As filed with the Securities and Exchange Commission on December 7, 2007
Investment Company Act File Number 811-4179
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Cortland Trust, Inc.
(Exact name of registrant as specified in charter)
600 Fifth Avenue
New York, NY 10020
(Address of principal executive offices) (Zip code)
Christine Manna
c/o Reich & Tang Asset Management, LLC
600 Fifth Avenue
New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-830-5200
Date of fiscal year end: March 31
Date of reporting period: September 30, 2006
Item 1: Report to Stockholders
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CORTLAND 600 Fifth Avenue
TRUST, INC. New York, NY 10020
(212) 830-5200
================================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Cortland Trust, Inc. (the
"Company") for the period ended September 30, 2007.
As of September 30, 2007, the Cortland General Money Market Fund had 134
shareholder accounts and net assets of $40,122,785.
The U.S. Government Fund had 389 shareholder accounts and net assets of
$57,700,217.
The Municipal Money Market Fund had 12 shareholder accounts and net assets of
$5,786,193.
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
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CORTLAND TRUST, INC.
EXPENSE CHART
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
As a shareholder of the Funds, you incur the following ongoing costs:
management fees and other Fund expenses. You may also incur distribution and/or
service (12b-1) fees. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period April 1, 2007 through September 30,
2007.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000(for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period' to estimate
the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees that you may incur in other
mutual funds. Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
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Cortland General Money Market Fund
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Cortland Shares Beginning Account Value Ending Account Value Expenses Paid During the
4/01/07 9/30/07 Period*
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Actual $1,000.00 $1,021.80 $5.11
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Hypothetical (5% return before $1,000.00 $1,019.95 $5.10
expenses)
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U.S. Government Fund
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Cortland Shares Beginning Account Value Ending Account Value Expenses Paid During the
4/01/07 9/30/07 Period*
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Actual $1,000.00 $1,021.00 $5.05
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Hypothetical (5% return before $1,000.00 $1,020.00 $5.05
expenses)
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Municipal Money Market Fund
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Cortland Shares Beginning Account Value Ending Account Value Expenses Paid During the
4/01/07 9/30/07 Period*
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Actual $1,000.00 $1,014.00 $4.48
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Hypothetical (5% return before $1,000.00 $1,020.55 $4.50
expenses)
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*Expenses are equal to the Fund's annualized expense ratios of 1.01%, 1.00% and
0.89%, for Cortland General Money Market Fund's Cortland shares, U.S. Government
Fund's Cortland shares and Municipal Money Market Fund's Cortland shares,
respectively, multiplied by the average account value over the period (April 1,
2007 through September 30, 2007), multiplied by 183/365 (to reflect the most
recent fiscal half-year).
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CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- ---------- -------
Asset Backed Commercial Paper (4.95%)
- ------------------------------------------------------------------------------------------------------------------------------------
<c> <c> <c> <c>
$ 2,000,000 Lexington Parker Capital 11/07/07 5.91% $ 1,987,965
- -------------- --------------
2,000,000 Total Asset Backed Commercial Paper 1,987,965
- -------------- --------------
Repurchase Agreements (29.91%)
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$ 5,000,000 Annaly Mortgage Management, Inc. purchased on 09/28/07,
repurchase proceeds at maturity $5,002,083
(Collateralized by $22,398,247, GNMA, 4.000% to 6.375%,
due 05/20/33 to 07/16/33, value $5,100,000) 10/01/07 5.00% $ 5,000,000
7,000,000 Bank of America purchased on 09/28/07,
repurchase proceeds at maturity $7,002,771
(Collateralized by $29,796,911, GNMA, 0.000% to 5.789%,
due 06/16/32 to 07/20/37, value $7,140,000) 10/01/07 4.75% 7,000,000
- -------------- --------------
12,000,000 Total Repurchase Agreements 12,000,000
- -------------- --------------
Variable Rate Demand Instruments (b) (52.95%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,795,000 361 Summit Blvd. LLC - Series 2003
LOC First Commercial Bank 05/01/28 5.18% $ 1,795,000
2,400,000 CEGW, Inc.
LOC PNC Bank, N.A 03/31/09 5.75 2,400,000
750,000 First Park Place LLC
LOC Fifth Third Bank 12/01/19 5.19 750,000
1,500,000 Genesee County, MI Taxable Obligation Notes 11/01/08 5.25 1,500,000
1,270,000 Healtheum, LLC - Series 2004
LOC Wells Fargo Bank, N.A. 11/01/29 5.12 1,270,000
700,000 Kit Carson County, CO Agricultural Development RB
(Midwest Farms, LLC) - Series 1997
LOC Wells Fargo Bank, N.A. 06/01/27 5.10 700,000
420,000 Lee County, FL Multifamily HFA RB
(Crossings at Cape Coral Apartments Project) - Series 1999B
LOC Suntrust Bank 06/01/14 5.22 420,000
470,000 LRC - B Wadsworth Investors, Ltd. - Series 1997
LOC US Bank, N.A. 09/01/17 5.32 470,000
760,000 Manatee County, FL Multifamily HFA RB - Series 2002B
(La Mirada Gardens Project)
LOC Suntrust Bank 11/01/33 5.12 760,000
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The accompanying notes are an integral part of these financial statements.
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CORTLAND TRUST, INC.
CORTLAND GENERAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- ---------- -------
Variable Rate Demand Instruments (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 895,000 Miami River Stone Company - Series 2002
LOC US Bank, N.A. 08/01/09 5.23% $ 895,000
885,000 Milwaukee, WI (Historic Third Ward Parking Project) - Series 1999
LOC Northern Trust Bank 09/01/28 5.23 885,000
1,310,000 Mississippi Business Finance Corporation IDRB
(Howard Industries, Inc.) - Series 1995
LOC Amsouth Bank 06/01/10 5.13 1,310,000
300,000 Mississippi Business Finance Corporation, IDRB
(Colle Towing Project) - Series 2004
LOC Regions Bank 10/01/19 5.13 300,000
990,000 Oswego County, NY IDA Civic Facilities (OH Properties, Inc Project - B)
LOC Manufacturers & Traders & Trust Co. 06/01/24 5.17 990,000
2,325,000 Smugglers Notch Management Company, Ltd. and
Smugglers Notch Investment Company, Ltd. - Series 2000
LOC KeyBank,N.A. 09/01/15 5.20 2,325,000
430,000 Warrior Roofing Manufacturing, Inc. - Series 2001
LOC Columbus Bank & Trust Company 09/01/26 5.25 430,000
1,750,000 Westchester County, NY IDA RB (B.W.P.Distributors Inc.)-Series 1997
LOC Wachovia Bank, N.A. 10/01/28 5.25 1,750,000
460,000 Westchester Presbyterian Church
LOC US Bank, N.A. 09/01/13 5.31 460,000
1,833,592 Wilmington Trust Company (Amtrak Trust 93-A) - Series B Notes
Guaranteed by General Electric Company 01/01/11 5.55 1,833,592
- -------------- --------------
21,243,592 Total Variable Rate Demand Instruments 21,243,592
- -------------- --------------
U.S Government Agency Discount Note (9.97%)
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$ 4,000,000 Federal Home Loan Bank 10/01/07 4.25% $ 4,000,000
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4,000,000 Total U.S Government Agency Discount Note 4,000,000
- -------------- --------------
Total Investments (97.78%) (Cost $39,231,557+) 39,231,557
Cash and other assets, net of liabilities (2.22%) 891,228
--------------
Net Assets (100.00%) $ 40,122,785
==============
<FN>
+ Aggregate cost for income tax purposes is identical.
</FN>
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The accompanying notes are an integral part of these financial statements.
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================================================================================
FOOTNOTES:
(a) The interest rate shown reflects the security's current coupon, unless
yield is available.
(b) These securities have a 7-day put feature exercisable by the Fund at
par value. Rate changes weekly.
KEY:
GNMA = Government National Mortgage Association IDRB = Industrial Development Revenue Bond
HFA = Housing Finance Authority LOC = Letter of Credit
IDA = Industrial Development Authority RB = Revenue Bond
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
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Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Less than 31 Days $ 37,243,592 94.93%
31 through 60 Days 1,987,965 5.07
61 through 90 Days -0- -0-
91 through 120 Days -0- -0-
121 through 180 Days -0- -0-
Over 180 Days -0- -0-
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Total $ 39,231,557 100.00%
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The accompanying notes are an integral part of these financial statements.
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CORTLAND TRUST, INC.
U.S GOVERNMENT FUND
SCHEDULE OF INVESTMENTS
September 30, 2007
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- --------- --------
Loan Participation (8.67%)
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$ 5,000,000 Army and Air Force Exchange Service with JP Morgan Chase & Company 10/10/07 5.50% $ 5,000,000
- -------------- --------------
5,000,000 Total Loan Participation 5,000,000
- -------------- --------------
Repurchase Agreement (15.60%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 9,000,000 UBS Securities, LLC, purchased on 09/28/07,
repurchase proceeds at maturity $9.003,713
(Collateralized by $9,380,000, RFIN, 0.000%
due 04/15/08, value $9,181,144) 10/01/07 4.95% $ 9,000,000
- -------------- --------------
9,000,000 Total Repurchase Agreement 9,000,000
- -------------- --------------
U.S. Government Agency Discount Note (74.52%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 43,000,000 Federal Home Loan Bank 10/01/07 4.25% $ 43,000,000
- -------------- --------------
43,000,000 Total U.S. Government Agency Discount Note 43,000,000
- -------------- --------------
Total Investments (98.79%) (Cost $57,000,000+) 57,000,000
Cash and other assets, net of liabilities (1.21%) 700,217
--------------
Net Assets (100.00%) $ 57,700,217
==============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
(a) The interest rate shown reflects the security's current
coupon, unless yield is available.
</FN>
KEY:
RFIN = Resolution Funding Corporation Strip Interest
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
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Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Less than 31 Days $ 57,000,000 100.00%
31 through 60 Days -0- -0-
61 through 90 Days -0- -0-
91 through 120 Days -0- -0-
121 through 180 Days -0- -0-
Over 180 Days -0- -0-
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Total $ 57,000,000 100.00%
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The accompanying notes are an integral part of these financial statements.
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CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
Ratings (a)
------------------
Face Maturity Current Value Standard
Amount Date Coupon (b) (Note 1) Moody's & Poor's
------ ---- --------- ------- ------- ---------
Variable Rate Demand Instruments (c) (97.91%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 250,000 Auburn, AL Non-Profit HDA MHRB (Lakeside Project)
LOC Columbus Bank & Trust Company 09/01/27 4.09% $ 250,000 A-1
250,000 Bowie County Texas IDC - Series 1985
LOC Bank of New York 11/01/25 4.05 250,000 A-1+
300,000 Brazos River, TX Habor Navigation
(Merey Sweeny LP Project) - Series 2001A
LOC Bank of America 04/01/21 4.15 300,000 VMIG-1
300,000 Farmington, NM PCRB
(Arizona Public Service Corp Four Corners Project) - Series B
LOC Barclay Bank PLC 09/01/24 4.04 300,000 P-1 A-1+
250,000 Florida HFC (Charleston Landing Apartments) - 2001 Sereis 1-A
Guaranteed by FHLMC 07/01/31 3.86 250,000 A-1+
250,000 Gulf Coast, TX Exempt Facility IDRB
(BP Global Power Corporation Project) - Series 2003 04/01/38 4.13 250,000 VMIG-1
250,000 Jacksonville, FL Health Facilities Authority Hospital RB
(Baptist Medical Center Project) - Series 2001
LOC Wachovia Bank, N.A 08/15/21 4.00 250,000 A-1+
280,000 Jay Street Development Corporation, NY
(Courts Facility Lease Revenue) - Series 2005A
LOC Depfa Bank PLC 05/01/22 3.77 280,000 VMIG-1 A-1+
300,000 King George County, VA IDA RB
(Birchwood Power Partners Project) - Series
LOC Bank of Nova Scotia 11/01/25 4.13 300,000 A-1+
250,000 Loudoun County, VA IDA RB
(Howard Hughes Medical Institute Project) - Series 2003C 02/15/38 4.03 250,000 VMIG-1 A-1+
250,000 Manatee County, FL PCRB (FL Powers & Light Project) 1994 09/01/24 4.05 250,000 VMIG-1 A-1
250,000 Massachusetts HEFA (Harvard University) - Series B-10 07/15/36 4.00 250,000 VMIG-1 A-1+
300,000 Massachusetts Water Resources
(Multi-Modal Subordinated) - 2002 C
LOC Landesbank Hessen 08/01/20 4.05 300,000 VMIG-1 A-1+
250,000 Montgomery, AL IDB Pollution (General Electric Company) 05/01/21 3.96 250,000 VMIG-1 A-1+
270,000 New York State Dormitory Authority Revenue Derivatives
Guaranteed by FHA 08/15/25 3.89 270,000 A-1
250,000 New York City, NY Transitional Finance Authority
Future Tax Secured Bonds - Fiscal 2003 - Sereis C2
(ROCs RR II - R - 2019) 08/01/31 3.96 250,000 VMIG-1 A-1+
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The accompanying notes are an integral part of these financial statements.
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CORTLAND TRUST, INC.
MUNICIPAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
Ratings (a)
------------------
Face Maturity Current Value Standard
Amount Date Coupon (b) (Note 1) Moody's & Poor's
------ ---- --------- ------ ------ -------
Variable Rate Demand Instruments (c) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 100,000 New York State Dormitory Authority (Cornell University) -
Series 1990B 07/01/25 3.96% $ 100,000 VMIG-1 A-1+
250,000 New York State Dormitory Authority
Guaranteed by GNMA 02/15/41 3.90% 250,000 A-1
300,000 New York State Thruway Authority Second General
Highway and Bridges - Series 2003A
Insured by MBIA Insurance Corp 04/01/15 3.93 300,000 VMIG-1
250,000 Orlando, FL Utilities Commision - Series B 10/01/22 3.87 250,000 VMIG-1 A-1+
265,000 University of North Carolina at Chapel Hill RB - Sereis 2001 B 12/01/25 3.85 265,000 VMIG-1 A-1+
250,000 Washington State HFC
LOC Allied Irish Bank 07/01/33 3.99 250,000 VMIG-1 A-1
- -------------- -----------
5,665,000 Total Variable Rate Demand Instruments 5,665,000
- -------------- -----------
Total Investments (97.91%) (Cost $5,665,000+) 5,665,000
Cash and other assets, net of liabilities (2.09%) 121,193
-----------
Net Assets (100.00%) $ 5,786,193
===========
<FN>
+ Aggregate cost for income tax purposes is identical.
</FN>
FOOTNOTES:
(a) Unless the securities are assigned their own ratings, the ratings are
those of the bank whose letter of credit guarantees the issue or the
insurance company who insures the issue. All letters of credit and insurance
are irrevocable and direct pay covering both principal and interest. Ratings
are unaudited.
In addition, certain issuers have a line of credit, a liquidity facility, a
standby purchase agreement or some other financing mechanism to ensure the
remarketing of the securities. This is not a guarantee and does not serve
to insure or collateralize the issue.
(b) The interest rate shown reflects the security's current coupon, unless yield
is available.
(c) Securities payable on demand at par including accrued interest (usually
with seven days' notice) and, if indicated, 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.
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The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
KEY:
FHLMC = Federal Home Loan Mortgage Corporation IDC = Industrial Development Revenue Bond
FHA = Federal Housing Authority IDRB = Industrial Development Revenue Bond
GNMA = Government National Mortgage Association LOC = Letter of Credit
HDA = Housing Development Authority MHRB = Multi-Family Housing Revenue Bond
HEFA = Health and Education Facilities Authority PCRB = Pollution Control Revenue Bond
HFC = Housing Finance Commission RB = Revenue Bond
IDA = Industrial Development Authority ROCs = Reset Option Certificates
IDB = Industrial Development Bond
BREAKDOWN OF PORTFOLIO HOLDINGS BY STATE:
- --------------------------------------------------------------------------------
States Value % of Portfolio
- --------------------------------------------------------------------------------
Alabama $ 500,000 8.83%
Florida 1,000,000 17.65
Massachusetts 550,000 9.71
New Mexico 300,000 5.29
New York 1,450,000 25.60
North Carolina 265,000 4.68
Texas 800,000 14.12
Virginia 550,000 9.71
Washington 250,000 4.41
- --------------------------------------------------------------------------------
Total $ 5,665,000 100.00%
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The accompanying notes are an integral part of these financial statements.
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CORTLAND TRUST, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
ASSETS:
Investments in securities, at
amortized cost (Note 1)......... $ 27,231,557 $ 48,000,000 $ 5,665,000
Repurchase Agreements................. 12,000,000 9,000,000 -0-
Cash.................................. 813,317 725,232 95,015
Accrued interest receivable........... 97,560 19,754 23,041
Other assets.......................... 843 49 3,673
------------------ ---------------- ----------------
Total Assets...................... 40,143,277 57,745,035 5,786,729
------------------ ---------------- ----------------
LIABILITIES:
Payable to affiliates*................ 16,614 41,474 536
Accrued expenses...................... 3,870 3,308 -0-
Dividends payable..................... 8 36 -0-
------------------ --------------- ----------------
Total Liabilities................. 20,492 44,818 536
------------------ --------------- ----------------
Net assets............................ $ 40,122,785 $ 57,700,217 $ 5,786,193
================== =============== ================
SOURCE OF NET ASSETS:
Net capital paid in on shares
of capital stock (Note 3)........ $ 40,126,075 $ 57,712,951 $ 5,774,548
Accumulated net investment income..... -0- -0- 11,814
Accumulated net realized gain (loss).. (3,290) (12,734) (169)
------------------ --------------- ----------------
Net assets............................ $ 40,122,785 $ 57,700,217 $ 5,786,193
------------------ --------------- ----------------
Net asset value, per share (Note 3):
Class Name Net Assets Shares Outstanding Net Asset Value
Cortland General Money Market Fund:
Cortland Shares....................... $40,122,785 40,126,075 $1.00
U. S. Government Fund:
Cortland Shares....................... $57,700,217 57,712,951 $1.00
Municipal Money Market Fund:
Cortland Shares....................... $5,786,193 5,796,016 $1.00
<FN>
* Including fees payable to Reich & Tang Asset Management, LLC and Reich &
Tang Distributors, Inc.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
================================================================================
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------- --------------- ---------------
INVESTMENT INCOME
Income:
Interest..................................... $ 34,708,393 $ 938,284 $ 626,157
----------------- --------------- ---------------
Expenses: (Note 2)
Investment management fee.................... 5,047,670 141,849 129,363
Distribution fee (Cortland Shares)........... 323,422 45,616 41,601
Distribution fee (Short Term Fund Shares).... 28,720 -- --
Distribution fee (Xpress Shares)............. 1,271,102 -- --
Shareholder servicing fee (Xpress Shares).... 1,271,102 -- --
Directors' fees and expenses................. 34,317 2,892 2,821
Other........................................ 54,690 9,790 (6,010)
----------------- --------------- ---------------
Total expenses............................. 8,031,023 200,147 167,775
Less: Fees waived (Note 2)................ (248,286) (16,774) (20,280)
----------------- --------------- ---------------
Net expenses................................ 7,782,737 183,373 147,495
----------------- --------------- ---------------
Net investment income ....................... 26,925,656 754,911 478,662
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments...... 4,746 (10,316) 6,907
----------------- --------------- ---------------
Increase in net assets from operations....... $ 26,930,402 $ 744,595 $ 485,569
================= =============== ===============
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
----------------------------- ----------------------------- ----------------------------
For the Six For the For the Six For the For the Six For the
Months Ended Year Months Ended Year Months Ended Year
September 30, Ended September 30, Ended September 30, Ended
2007 March 31, 2007 March 31, 2007 March 31,
(Unaudited) 2007 (Unaudited) 2007 (Unaudited) 2007
-------------- ------------- ------------- ------------- ------------ --------------
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment income..... $ 26,925,656 $ 189,056,965 $ 754,911 $ 10,858,474 $ 478,662 $ 4,783,351
Net realized gain (loss) on
investments.......... .. 4,746 29,094 (10,316) (2,418) 6,907 (5,028)
-------------- -------------- ------------- ------------- ------------ --------------
Increase in net assets
from operations......... 26,930,402 189,086,059 744,595 10,856,056 485,569 4,778,323
Dividends to shareholders from
net investment income:
Cortland Shares......... (5,596,228) (49,978,927) (754,911) (5,691,755) (466,848)+ (2,473,756)+
Short Term Fund Shares.. (496,885) (1,479,005) -- -- -- --
Advantage Shares........ -0- (82,976,116) -0- (5,166,719) -0- (2,309,595)+
Xpress Shares........... (20,832,543) (54,622,917) -- -- -- --
-------------- -------------- ------------- ------------- ------------ --------------
Total dividend to shareholders (26,925,656) (189,056,965) (754,911) (10,858,474) (466,848)+ (4,783,351)+
-------------- -------------- ------------- ------------- ------------ -------------
Distributions to shareholders from
realized gains on investments:
Cortland Shares......... (1,032) (7,284) -0- -0- -0- -0-
Short Term Fund Shares.. (113) (222) -- -- -- --
Advantage Shares........ -0- (15,543) -0- -0- -0- -0-
Xpress Shares........... (5,433) (7,503) -- -- -- --
-------------- -------------- ------------- ------------- ------------ -------------
Total distribution to shareholders (6,578) (30,552) -0- -0- -0- -0-
-------------- -------------- ------------- ------------- ------------ -------------
Capital share transactions (Note 3):
Cortland Shares......... 431,237,477) (820,343,893) 6,382,302 (113,826,685) (40,909,928) (75,772,841)
Short Term Fund Shares.. (32,104,699) (8,379,124) -- -- -- --
Advantage Shares........ -0- (2,769,927,818) -0- (202,118,561) -0- 129,648,857)
Xpress Shares........... (1,475,324,695) 256,536,970 -- -- -- --
-------------- -------------- ------------- ------------- ------------ --------------
Total capital share transactions (1,938,666,871) (3,342,113,865) 6,382,302 (315,945,246) (40,909,928) (205,421,698)
-------------- -------------- ------------- ------------- ------------ --------------
Total increase (decrease) (1,938,668,703) (3,342,115,323) 6,371,986 (315,947,664) (40,891,207) (205,426,726)
Net assets:
Beginning of period....... 1,978,791,488 5,320,906,811 51,328,231 367,275,895 46,677,400 252,104,126
-------------- -------------- ------------- ------------- ------------ --------------
End of period............. $ 40,122,785 $ 1,978,791,488 $ 57,700,217 $51,328,231 $ 5,786,193 $ 46,677,400
============== =============== ============= ============= ============ ==============
Undistributed net
investment income....... $ -0- $ -0- $ -0- $ -0- $ 11,814 $ 6,789
============== =============== ============= ============= ============ ==========-===
<FN>
+ Designated as exempt-interest dividends for regular federal income tax purposes.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies
Cortland Trust, Inc. is a diversified, open-end management investment company
registered under the Investment Company Act of 1940 (the "Act"). The Company is
presently comprised of three Funds (the "Funds"), the Cortland General Money
Market Fund, the U.S. Government Fund and the Municipal Money Market Fund. On
June 7, 2007, the Board of Directors of the Fund approved the merger of the
Funds into Daily Income Fund, an affiliated fund also managed by Reich & Tang
Asset Management, LLC. On November 19, 2007 these Funds have merged into Daily
Income Fund after the approval of the Shareholders of record of August 24,
2007. The Cortland General Money Market Fund has four classes of stock
authorized, Cortland Shares, Short Term General Fund - General Shares ("Short
Term Fund Shares"), Advantage Primary Liquidity Fund Shares ("Advantage
Shares") and money market Xpress fund Shares ("Xpress Shares"). The U.S
Government Fund has two classes of stock authorized, Cortland Shares and
Advantage Government Liquidity Fund Shares. The Municipal Money Market Fund has
two classes of stock authorized, Cortland Shares and Advantage Municipal
Liquidity Fund Shares. All share classes are subject to a service fee pursuant
to each Fund's Distribution Plan. The Advantage and Xpress Shares are subject
to an additional shareholder servicing fee pursuant to a Shareholder Servicing
Agreement. The Short Term Fund Shares, Advantage Shares and Xpress Shares
commenced operations on September 5, 2002, November 22, 2002 and September 17,
2004, respectively. The Advantage Shares liquidated on December 15, 2006.
Income, expenses (other than expenses attributable to a specific class), and
realized and unrealized gain s and losses on investments are allocated to each
class of shares based on its relative net assets. In all other respects, the
Cortland Shares, Short Term Fund Shares, Advantage Shares and Xpress Shares
represent the same interest in the income and assets of each 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. The Company accounts separately
for the assets, liabilities and operations of each Fund. The Funds' financial
statements are prepared in accordance with accounting principles generally
accepted in the United States of America for investment companies as follows:
a) Valuation of Securities -
Investments are valued at amortized cost, which approximates market value.
Under this valuation method, a portfolio instrument is valued at cost and
any discount or premium is amortized on a constant basis to the maturity of
the instrument. If fluctuating interest rates cause the market value of the
Fund's portfolio to deviate more than 1/2 of 1% from the value determined
on the basis of amortized cost,the Board of Directors will consider whether
any action should be initiated. The maturity of variable rate demand
instruments is deemed to be the longer of the period required before the
Fund is entitled to receive payment of the principal amount or the period
remaining until the next interest rate adjustment.
b) Repurchase Agreements -
The Cortland General Money Market Fund and U.S. Government Fund may enter
into repurchase agreements. In connection with transactions in repurchase
agreements, it is the Fund's policy that its custodian take possession of
the underlying collateral securities, the fair value of which exceeds the
principal amount of the repurchase transaction, including accrued interest,
at all times. If the seller defaults and the fair market value of the
collateral declines, realization of the collateral by the Fund may be
delayed or limited.
c) Federal Income Taxes -
It is the policy of each Fund to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of their tax exempt and taxable income to shareholders.
Therefore, no provision for federal income tax is required.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies (Continued)
d) Dividends and Distributions -
Dividends from net investment income including realized capital gains and
losses, if any, and amortization of market discount), determined on a class
level, are declared daily and paid on the subsequent business day.
Distributions of net realized capital gains, offset by capital loss
carryovers, if any, are generally declared and paid when realized.
e) Use of Estimates -
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
f) General -
Securities transactions are recorded on a trade date basis.Interest income,
including accretion of discount and amortization of premium, is accrued as
earned. Realized gains and losses from securities transactions are recorded
on the identified cost basis.
2. Investment Management Fees and Other Transactions with Affiliates
Reich & Tang Asset Management, LLC (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, 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.
Pursuant to a Distribution Plan adopted under Securities and Exchange Commission
Rule 12b-1, each Fund and Reich & Tang Distributors, Inc. (the "Distributor"),
an affiliate of the Manager, has entered into a Distribution Agreement and a
Shareholder Servicing Agreement with respect to all share classes of the Funds.
For its services under the Distribution Agreement, the Distributor receives from
the Funds a fee equal to 0.25% of the average daily net assets with respect to
the Cortland, Short Term Fund, Advantage and Xpress 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. In addition, the Distributor receives
an additional 0.25% per annum in shareholder servicing fees of the Advantage and
Xpress Shares' average daily net assets.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
During the period ended September 30, 2007, the Distributor voluntarily waived
the following fees:
Cortland General Money Municipal Money
Market Fund U.S. Government Fund Market Fund
Management fees $118,275 -- $16,710
Distribution fees - Short Term Fund Shares 499 -- --
Distribution fees - Xpress Shares 106,174 -- --
Distribution fees - Cortland Shares 12,257 $16,774 3,570
Sub-TA fees - Short Term Fund Shares 11,081
The Distributor has no right to recoup prior fee waivers.
The Directors of the Company not affiliated with the Manager will be paid a fee
that is to be allocated among multiple funds, as defined below. Each Independent
Director will receive an annual retainer of $50,000 and a fee of $3,000 for each
Board of Directors meeting attended. Each Independent Director will also receive
a fee of $1,500 for each Board of Directors or committee meeting held
telephonically. Each Independent Director will also be reimbursed for all
out-of-pocket expenses relating to attendance at such meetings. The fees noted
above are to be allocated at the discretion of the Manager and for purposes of
determining which funds in the Reich & Tang complex will bear the related
expense of Independent Directors' fees, California Daily Tax Free Income Fund,
Inc., Connecticut Daily Tax Free Income Fund, Inc., the Daily Income Fund, and
the New Jersey Municipal Income Fund, Inc. are collectively referred to as, the
Combined Funds, and the Cortland Trust, Inc. is referred to as, the Cortland
Funds. Mr. Dowden, Mr. Frischling, Mr. Lerner and Mr. Schultz will have their
fees allocated among the Combined Funds and the Cortland Funds in accordance
with the Manager's discretion. Directors who are affiliated with the Manager do
not receive compensation from the Fund.
Included in the Statements of Operations under the caption "Other Expenses" were
fees of $406 paid to the Distributor for sub-accounting and administration
services for the Short Term Fund Shares of Cortland General Money Market Fund.
The Distributor receives a fee at an annual rate of up to 0.10% of the daily
average net assets of Short Term Fund Shares of Cortland General Money Market
Fund. For the period ended September 30, 2007 these fees amounted to an annual
rate of less than 0.01% of the Short Term Fund Shares of Cortland General Money
Market Fund.
3. Compensating Balance Agreement
Reich & Tang and the Bank of New York have entered into a compensating balance
arrangement, which would allow the Fund to compensate the Bank for any
overdrafts by maintaining a positive cash balance the next day. Conversely, on
any day the Fund maintains a positive balance it will be allowed to overdraw the
account as compensation. In both cases Federal Reserve requirements, currently
10%, will be assessed. Therefore, all overdrafts must be compensated at 100% of
the total and all positive balances will allow for an overdraft of 90% of the
total.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
4. Capital Stock
The shares outstanding in the Cortland General Money Market 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 September
30, 2007, there were 5,205,283 Pilgrim Shares outstanding, with a net asset
value of $1.00 per share, included in the Cortland Shares.
At September 30, 2007, 11 billion shares of $.001 par value stock of the Company
were authorized, of which 8 billion are designated as Cortland General Money
Market Fund shares, 1 billion are designated as U.S. Government Fund shares, 1
billion are designated as Municipal Money Market 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:
Cortland General U.S. Government Municipal Money
Money Market Fund Fund Market Fund
------------------------------- --------------------------- ---------------------------
Six Months For the Year Six Months For the Year Six Month For the Year
Ended Ended Ended Ended Ended Ended
September 30, March 31, September 30, March 31, September 30, March 31,
2007 2007 2007 2007 2007 2007
------------ ------------- ------------- ------------- -------------- -----------
Cortland Shares
Shares sold.......... 457,776,935 4,854,935,809 118,260,270 666,396,216 96,495,248 625,075,186
Dividends reinvested. 5,596,834 49,837,566 755,014 5,688,155 466,568 2,472,072
Shares redeemed...... (894,611,246) (5,725,117,268) (112,632,982) (785,911,056) (137,871,744) (703,320,099)
-------------- --------------- ------------- ------------- ------------- -------------
Net increase (decrease) (431,237,477) (820,343,893) 6,382,302 (113,826,685) (40,909,928) (75,772,841)
============== =============== ============= ============= ============= =============
Short Term Fund Shares
Shares sold.......... 20,548,218 70,010,898
Dividends reinvested. 496,627 1,478,060
Shares redeemed...... (53,149,544) (79,868,082)
-------------- ---------------
Net increase (decrease) (32,104,699) (8,379,124)
============== ===============
Advantage Shares
Shares sold.......... -0- 2,595,760,417 -0- 256,330,858 -0- 277,930,170
Dividends reinvested. -0- 82,650,244 -0- 5,152,772 -0- 2,302,083
Shares redeemed...... -0- (5,448,338,479) -0- (463,602,191) -0- (409,881,110)
-------------- --------------- ------------- ------------- ------------- -------------
Net increase (decrease) -0- (2,769,927,818) -0- (202,118,561) -0 (129,648,857)
============== =============== ============= ============= ============= =============
Xpress Shares
Shares sold.......... 804,332,032 1,973,279,108
Dividends reinvested. 20,819,839 54,604,886
Shares redeemed...... (2,300,476,566) (1,771,347,024)
-------------- ---------------
Net increase (decrease) (1,475,324,695) 256,536,970
============== ===============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
5. Tax Information
The tax character of all distributions paid during the years ended March 31,
2007 and 2006 were as follows:
Cortland General Money Municipal Money
Market Fund U.S. Government Fund Market Fund
---------------------------- --------------------------- ---------------------------
Year Ended March 31, Year Ended March 31, Year Ended March 31,
2007 2006 2007 2006 2007 2006
------------- ------------ ------------ ------------ ------------ ------------
Ordinary Income $ 189,087,517 $135,576,950 $ 10,858,474 $ 9,816,111 $ 6,789 $ -0-
Tax - Exempt Income -0- -0- -0- -0- 4,776,562 4,097,394
At March 31, 2007, there were no distributable earnings for the Cortland General
Money Market Fund and U.S. Government Fund. At March 31, 2007, the Cortland
General Money Market Fund, the U.S. Government Fund and Municipal Money Market
Fund had capital loss carryforward of $0, $0 and $8,541, respectively, available
for Federal income tax purposes to be applied against future gains, if any. If
not applied against future gains, these will expire in the year 2015. At March
31, 2007, the Cortland General Money Market Fund, U.S. Government Fund and
Municipal Money Market Fund had post-October losses of $1,309, $2,418 and
$5,324, respectively.
During the year ended March 31, 2007, the Cortland General Money Market Fund
utilized $19 of its carried forward capital losses.
In July 2006, the Financial Accounting Standards Board (the "FASB") issued
Interpretation No.48, "Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109" ("the Interpretation"). The
Interpretation establishes for all entities, including pass-through entities
such as the Fund, a minimum threshold for financial statement recognition of the
benefit of positions taken in filling tax returns (including whether an entity
is taxable in a particular jurisdiction) and requires certain expanded tax
disclosures. FIN 48 is effective for fiscal years beginning after December 15,
2006. On December 22, 2006, the Securities and Exchange Commission notified the
industry that the implementation of the Interpretation must be incorporated no
later than the last day on which a Net Assets Value is calculated preceding the
Portfolio's 2007 semi-annual report. Management has begun to evaluate the
application of the Interpretation to the Fund, and is not in a position at this
time to estimate the significance of its impact, if any, on the Fund's financial
statements.
6. New Accounting Pronouncements
In September 2006, FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements ("SFAS157"). SFAS 157 defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. SFAS 157 applies to reporting periods beginning after
November 15, 2007. Management is currently evaluating the impact the adoption of
SFAS 157 will have on the Fund's financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
7. Financial Highlights
Cortland General Money Market Fund
--------------------------------------------------------------------
Six Months Ended For the Year Ended March 31,
Cortland Shares September 30, 2007--------------------------------------------------------------------
- --------------- (Unaudited) 2007 2006 2005 2004 2003
---------- ----------- ----------- ----------- ---------- ----------
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
---------- ----------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income...... 0.022 0.042 0.028 0.008 0.002 0.008
Net realized and unrealized
gain/(loss) on investments. 0.000 0.000 0.000 0.000 0.000 0.000
---------- ----------- ----------- ----------- ---------- ----------
Total from investment operations 0.022 0.042 0.028 0.008 0.002 0.008
Less distributions from:
Dividends from net investment income (0.022) (0.042) (0.028) (0.008) (0.002) (0.008)
Net realized gains on investments (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)
---------- ----------- ----------- ----------- ---------- -----------
Total distributions.......... (0.022) (0.042) (0.028) (0.008) (0.002) (0.008)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== =========== =========== =========== ===========
Total Return................. 2.18%(a) 4.32% 2.84% 0.82% 0.21% 0.79%
Ratios/Supplemental Data
Net assets, end of period (000's) $ 40,123 $ 471,363 $ 1,291,707 $ 1,271,752 $ 1,252,029 $ 1,569,605
Ratios to average net assets:
Expenses................... 1.01%(b) 1.00% 0.98% 0.98% 1.00% 1.01%
Net investment income...... 4.33%(b) 4.22% 2.80% 0.82% 0.21% 0.78%
Management fees waived..... 0.02%(b) -- -- -- -- --
Distribution fees waived... 0.01%(b) -- -- -- -- --
<FN>
(a) Not annualized
(b) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
7. Financial Highlights (Continued)
U.S. Government Fund
--------------------------------------------------------------------
Six Months Ended For the Year Ended March 31,
Cortland Shares September 30, 2007--------------------------------------------------------------------
- --------------- (Unaudited) 2007 2006 2005 2004 2003
------------ ----------- ----------- ---------- ---------- ----------
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
----------- ----------- ----------- ---------- ---------- ----------
Income from investment operations:
Net investment income...... 0.021 0.041 0.027 0.007 0.002 0.008
Net realized and unrealized
gain/(loss) on investments. -- -- -- -- 0.000 0.000
----------- ----------- ----------- ---------- ---------- ----------
Total from investment operations 0.021 0.041 0.027 0.007 0.002 0.008
Less distributions from:
Dividends from net investment income (0.021) (0.041) (0.027) (0.007) (0.002) (0.008)
Net realized gains on investments ( -- ) ( -- ) ( -- ) ( -- ) 0.000 0.000
----------- ----------- ----------- ---------- ---------- ----------
Total distributions.......... (0.021) (0.041) (0.027) (0.007) (0.002) (0.008)
----------- ----------- ----------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== ========== ========== ==========
Total Return................. 2.10%(a) 4.22% 2.74% 0.74% 0.15% 0.76%
Ratios/Supplemental Data
Net assets, end of period (000's) $ 57,700 $ 51,328 $ 165,157 $ 194,890 $ 197,189 $ 177,455
Ratios to average net assets:
Expenses (net of fees waived) 1.01%(b) 0.99% 0.99% 0.99% 1.00% 1.01%
Net investment income...... 4.14%(b) 4.13% 2.68% 0.70% 0.15% 0.69%
Distribution fees waived... 0.09%(b) 0.01% -- -- 0.00% --
<FN>
(a) Not Annualized
(b) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
7. Financial Highlights (Continued)
Municipal Money Market Fund
--------------------------------------------------------------------
Six Months Ended For the Year Ended March 31,
Cortland Shares September 30, 2007--------------------------------------------------------------------
- --------------- (Unaudited) 2007 2006 2005 2004 2003
------------ ----------- ----------- ---------- ---------- ----------
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
------------ ----------- ----------- ---------- ---------- ----------
Income from investment operations:
Net investment income...... 0.014 0.027 0.018 0.005 0.001 0.005
Net realized and unrealized
gain/(loss) on investments. 0.000 -- -- -- 0.000 0.000
------------ ----------- ----------- ---------- ---------- ----------
Total from investment operations 0.014 0.027 0.018 0.005 0.001 0.005
Less distributions from:
Dividends from net investment income (0.014) (0.027) (0.018) (0.005) (0.001) (0.005)
Net realized gains on investments (0.000) ( -- ) -- (0.000) -- --
------------ ----------- ----------- ---------- ---------- ----------
Total distributions.......... (0.014) (0.027) (0.018) (0.005) (0.001) (0.005)
------------ ----------- ----------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ =========== =========== ========== ========== ==========
Total Return................. 1.40%(a) 2.69% 1.77% 0.47% 0.13% 0.49%
Ratios/Supplemental Data
Net assets, end of period (000's) $ 5,786 $ 46,677 $ 122,467 $ 120,743 $ 106,058 $ 90,001
Ratios to average net assets:
Expenses (net of fees waived) 0.87%(b) 0.98% 1.00% 1.00% 0.98% 1.00%
Net investment income........ 2.88%(b) 2.64% 1.76% 0.47% 0.12% 0.47%
Distribution fees waived..... 0.02%(b) -- -- 0.00 0.02% 0.01%
Management fees waived....... 0.10%(b) -- -- -- -- --
<FN>
(a) Not Annualized
(b) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
ADDITIONAL INFORMATION ABOUT PORTFOLIO HOLDINGS
The Company is required to file its complete schedule of portfolio holdings with
the Securities and Exchange Commission ("SEC") on Form N-Q for its first and
third fiscal quarters. The Fund's Form N-Q is available without charge on the
SEC's website (http://www.sec.gov) or by calling the Fund toll free at (800)
433-1918. You can also obtain copies of the Fund's Form N-Q by visiting the
SEC's Public Reference Room in Washington, DC (please call the SEC at (800)
732-0330 for information on the operation of the Public Reference Room).
INFORMATION ABOUT PROXY VOTING
Information regarding the Company's proxy voting record for the 12 month period
ending June 30 of each year is filed with the SEC on Form N-PX no later than
August 31 of each year. The Company's Form N-PX is available without charge,
upon request, by calling the Company at (800) 433-1918 and on the SEC's website
(http//www.sec.gov). The Funds do not presently invest in voting securities and
has therefore not adopted proxy voting policies and procedures.
QUALIFIED INTEREST INCOME
For the fiscal year ended March 31, 2007 the Funds designate the following
percentages of ordinary distributions paid during the Funds' fiscal year that
are from qualified interest income to foreign shareholders:
Qualified Interest
Income
-------
Cortland Trust, Inc. - Cortland General Money Market Fund 54%
Cortland Trust, Inc. - U.S. Government Fund 100%
APPROVAL OF THE MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS
The Directors unanimously approved the continuance of each Management/Investment
Agreement between the Company on behalf of each Fund and the Manager at a
meeting held on June 7, 2007.
In preparation for the meeting, the Directors had requested and evaluated
extensive materials from the Manager, which included information on the
following factors:
1. the nature, extent and quality of investment management and administrative
services rendered by the Manager;
2. the investment performance of each Fund compared to other investment
companies with similar investment objectives and similar distribution
channels;
3. the costs borne by, and profitability of, the Manager and its affiliates
in providing services to the Funds and to all investment companies in the
Reich and Tang Funds Complex;
4. comparative fee and expense data for other investment companies with
similar investment objectives and similar distribution channels;
5. information about fees charged by the Manager to other clients with similar
investment objectives; and
6. the extent to which economies of scale would be realized as the Funds
grow and whether fee levels reflect these economies of scale for the
benefit of investors.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORTLAND TRUST, INC.
ADDITIONAL INFORMATION
(UNAUDITED)
================================================================================
APPROVAL OF THE MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS,
continued
Prior to approving the continuance of the Management/Investment Advisory
Agreements, the Directors reviewed these materials with management and counsel
to the Directors who are independent of the Manager. The Directors received a
memorandum from such counsel discussing the legal standards for their
consideration of the proposed continuances. The Directors also discussed the
proposed continuance in an executive session with such counsel at which no
representatives of the Manager were present. In their deliberations, the
Directors did not identify any particular information that was all-important or
controlling, and each Director attributed different weights to the various
factors.
The Directors determined that the overall arrangements between the Company and
the Manager, as provided in each Management/Investment Advisory Agreement, were
fair and reasonable in light of the services performed, expenses incurred and
such other matters as the Directors considered relevant in the exercise of their
reasonable judgment.
The material factors and conclusions that formed the basis for the Directors'
reaching their determination to approve the continuance of each
Management/Investment Advisory Agreement, including their determinations that
the Manager should continue to serve as the Manager for the Funds and that the
fees payable to the Manager pursuant to each Management/Investment Advisory
Agreement are appropriate, were separately considered by the Directors.
Nature, extent and quality of services
The Board reviewed and considered the nature and extent of the investment
advisory services provided by the Funds' Manager under the Management/Investment
Advisory Agreements, including portfolio management, investment research and
trading in money market instruments. The Board also reviewed and considered the
nature and extent of the non-advisory, administrative services provided by the
Funds' Manager including accounting, clerical, bookkeeping, compliance, business
management and planning, and the provision of supplies, office space and
utilities at the Manager's expense.
The Board reviewed and considered the qualifications of the portfolio manager,
the senior administrative managers and other key personnel of the Manager who
provide the administrative and investment advisory services to the Funds. The
Board determined that the Manager's portfolio manager and key personnel are well
qualified by education and/or training and experience to perform the services in
an efficient and professional manner. The Board concluded that the nature and
extent of the advisory and administrative services provided were necessary and
appropriate for the conduct of the business and investment activities of the
Funds. The Board also concluded that the overall quality of the advisory and
administrative services was satisfactory.
Performance relative to comparable funds managed by other advisers
The Board reviewed the Funds' gross and net performance for the one, three, five
and ten-year periods ended March 31, 2007 compared to the performance of
comparable money market funds with similar distribution channels (the
"competitor group").
In evaluating the Cortland General Fund's performance, the Directors noted that
its rankings in net performance compared to its competitor group for the one,
three, five and ten-year periods ended March 31, 2007 were last out of eight,
first out of six, first out of six and third out of five, respectively.
In evaluating the Government Fund's performance, the Directors noted that its
rankings in net performance compared to its competitor group for the one, three,
five and ten-year periods ended March 31, 2007 were last out of eight, third out
of six, second out of six and third out of five, respectively.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
APPROVAL OF THE MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS,
continued
In evaluating the Municipal Fund's performance, the Directors noted that its
rankings in net performance compared to its competitor group for the one, three,
five and ten-year periods ended March 31, 2007 were first out of eight, third
out of five, third out of five and third out of four, respectively.
Fees relative to other funds managed by the adviser with comparable investment
strategies
The Board reviewed the management fees paid by the Funds under the
Management/Investment Advisory Agreements. The Board noted that the contractual
management fee rate for each of the Cortland General and Municipal Funds was
higher than the contractual management fee rate charged by the Manager to other
funds it manages with investment strategies comparable to those of these Funds.
With respect to the Government Fund, the Board noted that no fund similar to the
Government Fund was advised/sub-advised by the Manager. The Directors noted that
the Funds operate under an all-inclusive fee arrangement and that the other
funds managed by the Manager do not offer services that the Company offers.
Fees and expenses relative to comparable funds managed by other advisers
The Board considered that the Funds' total expenses, including 12b-1 and
non-12b-1 service fees, compared to the competitor groups of other retail money
market funds, indicated that the Cortland General Fund was ranked second out of
eight funds; that the Government Fund was ranked first out of eight funds; and
that the Municipal Fund was ranked fourth out of eight funds. The Board
concluded that the Funds' total expenses was competitive with the total expenses
of other retail money market funds.
Breakpoints and economies of scale
The Board noted that the management fee schedule of each Fund did include some
breakpoints, but that no breakpoints existed on the Company's average net assets
in excess of $1.5 billion. The Board concluded that the management fee of each
Fund reflects economies of scale and that additional breakpoints would result
should the Funds be reorganized into Daily Income Fund.
Profitability of adviser
At the May 22, 2007 meeting of the Board, the Board considered and reviewed
information concerning the costs incurred and profits realized by the Manager
from its relationship with the Funds and the Reich & Tang Fund Complex and
reviewed with the Manager the cost allocation methodology used to determine the
Manager's profitability. Based on their review of the information they received,
the Board concluded that the profits earned by the Manager were not excessive in
light of the advisory, administrative and other services provided to the Funds.
Fall-out benefits
The Board considered so-called "fall-out benefits" derived by the Manager and
its affiliates from their relationship with the Funds and noted that there were
no "fall-out benefits."
Soft dollar benefits
The Board considered whether the Manager realizes any benefits from commissions
paid to brokers who execute securities transactions for the Funds ("soft
dollars"). The Board noted that the Funds invest only in fixed income
securities, which do not generate soft dollars.
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CORTLAND TRUST, INC.
ADDITIONAL INFORMATION
(UNAUDITED)
================================================================================
APPROVAL OF THE MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS,
continued
Adviser financially sound and financially capable of meeting the funds' needs
The Board considered whether the Manager is financially sound and has the
resources necessary to perform its obligations under the Management/Investment
Advisory Agreements. The Board noted that the Manager's operations remain
profitable, although decreased revenues last year has reduced the profitability.
The Board concluded that the Manager has the financial resources necessary to
fulfill its obligations under the Management/Investment Advisory Agreements.
Historical relationship between the funds and the manager
The Board also reviewed and considered the historical relationship between the
Funds and the Manager, including the organizational structure of the Manager,
the policies and procedures formulated and adopted by the Manager for managing
the Funds' operations and the Board's confidence in the competence and integrity
of the senior managers and key personnel of the Manager. The Board concluded
that it is beneficial for the Funds to continue their relationship with the
Manager.
Other factors and current trends
The Board considered the controls and procedures adopted and implemented by the
Manager and monitored by the Funds' Chief Compliance Officer and concluded that
the conduct of business by the Manager indicates a good faith effort on its part
to adhere to high ethical standards in the conduct of the Funds' business.
General conclusion
After considering and weighing all of the above factors, the Board concluded it
would be in the best interest of the Funds and their shareholders to approve
renewal of the Management/Investment Advisory Agreements for another year.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORTLAND
TRUST, INC.
Semi-Annual Report
September 30, 2007
(Unaudited)
CRT9/07S
- --------------------------------------------------------------------------------
Item 2: Code of Ethics
Not Applicable (disclosure required in annual report on N-CSR only).
Item 3: Audit Committee Financial Expert
Not Applicable (disclosure required in annual report on N-CSR only).
Item 4: Principal Accountant Fees and Services
Not Applicable (disclosure required in annual report on N-CSR only).
Item 5: Audit Committee of Listed Registrants
Not Applicable.
Item 6: Schedule of Investments
Schedule of Investments in securities of unaffiliated issuers is included under
Item 1.
Item 7: Discholsure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not Applicable.
Item 8: Purchase of Equity Securties by Closed-End Management Investment Company
and Affiliated Purchasers
Not Applicable.
Item 9: Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors that were implemented
after the registrant last provided disclosure in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A, or this Item 9.
Item 10: Controls and Procedures
(a) The registrant's Principal Executive Officer and Principal Financial
Officer have evaluated the design and operation of the registrant's
disclosure controls and procedures within 90 days of this filing and
have concluded that the registrant's disclosure controls and procedures
were effective in ensuring that information required to be disclosed by
the registrant in this Form N-CSR was recorded, processed, summarized
and reported on a timely basis.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the second fiscal quarter of
the period covered by this report that have materially affected, or are
reasonably likely to affect, the registrant's internal controls over
financial reporting.
Item 11: Exhibits
(a)(1) Not Applicable (disclosure required in annual report on N-CSR only).
(a)(2) Certifications of Principal Executive Officer and Principal Financial
Officer, under Rule 30a-2 of the Investment Company Act of 1940.
(a)(3) Not Applicable.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer, under Section 906 of the Sarbanes-Oxley Act of 2002 and 18
U.S.C. ss.1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Cortland Trust, Inc.
By (Signature and Title)* /s/Christine Manna, Secretary
-----------------------------
Christine Manna, Secretary
Date: December 7, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/Steven W. Duff, President
----------------------------
Steven W. Duff, President
Date: December 7, 2007
By (Signature and Title)* /s/Anthony Pace, Treasurer
--------------------------
Anthony Pace, Treasurer
Date: December 7, 2007
* Print the name and title of each signing officer under his or her signature.