<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, 1998.
The Cortland General Money Market Fund had 84,971 shareholder accounts and net
assets of $1,115,259,674 as of March 31, 1998.
As of March 31, 1998, the U.S. Government Fund had 6,443 shareholder accounts
and net assets of $166,482,253.
As of March 31, 1998, the Municipal Money Market Fund had 2,875 shareholder
accounts and net assets of $287,792,230.
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>
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CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-------------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- --------
Commercial Paper (14.62%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000,000 Banco Santander Puerto Rico 04/06/98 5.71% $ 19,984,583 P1 A1+
20,000,000 Bank of America Corporation 07/07/98 5.61 19,705,767 P1 A1+
30,000,000 Caisse Centrale Desjardins du Quebec 04/22/98 5.52 29,904,800 P1 A1+
15,000,000 GTE Corporation (b) 04/02/98 5.61 14,997,679 P2 A2
12,495,000 GTE Corporation (b) 04/13/98 5.75 12,471,218 P2 A2
11,812,000 GTE Corporation (b) 04/28/98 5.77 11,761,238 P2 A2
10,000,000 GTE Corporation (b) 05/04/98 5.78 9,947,292 P2 A2
20,000,000 Sigma Finance Corporation 06/30/98 5.59 19,727,500 P1 A1+
25,000,000 Sigma Finance Corporation 07/17/98 5.51 24,601,722 P1 A1+
-------------- -------------
164,307,000 Total Commercial Paper 163,101,799
-------------- -------------
Domestic Certificates of Deposit (4.04%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000,000 Chase Manhattan Bank 07/07/98 5.62% $ 20,000,000
25,000,000 PNC Bank, N.A. 05/27/98 5.67 24,998,466 P1 A1
-------------- -------------
45,000,000 Total Domestic Certificates of Deposit 44,998,466
------------- -------------
Eurodollar Certificate of Deposit (1.79%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000,000 Toronto-Dominion Bank 07/20/98 5.52% $ 19,999,154 P1 A1+
-------------- -------------
20,000,000 Total Eurodollar Certificate of Deposit 19,999,154
-------------- -------------
Letter of Credit Commercial Paper (19.09%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 Banco Bradesco S.A.
LOC Barclays Bank PLC 06/18/98 5.85% $ 9,878,017 P1 A1+
15,000,000 Banco De Credito Nacional, S.A.
LOC Barclays Bank PLC 11/20/98 5.55 14,482,546 P1 A1+
20,000,000 Banco Rio de La Plata S.A.
. LOC Bayerische Vereinsbank, A.G. 12/07/98 5.68 19,243,056 P1 A1+
10,000,000 Bancomer, S.A.
LOC Bank of Montreal 04/22/98 5.84 9,966,604 P1 A1+
13,000,000 Cemex S.A. de C.V.
LOC Credit Suisse First Boston 05/13/98 5.54 12,917,038 P1 A1+
15,000,000 China Ocean Shipping Company
LOC Credit Suisse First Boston 04/06/98 5.57 14,988,521 P1 A1+
6,550,000 Cibinong International Finance
LOC Bank of America 05/26/98 5.60 6,495,162 P1 A1+
10,000,000 ContiFinancial Corporation
LOC Dresdner Bank A.G. 05/07/98 5.70 9,944,700 P1 A1+
12,000,000 Corporacion Andina de Fomento
LOC Barclays Bank PLC 04/24/98 5.50 11,958,447 P1 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
------ ---- ----- ------ ------- --------
Letter of Credit Commercial Paper (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 8,000,000 Demir Funding Corporation I
LOC Bayerische Vereinsbank, A.G. 04/13/98 5.47% $ 7,985,600 P1 A1+
17,000,000 Demir Funding Corporation I
LOC Bayerische Vereinsbank, A.G. 04/13/98 5.58 16,968,833 P1 A1+
5,000,000 Demir Funding Corporation II
LOC Bayerische Vereinsbank, A.G. 04/13/98 5.47 4,991,000 P1 A1+
10,000,000 Formosa Plastics Corporation, U.S.A.
LOC Bank of America 06/04/98 5.63 9,902,222 P1 A1+
20,000,000 Minmetals Capitals & Securities, Inc.
LOC Credit Suisse First Boston 08/24/98 5.55 19,565,806 P1 A1+
10,000,000 Orix America, Inc.
LOC Bank of America 10/09/98 5.52 9,718,806 P1 A1+
9,000,000 TEB Funding Corporation II
LOC Societe Generale 06/03/98 5.62 8,912,745 P1 A1+
25,000,000 UniFunding
LOC Unibank 04/21/98 5.50 24,924,583 P1 A1
-------------- -------------
215,550,000 Total Letter of Credit Commercial Paper 212,843,686
-------------- -------------
Loan Participations (6.28%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 30,000,000 GMAC Mortgage Corporation (c) 04/01/98 6.28% $ 30,000,000
10,000,000 Marsh & McLennan Companies (d) 11/24/98 5.65 10,000,000 P1 A1+
30,000,000 Marsh & McLennan Companies (e) 03/24/99 5.69 30,000,000 P1 A1+
-------------- -------------
70,000,000 Total Loan Participations 70,000,000
-------------- -------------
Master Notes (10.31%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 Donaldson, Lufkin & Jenrette (f) 02/05/99 5.73% $ 5,000,000
35,000,000 Morgan (J.P.) Securities, Inc. (g) 04/02/98 5.67 35,000,000
25,000,000 The Goldman Sachs Group L.P. (h) 04/28/98 5.72 25,000,000
50,000,000 Willamette Industries, Inc. (i) 06/18/98 5.71 50,000,000 MIG-1 A1+
-------------- -------------
115,000,000 Total Master Notes 115,000,000
-------------- -------------
Medium Term Notes (4.93%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 35,000,000 First U.S.A. Credit Master Trust - Series 1995-96
Class A (Steers) (j) 12/10/98 5.69% $ 35,000,000
20,000,000 Long Lane Master Trust III (k) 11/02/98 5.68 20,000,000
-------------- -------------
55,000,000 Total Medium Term Notes 55,000,000
-------------- -------------
Other Notes (23.12%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,600,000 2150 Investment Company - Series 1997 (l)
LOC Fifth Third Bank 02/01/17 5.65% $ 2,600,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
================================================================================
<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>
$ 4,350,000 Alabama State IDA (Central Casting Corporation) (l)
LOC First Union National Bank of North Carolina 11/01/15 5.65% $ 4,350,000
3,750,000 Albany Dougherty, GA Payroll IDA
(Flint River Service, Inc.Project-B) (l)
LOC Columbus Bank & Trust Company 05/01/17 5.71 3,750,000 A1
5,000,000 CA Department of Water Resources
(Control Valley Project) Water System RB - Series R-V (l)
LOC Canadian Imperial Bank of Commerce 12/01/24 5.70 5,000,000
5,950,000 Cheney Brothers Inc. (l)
LOC First Union National Bank of North Carolina 12/01/16 5.65 5,950,000
9,575,000 Community Development Authority of the City of Madison, WI
RB - Series 1996A (Block '89 Project) (l) 01/01/19 5.68 9,575,000
2,020,000 Consolidated Equities, LLC - Series 1995 (l)
LOC Old Kent Bank & Trust Co. 12/01/25 5.68 2,020,000
4,000,000 Cunat Capital Corporation - Series 1997- B
(Cunat Bros., Inc./Irish Parie L.P.) (l)
LOC LaSalle National Bank 06/01/27 5.68 4,000,000
2,000,000 Delta Capital L.L.C. - Series A (l)
LOC First Michigan Bank 01/01/26 5.68 2,000,000
2,955,000 Devin F. & Janis L. McCarthy - Series 1997 (l)
LOC Star Bank, N.A. 07/01/17 5.70 2,955,000
5,000,000 F.C. Bellevue, Inc. (l)
LOC National City Bank 08/01/38 5.65 5,000,000
2,430,000 G&J Land Management - Series 1996 (l)
LOC Fifth Third Bank 12/01/17 5.68 2,430,000
10,410,000 General Electric Engine Receivables 1995-1 Trust VR
Guaranteed Notes (m) 02/14/00 5.68 10,410,000 P1 A1+
6,505,450 General Electric Engine Receivables 1996-1 Trust VR
Guaranteed Notes (n) 02/14/01 5.68 6,505,450 P1 A1+
8,315,000 Institutional Distributors, Inc. - Series 1997 (l)
LOC Star Bank, N.A. 06/01/17 5.70 8,315,000
9,800,000 Jacksonville Health Charity Group (Baptist/St. Vincent) (l)
MBIA Insured 08/15/19 5.75 9,800,000 VMIG-1
1,150,000 KBL Capital Fund, Inc. (BH Reality Limited Partnership) (l)
LOC Old Kent Bank & Trust Co. 05/01/21 5.68 1,150,000 A1
4,280,000 KBL Capital Fund, Inc. - Series 1995 A (l)
LOC Old Kent Bank & Trust Co. 07/01/05 5.68 4,280,000 A1
2,000,000 Kit Carson County, Colorado Agricultural Development RB
Series 1997 (Midwest Farms, LLC) (l)
LOC Norwest Bank Minneapolis 06/01/27 5.75 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 Notes (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,500,000 Laurel County, Kentucky Industrial Building RB
(Consolidated Biscuit Co. Project) (l)
LOC Fifth Third Bank 03/01/15 5.95% $ 4,500,000
4,000,000 Macroe Properties, Inc. (l)
LOC First Michigan Bank 09/01/27 5.68 4,000,000
4,400,000 Maryland HEFA RB (North Arundale Hospital) (l)
LOC Mellon Bank N.A. 07/01/27 5.75 4,400,000
4,000,000 Maximum Principle Amount Limited Partnership
(Riverview Medical Office Building) (l)
LOC National City Bank 11/01/17 5.65 4,000,000
6,500,000 Maximum Principle Amount VRB Notes
(Hancor, Inc. Project) (l)
LOC National City Bank 12/01/07 5.65 6,500,000 A1
16,620,000 Medical Clinic Board of Mobile, AL RB
(Springhill Medical Complex) - Series 1996B (l)
LOC Amsouth Bank N.A. 09/01/11 5.65 16,620,000 P1
1,000,000 Miami Valley Steel Service, Inc. - Series 1996 (l)
LOC National City Bank 02/01/16 5.65 1,000,000
2,790,000 Michigan HEFA (Hope College) - Series 1996M (l)
LOC Old Kent Bank & Trust Co. 10/01/16 5.68 2,790,000
6,900,000 Mississippi Business Finance Corporation IDRB
(Howard Industries, Inc.) - Series 1995 (l)
LOC National Bank of Detroit 06/01/10 5.75 6,900,000 P1
4,390,000 New Federal Cold Storage, Incorporated Project
Series 199C (l)
LOC National City Bank 08/01/11 5.65 4,390,000
20,000,000 Oakland-Alameda County (Oakland Coliseum)
LOC Canadian Imperial Bank of Commerce 05/28/98 5.60 20,000,000
5,500,000 Oxnard Financing Authority Refunding Lease RB
Series 1993 (l)
LOC Union Bank of California 06/01/06 5.70 5,500,000 A1
1,800,000 Pomeroy Investment, L.L.C. - Series 1997 (l)
LOC Star Bank, N.A. 04/01/17 5.67 1,800,000
4,000,000 Prince William County, VA - Series A (l)
LOC Wachovia Bank & Trust Co., N.A. 03/01/17 5.69 4,000,000 VMIG-1
25,000,000 SMM Trust 1997 - L 05/29/98 5.63 25,000,000 P1 A1+
4,500,000 Shepherd Capital L.L.C.
LOC First of America Michigan National Bank 09/15/47 5.68 4,500,000
5,090,000 Southern Electric Generating Company 05/04/98 5.60 5,064,105 P1 A1
19,000,000 State of Missouri HEFA
(SSM Health Care System) 1995 - Series D (l)
MBIA Insured 06/01/24 5.75 19,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
================================================================================
<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>
$ 12,640,000 Stone Creek, L.L.C. - Series 1995 (l)
LOC Columbus Bank & Trust Company 08/01/22 5.75% $ 12,640,000 P1
2,550,000 Vista Funding Corporation - Series 1997A (l)
LOC Fifth Third Bank 07/01/15 5.68 2,550,000
1,600,000 Walt Sweeney Ford - Series 1996 (l)
LOC Fifth Third Bank 01/01/12 5.68 1,600,000
2,580,000 Washington State Housing Finance Commission
(Marketplace Apt) (o)
LOC Bank One 07/01/29 5.75 2,580,000 VMIG-1
3,220,000 Westchester County, NY Industrial Development Agency RB
(B.W.P. Distributors Inc.) (l)
LOC First Union National Bank of North Carolina 10/01/28 5.65 3,220,000
3,230,000 William Thies & Son, Inc. (l)
LOC First Union National Bank of North Carolina 03/01/07 5.65 3,230,000
-------------- --------------
257,900,450 Total Other Notes 257,874,555
-------------- --------------
Repurchase Agreement, Overnight (6.01%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 67,000,000 The Goldman Sachs Group L.P., dated 03/31/98
(Collateralized by $75,250,239 GNMA, 6.125%, due 09/16/27) 04/01/98 6.05% $ 67,000,000
------------- --------------
67,000,000 Total Repurchase Agreement, Overnight 67,000,000
------------- --------------
U.S. Government Obligation (0.85%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 U.S. Treasury Bills 03/04/99 5.41% $ 9,519,307
------------- --------------
10,000,000 Total U.S. Government Obligation 9,519,307
------------- --------------
Yankee Certificates of Deposit (9.86%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 Barclays Bank PLC (p) 04/16/98 5.65% $ 10,000,000 P1 A1+
15,000,000 Canadian Imperial Bank of Commerce 04/14/98 5.43 15,000,534 P1 A1+
10,000,000 Canadian Imperial Bank of Commerce 05/26/98 5.53 10,000,000 P1 A1+
15,000,000 Cregem NY
LOC Credit Belgique 04/01/99 5.80 14,992,818 P1 A1+
10,000,000 Deutsche Bank, A.G. 03/02/99 5.70 9,995,601 P1 A1+
15,000,000 Rabobank Nederland 10/06/98 5.64 15,005,258 P1 A1+
20,000,000 Swiss Bank Corporation 02/26/99 5.69 19,991,307 P1 A1+
15,000,000 Swiss Bank Corporation 03/22/99 5.68 14,993,708 P1 A1+
------------- --------------
110,000,000 Total Yankee Certificates of Deposit 109,979,226
------------- --------------
Total Investments (100.90%) (Cost $1,125,316,193+) 1,125,316,193
Liabilities in Excess of Cash and Other Assets (-0.90%) ( 10,056,519)
--------------
Net Assets (100.00%) $1,115,259,674
==============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
FOOTNOTES:
(a) The ratings noted (unaudited) 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 invests.
(b) These are split rated securities, given the highest ratings by at least two
nationally recognized rating agencies.
(c) The interest rate is adjusted daily based upon the Federal Funds effective
rate plus 15 basis points.
(d) The interest rate is adjusted quarterly based upon three month LIBOR plus 2
basis points.
(e) The interest rate is adjusted quarterly based upon three month LIBOR.
(f) The interest rate is adjusted monthly based upon one month LIBOR plus
5 basis points; 30 day put option to issuer only.
(g) The interest rate is adjusted monthly based upon the one month LIBOR flat;
daily put option to issuer only.
(h) The interest rate is adjusted daily based upon the opening of Federal Funds
plus 10 basis points; daily put option to issuer only.
(i) The interest rate is adjusted monthly based upon the one month LIBOR rate
plus 3 basis point; 5 day put option to issuer only.
(j) The interest rate is adjusted monthly based upon the one month LIBOR.
(k) The interest rate is adjusted quarterly based upon three month LIBOR plus 3
basis points.
(l) These securities have a 7 day put feature exercisable by the Fund at par
value. Rate changes weekly.
(m) The interest rate is adjusted weekly based upon the commercial paper
composite plus 5 basis point; weekly put option.
(n) The interest rate is adjusted weekly based upon one month LIBOR minus 1
basis point; weekly put option.
(o) The interest rate is adjusted weekly at par value.
(p) The interest rate is adjusted daily based upon the prime rate.
<TABLE>
<CAPTION>
KEY:
<S> <C><C> <C> <C><C>
GMAC = General Motors Acceptance Corporation LOC = Letter of Credit
GNMA = Government National Mortgage Association MBIA = Municipal Bond Insurance Association
HEFA = Health & Education Facilities Authority RB = Revenue Bond
IDA = Industrial Development Authority VR = Variable Rate
IDRB = Industrial Development Revenue Bond VRB = Variable Revenue Bond
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 2)
------ ---- ----- ------
U. S. Government Agencies (66.88%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,000,000 Federal Farm Credit Bank (a) 05/27/98 5.59% $ 4,999,632
5,000,000 Federal Farm Credit Bank 06/01/98 5.50 5,000,000
2,000,000 Federal Farm Credit Bank 02/25/99 5.56 1,903,567
5,000,000 Federal Home Loan Bank 07/13/98 5.39 4,924,896
5,000,000 Federal Home Loan Bank 10/08/98 5.45 4,861,986
5,000,000 Federal Home Loan Bank Note 03/17/99 5.71 5,000,000
10,000,000 Federal Home Loan Mortgage Corporation 04/10/98 5.35 9,986,800
5,000,000 Federal Home Loan Mortgage Corporation 05/14/98 5.43 4,967,929
5,000,000 Federal Home Loan Mortgage Corporation 06/04/98 5.42 4,952,622
5,000,000 Federal Home Loan Mortgage Corporation 06/12/98 5.39 4,947,200
5,650,000 Federal Home Loan Mortgage Corporation 06/19/98 5.42 5,655,661
5,000,000 Federal National Mortgage Association 04/10/98 5.41 4,993,325
5,000,000 Federal National Mortgage Association 04/15/98 5.41 4,989,626
5,000,000 Federal National Mortgage Association 05/28/98 5.38 4,958,200
5,000,000 Federal National Mortgage Association 07/09/98 5.48 4,926,713
5,000,000 Federal National Mortgage Association 07/14/98 5.43 4,923,733
5,000,000 Federal National Mortgage Association 10/15/98 5.49 4,983,515
6,360,000 Federal National Mortgage Association 12/17/98 5.46 6,370,987
3,000,000 Federal National Mortgage Association 02/19/99 5.57 2,993,755
10,000,000 Federal National Mortgage Association (b) 05/21/98 5.62 9,999,198
5,000,000 Federal National Mortgage Association (c) 06/19/98 5.58 4,999,361
-------------- -------------
112,010,000 Total U. S. Government Agencies 111,338,706
-------------- -------------
Letter of Credit Commercial Paper (2.06%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,444,000 Kirksville, College of Osteopathic Medicine, Inc.
LOC Student Loan Marketing Association 05/07/98 5.55% $ 3,425,058
-------------- -------------
3,444,000 Total Letter of Credit Commercial Paper 3,425,058
-------------- -------------
Repurchase Agreements, Overnight (30.63%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 30,000,000 The Goldman Sachs Group L.P. dated 03/31/98
(Collateralized by $31,726,733 GNMA, 6.000% to 6.125%,
due 06/20/27 to 10/20/27) 04/01/98 6.05% $ 30,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 2)
------ ---- ----- ------
Repurchase Agreements, Overnight (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 21,000,000 Morgan (J.P.) Securities, Inc. dated 03/31/98
(Collateralized by $21,169,000 Treasury Note, 5.875%,
due 01/31/99) 04/01/98 6.05% $ 21,000,000
-------------- --------------
51,000,000 Total Repurchase Agreements, Overnight 51,000,000
-------------- --------------
Total Investments (99.57%) (Cost $165,763,764+) 165,763,764
Cash and Other Assets, Net of Liabilities (0.43%) 718,489
--------------
Net Assets (100.00%) $ 166,482,253
==============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
FOOTNOTES:
(a) This is a variable rate Federal Farm Credit Bank Floating Rate Note. The
interest rate is adjusted daily based upon the prime rate minus 2.96.
(b) This is a variable rate Federal National Mortgage Association Floating Rate
Note. The interest rate is adjusted daily based upon the prime rate minus
2.94%.
(c) This is a variable rate Federal National Mortgage Association Floating Rate
Note. The interest rate is adjusted daily based upon the prime rate minus
2.98%.
<TABLE>
<CAPTION>
KEY:
<S> <C><C>
LOC = Letter of Credit
GNMA = Government National Mortgage Association
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- -------
Tax Exempt Investments (15.28%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 900,000 City of Burlington, VT RAN 06/26/98 4.15% $ 902,773
6,500,000 City of Philadelphia, PA TRAN - Series A 06/30/98 3.45 6,514,275 MIG-1 SP-1+
5,000,000 Commonwealth of Puerto Rico TRAN - Series A 07/30/98 3.46 5,016,286 MIG-1 SP-1+
3,100,000 Cook County, IL High School District #227
(Rich Township Limited Tax School Bond) 12/01/98 3.90 3,111,053
1,699,000 Dansville, NY BAN 06/26/98 3.85 1,700,345
900,000 Harris County, TX Hospital District RB
AMBAC Insured 02/15/99 3.53 927,150
2,000,000 Indiana Bond Bank Advanced Funding Project Notes
Series 1998A-2 01/20/99 3.56 2,006,231 MIG-1 SP-1+
1,460,000 King County, WA School District #4125
FGIC Insured 12/01/98 3.85 1,468,029
5,000,000 New York City, NY RAN - Series A
LOC Morgan Guaranty/Bayerische Landesbank/
Westdeutsche Landesbank/Societe Generale/Helba
Landesbank/National Westminster PLC 06/30/98 3.53 5,011,096 MIG-1 SP-1+
5,000,000 Ohio Housing Finance Agency Residential Mortgage 1998
Series A-1
GIC - Trinity Funding 03/01/99 3.80 5,000,000 A1+
1,000,000 School District of City of Detroit, MI State School Aid Notes
(Wayne County) 05/01/98 3.85 1,000,478 SP-1+
3,500,000 South Bend Indiana Community School Corporation TAW 12/31/98 3.96 3,503,783
7,800,000 Sun Prairie Area School District TRAN 08/24/98 3.95 7,814,883
-------------- ------------
43,859,000 Total Tax Exempt Investments 43,976,382
-------------- ------------
<CAPTION>
Variable Rate Demand Instruments (b) (55.09%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,455,000 Auburn, AL Non-Profit HDA (Lakeside Project)
LOC Columbus Bank & Trust Company 09/01/27 3.95% $ 5,455,000 A1
6,200,000 Brazos River Authority, TX
(Utilities Electric Project) - Series 1996A
AMBAC Insured 03/01/26 3.85 6,200,000 VMIG-1 A1
2,000,000 Brazos River Authority, TX
(Utilities Electric Project) - Series 1996C
AMBAC Insured 06/01/30 3.85 2,000,000 VMIG-1 A1
600,000 Butler County, PA IDA
(Armco Incorporated Project) - Series 1996A
LOC Chase Manhattan Bank, N.A. 06/01/20 3.95 600,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- -------
Variable Rate Demand Instruments (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,500,000 City of Deridder IDRB (Pax Inc. Project)
LOC Bank One 08/01/12 3.90% $ 3,500,000 A1+
2,000,000 Clark County, NV IDRB
(Nevada Cogeneration Assoc. #2) - Series 1992
LOC ABN AMRO Bank N.V. 12/01/22 3.90 2,000,000 VMIG-1 A1+
2,000,000 Connecticut State Development Authority
(CT Light & Power Company Project) - Series 1993A
LOC Deutsche Bank A.G. 09/01/28 3.65 2,000,000 VMIG-1 A1+
5,000,000 County of Cuyahoga, OH
AMBAC Insured 01/01/16 3.70 5,000,000 VMIG-1 A1+
2,900,000 Covington, KY IDRB (Atkins & Pierce, Inc. Project)
LOC Fifth Third Bank 04/01/05 3.70 2,900,000
300,000 Delaware County, PA IDA PCRB
(Philadelphia Electric Co.) - Series A
LOC Toronto-Dominion Bank 08/01/16 3.80 300,000 P1 A1+
6,450,000 Delaware State EDA RB (Delmarva Power & Light) 10/01/29 3.85 6,450,000 VMIG-1 A1
8,250,000 Director State of NV Dept Business & Industry IDRB
(Valley Joist Inc. Project) - Series A
LOC Toronto-Dominion Bank 06/01/17 3.85 8,250,000 A1+
2,000,000 Finance Authority of Maine
(William Arthur, Inc.) - Series 1997
LOC First National Bank of Chicago 10/01/12 3.95 2,000,000 A1+
7,300,000 Fulton County, GA HRB (Shepard Center Inc. Project)
LOC Wachovia Bank & Trust Co., N.A. 09/01/17 3.70 7,300,000 A1+
6,445,000 Fulton County, GA MHRB
Fannie Mae Collateralized 04/01/30 3.70 6,445,000 A1+
1,290,000 Fulton County, GA Development Authority RB
(Darby Printing Company)
LOC Wachovia Bank & Trust Co., N.A. 04/01/11 4.15 1,290,000
2,500,000 Gulf Coast IDA Solid Waste Disposal RB
(Citgo Petroleum Corporation Project) - Series 1994
LOC Wachovia Bank & Trust Co., N.A. 04/01/26 3.90 2,500,000 VMIG-1 A1+
9,400,000 Gulf Coast IDA Solid Waste Disposal RB
(Citgo Petroleum Corporation Project) - Series 1995
LOC Nations Bank 05/01/25 3.90 9,400,000 VMIG-1
1,000,000 Gulf Coast Waste Disposal Authority Solid Waste Disposal
RB (Amoco Oil Co.) - Series 1994 08/01/23 3.85 1,000,000 VMIG-1 A1+
4,600,000 Hamilton County, OH HRB Health Alliance - Series A
MBIA Insured 01/01/18 3.65 4,600,000 VMIG-1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
================================================================================
<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>
$ 20,000,000 Harris County, TX HFDC (Sisters of Charity) - Series C 07/01/23 3.70% $ 20,000,000 VMIG-1 A1+
2,400,000 Industrial Dist. #3 Parish of W. Baton Rouge
(Dow Chemical Co.) - Series 1994A 12/01/24 3.90 2,400,000 P1 A1
1,100,000 Jackson County, MS PCRB
(Chevron USA Inc. Project) - Series 1994 12/15/24 3.85 1,100,000 P1
1,000,000 Lewisville, IDA Incorporated IDRB
(Benedict Optical Inc. Project)
LOC Comerica Bank 05/01/08 4.05 1,000,000 P1
3,000,000 Lincoln County, WY PCRB (Exxon Corp.) - Series 1987B 07/01/17 3.90 3,000,000 P1 A1+
6,900,000 Marion County, WV County Commission Solid Waste
Disposal Facility RB (Granttown Project)
LOC National Westminster Bank PLC 10/01/17 3.80 6,900,000 VMIG-1 A1+
5,000,000 Metropolitan Washington DC Airport Authority RB
LOC Union Bank of Switzerland 10/01/27 3.70 5,000,000 VMIG-1 A1+
2,100,000 North Texas Higher Education
Authority Student Loan RB - Series C
AMBAC Insured 04/01/36 3.80 2,100,000 VMIG-1
2,700,000 Parish of Calcasieu IDRB
(Citgo Petroleum Corporation) - Series 1995
LOC Banque Nationale de Paris 03/01/25 3.90 2,700,000 VMIG-1
500,000 Pennsylvania EDFA
LOC PNC Bank, N.A. 08/01/06 3.95 500,000
2,200,000 Pennsylvania EDFA
LOC PNC Bank, N.A. 12/01/12 3.95 2,200,000
2,000,000 Phoenix, AZ IDA MHRB (Sunset Ranch)
LOC Swiss Bank Corporation 12/01/27 3.80 2,000,000 VMIG-1
2,500,000 Port of Corpus Christie Nueces County, TX
Koch Refining Co. - Series 1995A 05/01/25 3.65 2,500,000 VMIG-1 A1+
1,600,000 Portland, OR IDRB (Oregon Transfer Company)
LOC US National Bank of Oregon 11/01/01 4.28 1,600,000
2,000,000 Regional Transportation District Colorado
(Transit Vehicles Project) - Series A
LOC State Street Bank & Trust Co. 12/01/17 3.70 2,000,000 A1+
4,700,000 Sheboygan, WI PCRB (Power & Light) 08/01/14 3.60 4,700,000 VMIG-1
5,000,000 South Texas Higher Education Authority
MBIA Insured 12/01/03 3.75 5,000,000 VMIG-1
7,000,000 Sussex County, DE IDRB
(Perdue Farms Inc. Project) - Series 1992
LOC Rabobank Nederland 04/01/12 3.85 7,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 2) Moody's & Poor's
------ ---- ----- ------ ------- -------
Variable Rate Demand Instruments (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,100,000 Washington State HFC MHRB (Wadering Creek Project)
LOC Bank of America 01/01/26 3.95% $ 2,100,000 VMIG-1
4,300,000 West Side Calhoun County, TX Navigation District Sewer &
Solid Waste Disposal (BP Chemicals Inc.) 04/01/31 3.90 4,300,000 P1 A1+
1,250,000 York County, PA IDA Limited Obligation RB
(Metal Exchange Corporation Project) - Series 1996
LOC Comerica Bank 06/01/06 4.00 1,250,000
------------- -------------
158,540,000 Total Variable Rate Demand Instruments 158,540,000
------------- -------------
<CAPTION>
Put Bonds (c) (6.01%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Butler County IDA RB
(Concordia Lutheran Ministries) - Series 1998A
LOC PNC Bank, N.A. 02/01/99 2.32% $ 4,011,375 A1
1,780,000 City of Dayton, KY Industrial Building RB
(RADAC Corporation) - Series 1994
LOC Fifth Third Bank 04/01/98 4.00 1,780,000
2,000,000 Connecticut State Special Assessment Unemployment
Compensation Advance Fund RB - Series 1993C
FGIC Insured 07/01/98 3.90 2,000,000 VMIG-1 A1+
6,500,000 Hartford County, MD IDRB (A.O. Smith)
LOC Bank One Milwaukee, N.A. 09/01/98 3.80 6,500,000
3,015,000 Vermont State Educational & Health Building Finance
Agency (Middlebury College) 11/01/98 3.85 3,015,000 A1+
-------------- -------------
17,295,000 Total Put Bonds 17,306,375
------------- -------------
<CAPTION>
Tax Exempt Commercial Paper (17.27%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,000,000 City of Burlington, KS PCRB
LOC Deutsche Bank A.G. 05/19/98 3.45% $ 3,000,000 P1 A1+
3,313,000 City of Gainesville, FL
LOC Bank of America/Sun Bank 06/08/98 3.50 3,313,000 P1 A1+
2,100,000 County & City of Denver, CO
Airport System Subordinate RB - Series 1997A
LOC Bayerische Landesbank Girozentrale 05/13/98 3.45 2,100,000 A1+
3,200,000 County & City of Denver, CO
Airport System Subordinate RB - Series 1997A
LOC Bayerische Landesbank Girozentrale 05/21/98 3.60 3,200,000 A1+
5,000,000 County & City of Denver, CO
Airport System Subordinate RB - Series 1997A
LOC Bayerische Landesbank Girozentrale 06/01/98 3.50 5,000,000 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
================================================================================
<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>
$ 4,000,000 Georgia Municipal Gas Authority Gas Revenue
(Southern Portfolio I Project) - Series D
LOC Wachovia Bank & Trust Co., N.A. 07/08/98 3.50% $ 4,000,000 A1+
8,000,000 Hospital Board of Lee County, FL RB
(Lee Memorial Hospital Project) - Series 1992C 05/08/98 3.40 8,000,000 VMIG-1 A1+
1,300,000 New York City GO 1996 - Series J-3
LOC Morgan Guaranty Trust Company 06/01/98 3.50 1,300,000 P1 A1+
2,100,000 North Carolina Municipal Power Agency #1
(Catawba Project)
LOC Morgan Guaranty/Union Bank of Switzerland 05/01/98 3.30 2,100,000 P1 A1+
4,000,000 North Carolina Municipal Power Agency #1
(Catawba Project)
LOC Morgan Guaranty/Union Bank of Switzerland 07/16/98 3.55 4,000,000 P1 A1+
3,000,000 Sarasota County, FL Public Hospital District HRB
(Sarasota Memorial Hospital) - Series 1996
LOC Sun Trust Bank 05/06/98 3.65 3,000,000 VMIG-1
5,000,000 State of Connecticut Special Assessment Second Injury Fund
LOC Credit Agricole/Credit Commercial de Belgique 06/16/98 3.45 5,000,000 P1 A1+
2,500,000 Venango, PA IDA Resource Recovery RB
(Scrubgrass Project) - Series 1990A
LOC National Westminster Bank PLC 05/12/98 3.60 2,500,000 P1 A1+
1,500,000 Venango, PA IDA Resource Recovery RB
(Scrubgrass Project) - Series 1990B
LOC National Westminster Bank PLC 05/12/98 3.60 1,500,000 P1 A1+
1,700,000 West Virginia Public Energy Auth. Energy RB
(Morgantown Energy Assoc. Project) - Series 1989A
LOC Swiss Bank Corporation 05/04/98 3.45 1,700,000 P1 A1+
-------------- -------------
49,713,000 Total Tax Exempt Commercial Paper 49,713,000
- -------------- -------------
<CAPTION>
Variable Rate Demand Instruments - Participations (b) (0.70%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 New Jersey State EDA IDRB
(Harrison Riverside 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
(Hartz Mountain Industries 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
------------- ------------
</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 - Private Placements (b) (4.88%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9,100,000 Bastrop County, TX Industrial Development Corp. IDRB
(Blocrest Partners, LP Project)
LOC Union Bank of California 04/01/22 4.40% $ 9,100,000
810,000 Jefferson County, MO IDA IDRB (Holley Partnership)
LOC Chase Manhattan Bank, N.A. 12/01/04 5.53 810,000 P1 A1
550,815 New Jersey State EDA IDRB (Henry Modelle & Company)
LOC Chase Manhattan Bank, N.A. 09/01/00 5.53 550,815 P1 A1
1,400,000 Tyler House Certificate Trust COPS - Series 1995A
LOC PNC Bank, N.A. 08/01/25 4.05 1,400,000 VMIG-1
2,177,000 York County, PA IDA IDRB
(Manor Care of Kingston Court Inc.)
LOC Chase Manhattan Bank, N.A. 12/01/08 5.53 2,177,000 P1 A1
------------- -------------
14,037,815 Total Variable Rate Demand Instruments - Private Placements 14,037,815
------------- -------------
Total Investments (99.23%) (Cost $285,573,572+) 285,573,572
Cash and Other Assets, Net of Liabilities (0.77%) 2,218,658
-------------
Net Assets (100.00%) $ 287,792,230
=============
+ 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, 1998
================================================================================
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 (primarily
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>
AMBAC = American Municipal Bond Assurance Corporation HRB = Hospital Revenue Bond
BAN = Bond Anticipation Note IDA = Industrial Development Authority
COPS = Certificates of Participations IDRB = Industrial Development Revenue Bond
EDA = Economic Development Authority LOC = Letter of Credit
EDFA = Economic Development Finance Authority MBIA = Municipal Bond Insurance Association
FGIC = Financial Guaranty Insurance Company MHRB = Multi-Family Housing Revenue Bond
GIC = Guaranteed Investment Contract PCRB = Pollution Control Revenue Bond
GO = General Obligation RAN = Revenue Anticipation Note
HDA = Housing Development Authority RB = Revenue Bond
HFC = Housing Finance Commission TAW = Tax Anticipation Warrant
HFDC = Housing Finance Development Authority TRAN = Tax and Revenue Anticipation Note
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
ASSETS:
<S> <C> <C> <C>
Investments in securities*........... $ 1,125,316,193 $ 165,763,764 $ 285,573,572
Cash................................. 2,463,958 389,787 594,972
Interest receivable.................. 3,569,573 468,551 1,843,297
----------------- ----------------- -----------------
Total Assets..................... 1,131,349,724 166,622,102 288,011,841
LIABILITIES:
<S> <C> <C> <C>
Dividends payable.................... 145,132 21,831 22,703
Management fee payable............... 715,695 109,281 194,579
Payable for securities purchased..... 14,992,818 -- --
Other accounts payable............... 236,405 8,737 2,329
------------------ ----------------- -----------------
Total Liabilities................ 16,090,050 139,849 219,611
------------------ ----------------- -----------------
NET ASSETS............................ $ 1,115,259,674 $ 166,482,253 $ 287,792,230
================== ================= =================
SHARES OUTSTANDING:
<S> <C> <C> <C>
Cortland Shares...................... 506,241,739 48,144,532 47,784,522
Live Oak Shares...................... 610,777,792 66,928,939 67,702,066
Bradford Shares...................... -- 51,667,101 172,330,305
Net asset value, offering and redemption
price per share, all classes
(net assets/shares).................. $ 1.00 $ 1.00 $ 1.00
================= ================= =================
* Including repurchase agreements amounting to $67,000,000 and $51,000,000 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
YEAR ENDED MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest Income...................... $ 79,992,315 $ 10,785,224 $ 9,048,653
----------------- ----------------- -----------------
Expenses:
Management fee--Note 3(a)........ 10,788,822 1,493,237 1,853,830
Distribution support and services
----Note 3(c):
Cortland shares............... 2,279,946 278,868 245,314
Live Oak shares............... 997,083 118,605 114,160
Bradford shares............... -- 60,597 215,184
Other expenses................... 56,392 26,626 6,490
----------------- ----------------- -----------------
Total Expenses................ 14,122,243 1,977,933 2,434,978
Expenses waived by
Manager--Notes 3(a) and (c)...... ( 575,473) ( 464,714) ( 190,489)
----------------- ----------------- -----------------
Net Expenses.................. 13,546,770 1,513,219 2,244,489
----------------- ----------------- -----------------
Net Investment Income................ 66,445,545 9,272,005 6,804,164
NET REALIZED GAIN
ON INVESTMENTS
<S> <C> <C> <C>
Net realized gain on investments ..... 30,820 7,240 21
----------------- ---------------- -----------------
Increase in net assets from operations $ 66,476,365 $ 9,279,245 $ 6,804,185
================= ================ =================
</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,
1998 1997 1998 1997 1998 1997
----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income... $ 66,445,545 $ 63,069,731 $ 9,272,005 $ 10,484,601 $ 6,804,164 $ 5,897,429
Net realized gain on
investments......... 30,820 63,635 7,240 6,270 21 -0-
-------------- -------------- -------------- -------------- -------------- --------------
Increase in net assets
from operations..... 66,476,365 63,133,366 9,279,245 10,490,871 6,804,185 5,897,429
Distributions
to shareholders from:
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Cortland shares....... ( 42,375,897) ( 46,314,882) ( 4,996,904) ( 8,320,482) ( 2,752,924)+ ( 4,436,681)+
Live Oak shares....... ( 23,562,542) ( 16,876,826) ( 2,753,335) ( 2,235,131) ( 1,631,855)+ ( 1,475,242)+
Bradford shares....... -- -- ( 1,144,489) -- ( 2,419,385)+ --
<S> <C> <C> <C> <C> <C> <C>
Capital share
transactions net (Note 4):
Cortland shares....... ( 655,776,020) 559,763 (116,800,799) ( 90,947,715) ( 105,555,742) ( 63,128,999)
Live Oak shares....... 169,688,175 90,104,978 11,710,418 7,893,226 8,901,280 9,140,492
Bradford shares....... -- -- 51,667,101 -- 172,330,305 --
-------------- -------------- -------------- -------------- -------------- --------------
Total increase (decrease) ( 485,549,919) 90,606,399 ( 53,038,763) ( 83,029,231) 75,675,864 ( 54,003,001)
Net assets:
<S> <C> <C> <C> <C> <C> <C>
Beginning of year....... 1,600,809,593 1,510,203,194 219,521,016 302,550,247 212,116,366 266,119,367
-------------- -------------- -------------- -------------- -------------- --------------
End of year............. $1,115,259,674 $1,600,809,593 $ 166,482,253 $ 219,521,016 $ 287,792,230 $ 212,116,366
============== ============== ============== ============== ============== ==============
Undistributed net
investment income.... $ 535,303 $ 28,197 $ 427,277 $ 50,000 $ -0- $ -0-
+ 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").
Cortland General Fund has two classes of stock authorized, Cortland shares and
Live Oak shares. Both the U.S. Government Fund and the Municipal Fund have three
classes of stock authorized, Cortland shares, Live Oak shares and Bradford
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. The Bradford shares are subject
to a service fee of .25% of its average net assets. In all other respects, the
Cortland shares, Live Oak shares and Bradford 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.
Bradford shares commenced distribution on October 1, 1997. The Company accounts
separately for the assets, liabilities and operations of each Fund.
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 shares outstanding in the Cortland General Fund include 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, 1998, there were
10,886,525 Pilgrim Shares outstanding included in the Cortland shares.
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 Reich & Tang Asset Management, L.P. (the
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, 1998, Cortland General Fund, U.S. Government Fund
and Municipal Fund had unused capital loss carryforwards of approximately
$2,295,160, $708,040 and $32,135 respectively, available for Federal income
tax purposes to be applied against future securities profit, if any. If not
applied against future securities profit $721,114 and $1,574,046 will
expire in the years 2003 and 2004, respectively, for Cortland General Fund.
$256,799 and $451,241 will expire in the years 2003 and 2004, respectively,
for U.S. Government Fund. $16,736, $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 Bradford 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.
- --------------------------------------------------------------------------------
<PAGE>
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CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Note 3-Management Fee and Other Transactions With Affiliates: (Continued)
Pursuant to a Distribution Plan approved by the company's Board on March 5,
1997, each Fund can make payments of up to .25% per annum of its average net
assets with respect to the Bradford shares of the Fund for assistance in
distributing its shares.
During the year ended March 31, 1998, the manager voluntarily waived investment
management fees of $428,000 and $361,000 for the Cortland General Fund and for
the U.S. Government Fund, respectively.
During the year ended March 31, 1998, the Distributor waived Distribution
support and services fees of $38,827 and $108,646 for the Cortland shares and
Live Oak shares, respectively, of the Cortland General Fund.
During the year ended March 31, 1998, the Distributor waived Distribution
support and services fees of $5,262, $54,822 and $43,630 for the Cortland
shares, Live Oak shares and Bradford shares, respectively, of the U.S.
Government Fund.
During the year ended March 31, 1998, the Distributor waived Distribution
support and services fees of $4,009, $40,155 and $146,325 for the Cortland
shares, Live Oak shares and Bradford shares, respectively, of the Municipal
Fund.
Note 4-Capital Share Transactions:
At March 31, 1998, 6 billion shares of $.001 par value shares of the Company
were authorized, of which $2.5 billion are designated as General Fund shares,
$1.5 billion are designated as U.S. Government Fund shares, $1 billion are
designated as Municipal Fund shares and $1 billion are unclassified.
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 Municipal Money
Money Market Fund U.S. Government Fund Market Fund
------------------------------ ------------------------------ ------------------------------
For the Year Ended March 31, For the Year Ended March 31, For the Year Ended March 31,
1998 1997 1998 1997 1998 1997
-------------- ------------- ------------- ------------- ------------- -------------
Cortland Shares
<S> <C> <C> <C> <C> <C> <C>
Shares sold.......... 2,461,650,252 3,372,653,022 297,730,449 482,519,139 319,463,272 636,672,511
Dividends reinvested. 42,496,995 46,616,699 5,015,292 8,302,991 2,763,449 4,476,740
------------- ------------- ------------- ------------- ------------- -------------
2,504,147,247 3,419,269,721 302,745,741 490,822,130 322,226,721 641,149,251
Shares redeemed...... (3,159,923,267) (3,418,709,958) ( 419,546,540) ( 581,769,845) ( 427,782,463) ( 704,278,250)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) ( 655,776,020) 559,763 ( 116,800,799) ( 90,947,715) ( 105,555,742) ( 63,128,999)
============= ============= ============= ============= ============= =============
Live Oak Shares
<S> <C> <C> <C> <C> <C> <C>
Shares sold.......... 2,667,980,939 1,692,487,353 257,860,909 198,329,103 229,697,164 195,656,417
Dividends reinvested. 23,505,015 16,917,952 2,746,692 2,241,698 1,627,788 1,478,139
------------- ------------- ------------- ------------- ------------- -------------
2,691,485,954 1,709,405,305 260,607,601 200,570,801 231,324,952 197,134,556
Shares redeemed...... (2,521,797,779) (1,619,300,327) ( 248,897,183) ( 192,677,575) ( 222,423,672) ( 187,994,064)
------------- ------------- ------------- ------------- ------------- -------------
Net increase......... 169,688,175 90,104,978 11,710,418 7,893,226 8,901,280 9,140,492
============= ============= ============= ============= ============= =============
</TABLE>
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<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Note 4-Capital Share Transactions: (Continued)
Municipal Money
U.S. Government Fund Market Fund
------------------------ ---------------------
For the Year Ended For the Year Ended
March 31, 1998 March 31, 1998
------------------------ ---------------------
Bradford Shares+
<S> <C> <C>
Shares sold....................................... 143,036,995 503,861,964
Dividends reinvested.............................. 1,138,745 2,406,792
------------- ------------
144,175,740 506,268,756
Shares redeemed................................... ( 92,508,639) ( 333,938,451)
------------- -------------
Net increase...................................... 51,667,101 172,330,305
============= =============
+ Bradford shares commenced distribution on October 1, 1997.
The components of net assets at March 31, are as follows:
Cortland General Money Municipal Money
Market Fund U.S. Government Fund Market Fund
------------------------ ------------------------ ---------------------
March 31, 1998 March 31, 1998 March 31, 1998
------------------------ ------------------------ ---------------------
<S> <C> <C> <C>
Paid-in capital...... $1,117,019,531 $ 166,740,572 $ 287,816,893
Accumulated net
realized losses.... ( 2,295,160) ( 685,596) ( 24,663)
Undistributed net
investment income. 535,303 427,277 -0-
------------- ------------- -------------
Total net assets..... $1,115,259,674 $ 166,482,253 $ 287,792,230
============= ============= =============
</TABLE>
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<PAGE>
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CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
Note 5-Financial Highlights:
Cortland General Money Market Fund
---------------------------------------------------------------------------------------------
Cortland Shares Live Oak Shares
--------------------------------------------------- --------------------------------------
For the Year For the Year
Ended March 31, Ended March 31,
--------------------------------------------------- --------------------------------------
1998 1997 1996 1995 1994 1998 1997 1996++
------- ------- ------- ------- ------- -------- -------- --------
<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......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income.......... 0.047 0.044 0.049 0.038 0.025 0.048 0.045 0.018
Net realized and unrealized
gain/(loss) on investments ( 0.001) -- 0.001 ( 0.003)+ -- ( 0.001) -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.046 0.044 0.050 0.035 0.025 0.047 0.045 0.018
Less distributions:
Dividends from net
investment income............ ( 0.047) ( 0.044) ( 0.048) ( 0.038) ( 0.025) ( 0.047) ( 0.045) ( 0.018)
-------- -------- -------- -------- -------- --------- -------- --------
Total distributions.............. ( 0.047) ( 0.044) ( 0.048) ( 0.038) ( 0.025) ( 0.047) ( 0.045) ( 0.018)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========
Total Return..................... 4.77% 4.52% 4.95% 3.91%+ 2.53% 4.84% 4.59% 4.78%*
<C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data
Net assets,
end of period (000's omitted) $505,442 $1,160,352 $1,159,173 $993,854 $926,400 $609,818 $440,457 $351,030
Ratios to average net assets:
Expenses....................... 0.99% 1.02% 1.03% 1.03% 1.02% 0.91% 0.95% 0.97%*
Net investment income.......... 4.67% 4.41% 4.86% 3.85% 2.48% 4.78% 4.48% 4.68%*
Management and Distribution support
and service fees waived 0.04% -- -- 0.02% 0.02% 0.05% 0.02% 0.02%*
* 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%.
</TABLE>
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<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Note 5-Financial Highlights: (Continued)
U.S. Government Fund
--------------------------------------------------------------------------------------------
Cortland Shares Live Oak Shares Bradford Shares
--------------------------------------------- ------------------------ ---------------
For the Year For the Year For the Year
Ended March 31, Ended March 31, Ended March 31,
--------------------------------------------- ------------------------ ---------------
1998 1997 1996 1995 1994 1998 1997 1996++ 1998(a)
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <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............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............. 0.046 0.043 0.047 0.038 0.025 0.049 0.044 0.017 0.026
Net realized and unrealized
loss on investments............... ( 0.001) ( 0.001) -- ( 0.003)+ -- ( 0.001) ( 0.001) -- ( 0.001)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 0.045 0.042 0.047 0.035 0.025 0.048 0.043 0.017 0.025
Less distributions:
Dividends from net
investment income............... ( 0.045) ( 0.043) ( 0.047) ( 0.038) ( 0.025) ( 0.046) ( 0.044) ( 0.017) ( 0.024)
------- ------- ------- ------- ------ ------- ----- ------ ------
Total distributions................. ( 0.045) ( 0.043) ( 0.047) ( 0.038) ( 0.025) ( 0.046) ( 0.044) ( 0.017) ( 0.024)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return........................ 4.61% 4.37% 4.80% 3.84%+ 2.55% 4.75% 4.53% 4.74%* 4.83%*
Ratios/Supplemental Data
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets,
end of period (000's omitted) $48,069 $164,464 $255,222 $218,307 $234,082 $66,829 $55,057 $47,328 $51,584
Ratios to average net assets:
Expenses.......................... 0.81% 1.01% 1.04% 1.04% 1.04% 0.68% 0.86% 0.89%* 0.86%*
Net investment income............. 4.58% 4.30% 4.72% 3.74% 2.47% 4.89% 4.45% 4.64%* 5.22%*
Management and Distribution support
and service fees waived........ 0.25% 0.02% -- 0.01% 0.01% 0.24% 0.12% 0.11%* 0.18%*
* 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%.
(a) Bradford shares commenced distribution on October 1, 1997.
</TABLE>
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<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
Note 5-Financial Highlights: (Continued)
Municipal Money Market
--------------------------------------------------------------------------------------------
Cortland Shares Live Oak Shares Bradford Shares
--------------------------------------------- ------------------------ ---------------
For the Year For the Year For the Year
Ended March 31, Ended March 31, Ended March 31,
--------------------------------------------- ------------------------ ---------------
1998 1997 1996 1995 1994 1998 1997 1996++ 1998(a)
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <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........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............ 0.028 0.026 0.030 0.026 0.018 0.029 0.027 0.011 0.014
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 0.028 0.026 0.030 0.026 0.018 0.029 0.027 0.011 0.014
Less distributions:
Dividends from net
investment income.............. ( 0.028) ( 0.026) ( 0.030) ( 0.026) ( 0.018) ( 0.029) ( 0.027) ( 0.011) ( 0.014)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions................ ( 0.028) ( 0.026) ( 0.030) ( 0.026) ( 0.018) ( 0.029) ( 0.027) ( 0.011) ( 0.014)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return....................... 2.81% 2.68% 3.06% 2.58% 1.82% 2.93% 2.77% 2.96%* 2.87%*
Ratios/Supplemental Data
Net assets,
end of period (000's omitted) $47,780 $153,322 $216,456 $224,041 $240,570 $67,697 $58,794 $49,663 $172,315
Ratios to average net assets:
Expenses......................... 1.01% 1.02% 1.03% 0.99% 0.98% 0.90% 0.93% 0.96%* 0.86%*
Net investment income............ 2.81% 2.64% 3.02% 2.54% 1.79% 2.86% 2.72% 2.91%* 2.81%*
Management and Distribution support
and service fees waived -- -- -- 0.06% 0.07% 0.07% 0.04% 0.03%* 0.17%*
* Annualized
++ Live Oak shares commenced distribution on November 16, 1995.
(a) Bradford shares commenced distribution on October 1, 1997.
</TABLE>
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<PAGE>
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
INDEPENDENT AUDITOR'S REPORT
================================================================================
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, 1998, 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, 1998, by correspondence with the custodian and
others. 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, 1998, 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.
[GRAPHIC OMITTED]
/s/ Ernst & Young LLP
May 8, 1998
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, 1998
CORTLAND
600 Fifth Avenue
New York, NY 10020
212-830-5200
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<PAGE>
