Certificate Trust
Certificates of Participation - Series 1995A
LOC PNC Bank 08/01/25 3.85 1,400,000 VMIG-1
2,281,000 York County, PA IDA IDRB
(Manor Care of Kingston Court Incorporated)
LOC Chase Manhattan Bank, N.A. 12/01/08 5.53 2,281,000 P1 A1
-------------- -------------
12,987,154 Total Variable Rate Demand Instruments - Private Placements 12,987,154
-------------- -------------
Total Investments (99.62%) (Cost $211,317,191+) 211,317,191
Cash and Other Assets, Net of Liabilities (0.38%) 799,175
-------------
Net Assets (100.00%) $ 212,116,366
=============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1997
================================================================================
FOOTNOTES:
(a) Unless the variable rate demand instruments are assigned their own ratings,
the ratings noted (unaudited) are the highest ratings assigned for tax
exempt 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 invests.
(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:
<C> <S>
BAN = Bond Anticipation Note IDRB = Industrial Development Revenue Bond
CP = Commercial Paper 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
GO = General Obligation RB = Revenue Bond
HDA = Housing Development Authority RDA = Revenue Development Authority
HFA = Housing Finance Authority RN = Revenue Note
HFC = Housing Finance Commission TAN = Tax Anticipation Note
HRB = Hospital Revenue Bond TAW = Tax Anticipation Warrant
IDA = Industrial Development Authority TRAN = Tax and Revenue Anticipation Note
UFSD = Unified School District
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
ASSETS:
<S> <C> <C> <C>
Investments in securities*........... $ 1,595,366,508 $ 218,449,822 $ 211,317,191
Cash................................. 2,712,921 724,750 -0-
Interest receivable.................. 5,495,743 569,780 1,376,544
------------------ ----------------- ---------------
Total Assets..................... 1,603,575,172 219,744,352 212,693,735
<CAPTION>
LIABILITIES:
<S> <C> <C> <C>
Dividends payable.................... 205,284 27,831 16,247
Management fee payable............... 1,025,307 143,510 142,498
Payable for securities purchased..... 1,100,000 -0- -0-
Other accounts payable............... 434,988 51,995 418,624
------------------ ----------------- ----------------
Total Liabilities................ 2,765,579 223,336 577,369
------------------ ----------------- ----------------
NET ASSETS............................. $ 1,600,809,593 $ 219,521,016 $ 212,116,366
================== ================= ================
<CAPTION>
SHARES OUTSTANDING:
<S> <C> <C> <C>
Cortland Shares...................... 1,162,017,759 164,945,330 153,340,264
Live Oak Shares...................... 441,089,617 55,218,521 58,800,786
Net asset value, offering and redemption
price per share, all classes
(net assets/shares).................. $ 1.00 $ 1.00 $ 1.00
================== ================= ================
</TABLE>
* Including repurchase agreements amounting to $51,000,000 and $47,000,000
for the Cortland General Money Market Fund and U.S. Government Fund,
respectively.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1997
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest Income......................... $ 77,338,407 $ 12,850,479 $ 8,116,106
-------------- -------------- --------------
Expenses:
Management fee--Note 3(a)............. 10,885,158 1,851,957 1,698,486
Distribution support and services
----Note 3(c):
Cortland shares................... 2,618,147 479,697 419,942
Live Oak shares................... 751,269 100,680 108,270
Other expenses........................ 71,167 36,328 11,106
-------------- -------------- --------------
Total Expenses.................... 14,325,741 2,468,662 2,237,804
Expenses waived by
Manager--Note 3(a) and (c)........... ( 57,065) ( 102,784) ( 19,127)
-------------- -------------- --------------
Net Expenses...................... 14,268,676 2,365,878 2,218,677
-------------- -------------- --------------
Net Investment Income................... $ 63,069,731 10,484,601 5,897,429
<CAPTION>
NET REALIZED GAIN
ON INVESTMENTS
<S> <C> <C> <C>
Net realized gain on investments........ 63,635 6,270 -0-
-------------- -------------- --------------
Increase in net assets from operations.. $ 63,133,366 $ 10,490,871 $ 5,897,429
============== ============== ==============
</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 Year Ended March 31, For the Year Ended March 31, For the Year Ended March 31,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income....... $ 63,069,731 $ 62,409,651 $ 10,484,601 $ 12,079,237 $ 5,897,429 $ 7,789,068
Net realized gain (loss) on
investments............. 63,635 182,364 6,270 ( 22,060) -0- 2,754
------------ ----------- ------------ ------------ ------------ ------------
Increase in net assets
from operations......... 63,133,366 62,592,015 10,490,871 12,057,177 5,897,429 7,791,822
Distributions
to shareholders from:
Net investment income:
Cortland shares........... ( 46,314,882) ( 56,739,267) ( 8,230,482) ( 11,281,834) ( 4,436,681)+ ( 7,250,573)+
Live Oak shares........... ( 16,876,826) ( 5,536,157) ( 2,235,131) ( 766,391) ( 1,475,242)+ ( 524,001)+
Capital share
transactions net (Note 4):
Cortland shares........... 559,763 165,048,002 ( 90,947,715) 36,908,866 ( 63,128,999) ( 7,599,135)
Live Oak shares........... 90,104,978 350,984,640 7,893,226 47,325,294 9,140,492 49,660,294
------------- ------------ ------------ ------------ ------------ ------------
Total increase (decrease)... 90,606,399 516,349,233 ( 83,029,231) 84,243,112 ( 54,003,001) 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................. $ 1,600,809,593 $1,510,203,194 $ 219,521,016 $ 302,550,247 $ 212,116,366 $ 266,119,367
============== ============= ============ ============ ============ ============
Undistributed net
investment income........ $ 28,197 $ 150,174 $ 50,000 $ 31,012 -0- $ 14,494
+ Designated as exempt-interest dividends for regular federal income tax purposes.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
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 have 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 Cortland 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 March 31, 1997, there were 9,571,788 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 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 March 31, 1997, Cortland General Fund, U.S. Government Fund
and Municipal Fund had unused capital loss carryforwards of approximately
$2,325,981, $715,280 and $32,156, respectively, available for Federal
income tax purposes to be applied against future securities profit, if any.
If not applied against future securities profit, $721,115 and $1,604,866
will expire in the years 2003 and 2004, respectively, for Cortland General
Fund. $264,039 and $451,241 will expire in the years 2003 and 2004,
respectively, for U.S. Government Fund. $16,757, $3,530 and $11,869 will
expire in the years 2001, 2002 and 2003, respectively, for Municipal Fund.
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.
(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.
(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 year ended March 31, 1997, the manager voluntarily waived investment
management fees of $42,433 and $7,567 for the Cortland shares and Live Oak
shares, respectively, of the Cortland U.S. Government Fund.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Note 3-Management Fee and Other Transactions With Affiliates: (Continued)
During the year ended March 31, 1997, the Distributor waived Distribution
support and services fees of $57,065, $52,784 and $19,127 for the Live Oak
shares of the Cortland General Fund, U.S. Government Fund and Municipal Fund,
respectively.
Note 4-Capital Share Transactions:
At March 31, 1997, 5 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 U.S. Government Municipal Money
Money Market Fund Fund Market Fund
------------------------------ ----------------------------- ------------------------------
For the Year Ended March 31, For the Year Ended March 31, For the Year Ended March 31,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cortland Shares
Shares sold.............. 3,372,653,022 5,692,461,972 482,519,139 1,147,151,347 636,672,511 1,118,581,921
Dividends reinvested..... 46,616,699 56,469,119 8,302,991 11,224,107 4,476,740 7,224,068
------------- ------------- ------------- ------------- ------------- -------------
3,419,269,721 5,748,931,091 490,822,130 1,158,375,454 641,149,251 1,125,805,989
Shares redeemed.......... (3,418,709,958) (5,583,883,089) ( 581,769,845) (1,121,466,588) ( 704,278,250) (1,133,405,124)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease).. 559,763 165,048,002 ( 90,947,715) 36,908,866 ( 63,128,999) ( 7,599,135)
============= ============= ============= ============= ============= =============
Live Oak Shares*
Shares sold.............. 1,692,487,353 803,496,773 198,329,103 107,188,689 195,656,417 108,031,220
Dividends reinvested..... 16,917,952 5,399,043 2,241,698 747,543 1,478,139 512,060
------------- ------------- ------------- ------------- ------------- -------------
1,709,405,305 808,895,816 200,570,801 107,936,232 197,134,556 108,543,280
Shares redeemed........... (1,619,300,327) ( 457,911,177) ( 192,677,575) ( 60,610,937) ( 187,994,064) ( 58,882,986)
------------- ------------- ------------- ------------- ------------- -------------
Net increase.............. 90,104,978 350,984,639 7,893,226 47,325,295 9,140,492 49,660,294
============= ============= ============== ============= ============= =============
* Live Oak shares commenced distribution on November 16, 1995.
The components of net assets at March 31, are as follows:
<CAPTION>
Cortland General Municipal Money
Money Market Fund U.S. Government Fund Market Fund
------------------------------ ----------------------------- ------------------------------
March 31, 1997 March 31, 1997 March 31, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Paid-in capital............ $1,603,107,376 $ 220,163,851 $ 212,141,050
Accumulated net
realized losses......... ( 2,325,980) ( 692,835) ( 24,684)
Undistributed net
investment income....... 28,197 50,000 -0-
-------------- ------------- -------------
Total net assets........... $1,600,809,593 $ 219,521,016 $ 212,116,366
============== ============= =============
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Note 5-Financial Highlights:
<TABLE>
<CAPTION>
Cortland General Money Market Fund
For the Year Ended March 31,
------------------------------------------------------------------------------------
Live Oak Shares Cortland Shares
--------------------- ---------------------------------------------------------
1997 1996# 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income.................... 0.045 0.018 0.044 0.049 0.038 0.025 0.028
Net realized and unrealized
gain/(loss) on investments.............. -- -- -- 0.001 ( 0.003)+ -- --
--------- --------- --------- --------- --------- --------- ---------
Total from investment operations 0.045 0.018 0.044 0.050 0.035 0.025 0.028
Less distributions:
Dividends from net investment income ( 0.045) ( 0.018) ( 0.044) ( 0.048) ( 0.038) ( 0.025) ( 0.028)
--------- --------- --------- --------- --------- --------- ---------
Total distributions....................... ( 0.045) ( 0.018) ( 0.044) ( 0.048) ( 0.038) ( 0.025) ( 0.028)
Net asset value, end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= =========
Total Return.............................. 4.59% 4.78%++ 4.52% 4.95% 3.91%+ 2.53% 2.88%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 440,457 $ 351,030 $1,160,352 $1,159,173 $ 993,854 $ 926,400 $ 904,735
Ratios to average net assets:
Expenses................................. 0.95%* 0.97%++* 1.02% 1.03% 1.03%* 1.02%* 1.00%*
Net investment income.................... 4.48% 4.68%++ 4.41% 4.86% 3.85% 2.48% 2.84%
</TABLE>
* Management and distribution support and services fees of .02%, .02%, and
.04% of average net assets, respectively, were waived during the years
ended 1995, 1994, and 1993 for Cortland shares. Distribution support and
service fees of .02% of average net assets were waived during both the
period ended March 31, 1996 and the year ended March 31, 1997 for Live Oak
shares.
++ Annualized
# Live Oak shares commenced distribution on November 16, 1995.
+ Includes the effect of a capital contribution from the Manager of $.004
per share. Without a capital contribution the net realized and unrealized
loss on investments would have been $.007 per share and the total return
would have been 2.89%.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Note 5-Financial Highlights: (Continued)
<TABLE>
<CAPTION>
U.S. Government Fund
For the Year Ended March 31,
------------------------------------------------------------------------------------
Live Oak Shares Cortland Shares
--------------------- ---------------------------------------------------------
1997 1996# 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................ 0.044 0.017 0.043 0.047 0.038 0.025 0.029
Net realized and unrealized
gain/(loss) on investments......... ( 0.001) -- ( 0.001) -- ( 0.003)+ -- --
--------- --------- --------- --------- --------- --------- ---------
Total from investment operations 0.043 0.017 0.042 0.047 0.035 0.025 0.029
Less distributions:
Dividends from net investment income ( 0.044) ( 0.017) ( 0.043) ( 0.047) ( 0.038) ( 0.025) ( 0.029)
--------- --------- --------- --------- --------- --------- ---------
Total distributions................... ( 0.044) ( 0.017) ( 0.043) ( 0.047) ( 0.038) ( 0.025) ( 0.029)
Net asset value, end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= =========
Total Return.......................... 4.53% 4.74%++ 4.37% 4.80% 3.84%+ 2.55% 2.94%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 55,057 $ 47,328 $ 164,464 $ 255,222 $ 218,307 $ 234,082 $ 242,199
Ratios to average net assets:
Expenses........................... 0.86%* 0.89%++* 1.01%* 1.04% 1.04%* 1.04%* 1.01%*
Net investment income.............. 4.45% 4.64%++ 4.30% 4.72% 3.74% 2.47% 2.89%
</TABLE>
* Management and distribution support and services fees of .02%, .01%, .01%
and .04% of average net assets, respectively, were waived during the years
ended 1997, 1995, 1994, and 1993 for Cortland shares. Management and
distribution support and service fees of .12% and .11% of average net
assets, respectively, were waived during the year ended March 31, 1997 and
the period ended March 31, 1996 for Live Oak shares.
++ Annualized
# Live Oak shares commenced distribution on November 16, 1995.
+ Includes the effect of a capital contribution from the Manager of $.006 per
share. Without a capital contribution the net realized and unrealized loss
on investments would have been $.009 per share and the total return would
have been 2.81%.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Note 5-Financial Highlights: (Continued)
<TABLE>
<CAPTION>
Municipal Money Market
For the Year Ended March 31,
------------------------------------------------------------------------------------
Live Oak Shares Cortland Shares
--------------------- ---------------------------------------------------------
1997 1996# 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income............... 0.027 0.011 0.026 0.030 0.026 0.018 0.022
Net realized and unrealized
gain/(loss) on investments......... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total from investment operations..... 0.027 0.011 0.026 0.030 0.026 0.018 0.022
Less distributions:
Dividends from net investment income. ( 0.027) ( 0.011) ( 0.026) ( 0.030) ( 0.026) ( 0.018) ( 0.022)
--------- --------- --------- --------- --------- --------- ---------
Total distributions.................. ( 0.027) ( 0.011) ( 0.026) ( 0.030) ( 0.026) ( 0.018) ( 0.022)
Net asset value, end of period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= =========
Total Return......................... 2.77% 2.96%++ 2.68% 3.06% 2.58% 1.82% 2.26%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 58,794 $ 49,663 $ 153,322 $ 216,456 $ 224,041 $ 240,570 $ 210,521
Ratios to average net assets:
Expenses............................ 0.93%* 0.96%++* 1.02% 1.03% 0.99%* 0.98%* 0.92%*
Net investment income............... 2.72% 2.91%++ 2.64% 3.02% 2.54% 1.79% 2.22%
</TABLE>
* Management and distribution support and services fees of .06%, .07%, and
.13% of average net assets, respectively, were waived during the years
ended 1995, 1994 and 1993 for Cortland shares. Distribution support and
service fees of .04% and .03% of average net assets, respectively, were
waived during the year ended March 31, 1997 and period ended March 31, 1996
for Live Oak shares.
++ Annualized
# Live Oak shares commenced distribution on November 16, 1995.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
================================================================================
Shareholders and Board of Directors
Cortland Trust, Inc.
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of Cortland Trust, Inc. (comprising,
respectively, the Cortland General Money Market Fund, the U.S. Government Fund
and the Municipal Money Market Fund) as of March 31, 1997, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights (Note 5) for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1997, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting Cortland Trust, Inc. at March 31, 1997, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights (Note 5) for each of the indicated years, in conformity with
generally accepted accounting principles.
\s\ Ernst & Young LLP
May 1, 1997
New York, New York
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ----------------
CORTLAND
TRUST INC.
- ----------------
CORTLAND GENERAL
MONEY MARKET
FUND
- ----------------
U.S. GOVERNMENT
FUND
- ----------------
MUNICIPAL MONEY
MARKET FUND
- ----------------
Annual Report
March 31, 1997
CORTLAND
600 Fifth Avenue
New York, NY 10020
212-830-5200
- --------------------------------------------------------------------------------
<PAGE>
