As filed with the Securities and Exchange Commission
on June 19, 1995
Securities Act File No.33-90952
Investment
Company Act File No. 811-9012
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/X/
(Check appropriate box or boxes)
/X/ Pre-Effective Amendment No. 1
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND INC.
.................................................
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street
New York, New York 10013
..............................................
..............
(Address of Principal Executive Offices)
(Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 723-9218
Christina T. Sydor
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
22nd Floor
New York, New York 10013
.........................................
(Name and Address of Agent for Service)
Rule 24f-2(a)(1) Declaration:
Registrant is registering an indefinite number if shares of
capital stock by this Registration Statement pursuant to Rule 24f-
2 under the Investment Company Act of 1940, as amended.
Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of the Registration
Statement.
Registrant amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until
Registrant files a further amendment that specifically states
that this Registration Statement will thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement becomes effective
on such date as the Commission, acting pursuant to Section 8(a)
of the Securities Act of 1933, as amended, may determine.
Page 1 of Pages
Exhibit Index at Page
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND INC.
FORM N-lA
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A The Cash Portfolio,
Item No. the Municipal Portfolio and
the Government Portfolio
Prospectus Heading
1. Cover Page................. Cover Page
2. Synopsis................... Fee Table
3. Condensed Financial
Information.............. Not
Applicable
4. General Description of
Registrant...............
Cover Page; Investment
Objectives and Policies; Yield
Information; Additional
Information
5. Management of the Fund..... Fee Table; Management of
the Fund; Distributor
6. Capital Stock and
Other Securities.........
Dividends, Automatic Reinvestment
and Taxes; Additional Information
7. Purchase of Securities
Being Offered............
Purchase of Shares; Valuation of
Shares
8. Redemption or
Repurchase...............
Redemption of Shares
9. Pending Legal
Proceedings.............. Not Applicable
The Cash Portfolio,
the Municipal Portfolio and
the Government Portfolio
Part B Heading in Statement of
Item No. Additional Information
10. Cover Page................. Cover Page
11. Table of Contents.......... Table of Contents
12. General Information
and History..............
Management Agreement, Plan of
Distribution and Other
Services; See Prospectus --
"Cover Page," and "Additional
Information"
13. Investment Objectives
and Policies.............
Investment Objectives
14. Management of the
Fund.....................
Management Agreement, Plan
of Distribution and Other
Services; See Prospectus --
"Management of the Fund"
15. Control Persons and
Principal Holders of
Securities...............
Management Agreement, Plan
of Distribution and Other
Services; See Prospectus --
"Management of the Fund"
16. Investment Advisory and
Other Services...........
Management Agreement Plan of
Distribution and Other
Services; Custodian, Transfer
Agent and Dividend Disbursing
Agent; See Prospectus --
"Management of the Fund" and
"Distributor"; "Additional
Information".
17. Brokerage Allocation
and Other
Practices......
Investment Objectives;
Management Agreement,
Plan Of Distribution and
Other Services.
18. Capital Stock and
Other Securities.........
See Prospectus -- "Purchase of
Shares," "Redemption of
Shares,""Dividends,Automatic
Reinvestment and Taxes"
19. Purchase, Redemption
and Pricing of
Securities Being
Offered..................
Determination of Net Asset
Value. See Prospectus --
"Purchase of Shares,"
"Redemption of Shares,"
"Valuation of Shares"
20. Tax Status.................
See Prospectus
"Dividends,Automatic
Reinvestment and Taxes"
21. Underwriters...............
See Prospectus -- "Purchase
of Shares"
22. Calculation of
Performance Data.........
Yield Information; See Prospectus --
"Yield Information "
23. Financial Statements.......
Not Applicable
Item 25. Persons Controlled by or Under Common Control with
Registrant
The Registrant is not controlled directly or indirectly by
any person. Information regarding the Registrant's institutional
manager is set forth under the caption "Management of the Fund"
in the prospectus included in Part A of this Registration
Statement on Form N-1A.
Item 26. Number of Holders of Securities
Number of Record
Title of Series Holders as of
June 1, 1995
The Cash Portfolio
Class A none
Class B none
The Government Portfolio
Class A none
Class B none
The Municipal Portfolio
Class A none
Class B none
Item 27. Indemnification
Reference is made to Article IX of Registrant's Articles of
Incorporation for a complete statement of its terms.
Item 28. Business and Other Connections of the Investment
Advisers
Smith Barney Mutual Funds Management Inc. ("SBMFM") acts as
the investment adviser for Smith Barney Money Funds, Inc., Smith
Barney Muni Funds, Smith Barney Intermediate Municipal Fund,
Inc., Smith Barney Municipal Fund, Inc., Smith Barney Municipal
Money Market Fund Inc., Smith Barney Series Fund, Smith Barney
Managed Governments Fund Inc., Smith Barney Arizona Municipals
Fund Inc., Smith Barney California Municipals Fund Inc, Smith
Barney Florida Municipals Fund, Smith Barney Massachusetts
Municipals Fund, Smith Barney New Jersey Municipals Fund Inc.,
Smith Barney New York Municipals Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Investment Funds, Smith Barney
Income Funds, Smith Barney Income Trust, Smith Barney Equity
Funds, Smith Barney Funds Inc., Smith Barney World Funds, Inc.,
Managed Municipals Portfolio Inc., Managed Municipals Portfolio
II Inc., and Consulting Group Capital Market Funds each located
at 388 Greenwich Street, New York, New York 10013
Smith Barney Mutual Funds Management Inc ("SBMFM") renders
investment advisory services only to investment company clients.
The list required by this Item 28 of officers and directors of
the foregoing, together with information as to any other
business, profession, vocation or employment of a substantial
nature engaged in by such officers and directors during the past
two years, is incorporated by reference to
the Form ADV filed by SBMFM pursuant to the Investment Advisers
Act of 1940, as amended (the "Advisers Act") (SEC File No.
801-8314).
Item 29. Principal Underwriter
(a) Smith Barney Inc., currently acts as underwriter for Smith
Barney Money Funds, Inc.; Smith Barney Municipal Money Market
Fund, Inc.; Smith Barney Muni Funds; Smith Barney Funds, Inc.;
Smith Barney Variable Account Funds; Smith Barney Intermediate
Municipal Fund, Inc.; Smith Barney Municipal Fund, Inc.; High
Income Opportunity Fund Inc.; Smith Barney Investment Funds, Inc.;
Smith Barney Adjustable Rate Government Income Fund; Smith Barney
Equity Funds; Smith Barney Income Funds; Smith Barney
Massachusetts Municipals Fund; Smith Barney Small Capitalization
Fund; Zenix Income Fund Inc; Smith Barney Arizona Municipals Fund
Inc.; Smith Barney Principal Return Fund; Smith Barney 1990s Fund;
Municipal High Income Fund Inc.; Pacific Corinthian Variable
Annuity Fund; The Trust for TRAK Investments; Smith Barney Series
Fund; Smith Barney Income Trust; Smith Barney Aggressive Growth
Fund Inc.; Smith Barney Appreciation Fund Inc.; Smith Barney
California Municipals Fund Inc.; Smith Barney Fundamental Value
Fund Inc.; Smith Barney Managed Governments Fund Inc.; Smith
Barney Managed Municipals Fund Inc.; Smith Barney New York
Municipals Fund Inc.; Smith Barney New Jersey Municipals Fund
Inc.; Smith Barney Short-Term World Income Fund; Smith Barney
Global Opportunities Fund; Smith Barney Precious Metals and
Minerals Fund Inc.; Smith Barney Investment Funds Inc.; The Italy
Fund Inc.; Smith Barney Telecommunications Trust; Managed
Municipals Portfolio Inc.; Managed Municipals Portfolio II Inc.;
Smith Barney Florida Municipal Fund; Managed High Income Portfolio
Inc.; Smith Barney acts as investment manager of The Inefficient-
Market Fund, Inc.
Smith Barney, the distributor of Registrant's shares, is a wholly
owned subsidiary of The Travelers, Inc..
(b) The information required by this Item 29 with
respect to each director and officer of Smith Barney is
incorporated by reference to Schedule A of Form BD filed by Smith
Barney pursuant to the Securities Exchange Act of 1934 (SEC File
No. 8-8177)
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents of Registrant are
maintained at the offices of:
(1) Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(Records relating to its function as Registrant's
investment adviser)
(2) PNC Bank, National Asociation
17th and Chestnut Streets
Philadelphia, Pennsylvania 19103
(Records relating to its function as Registrant's
custodian)
(3) The Shareholder Services Group, Inc.
Exchange Place
BostonBy-Laws
5 Form or Investment Advisory
Agreement
6 Distribution Agreement
8 Custody Agreement
9 Form of Transfer Agency Agreement
10 (a) Opinion of Willkie Farr & Gallagher
10 (b) Opinion of Venable, Baetjer & Howard
11 Consent of KPMG Peart Marwick LLP
13 Purchase Agreement, Massachusetts
02109
(Records relating to its function as Registrant's
transfer agent and dividend
paying agent)
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of its
shareholders for the purpose of voting upon the question of
removal of a director or directors of Registrant when requested
in writing to do so by the holders of at least 10% of
Registrant's outstanding shares, and the Registrant will assist
shareholders in calling such a meeting as required by the 1940
Act.
(b) Registrant undertakes to file a post-effective
amendment, with respect to the Funds, containing reasonably
current financial statements that need not be certified, within
four to six months from the effective date of this Registration
Statement.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit Page Number
2
15 Rule 12b-1 Distribution
Plan
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND
INC.- Class A Shares
388 Greenwich Street
New York, New York 10013
(800) 282-3505
PROSPECTUS
June 19, 1995
Smith Barney Institutional Cash Management Fund
Inc. (the "Fund") is a money market fund that
invests in high quality money market instruments.
The Fund is a no-load, open-end management
investment company that offers shares in three
Portfolios: the Cash Portfolio, the Government
Portfolio and the Municipal Portfolio
(individually a "Portfolio" and collectively the
"Portfolios").
The investment objective of each of the Cash
Portfolio and the Government Portfolio is to
maximize current income to the extent consistent
with the preservation of capital and the
maintenance of liquidity. The investment
objective of the Municipal Portfolio is to
maximize current income exempt from Federal
income taxes to the extent consistent with the
preservation of capital and the maintenance of
liquidity.
An investment in a Portfolio is neither insured
nor guaranteed by the U.S. Government. There is
no assurance that a Portfolio will be able to
maintain a stable net asset value of $1.00 per
share.
Each Portfolio is designed primarily for
institutions as an economical and convenient
means for the investment of short-term funds.
Each Portfolio currently offers two Classes of
shares. Class A shares may be purchased by
institutional investors on their own behalf.
Class B shares may be purchased by institutional
investors on behalf of their clients. A
Prospectus for Class B shares is available upon
request and without charge by calling or writing
the Fund at the address set forth above or by
contacting a Smith Barney Financial Consultant.
This Prospectus sets forth concisely certain
information about the Fund and the Portfolios,
including service fees and expenses, that
prospective investors will find helpful in making
an investment decision. Investors are encouraged
to read this Prospectus carefully and retain it
for future reference. Additional information
about the Fund is contained in a Statement of
Additional Information dated June 19, 1995, as
amended or supplemented from time to time, that
is available upon request and without charge by
calling or writing the Fund at the telephone
number or address set forth above. The Statement
of Additional Information has been filed with the
Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this
Prospectus in its entirety.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Table of Contents
Fee Table
- -------------------------------------------------
- ------------------- 3
Investment Objectives and Policies
- -------------------------------------------------
- ------------------- 4
Common Investment Techniques
- -------------------------------------------------
- ------------------- 10
Risk and Special Considerations
- -------------------------------------------------
- ------------------- 12
Valuation of Shares
- -------------------------------------------------
--------------
---------- 13
Dividends, Automatic Reinvestment and Taxes
- -------------------------------------------------
- ------------------------ 13
Purchase of Shares
- -------------------------------------------------
- ------------------- 14
Exchange Privilege
- -------------------------------------------------
- ------------------------ 14
Redemption of Shares
- -------------------------------------------------
- ------------------- 15
Minimum Account Size
- -------------------------------------------------
- ------------------- 16
Yield Information
- -------------------------------------------------
- ------------------- 17
Management of the Fund
- -------------------------------------------------
- ------------------- 17
Distributor
- -------------------------------------------------
- ------------------- 18
Additional Information
- -------------------------------------------------
- ------------------- 18
- -------------------------------------------------
- -------------------------------------------------
- ---------------- No person has been authorized to
give any information or to make any
representations in connection with this offering
other than those contained in this Prospectus
and, if given or made, such other information and
representations must not be relied upon as having
been authorized by the Fund or Smith Barney Inc.
This Prospectus does not constitute an offer by
the Fund or Smith Barney Inc., to sell or a
solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
- -------------------------------------------------
- -------------------------------------------------
- ----------------
FEE TABLE
The following expense table lists the costs and
expenses that an investor will incur either
directly or indirectly as a shareholder of a
Portfolio based on its projected annual operating
expenses:
Class A
- -------------------------------------------------
- -------------------------------------------------
- ----------------
Shareholders Transaction Expenses
Sales Charge Imposed on Purchase None
Deferred Sales Charge None
- -------------------------------------------------
- -------------------------------------------------
- ----------------
Class A
- -------------------------------------------------
- -------------------------------------------------
- ----------------
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees 0.27%
12b-1 Fees 0.00
Other Expenses 0.08
- -------------------------------------------------
- -------------------------------------------------
- ----------------
TOTAL PORTFOLIO OPERATING
EXPENSES 0.35%
Example
The following example is intended to assist an
investor in understanding the various costs that
an investor in each of the Portfolios will bear
directly or indirectly. The example assumes
payment by the Portfolio of operating expenses
at the levels set forth in the table above. See
"Purchase of Shares," "Redemption of Shares,"
"Management of the Fund" and "Distributor."
1 Year 3 Years
- -------------------------------------------------
- -------------------------------------------------
- ----------------
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5.00% annual return and
(2)redemption at the end of each time
period:
Class A $ $
The example also provides a means for the
investor to compare expense levels of funds with
different fee structures over varying investment
periods. To facilitate such comparison, all
funds are required to utilize a 5.00% annual
return assumption. However, a Portfolio's actual
return will vary and may be greater or less than
5.00%. This example should not be considered a
representation of past or future expenses and
actual expenses may be greater or less than those
shown.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Portfolio set
forth in this Prospectus is fundamental and may
not be changed without the affirmative vote of a
majority of the outstanding voting securities of
that Portfolio. Shareholders will be notified of
material changes in investment policies. The
Portfolios are subject to additional investment
policies and restrictions described in the
Statement of Additional Information, some of
which are fundamental and may not be changed
without shareholder approval.
The investment objective of each of the Cash
Portfolio and the Government Portfolio is to seek
maximum current income to the extent consistent
with preservation of capital and the maintenance
of liquidity. The investment objective of the
Municipal Portfolio is to seek maximum current
income that is exempt from Federal income taxes
to the extent consistent with preservation of
capital and the maintenance of liquidity. There
can be no assurance that a Portfolio will achieve
its investment objective or be able to maintain a
stable net asset value of $1.00 per share.
Common Investment Policies
The Portfolios will invest only in eligible high
quality, short-term money market instruments that
present minimal credit risks, as determined by
Smith Barney Mutual Funds Management Inc., the
Funds' investment manager ("SBMFM"), pursuant to
procedures adopted by the Fund's Board of
Directors (the "Directors"). Each Portfolio may
invest only in U.S. dollar-denominated
instruments that have a remaining maturity of 13
months or less (as calculated pursuant to Rule
2a-7 under the Investment Company Act of 1940
("1940 Act") and will maintain a dollar-weighted
average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule
2a-7 and except for U.S. Government Securities
(as defined below), each of the Cash Portfolio
and the Government Portfolio will not invest more
than 5% of its total assets in the securities of
any one issuer. A guarantor is not considered an
issuer for the purpose of this limit provided
that the value of all securities held by a
Portfolio that are issued or guaranteed by that
institution does not exceed 10% of the
Portfolio's total assets. In the case of the
Municipal Portfolio, up to 25% of its assets may
be invested without regard to the foregoing
limitations. To ensure adequate liquidity, no
Portfolio may invest more than 10% of its net
assets in illiquid securities, including
repurchase agreements maturing in more than seven
days and certain time deposits that are subject
to early withdrawal penalties and mature in more
than seven days. Because the Portfolios are
typically used as a cash management vehicle, they
intend to maintain a high degree of liquidity.
SBMFM determines and monitors the liquidity of
portfolio securities under the supervision of the
Directors.
Portfolio Quality
Each Portfolio will limit its investments to
securities that the Directors determine present
minimal credit risks and that are "Eligible
Securities" at the time of acquisition by the
Portfolio. The term "Eligible Securities"
includes securities rated by the "Requisite
NRSROs" in one of the two highest short-term
rating categories, securities of issuers that
have received such ratings with respect to other
short-term debt securities and comparable unrated
securities. "Requisite NRSROs" means, in the
case of the Cash Portfolio and the Government
Portfolio, (a) any two nationally recognized
statistical rating organizations ("NRSROs") that
have issued a rating with respect to a security
or class of debt obligations of an issuer or (b)
one NRSRO, if only one NRSRO has issued a rating
with respect to such security or issuer at the
time the Portfolio acquires the security, and, in
the case of the Municipal Portfolio, means any
one NRSRO that has issued ratings with respect to
a security or class of debt obligations of an
issuer. If the Cash Portfolio or the Government
Portfolio acquires securities that are unrated
(other than U.S. Government securities, as
defined below) or that have been rated by a
single NRSRO, the acquisition must be approved or
ratified by the Directors. The NRSROs currently
designated as such by the SEC are Standard &
Poor's Corporation ("S & P"), Moody's Investors
Service, Inc.("Moody's"), Fitch Investors
Services, Inc., Duff and Phelps, Inc., IBCA
Limited and its affiliate, IBCA, Inc. and Thomson
BankWatch. A more detailed discussion of the
categories of Municipal Obligations (as defined
below) and the ratings of NRSROs is contained in
the Statement of Additional Information relating
to the Portfolios.
In addition, the Cash Portfolio and the
Government Portfolio may not invest more than 5%
of their respective total assets in Eligible
Securities that have not received the highest
rating from the requisite NRSROs and comparable
unrated securities ("Second Tier Securities") and
may not invest more than 1% of their total assets
in the Second Tier Securities of any one issuer.
Each of the Cash Portfolio and the Government
Portfolio may invest more than 5% (but no more
than 25%) of the then-current value of its total
assets in the securities of a single issuer for a
period of up to three business days, provided
that (a) the securities either are rated by the
Requisite NRSROs in the highest short-term rating
category or are securities of issuers that have
received such rating with respect to other short-
term debt securities or are comparable unrated
securities, and (b) the Portfolio does not make
more than one such investment at any one time.
The Cash Portfolio
The Cash Portfolio pursues its objective by
investing primarily in high quality commercial
paper and obligations of financial institutions.
The Portfolio may also invest in U.S. Government
Securities (as defined below) and municipal
securities, although the Portfolio expects to
invest in such securities to a lesser degree.
Debt Securities. The Portfolio may invest in debt
obligations of domestic and foreign issuers,
including commercial paper (short-term promissory
notes issued by companies to finance their, or
their affiliates', current obligations), notes
and bonds, and variable amount master demand
notes. The Portfolio may invest in privately
issued commercial paper that is restricted as to
disposition under the federal securities laws.
In general, any sale of this paper may not be
made absent registration under the Securities Act
of 1933 (the "1933 Act") or the availability of
an appropriate exemption therefrom. Pursuant to
the provisions of Section 4(2) of the 1933 Act,
however, some privately issued commercial paper
("Section 4(2) paper") is eligible for resale to
institutional investors, and accordingly, SBMFM
may determine that a liquid market exists for
that paper pursuant to guidelines adopted by the
Directors. If a particular investment in Section
4(2) paper is not determined to be liquid, that
investment will be included within the 10%
limitation on illiquid securities.
Obligations of Financial Institutions. The
Portfolio may invest in obligations of financial
institutions. Examples of obligations in which
the Portfolio may invest include negotiable
certificates of deposit, bankers' acceptances and
time deposits of U.S. banks (including savings
and loan associations) having total assets in
excess of $1 billion or the equivalent of $1
billion in other currencies (in the case of
foreign banks) and securities backed by letters
of credit of U.S. Banks or other U.S. financial
institutions that are members of the Federal
Reserve System or the Federal Deposit Insurance
Corporation ("FDIC") (including obligations of
foreign branches of such members) if either: (a)
the principal amount of the obligation is insured
in full by the FDIC, or (b) the issuer of such
obligation has capital, surplus and undivided
profits in excess of $100 million or total assets
of $1 billion (as reported in its most recently
published financial statements prior to the date
of investment). Under current FDIC regulations,
the maximum insurance payable as to any one
certificate of deposit is $100,000; therefore,
certificates of deposit in denominations greater
than $100,000, that are purchased by the
Portfolio, will not be fully insured. The Cash
Portfolio will not purchase fixed time deposits
maturing in more than seven calendar days, and
will limit its investment in fixed time deposits
maturing from two business to seven calendar days
to 10% of its total assets.
The Cash Portfolio intends to maintain at least
25% of its total assets invested in obligations
of domestic and foreign banks, subject to the
above-mentioned size criteria. The Portfolio may
invest in instruments issued by domestic banks,
including those issued by their branches outside
the United States and subsidiaries located in
Canada, and in instruments issued by foreign
banks through their branches located in the
United States and the United Kingdom. In
addition, the Cash Portfolio may invest in fixed
time deposits of foreign banks issued through
their branches located in Grand Cayman Island,
Nassau, Tokyo and Toronto. The Portfolio may
also invest in Eurodollar and Yankee bank
obligations as discussed below.
Eurodollar or Yankee Obligations. Eurodollar
bank obligations are dollar-denominated certifi
cates of deposit or time deposits issued outside
the U.S. capital markets by foreign branches of
U.S. banks and by foreign banks. Yankee bank
obligations are dollar denominated obligations
issued in the U.S. capital markets by foreign
banks. Eurodollar (and to a limited extent,
Yankee) bank obligations are subject to certain
sovereign risks. One such risk is the possibility
that a foreign government might prevent dollar
denominated funds from flowing across its
borders. Other risks include: adverse political
and economic developments in a foreign country;
the extent and quality of government regulation
of financial markets and institutions; the
imposition of foreign withholding taxes; and
expropriation or nationalization of foreign
issuers. See "Risks and Special Considerations"
U.S. Government Securities. The Portfolio may
invest without limit in U.S. Government
Securities as described below under "The
Government Portfolio."
Municipal Securities. The Portfolio may invest in
obligations of states, territories or possessions
of the United States and their subdivisions,
authorities and corporations as described below
under "The Municipal Portfolio." These
obligations may pay interest that is exempt from
Federal income taxation.
Custodial Receipts. The Cash Portfolio may
acquire custodial receipts or certificates with
respect to U.S. Government Securities, such as
CATS, TIGRs and FICO Strips, underwritten by
securities dealers or banks that evidence
ownership of future interest payments, principal
payments or both on certain notes or bonds issued
by the U.S. Government, its agencies,
authorities or instrumentalities. The
underwriters of these certificates or receipts
purchase a U.S. Government Security and deposit
the security in an irrevocable trust or custodial
account with a custodian bank, which then issues
receipts or certificates that evidence ownership
of the periodic unmatured coupon payments and the
final principal payment on the U.S. Government
Security. Custodial receipts evidencing specific
coupon or principal payments have the same
general attributes as zero coupon U.S. Government
Securities but are not U.S. Government
Securities. Although typically under the terms
of a custodial receipt the Cash Portfolio is
authorized to assert its rights directly against
the issuer of the underlying obligation, the Cash
Portfolio may be required to assert through the
custodian bank such rights as may exist against
the underlying issuer. Thus, in the event the
underlying issuer fails to pay principal and/or
interest when due, the Cash Portfolio may be
subject to delays, expenses and risks that are
greater than those that would have been involved
if the Cash Portfolio had purchased a direct
obligation of the issuer. In addition, in the
event that the trust or custodial account in
which the underlying security has been deposited
is determined to be an association taxable as a
corporation, instead of a non-taxable entity, the
yield on the underlying security would be reduced
in respect of any taxes paid.
The Government Portfolio
The Government Portfolio pursues its objective by
investing exclusively in obligations issued
and/or guaranteed as to payment of principal and
interest by the United States government or by
its agencies and instrumentalities and repurchase
agreements secured by such obligations. The
Government Portfolio will be rated from time to
time by S&P and Moody"s.
U.S. Government Securities. U.S. government
securities are securities issued or guaranteed by
the U.S. government, its agencies and
instrumentalities and include repurchase
agreements collateralized and municipal
securities refunded with escrowed U.S. government
securities ("U.S. Government Securities"). U.S.
Government Securities in which the Portfolio may
invest include U.S. Treasury securities and
obligations issued or guaranteed by U.S. govern
ment agencies and instrumentalities that are
backed by the full faith and credit of the U.S.
government, such as those guaranteed by the Small
Business Administration or issued by the
Government National Mortgage Association. In
addition, U.S. Government Securities in which the
Portfolio may invest include securities supported
by the right of the issuer to borrow from the
U.S. Treasury, such as securities of Federal Home
Loan Banks; and securities supported primarily or
solely by the creditworthiness of the issuer,
such as securities of the Federal National
Mortgage Association, the Federal Home Loan
Mortgage Corporation and the Tennessee Valley
Authority. There is no guarantee that the U.S.
government will support securities not backed by
its full faith and credit. Accordingly, although
these securities have historically involved
little risk of loss of principal if held to
maturity, they may involve more risk than
securities backed by the full faith and credit of
the U.S. government.
The Municipal Portfolio
The Municipal Portfolio pursues its objective by
investing primarily in municipal securities whose
interest is exempt from Federal income taxes.
Under normal market conditions the Portfolio will
invest at least 80%, of its assets in municipal
securities whose interest is exempt from Federal
income taxes. However, the Portfolio reserves
the right to invest up to 20% of the value of its
assets in securities whose interest is federally
taxable. In addition, the Portfolio may invest
without limit in private activity bonds.
Interest income on certain types of private
activity bonds issued after August 7, 1986, to
finance non-governmental activities, is a
specific tax preference item for purposes of the
Federal individual and corporate alternative
minimum taxes. Individual and corporate
shareholders may be subject to a Federal
alternative minimum tax to the extent the
Portfolio's dividends are derived from interest
on these bonds. These private activity bonds are
included in the term "municipal securities" for
purposes of determining compliance with the 80%
test described above. Dividends derived from
interest income on all municipal securities are a
component of the "current earnings" adjustment
item for purposes of the Federal corporate
alternative minimum tax. Additionally, when SBMFM
is unable to locate investment opportunities with
desirable risk/reward characteristics, the
Portfolio may invest without limit in cash and
cash equivalents, including obligations that may
be Federally taxable (See "Taxable Investments").
Municipal Securities. The municipal securities in
which the Portfolio may invest include municipal
notes and short-term municipal bonds. Municipal
notes are generally used to provide for the
issuer's short-term capital needs and generally
have maturities of thirteen months or less.
Examples include tax anticipation and revenue
anticipation notes, which generally are issued in
anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and
tax-exempt commercial paper. Short-term municipal
bonds may include "general obligation bonds,"
which are secured by the issuer's pledge of its
faith, credit and taxing power for payment of
principal and interest; "revenue bonds", which
are generally paid from the revenues of a
particular facility or a specific excise tax or
other source; and "industrial development bonds,"
which are issued by or on behalf of public
authorities to provide funding for various
privately operated industrial and commercial
facilities. The Portfolio may also invest in high
quality participation interests in municipal
securities. A more detailed description of
various types of municipal securities is
contained in Appendix B in the Statement of
Additional Information.
When the assets and revenues of an agency,
authority, instrumentality or other political
subdivision are separate from those of the
government creating the issuing entity and a
security is backed only by the assets and
revenues of the issuing entity, that entity will
be deemed to be the sole issuer of the security.
Similarly, in the case of an industrial
development bond backed only by the assets and
revenues of the non-governmental issuer, the
non-governmental issuer will be deemed to be the
sole issuer of the bond.
At times, the Portfolio may invest more than 25%
of the value of its total assets in tax-exempt
securities that are related in such a way that an
economic, business, or political development or
change affecting one such security could
similarly affect the other securities; for
example, securities whose issuers are located in
the same state, or securities whose interest is
derived from revenues of similar type projects.
The Portfolio may also invest more than 25% of
its assets in industrial development bonds or
participation interests therein.
The Municipal Portfolio intends to conduct its
operations so as to qualify as a "regulated
investment company" for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"),
which will relieve the Fund of any liability for
Federal income tax to the extent that its
earnings are distributed to shareholders. In
order to so qualify, among other things, the
Portfolio must ensure that, at the close of each
quarter of the taxable year, (i) not more than
25% of the market value of the Portfolio's total
assets will be invested in the securities (other
than U.S. Government Securities) of a single
issuer or of two or more issuers that the
Portfolio
controls and that are engaged in the same,
similar or related trades or businesses and (ii)
at least 50% of the market value of the
Portfolio's total assets is represented by (a)
cash and cash items, (b) U.S. Government
Securities and (c) other securities limited in
respect of any one issuer to an amount not
greater in value than 5% of the market value of
the Portfolio's total assets and to not more than
10% of the outstanding voting securities of the
issuer.
Yields on municipal securities are dependent on a
variety of factors, including the general
conditions of the money market and of the
municipal bond and municipal note markets, the
size of a particular offering, the maturity of
the obligation and the rating of the issue. The
achievement of the Portfolio's investment
objective is dependent in part on the continuing
ability of the issuers of municipal securities in
which the Portfolio invests to meet their
obligations for the payment of principal and
interest when due. Obligations of issuers of
municipal securities are subject to the
provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of
creditors, such as the Bankruptcy Reform Act of
1978, as amended. Therefore, the possibility
exists, that as a result of litigation or other
conditions, the ability of any issuer to pay,
when due, the principal of and interest on its
municipal securities may be materially affected.
Municipal Leases. The Portfolio may invest in
municipal leases or participation interests
therein. Municipal leases are municipal
securities which may take the form of a lease or
an installment purchase or conditional sales
contract. Municipal leases are issued by state
and local governments and authorities to acquire
a wide variety of equipment and facilities.
Lease obligations may not be backed by the
issuing municipality's credit and may involve
risks not normally associated with general
obligation bonds and other revenue bonds. For
example, their interest may become taxable if the
lease is assigned and the holders may incur
losses if the issuer does not appropriate funds
for the lease payment on an annual basis, which
may result in termination of the lease and
possible default. SBMFM may determine that a
liquid market exists for municipal lease obli
gations pursuant to guidelines established by the
Directors.
Taxable Investments. As discussed above, although
the Portfolio will attempt to invest
substantially all of its assets in municipal
securities whose interest is exempt from Federal
income tax, the Portfolio may under certain
circumstances invest in certain securities whose
interest is subject to such taxation. These
securities include: (i) short-term obligations of
the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit,
bankers' acceptances and interest-bearing savings
deposits of banks having total assets of more
than $1 billion and whose deposits are insured by
the FDIC, (iii) commercial paper and (iv)
repurchase agreements as described below covering
any of the securities described in items
(i)-(iii) above or any other obligations of the
U.S. government, its agencies or
instrumentalities .
Tender Option Bonds. The Municipal Portfolio may
invest up to 2% of the value of its assets in
tender option bonds. A tender option bond is a
municipal security (generally held pursuant to a
custodial arrangement) having a relatively long
maturity and bearing interest at a fixed rate
substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the
agreement of a third party, such as a bank,
broker-dealer or other financial institution,
pursuant to which such institution grants the
security holders the option, at periodic
intervals, to tender their securities to the
institution and receive the face value thereof.
As consideration for providing the option, the
financial institution receives periodic fees
equal to the difference between the municipal
security's fixed coupon rate and the rate, as
determined by a remarketing or similar agent at
or near the commencement of such period, that
would cause the securities, coupled with the
tender option, to trade at par on the date of
such determination. Thus, after payment of this
fee, the security holder effectively holds a
demand obligation that bears interest at the
prevailing short-term tax-exempt rate. SBMFM, on
behalf of the Portfolio, will consider on an
ongoing basis the creditworthiness of the issuers
of the underlying municipal security, of any
custodian and the third-party provider of the
tender option. In certain instances and for
certain tender option bonds, the option may be
terminable in the event of a default in payment
of principal of interest on the underlying
municipal securities and for other reasons. The
Portfolio will not invest more than 10% of the
value of its net assets in illiquid securities,
which would include tender option bonds for which
the required notice to exercise the tender
feature is more than seven days if there is no
secondary market available for these securities.
Stand-by Commitments. The Municipal Portfolio
may acquire "stand-by commitments" with respect
to municipal securities held in its portfolio.
Under a stand-by commitment, a dealer agrees to
purchase, at the Portfolio's option, specified
municipal securities at a specified price. The
Portfolio intends to enter into stand-by
commitments only with dealers, banks and broker-
dealers which, in the opinion of SBMFM, present
minimal credit risks. In evaluating the
creditworthiness of the issuer of a stand-by
commitment, SBMFM will review periodically the
issuer's assets, liabilities, contingent claims
and other relevant financial information. The
Portfolio will acquire stand-by commitments
solely to facilitate portfolio liquidity and does
not intend to exercise its rights thereunder for
trading purposes.
COMMON INVESTMENT TECHNIQUES
Participation Interests. The Portfolios may
invest in participation interests in any type of
security in which the Portfolios may invest. A
participation interest gives a Portfolio an
undivided interest in the underlying securities
in the proportion that the Portfolio's
participation interest bears to the total
principal amount of the underlying securities.
Participation interests usually carry a demand
feature, as described below, backed by a letter
of credit or guarantee of the institution that
issued the interests permitting the holder to
tender them back to the institution.
Demand Features. The Portfolios may invest in
securities that are subject to puts and stand-by
commitments ("demand features"). Demand features
give the Portfolio the right to resell securities
at specified periods prior to their maturity
dates to the seller or to some third party at an
agreed-upon price or yield. Securities with
demand features may involve certain expenses and
risks, including the inability of the issuer of
the instrument to pay for the securities at the
time the instrument is exercised,
non-marketability of the instrument and
differences between the maturity of the
underlying security and the maturity of the
instrument. Securities may cost more with demand
features than without them. Demand features can
serve three purposes: (i) to shorten the maturity
of a variable or floating rate security, (ii) to
enhance the instrument's credit quality and (iii)
to provide a source of liquidity. Demand features
are often issued by third party financial
institutions, generally domestic and foreign
banks. Accordingly, the credit quality and
liquidity of the Portfolios' investments may be
dependent in part on the credit quality of the
banks supporting the Portfolios' investments.
This will result in exposure to risks pertaining
to the banking industry, including the foreign
banking industry. Brokerage firms and insurance
companies also provide certain liquidity and
credit support.
Variable and Floating Rate Securities. The
securities in which the Portfolios invest may
have variable or floating rates of interest.
These securities pay interest at rates that are
adjusted periodically according to a specified
formula, usually with reference to some interest
rate index or market interest rate. Securities
with ultimate maturities of greater than 13
months may be purchased only pursuant to Rule
2a-7. Under that Rule, only those long-term
instruments that have demand features which
comply with certain requirements and certain
variable rate U.S. Government Securities may be
purchased. Similar to fixed rate debt
instruments, variable and floating rate
instruments are subject to changes in value based
on changes in market interest rates or changes in
the issuer's or guarantor's creditworthiness. The
rate of interest on securities purchased by a
Portfolio may be tied to short-term Treasury or
other government securities or indices on
securities that are permissible investments of
the Portfolios, as well as other money market
rates of interest. The Portfolios will not
purchase securities whose values are tied to
interest rates or indexes that are not
appropriate for the duration and volatility
standards of a money market fund.
Mortgage- and Asset-Backed Securities. Each of
the Cash Portfolio and the Government Portfolio
may purchase fixed or adjustable rate mortgage-
backed securities issued by the Government
National Mortgage Association, Federal National
Mortgage Association or the Federal Home Loan
Mortgage Corporation. In addition, the Cash
Portfolio may purchase other asset-backed
securities, including securities backed by
automobile loans, equipment leases or credit card
receivables. These securities directly or
indirectly represent a participation in, or are
secured by and payable from, fixed or adjustable
rate mortgage or other loans which may be secured
by real estate or other assets. Unlike
traditional debt instruments, payments on these
securities include both interest and a partial
payment of principal. Prepayments of the
principal of underlying loans may shorten the
effective maturities of these securities and may
result in a Portfolio having to reinvest proceeds
at a lower interest rate.
Repurchase Agreements. Each Portfolio may seek
additional income by entering into repurchase
agreements with respect to obligations that could
otherwise be purchased by a Portfolio. Repurchase
agreements are transactions in which a Portfolio
purchases securities (normally U.S. Government
Securities) and simultaneously commits to resell
those securities to the seller at an agreed-upon
price on an agreed upon future date, normally one
to seven days later. The resale price reflects a
market rate of interest that is not related to
the coupon rate or maturity of the securities. If
the seller of the securities underlying a
repurchase agreement fails to pay the agreed
resale price on the agreed delivery date, a
Portfolio may incur costs in disposing of the
collateral and may experience losses if there is
any delay in its ability to do so. The Fund's
custodian maintains possession of the underlying
collateral, which is maintained at not less than
100% of the repurchase price.
Reverse Repurchase Agreements. Each Portfolio may
enter into reverse repurchase agreements. Reverse
repurchase agreements are transactions in which a
Portfolio sells a security and simultaneously
commits to repurchase that security from the
buyer at an agreed upon price on an agreed upon
future date. This technique will be used only for
temporary or emergency purposes, such as meeting
redemption requests or to earn additional income
on portfolio securities.
When - Issued or Delayed Delivery Securities.
Each Portfolio may purchase securities on a
when-issued or delayed delivery basis. Securities
so purchased are subject to market price
fluctuation from the time of purchase but no
interest on the securities accrues to a Portfolio
until delivery and payment for the securities
take place. Accordingly, the value of the
securities on the delivery date may be more or
less than the purchase price. Forward commitments
will be entered into only when a Portfolio has
the intention of taking possession of the
securities, but a Portfolio may sell the
securities before the settlement date if deemed
advisable.
Borrowing and Lending. Each Portfolio may borrow
money for temporary or emergency purposes in
amounts up to 33 1/3% of its total assets;
provided, however that no additional investments
will be made while borrowings exceed 5% of a
Portfolio's total assets. A Portfolio may not
mortgage or pledge securities except to secure
permitted borrowings. As a fundamental policy, a
Portfolio will not lend securities or other
assets if, as a result, more than 20% of its
total assets would be lent to other parties;
however, the Portfolios do not currently intend
to engage in securities lending.
Portfolio Turnover. Because the Portfolios invest
in securities with relatively short-term
maturities, each Portfolio is expected to have a
high portfolio turnover rate. However, a high
turnover rate should not increase a Portfolio's
costs because brokerage commissions are not
normally charged on the purchase and sale of
money market instruments.
RISKS AND SPECIAL CONSIDERATIONS
Although each Portfolio only invests in high
quality money market instruments, an investment
in a Portfolio is subject to risk even if all
securities in a Portfolio's portfolio are paid in
full at maturity. All money market instruments,
including U.S. Government Securities, can change
in value as a result of changes in interest
rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet
its obligations.
Each Portfolio will be affected by general
changes in interest rates which will result in
increases or decreases in the value of the
obligations held by such Portfolio. The market
value of the obligations in each Portfolio can be
expected to vary inversely to changes in
prevailing interest rates. Investors should
recognize that, in periods of declining interest
rates, the yield of each Portfolio will tend to
be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the
yield of each Portfolio will tend to be somewhat
lower. Also, when interest rates are falling,
the inflow of net new money to each Portfolio
from the continuous sale of its shares will
likely be invested in portfolio instruments
producing lower yields than the balance of the
Portfolio, thereby reducing the current yield of
the Portfolio. In periods of rising interest
rates, the opposite can be expected to occur. In
addition, securities in which the Portfolios will
invest may not yield as high a level of current
income as might be achieved by investing in
securities with less liquidity and safety and
longer maturities.
Investments in securities issued by foreign banks
or foreign issuers present certain risks,
including those resulting from fluctuations in
currency exchange rates, revaluation of
currencies, future political and economic
developments and the possible imposition of
currency exchange blockages or other foreign
governmental laws or restrictions and reduced
availability of public information. Foreign
issuers generally are not subject to uniform
accounting, auditing and financial reporting
standards or to other regulatory practices and
requirements applicable to domestic issuers. In
addition, there may be less publicly available
information about a foreign bank than about a
domestic bank.
VALUATION OF SHARES
The net asset value per share of each Portfolio
is determined as of 12 noon New York City time on
each day that the New York Stock Exchange
("NYSE") and the Fund's custodian are open by
dividing the Portfolio's net assets attributable
to the Class (i.e., the value of its assets less
liabilities) by the total number of shares of the
Class outstanding. Each Portfolio may also
determine net asset value per share on days when
the NYSE is not open, but when the settlement of
securities may otherwise occur. The Fund employs
the amortized cost method of valuing portfolio
securities and intends to use its best efforts to
continue to maintain a constant net asset value
of $1.00 per share.
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES
All Portfolios.
Each Portfolio intends to declare a dividend of
substantially all of its net investment income on
each day the NYSE is open. Net investment income
includes interest accrued and discount earned and
all short-term realized gains and losses on
portfolio securities and is less premium
amortized and expenses accrued. Income dividends
are paid monthly and will automatically be
reinvested in shares of the same Class of the
respective Portfolio unless a shareholder has
elected to receive distributions in cash. If a
shareholder redeems in full an account between
payment dates, all dividends declared up to and
including the date of liquidation will be paid
with the proceeds from the redemption of shares.
Long-term capital gains, if any, will be
distributed annually.
It is each Portfolio's intention to qualify as a
regulated investment company under Subchapter M
of the Internal Revenue Code. If so qualified,
the Portfolio will not be subject to Federal
income taxes to the extent that it distributes
its taxable net income. For Federal income tax
purposes, dividends (other than dividends derived
from income on tax-exempt municipal securities,
if any) and capital gain distributions, if any,
whether in shares or cash, are taxable to
shareholders of each Portfolio. Under the Code
no portion of the Portfolio distributions will be
eligible for the dividends received deduction for
corporations.
The Municipal Portfolio.
Distributions by the Municipal Portfolio that are
exempt for Federal income tax purposes will not
necessarily result in exemption under income tax
or other tax laws of any state or local taxing
authority. Generally, only interest earned on
obligations issued by the state or municipality
in which the investor resides will be exempt from
state and local taxes; however, the laws of the
several states and local taxing authorities vary
with respect to the taxation of exempt-interest
income, and each shareholder should consult a tax
advisor in that regard. The Portfolio will make
available annually to its shareholders
information concerning the percentage of interest
income the Portfolio received during the calendar
year from municipal securities on a state-by
state basis.
Under the Code, interest on indebtedness incurred
or continued to purchase or carry shares of the
Portfolio will not be deductible to the extent
that the Portfolio's distributions are exempt
from Federal income tax. In addition, any loss
realized upon the redemption of shares held less
than six months will be disallowed to the extent
of any exempt-interest dividends received by the
shareholder during such period. However, this
holding period may be shortened by the Treasury
Department to a period of not less than the
greater of 31 days or the period between regular
dividend distributions. Further, persons who may
be "substantial users" (or "related persons" of
substantial users) of facilities financed by
industrial development bonds should consult their
tax advisors before purchasing Portfolio shares.
The Tax Reform Act of 1986 provides that interest
on certain municipal securities (i.e., certain
private activity bonds) issued after August 7,
1986 will be treated as preference item for
purposes of both the corporate and individual
alternative minimum tax. Under Treasury
regulations, that portion of the Portfolio's
exempt-interest dividend to be treated as a
preference item for shareholders will be based on
the proportionate share of the interest received
by the Portfolio from the specified private
activity bonds. Shareholders should consult
their tax advisors concerning the effect of the
Tax Reform Act on an investment in the Fund.
PURCHASE OF SHARES
Purchases of Portfolio shares may be made
directly through the Fund's transfer agent, The
Shareholder Services Group, Inc. ("TSSG"), a
subsidiary of First Data Corporation, through a
brokerage account maintained with Smith Barney
Inc. ("Smith Barney") or with a broker that
clears securities transactions through Smith
Barney on a fully disclosed basis (an
"Introducing Broker"). No maintenance fee will be
charged by the Fund in connection with a
brokerage account through which an investor
purchases or holds shares. The Fund reserves the
right to waive or change minimums, to decline any
order to purchase its shares and to suspend the
offering of shares from time to time. Class A
shares are available for purchase by
institutional investors on their own behalf.
The minimum initial investment in the Fund is
$5,000,000 which may be met by aggregating the
amount of the initial investment made in all
three Portfolios; provided, however, that the
minimum initial investment made in each Portfolio
is $1,000,000. There is no minimum subsequent
requirement.
The Fund's shares are sold continuously at their
net asset value next determined after a purchase
order is received and becomes effective. A
purchase order becomes effective when TSSG, Smith
Barney or an Introducing Broker receives, or
converts the purchase amount into, Federal funds
(i.e., monies of members banks within the
Federal Reserve Bank). When orders for the
purchase of Fund shares are paid for in Federal
funds, or are placed by an investor with
sufficient Federal funds or cash balance in the
investor's brokerage account with Smith Barney or
the Introducing Broker, the order becomes
effective on the day of receipt if received prior
to 12 noon (New York time), on any day the Fund
calculates its net asset value. See "Valuation of
Shares". Purchase orders received after 12 noon
(New York time) on any business day are effective
as of the time the net asset value is next
determined. When orders for the purchase of Fund
shares are paid for other than in Federal funds,
TSSG, Smith Barney or the Introducing Broker,
acting on behalf of the investor, will complete
the conversion into, or itself advance, Federal
funds, and the order will become effective on
the day following its receipt by TSSG, Smith
Barney or the Introducing Broker (as the case may
be). Shares purchased begin to accrue income
dividends on the business day the purchase order
becomes effective.
REDEMPTION OF SHARES
Upon receipt of a proper redemption request
(indicating the name and account number of the
shareholder, the name of the Portfolio and the
dollar amount of shares to be redeemed), each
Portfolio will redeem its shares at the next
determined net asset value on a day that the NYSE
is open for business. On days that the NYSE is
open for business, net asset value per share is
determined at 12:00 Noon (New York time). See
"Valuation of Shares". Shareholders may use
either the ordinary or, if they elect, the
expedited redemption procedure. If utilizing any
of the redemption procedures the shareholder
redeems all shares owned, his dividends accrued
for the month to date will be simultaneously
remitted by check.
Expedited Redemption Procedure
Shareholders meeting the requirements stated
below may initiate redemptions by submitting
their redemption requests by telephone or mail to
TSSG and have the proceeds sent by a Federal
Funds wire to a previously designated bank
account. A redemption request received prior to
12:00 Noon (New York time) will not earn a
dividend on the day the request is received and
payment will be made in Federal Funds wired on
the same business day. If an expedited
redemption request for which the redemption
proceeds will be wired is received after 12:00
Noon (New York time), and prior to the regular
close of trading on the NYSE on a day on which
TSSG is open for business, the redemption
proceeds will be wired on the next business day
following the redemption request that TSSG is
open for business. A redemption request received
after 12:00 Noon (New York time) will earn a
dividend on the day the request is received. If
an expedited redemption request is received after
the regular close of trading on the NYSE or on a
day that Smith Barney or TSSG is closed, the
redemption proceeds will be wired on the next
business day following receipt of the redemption
request. Therefore, a redeeming shareholder
will receive a dividend on the day the request is
received, but not on the day that shares are
redeemed out of his account.
To utilize the expedited redemption procedure,
an account application with the expedited section
properly completed must be on file with TSSG
before an expedited redemption request is
submitted. This form requires a shareholder to
designate the bank account to which its
redemption proceeds should be sent. Any change
in the bank account designated to receive the
proceeds must be submitted in proper form on a
new account application with signature
guaranteed. In making a telephone redemption
request, a shareholder must provide the
shareholder's name and account number, the
dollar amount of the redemption requested, and
the name of the bank to which the redemption
proceeds should be sent. If the information
provided by the shareholder does not correspond
to the information on the application, the
transaction will not be approved. If, because of
unusual circumstances, a shareholder is unable
to contact TSSG at the telephone number listed
above to make an expedited redemption request,
he may contact his Smith Barney financial
consultant to effect such a redemption, or
request redemption in writing as described under
"Ordinary Redemption Procedure" below.
Ordinary Redemption Procedure
If this method of redemption is used, the
shareholder may submit his redemption request in
writing to TSSG. A Portfolio will make payment
for shares redeemed pursuant to the ordinary
redemption procedure by check sent to the
shareholder at the address on such shareholder's
account application. Such checks will normally
be sent out within one business day, but in no
event more than three business days after receipt
of the redemption request in proper form. A
shareholder's signature must be guaranteed by an
"eligible guarantor institution" as such term is
defined by Rule 17 Ad-15 of the Securities
Exchange Act of 1934, the existence and validity
of which may be verified by TSSG through use of
industry publications. A notary public is not an
acceptable guarantor. In certain instances, TSSG
may request additional documentation which it
believes necessary to insure proper authorization
such as, but not limited to: trust instruments,
death certificates, appointment of executor or
administrator, or certificates of corporate
authority. Shareholders having questions
regarding proper documentation should contact
TSSG.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to redeem
involuntarily any shareholder's account, if the
aggregate net asset value of the shares held in
the account in a Portfolio is less than $100,000
(if a shareholder has more than one account in a
Portfolio, each account must satisfy the minimum
account size.) Before the Directors of the Fund
elect to exercise such right, shareholders will
receive prior written notice and will be
permitted 60 days to bring accounts up to the
minimum to avoid involuntary redemption.
YIELD INFORMATION
The Portfolios may measure performance in several
ways, including "yield", "effective yield" and
"tax equivalent yield" (for the Municipal
Portfolio only). A Portfolio's yield is a way of
showing the rate of income the Portfolio earns on
its investments as a percentage of the
Portfolio's share price. Yield represents the
income, less expenses generated by the
investments, in the Portfolio over a seven-day
period expressed as an annual percentage rate.
Effective yield is similar in that it is
calculated over the same time frame, but instead
the net investment income is compounded and then
annualized. Due to the compounding effect, the
effective yield will normally be higher than the
yield. The Municipal Portfolio may also quote
its tax-equivalent yield, which shows the taxable
yield an investor would have to earn before taxes
to equal the Portfolio's tax-free yield.
Portfolio yield figures are base upon historical
earnings and are not intended to indicate future
performance.
From time to time in advertisements or sales
material, the Portfolios may discuss their
performance ratings or other information as
published by recognized statistical or rating
services, such as Lipper Analytical Services,
Inc., IBC/Donoghue's Money Fund Report,
Morningstar, or by publications of general
interest, such as Forbes or Money. In addition,
the Portfolios may compare their yields to those
of certain U.S. Treasury obligations or other
money market instruments.
MANAGEMENT OF THE FUND
Directors
Overall responsibility for management and
supervision of the Fund rests with its Directors.
The Directors approve all significant agreements
between the Fund and the companies that furnish
services to the Fund and each Portfolio,
including agreements with the Fund's distributor,
investment manager, custodian and transfer agent.
The day-to-day operations of each Portfolio are
delegated to the Portfolio's investment manager.
The Statement of Additional Information contains
background information regarding each Director
and executive officer of the Fund.
Investment Manager
Smith Barney Mutual Funds Management Inc.("SBMFM"
or the "Manager") manages the day to day
operations of each Portfolio pursuant to
management agreements entered into by the Fund on
behalf of each Portfolio, subject to the
direction of the Directors of the Fund. As
compensation for SBMFM's services to the
Portfolios, each Portfolio pays a monthly fee at
the annual rate of 0.27% of the value of that
Portfolio's average daily net assets.
SBMFM is a subsidiary of Smith Barney Holdings
Inc., which is a subsidiary of The Travelers,
Inc., a financial services holding company
engaged, through its subsidiaries, principally in
four business segments: Investment Services,
Consumer Finance Services, Life Insurance
Services and Property & Casualty Services. Smith
Barney and Smith Barney Holdings Inc. are each
located at 388 Greenwich Street, New York, New
York 10013.
The Manager was incorporated on March 12, 1968
under the laws of Delaware. As of January 31,
1995 the Manager had aggregate assets under
management of approximately $55 billion.
DISTRIBUTOR
Smith Barney serves as Principal Underwriter of
shares of the Fund. The Fund has adopted a
Distribution and Shareholder Servicing Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940
Act. With respect to Class A shares, the Plan
permits SBMFM to use its advisors fee to pay a
fee to Smith Barney which in turn is authorized
to make payments to securities dealers with which
Smith Barney has entered into selected dealers
agreements. Smith Barney may also use a portion
of the fee it receives under the Plan to
compensate its Financial Consultants. The
purpose of the Plan is to promote distribution of
the Fund's shares and to enhance the provision of
shareholder services. The Plan merely permits
the reallocation of a portion of the advisory fee
receives to pay for distribution related and
shareholder servicing activities.
ADDITIONAL INFORMATION
The Fund, an open-end, management investment
company, was organized under the laws of the
State of Maryland on March 28, 1995. The
Directors have authorized the issuance of three
series of shares, each representing shares in one
of three separate Portfolios and may also
authorize the creation of additional series of
shares. Each share of a Portfolio represents an
equal proportionate interest in the net assets of
that Portfolio or Class with each other share of
the same Portfolio or Class and is entitled to
such dividends and distributions out of the net
income of that Portfolio or Class as are declared
in the discretion of the Directors. Shareholders
are entitled to one vote for each share held and
will vote in the aggregate and not by Portfolio
or Class except as otherwise required by the 1940
Act or Maryland General Corporation Law. As
described under "Voting Rights" in the Statement
of Additional Information, the Portfolio
ordinarily will not hold shareholder meetings;
however, shareholders have the right to call a
meeting upon a vote of 10% of the Portfolio's
outstanding shares for the purpose of voting to
remove Directors and the Fund will assist
shareholders in calling such a meeting as
required by the 1940 Act.
PNC Bank, National Association, located at 17th
and Chestnut Streets, Philadelphia, Pennsylvania
19103, is the custodian of each Portfolio's
assets.
TSSG, located at Exchange Place, Boston,
Massachusetts provides transfer agency and
shareholder services for the Fund.
The Fund sends to each shareholder a semi-annul
report and an audited annual report, each of
which includes a list of the investment
securities held by the Fund at the end of the
period covered.
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND
INC.- Class B Shares
388 Greenwich Street
New York, New York 10013
(800) 282-3505
PROSPECTUS
June 19, 1995
Smith Barney Institutional Cash Management Fund
Inc. (the "Fund") is a money market fund that
invests in high quality money market instruments.
The Fund is a no-load, open-end management
investment company that offers shares in three
Portfolios: the Cash Portfolio, the Government
Portfolio and the Municipal Portfolio
(individually a "Portfolio" and collectively the
"Portfolios").
The investment objective of each of the Cash
Portfolio and the Government Portfolio is to
maximize current income to the extent consistent
with the preservation of capital and the
maintenance of liquidity. The investment
objective of the Municipal Portfolio is to
maximize current income exempt from Federal
income taxes to the extent consistent with the
preservation of capital and the maintenance of
liquidity.
An investment in a Portfolio is neither insured
nor guaranteed by the U.S. Government. There is
no assurance that a Portfolio will be able to
maintain a stable net asset value of $1.00 per
share.
Each Portfolio is designed primarily for
institutions as an economical and convenient
means for the investment of short-term funds.
Each Portfolio currently offers two Classes of
shares. Class B shares may be purchased by
institutional investors on behalf of their
customers. Class B shares accrue daily dividends
but bear certain fees payable by the Fund to
institutional investors for certain services they
provide to the beneficial owners of such shares.
Class A shares may be purchased by institutional
investors on their own behalf. A Prospectus for
Class A shares is available upon request and
without charge by calling or writing the Fund at
the address set forth above or by contacting a
Smith Barney Financial Consultant.
This Prospectus sets forth concisely certain
information about the Fund and the Portfolios,
including service fees and expenses, that
prospective investors will find helpful in making
an investment decision. Investors are encouraged
to read this Prospectus carefully and retain it
for future reference. Additional information
about the Fund is contained in a Statement of
Additional Information dated June 19, 1995 as
amended or supplemented from time to time, that
is available upon request and without charge by
calling or writing the Fund at the telephone
number or address set forth above. The Statement
of Additional Information has been filed with the
Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this
Prospectus in its entirety.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Table of Contents
Fee Table
- -------------------------------------------------
- ------------------- 3
Investment Objectives and Policies
- -------------------------------------------------
- ------------------- 4
Common Investment Techniques
- -------------------------------------------------
- ------------------- 10
Risk and Special Considerations
- -------------------------------------------------
- ------------------- 12
Valuation of Shares
- -------------------------------------------------
--------------
----- 13
Dividends, Automatic Reinvestment and Taxes
- -------------------------------------------------
- ------------------- 13
Purchase of Shares
- -------------------------------------------------
- ------------------- 14
Redemption of Shares
- -------------------------------------------------
- ------------------- 15
Minimum Account Size
- -------------------------------------------------
- ------------------- 16
Yield Information
- -------------------------------------------------
- ------------------- 16
Management of the Fund
- -------------------------------------------------
- ------------------- 17
Distributor
- -------------------------------------------------
- ------------------- 17
Additional Information
- -------------------------------------------------
- ------------------- 18
- -------------------------------------------------
- -------------------------------------------------
- ---------------- No person has been authorized to
give any information or to make any
representations in connection with this offering
other than those contained in this Prospectus
and, if given or made, such other information and
representations must not be relied upon as having
been authorized by the Fund or Smith Barney Inc.
This Prospectus does not constitute an offer by
the Fund or Smith Barney Inc., to sell or a
solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
- -------------------------------------------------
- -------------------------------------------------
- ----------------
FEE TABLE
The following expense table lists the costs and
expenses that an investor will incur either
directly or indirectly as a shareholder of a
Portfolio based on its projected annual operating
expenses:
Class B
- -------------------------------------------------
- -------------------------------------------------
- ----------------
Shareholders Transaction Expenses
Sales Charge Imposed on Purchase None
Deferred Sales Charge None
- -------------------------------------------------
- -------------------------------------------------
- ----------------
Class B
- -------------------------------------------------
- -------------------------------------------------
- ----------------
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees 0.27%
12b-1 Fees 0.25
Other Expenses 0.08
- -------------------------------------------------
- -------------------------------------------------
- ----------------
TOTAL PORTFOLIO OPERATING
EXPENSES 0.60%
Example
The following example is intended to assist an
investor in understanding the various costs that
an investor in each of the Portfolios will bear
directly or indirectly. The example assumes
payment by the Portfolio of operating expenses
at the levels set forth in the table above. See
"Purchase of Shares," "Redemption of Shares,"
"Management of the Fund" and "Distributor."
1 Year 3 Years
- -------------------------------------------------
- -------------------------------------------------
- ----------------
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5.00% annual return and
(2)redemption at the end of each time
period:
Class B $ $
The example also provides a means for the
investor to compare expense levels of funds with
different fee structures over varying investment
periods. To facilitate such comparison, all
funds are required to utilize a 5.00% annual
return assumption. However, a Portfolio's actual
return will vary and may be greater or less than
5.00%. This example should not be considered a
representation of past or future expenses and
actual expenses may be greater or less than those
shown.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Portfolio set
forth in this Prospectus is fundamental and may
not be changed without the affirmative vote of a
majority of the outstanding voting securities of
that Portfolio. Shareholders will be notified of
material changes in investment policies. The
Portfolios are subject to additional investment
policies and restrictions described in the
Statement of Additional Information, some of
which are fundamental and may not be changed
without shareholder approval.
The investment objective of each of the Cash
Portfolio and the Government Portfolio is to seek
maximum current income to the extent consistent
with preservation of capital and the maintenance
of liquidity. The investment objective of the
Municipal Portfolio is to seek maximum current
income that is exempt from Federal income taxes
to the extent consistent with preservation of
capital and the maintenance of liquidity. There
can be no assurance that a Portfolio will achieve
its investment objective or be able to maintain a
stable net asset value of $1.00 per share.
Common Investment Policies
The Portfolios will invest only in eligible high
quality, short-term money market instruments that
present minimal credit risks, as determined by
Smith Barney Mutual Funds Management Inc., the
Funds' investment manager ("SBMFM"), pursuant to
procedures adopted by the Fund's Board of
Directors (the "Directors"). Each Portfolio may
invest only in U.S. dollar-denominated
instruments that have a remaining maturity of 13
months or less (as calculated pursuant to Rule
2a-7 under the Investment Company Act of 1940
("1940 Act") and will maintain a dollar-weighted
average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule
2a-7 and except for U.S. Government Securities
(as defined below), each of the Cash Portfolio
and the Government Portfolio will not invest more
than 5% of its total assets in the securities of
any one issuer. A guarantor is not considered an
issuer for the purpose of this limit provided
that the value of all securities held by a
Portfolio that are issued or guaranteed by that
institution does not exceed 10% of the
Portfolio's total assets. In the case of the
Municipal Portfolio, up to 25% of its assets may
be invested without regard to the foregoing
limitations. To ensure adequate liquidity, no
Portfolio may invest more than 10% of its net
assets in illiquid securities, including
repurchase agreements maturing in more than seven
days and certain time deposits that are subject
to early withdrawal penalties and mature in more
than seven days. Because the Portfolios are
typically used as a cash management vehicle, they
intend to maintain a high degree of liquidity.
SBMFM determines and monitors the liquidity of
portfolio securities under the supervision of the
Directors.
Portfolio Quality
Each Portfolio will limit its investments to
securities that the Directors determine present
minimal credit risks and that are "Eligible
Securities" at the time of acquisition by the
Portfolio. The term "Eligible Securities"
includes securities rated by the "Requisite
NRSROs" in one of the two highest short-term
rating categories, securities of issuers that
have received such ratings with respect to other
short-term debt securities and comparable unrated
securities. "Requisite
NRSROs" means, in the case of the Cash Portfolio
and the Government Portfolio, (a) any two
nationally recognized statistical rating
organizations ("NRSROs") that have issued a
rating with respect to a security or class of
debt obligations of an issuer or (b) one NRSRO,
if only one NRSRO has issued a rating with
respect to such security or issuer at the time
the Portfolio acquires the security, and, in the
case of the Municipal Portfolio, means any one
NRSRO that has issued ratings with respect to a
security or class of debt obligations of an
issuer. If the Cash Portfolio or the Government
Portfolio acquires securities that are unrated
(other than U.S. Government securities, as
defined below) or that have been rated by a
single NRSRO, the acquisition must be approved or
ratified by the Directors. The NRSROs currently
designated as such by the SEC are Standard &
Poor's Corporation ("S & P"), Moody's Investors
Service, Inc.("Moody's"), Fitch Investors
Services, Inc., Duff and Phelps, Inc., IBCA
Limited and its affiliate, IBCA, Inc. and Thomson
BankWatch. A more detailed discussion of the
categories of Municipal Obligations (as defined
below) and the ratings of NRSROs is contained in
the Statement of Additional Information relating
to the Portfolios.
In addition, the Cash Portfolio and the
Government Portfolio may not invest more than 5%
of their respective total assets in Eligible
Securities that have not received the highest
rating from the requisite NRSROs and comparable
unrated securities ("Second Tier Securities") and
may not invest more than 1% of their total assets
in the Second Tier Securities of any one issuer.
Each of the Cash Portfolio and the Government
Portfolio may invest more than 5% (but no more
than 25%) of the then-current value of its total
assets in the securities of a single issuer for a
period of up to three business days, provided
that (a) the securities either are rated by the
Requisite NRSROs in the highest short-term rating
category or are securities of issuers that have
received such rating with respect to other short-
term debt securities or are comparable unrated
securities, and (b) the Portfolio does not make
more than one such investment at any one time.
The Cash Portfolio
The Cash Portfolio pursues its objective by
investing primarily in high quality commercial
paper and obligations of financial institutions.
The Portfolio may also invest in U.S. Government
Securities (as defined below) and municipal
securities, although the Portfolio expects to
invest in such securities to a lesser degree.
Debt Securities. The Portfolio may invest in debt
obligations of domestic and foreign issuers,
including commercial paper (short-term promissory
notes issued by companies to finance their, or
their affiliates', current obligations), notes
and bonds, and variable amount master demand
notes. The Portfolio may invest in privately
issued commercial paper that is restricted as to
disposition under the federal securities laws.
In general, any sale of this paper may not be
made absent registration under the Securities Act
of 1933 (the "1933 Act") or the availability of
an appropriate exemption therefrom. Pursuant to
the provisions of Section 4(2) of the 1933 Act,
however, some privately issued commercial paper
("Section 4(2) paper") is eligible for resale to
institutional investors, and accordingly, SBMFM
may determine that a liquid market exists for
that paper pursuant to guidelines adopted by the
Directors. If a particular investment in Section
4(2) paper is not determined to be liquid, that
investment will be included within the 10%
limitation on illiquid securities.
Obligations of Financial Institutions. The
Portfolio may invest in obligations of financial
institutions. Examples of obligations in which
the Portfolio may invest include negotiable
certificates of deposit, bankers' acceptances and
time deposits of U.S. banks (including savings
and loan associations) having total assets in
excess of $1 billion or the equivalent of $1
billion in other currencies (in the case of
foreign banks) and securities backed by letters
of credit of U.S. Banks or other U.S. financial
institutions that are members of the Federal
Reserve System or the Federal Deposit Insurance
Corporation ("FDIC") (including obligations of
foreign branches of such members) if either: (a)
the principal amount of the obligation is insured
in full by the FDIC, or (b) the issuer of such
obligation has capital, surplus and undivided
profits in excess of $100 million or total assets
of $1 billion (as reported in its most recently
published financial statements prior to the date
of investment). Under current FDIC regulations,
the maximum insurance payable as to any one
certificate of deposit is $100,000; therefore,
certificates of deposit in denominations greater
than $100,000, that are purchased by the
Portfolio, will not be fully insured. The Cash
Portfolio will not purchase fixed time deposits
maturing in more than seven calendar days, and
will limit its investment in fixed time deposits
maturing from two business to seven calendar days
to 10% of its total assets.
The Cash Portfolio intends to maintain at least
25% of its total assets invested in obligations
of domestic and foreign banks, subject to the
above-mentioned size criteria. The Portfolio may
invest in instruments issued by domestic banks,
including those issued by their branches outside
the United States and subsidiaries located in
Canada, and in instruments issued by foreign
banks through their branches located in the
United States and the United Kingdom. In
addition, the Cash Portfolio may invest in fixed
time deposits of foreign banks issued through
their branches located in Grand Cayman Island,
Nassau, Tokyo and Toronto. The Portfolio may
also invest in Eurodollar and Yankee bank
obligations as discussed below.
Eurodollar or Yankee Obligations. Eurodollar
bank obligations are dollar-denominated certifi
cates of deposit or time deposits issued outside
the U.S. capital markets by foreign branches of
U.S. banks and by foreign banks. Yankee bank
obligations are dollar denominated obligations
issued in the U.S. capital markets by foreign
banks. Eurodollar (and to a limited extent,
Yankee) bank obligations are subject to certain
sovereign risks. One such risk is the possibility
that a foreign government might prevent dollar
denominated funds from flowing across its
borders. Other risks include: adverse political
and economic developments in a foreign country;
the extent and quality of government regulation
of financial markets and institutions; the
imposition of foreign withholding taxes; and
expropriation or nationalization of foreign
issuers. See "Risks and Special Considerations"
U.S. Government Securities. The Portfolio may
invest without limit in U.S. Government
Securities as described below under "The
Government Portfolio."
Municipal Securities. The Portfolio may invest in
obligations of states, territories or possessions
of the United States and their subdivisions,
authorities and corporations as described below
under "The Municipal Portfolio." These
obligations may pay interest that is exempt from
Federal income taxation.
Custodial Receipts. The Cash Portfolio may
acquire custodial receipts or certificates with
respect to U.S. Government Securities, such as
CATS, TIGRs and FICO Strips, underwritten by
securities dealers or banks that evidence
ownership of future interest payments, principal
payments or both on certain notes or bonds issued
by the U.S. Government, its agencies,
authorities or instrumentalities. The
underwriters of these certificates or receipts
purchase a U.S. Government Security and deposit
the security in an irrevocable trust or custodial
account with a custodian bank, which then issues
receipts or certificates that evidence ownership
of the periodic unmatured coupon payments and the
final principal payment on the U.S. Government
Security. Custodial receipts evidencing specific
coupon or principal payments have the same
general attributes as zero coupon U.S. Government
Securities but are not U.S. Government
Securities. Although typically under the terms
of a custodial receipt the Cash Portfolio is
authorized to assert its rights directly against
the issuer of the underlying obligation, the Cash
Portfolio may be required to assert through the
custodian bank such rights as may exist against
the underlying issuer. Thus, in the event the
underlying issuer fails to pay principal and/or
interest when due, the Cash Portfolio may be
subject to delays, expenses and risks that are
greater than those that would have been involved
if the Cash Portfolio had purchased a direct
obligation of the issuer. In addition, in the
event that the trust or custodial account in
which the underlying security has been deposited
is determined to be an association taxable as a
corporation, instead of a non-taxable entity, the
yield on the underlying security would be reduced
in respect of any taxes paid.
The Government Portfolio
The Government Portfolio pursues its objective by
investing exclusively in obligations issued
and/or guaranteed as to payment of principal and
interest by the United States government or by
its agencies and instrumentalities and repurchase
agreements secured by such obligations. The
Government Portfolio will be rated from time to
time by S&P and Moody's.
U.S. Government Securities. U.S. government
securities are securities issued or guaranteed by
the U.S. government, its agencies and
instrumentalities and include repurchase
agreements collateralized and municipal
securities refunded with escrowed U.S. government
securities ("U.S. Government Securities"). U.S.
Government Securities in which the Portfolio may
invest include U.S. Treasury securities and
obligations issued or guaranteed by U.S. govern
ment agencies and instrumentalities that are
backed by the full faith and credit of the U.S.
government, such as those guaranteed by the Small
Business Administration or issued by the
Government National Mortgage Association. In
addition, U.S. Government Securities in which the
Portfolio may invest include securities supported
by the right of the issuer to borrow from the
U.S. Treasury, such as securities of Federal Home
Loan Banks; and securities supported primarily or
solely by the creditworthiness of the issuer,
such as securities of the Federal National
Mortgage Association, the Federal Home Loan
Mortgage Corporation and the Tennessee Valley
Authority. There is no guarantee that the U.S.
government will support securities not backed by
its full faith and credit. Accordingly,
although these securities have historically
involved little risk of loss of principal if held
to maturity, they may involve more risk than
securities backed by the full faith and credit of
the U.S. government.
The Municipal Portfolio
The Municipal Portfolio pursues its objective by
investing primarily in municipal securities whose
interest is exempt from Federal income taxes.
Under normal market conditions the Portfolio will
invest at least 80%, of its assets in municipal
securities whose interest is exempt from Federal
income taxes. However, the Portfolio reserves
the right to invest up to 20% of the value of its
assets in securities whose interest is federally
taxable. In addition, the Portfolio may invest
without limit in private activity bonds.
Interest income on certain types of private
activity bonds issued after August 7, 1986, to
finance non-governmental activities, is a
specific tax preference item for purposes of the
Federal individual and corporate alternative
minimum taxes. Individual and corporate
shareholders may be subject to a Federal
alternative minimum tax to the extent the
Portfolio's dividends are derived from interest
on these bonds. These private activity bonds are
included in the term "municipal securities" for
purposes of determining compliance with the 80%
test described above. Dividends derived from
interest income on all municipal securities are a
component of the "current earnings" adjustment
item for purposes of the Federal corporate
alternative minimum tax. Additionally, when SBMFM
is unable to locate investment opportunities with
desirable risk/reward characteristics, the
Portfolio may invest without limit in cash and
cash equivalents, including obligations that may
be Federally taxable (See "Taxable Investments").
Municipal Securities. The municipal securities in
which the Portfolio may invest include municipal
notes and short-term municipal bonds. Municipal
notes are generally used to provide for the
issuer's short-term capital needs and generally
have maturities of thirteen months or less.
Examples include tax anticipation and revenue
anticipation notes, which generally are issued in
anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and
tax-exempt commercial paper. Short-term municipal
bonds may include "general obligation bonds,"
which are secured by the issuer's pledge of its
faith, credit and taxing power for payment of
principal and interest; "revenue bonds", which
are generally paid from the revenues of a
particular facility or a specific excise tax or
other source; and "industrial development bonds,"
which are issued by or on behalf of public
authorities to provide funding for various
privately operated industrial and commercial
facilities. The Portfolio may also invest in high
quality participation interests in municipal
securities. A more detailed description of
various types of municipal securities is
contained in Appendix B in the Statement of
Additional Information.
When the assets and revenues of an agency,
authority, instrumentality or other political
subdivision are separate from those of the
government creating the issuing entity and a
security is backed only by the assets and
revenues of the issuing entity, that entity will
be deemed to be the sole issuer of the security.
Similarly, in the case of an industrial
development bond backed only by the assets and
revenues of the non-governmental issuer, the
non-governmental issuer will be deemed to be the
sole issuer of the bond.
At times, the Portfolio may invest more than 25%
of the value of its total assets in tax-exempt
securities that are related in such a way that an
economic, business, or political development or
change affecting one such security could
similarly affect the other securities; for
example,
securities whose issuers are located in the same
state, or securities whose interest is derived
from revenues of similar type projects. The
Portfolio may also invest more than 25% of its
assets in industrial development bonds or
participation interests therein.
The Municipal Portfolio intends to conduct its
operations so as to qualify as a "regulated
investment company" for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"),
which will relieve the Fund of any liability for
Federal income tax to the extent that its
earnings are distributed to shareholders. In
order to so qualify, among other things, the
Portfolio must ensure that, at the close of each
quarter of the taxable year, (i) not more than
25% of the market value of the Portfolio's total
assets will be invested in the securities (other
than U.S. Government Securities) of a single
issuer or of two or more issuers that the
Portfolio
controls and that are engaged in the same,
similar or related trades or businesses and (ii)
at least 50% of the market value of the
Portfolio's total assets is represented by (a)
cash and cash items, (b) U.S. Government
Securities and (c) other securities limited in
respect of any one issuer to an amount not
greater in value than 5% of the market value of
the Portfolio's total assets and to not more than
10% of the outstanding voting securities of the
issuer.
Yields on municipal securities are dependent on a
variety of factors, including the general
conditions of the money market and of the
municipal bond and municipal note markets, the
size of a particular offering, the maturity of
the obligation and the rating of the issue. The
achievement of the Portfolio's investment
objective is dependent in part on the continuing
ability of the issuers of municipal securities in
which the Portfolio invests to meet their
obligations for the payment of principal and
interest when due. Obligations of issuers of
municipal securities are subject to the
provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of
creditors, such as the Bankruptcy Reform Act of
1978, as amended. Therefore, the possibility
exists, that as a result of litigation or other
conditions, the ability of any issuer to pay,
when due, the principal of and interest on its
municipal securities may be materially affected.
Municipal Leases. The Portfolio may invest in
municipal leases or participation interests
therein. Municipal leases are municipal
securities which may take the form of a lease or
an installment purchase or conditional sales
contract. Municipal leases are issued by state
and local governments and authorities to acquire
a wide variety of equipment and facilities.
Lease obligations may not be backed by the
issuing municipality's credit and may involve
risks not normally associated with general
obligation bonds and other revenue bonds. For
example, their interest may become taxable if the
lease is assigned and the holders may incur
losses if the issuer does not appropriate funds
for the lease payment on an annual basis, which
may result in termination of the lease and
possible default. SBMFM may determine that a
liquid market exists for municipal lease obli
gations pursuant to guidelines established by the
Directors.
Taxable Investments. As discussed above, although
the Portfolio will attempt to invest
substantially all of its assets in municipal
securities whose interest is exempt from Federal
income tax, the Portfolio may under certain
circumstances invest in certain securities whose
interest is subject to such taxation. These
securities include: (i) short-term obligations of
the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit,
bankers' acceptances and interest-bearing savings
deposits of banks having total assets of more
than $1 billion and whose deposits are insured by
the FDIC, (iii) commercial paper and (iv)
repurchase agreements as described below covering
any of the securities described in items
(i)-(iii) above or any other obligations of the
U.S. government, its agencies or
instrumentalities .
Tender Option Bonds. The Municipal Portfolio may
invest up to 2% of the value of its assets in
tender option bonds. A tender option bond is a
municipal security (generally held pursuant to a
custodial arrangement) having a relatively long
maturity and bearing interest at a fixed rate
substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the
agreement of a third party, such as a bank,
broker-dealer or other financial institution,
pursuant to which such institution grants the
security holders the option, at periodic
intervals, to tender their securities to the
institution and receive the face value thereof.
As consideration for providing the option, the
financial institution receives periodic fees
equal to the difference between the municipal
security's fixed coupon rate and the rate, as
determined by a remarketing or similar agent at
or near the commencement of such period, that
would cause the securities, coupled with the
tender option, to trade at par on the date of
such determination. Thus, after payment of this
fee, the security holder effectively holds a
demand obligation that bears interest at the
prevailing short-term tax-exempt rate. SBMFM, on
behalf of the Portfolio, will consider on an
ongoing basis the creditworthiness of the issuers
of the underlying municipal security, of any
custodian and the third-party provider of the
tender option. In certain instances and for
certain tender option bonds, the option may be
terminable in the event of a default in payment
of principal of interest on the underlying
municipal securities and for other reasons. The
Portfolio will not invest more than 10% of the
value of its net assets in illiquid securities,
which would include tender option bonds for which
the required notice to exercise the tender
feature is more than seven days if there is no
secondary market available for these securities.
Stand-by Commitments. The Municipal Portfolio
may acquire "stand-by commitments" with respect
to municipal securities held in its portfolio.
Under a stand-by commitment, a dealer agrees to
purchase, at the Portfolio's option, specified
municipal securities at a specified price. The
Portfolio intends to enter into stand-by
commitments only with dealers, banks and broker-
dealers which, in the opinion of SBMFM, present
minimal credit risks. In evaluating the
creditworthiness of the issuer of a stand-by
commitment, SBMFM will review periodically the
issuer's assets, liabilities, contingent claims
and other relevant financial information. The
Portfolio will acquire stand-by commitments
solely to facilitate portfolio liquidity and does
not intend to exercise its rights thereunder for
trading purposes.
COMMON INVESTMENT TECHNIQUES
Participation Interests. The Portfolios may
invest in participation interests in any type of
security in which the Portfolios may invest. A
participation interest gives a Portfolio an
undivided interest in the underlying securities
in the proportion that the Portfolio's
participation interest bears to the total
principal amount of the underlying securities.
Participation interests usually carry a demand
feature, as described below, backed by a letter
of credit or guarantee of the institution that
issued the interests permitting the holder to
tender them back to the institution.
Demand Features. The Portfolios may invest in
securities that are subject to puts and stand-by
commitments ("demand features"). Demand features
give the Portfolio the right to resell securities
at specified periods prior to their maturity
dates to the seller or to some third party at an
agreed-upon price or yield. Securities with
demand features may involve certain expenses and
risks, including the inability of the issuer of
the instrument to pay for the securities at the
time the instrument is exercised,
non-marketability of the instrument and
differences between the maturity of the
underlying security and the maturity of the
instrument. Securities may cost more with demand
features than without them. Demand features can
serve three purposes: (i) to shorten the maturity
of a variable or floating rate security, (ii) to
enhance the instrument's credit quality and (iii)
to provide a source of liquidity. Demand features
are often issued by third party financial
institutions, generally domestic and foreign
banks. Accordingly, the credit quality and
liquidity of the Portfolios' investments may be
dependent in part on the credit quality of the
banks supporting the Portfolios' investments.
This will result in exposure to risks pertaining
to the banking industry, including the foreign
banking industry. Brokerage firms and insurance
companies also provide certain liquidity and
credit support.
Variable and Floating Rate Securities. The
securities in which the Portfolios invest may
have variable or floating rates of interest.
These securities pay interest at rates that are
adjusted periodically according to a specified
formula, usually with reference to some interest
rate index or market interest rate. Securities
with ultimate maturities of greater than 13
months may be purchased only pursuant to Rule
2a-7. Under that Rule, only those long-term
instruments that have demand features which
comply with certain requirements and certain
variable rate U.S. Government Securities may be
purchased. Similar to fixed rate debt
instruments, variable and floating rate
instruments are subject to changes in value based
on changes in market interest rates or changes in
the issuer's or guarantor's creditworthiness. The
rate of interest on securities purchased by a
Portfolio may be tied to short-term Treasury or
other government securities or indices on
securities that are permissible investments of
the Portfolios, as well as other money market
rates of interest. The Portfolios will not
purchase securities whose values are tied to
interest rates or indexes that are not
appropriate for the duration and volatility
standards of a money market fund.
Mortgage- and Asset-Backed Securities. Each of
the Cash Portfolio and the Government Portfolio
may purchase fixed or adjustable rate mortgage-
backed securities issued by the Government
National Mortgage Association, Federal National
Mortgage Association or the Federal Home Loan
Mortgage Corporation. In addition, the Cash
Portfolio may purchase other asset-backed
securities, including securities backed by
automobile loans, equipment leases or credit card
receivables. These securities directly or
indirectly represent a participation in, or are
secured by and payable from, fixed or adjustable
rate mortgage or other loans which may be secured
by real estate or other assets. Unlike
traditional debt instruments, payments on these
securities include both interest and a partial
payment of principal. Prepayments of the
principal of underlying loans may shorten the
effective maturities of these securities and may
result in a Portfolio having to reinvest proceeds
at a lower interest rate.
Repurchase Agreements. Each Portfolio may seek
additional income by entering into repurchase
agreements with respect to obligations that could
otherwise be purchased by a Portfolio. Repurchase
agreements are transactions in which a Portfolio
purchases securities (normally U.S. Government
Securities) and simultaneously commits to resell
those securities to the seller at an agreed-upon
price on an agreed upon future date, normally one
to seven days later. The resale price reflects a
market rate of interest that is not related to
the coupon rate or maturity of the securities. If
the seller of the securities underlying a
repurchase agreement fails to pay the agreed
resale price on the agreed delivery date, a
Portfolio may incur costs in disposing of the
collateral and may experience losses if there is
any delay in its ability to do so. The Fund's
custodian maintains possession of the underlying
collateral, which is maintained at not less than
100% of the repurchase price.
Reverse Repurchase Agreements. Each Portfolio may
enter into reverse repurchase agreements. Reverse
repurchase agreements are transactions in which a
Portfolio sells a security and simultaneously
commits to repurchase that security from the
buyer at an agreed upon price on an agreed upon
future date. This technique will be used only for
temporary or emergency purposes, such as meeting
redemption requests or to earn additional income
on portfolio securities.
When - Issued or Delayed Delivery Securities.
Each Portfolio may purchase securities on a
when-issued or delayed delivery basis. Securities
so purchased are subject to market price
fluctuation from the time of purchase but no
interest on the securities accrues to a Portfolio
until delivery and payment for the securities
take place. Accordingly, the value of the
securities on the delivery date may be more or
less than the purchase price. Forward commitments
will be entered into only when a Portfolio has
the intention of taking possession of the
securities, but a Portfolio may sell the
securities before the settlement date if deemed
advisable.
Borrowing and Lending. Each Portfolio may borrow
money for temporary or emergency purposes in
amounts up to 33 1/3% of its total assets;
provided, however that no additional investments
will be made while borrowings exceed 5% of a
Portfolio's total assets. A Portfolio may not
mortgage or pledge securities except to secure
permitted borrowings. As a fundamental policy, a
Portfolio will not lend securities or other
assets if, as a result, more than 20% of its
total assets would be lent to other parties;
however, the Portfolios do not currently intend
to engage in securities lending.
Portfolio Turnover. Because the Portfolios invest
in securities with relatively short-term
maturities, each Portfolio is expected to have a
high portfolio turnover rate. However, a high
turnover rate should not increase a Portfolio's
costs because brokerage commissions are not
normally charged on the purchase and sale of
money market instruments.
RISKS AND SPECIAL CONSIDERATIONS
Although each Portfolio only invests in high
quality money market instruments, an investment
in a Portfolio is subject to risk even if all
securities in a Portfolio's portfolio are paid in
full at maturity. All money market instruments,
including U.S. Government Securities, can change
in value as a result of changes in interest
rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet
its obligations.
Each Portfolio will be affected by general
changes in interest rates which will result in
increases or decreases in the value of the
obligations held by such Portfolio. The market
value of the obligations in each Portfolio can be
expected to vary inversely to changes in
prevailing interest rates. Investors should
recognize that, in periods of declining interest
rates, the yield of each Portfolio will tend to
be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the
yield of each Portfolio will tend to be somewhat
lower. Also, when interest rates are falling,
the inflow of net new money to each Portfolio
from the continuous sale of its shares will
likely be invested in portfolio instruments
producing lower yields than the balance of the
Portfolio, thereby reducing the current yield of
the Portfolio. In periods of rising interest
rates, the opposite can be expected to occur. In
addition, securities in which the Portfolios will
invest may not yield as high a level of current
income as might be achieved by investing in
securities with less liquidity and safety and
longer maturities.
Investments in securities issued by foreign banks
or foreign issuers present certain risks,
including those resulting from fluctuations in
currency exchange rates, revaluation of
currencies, future political and economic
developments and the possible imposition of
currency exchange blockages or other foreign
governmental laws or restrictions and reduced
availability of public information. Foreign
issuers generally are not subject to uniform
accounting, auditing and financial reporting
standards or to other regulatory practices and
requirements applicable to domestic issuers. In
addition, there may be less publicly available
information about a foreign bank than about a
domestic bank.
VALUATION OF SHARES
The net asset value per share of each Portfolio
is determined as of 12 noon New York City time on
each day that the New York Stock Exchange
("NYSE") and the Fund's custodian are open by
dividing the Portfolio's net assets attributable
to the Class (i.e., the value of its assets less
liabilities) by the total number of shares of the
Class outstanding. Each Portfolio may also
determine net asset value per share on days when
the NYSE is not open, but when the settlement of
securities may otherwise occur. The Fund employs
the amortized cost method of valuing portfolio
securities and intends to use its best efforts to
continue to maintain a constant net asset value
of $1.00 per share.
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES
All Portfolios.
Each Portfolio intends to declare a dividend of
substantially all of its net investment income on
each day the NYSE is open. Net investment income
includes interest accrued and discount earned and
all short-term realized gains and losses on
portfolio securities and is less premium
amortized and expenses accrued. Income dividends
are paid monthly and will automatically be
reinvested in shares of the Class of the
respective Portfolio unless a shareholder has
elected to receive distributions in cash. If a
shareholder redeems in full an account between
payment dates, all dividends declared up to and
including the date of liquidation will be paid
with the proceeds from the redemption of shares.
The per share dividends of Class B shares of each
Portfolio will be less than the per share
dividends of Class A shares of each Portfolio
principally as a result of the service fee
applicable to Class B shares. Long-term capital
gains, if any, will be distributed annually.
It is each Portfolio's intention to qualify as a
regulated investment company under Subchapter M
of the Internal Revenue Code. If so qualified,
the Portfolio will not be subject to Federal
income taxes to the extent that it distributes
its taxable net income. For Federal income tax
purposes, dividends (other than dividends derived
from income on tax-exempt municipal securities,
if any) and capital gain distributions, if any,
whether in shares or cash, are taxable to
shareholders of each Portfolio. Under the Code
no portion of the Portfolio distributions will be
eligible for the dividends received deduction for
corporations.
The Municipal Portfolio.
Distributions by the Municipal Portfolio that are
exempt for Federal income tax purposes will not
necessarily result in exemption under income tax
or other tax laws of any state or local taxing
authority. Generally, only interest earned on
obligations issued by the state or municipality
in which the investor resides will be exempt from
state and local taxes; however, the laws of the
several states and local taxing authorities vary
with respect to the taxation of exempt-interest
income, and each shareholder should consult a tax
advisor in that regard. The Portfolio will make
available annually to its shareholders
information concerning the percentage of interest
income the Portfolio received during the calendar
year from municipal securities on a state-by
state basis.
Under the Code, interest on indebtedness incurred
or continued to purchase or carry shares of the
Portfolio will not be deductible to the extent
that the Portfolio's distributions are exempt
from Federal income tax. In addition, any loss
realized upon the redemption of shares held less
than six months will be disallowed to the extent
of any exempt-interest dividends received by the
shareholder during such period. However, this
holding period may be shortened by the Treasury
Department to a period of not less than the
greater of 31 days or the period between regular
dividend distributions. Further, persons who may
be "substantial users" (or "related persons" of
substantial users) of facilities financed by
industrial development bonds should consult their
tax advisors before purchasing Portfolio shares.
The Tax Reform Act of 1986 provides that interest
on certain municipal securities (i.e., certain
private activity bonds) issued after August 7,
1986 will be treated as preference item for
purposes of both the corporate and individual
alternative minimum tax. Under Treasury
regulations, that portion of the Portfolio's
exempt-interest dividend to be treated as a
preference item for shareholders will be based on
the proportionate share of the interest received
by the Portfolio from the specified private
activity bonds. Shareholders should consult
their tax advisors concerning the effect of the
Tax Reform Act on an investment in the Fund.
PURCHASE OF SHARES
Purchases of Portfolio shares may be made
directly through the Fund's transfer agent, The
Shareholder Services Group, Inc. ("TSSG"), a
subsidiary of First Data Corporation, through a
brokerage account maintained with Smith Barney
Inc. ("Smith Barney") or with a broker that
clears securities transactions through Smith
Barney on a fully disclosed basis (an
"Introducing Broker"). No maintenance fee will be
charged by the Fund in connection with a
brokerage account through which an investor
purchases or holds shares. The Fund reserves the
right to waive or change minimums, to decline any
order to purchase its shares and to suspend the
offering of shares from time to time. Class B
shares are available for purchase by
institutional investors on behalf of their
customers.
The minimum initial investment in the Fund is
$5,000,000 which may be met by aggregating the
amount of initial investments made in alll three
Portfolios; provided, however, that the minimum
initial investment amount made in each Portfolio
is $1,000,000. There is no minimum subsequent
investment requirement.
The Fund's shares are sold continuously at their
net asset value next determined after a purchase
order is received and becomes effective. A
purchase order becomes effective when TSSG, Smith
Barney or an Introducing Broker receives, or
converts the purchase amount into, Federal funds
(i.e., monies of members banks within the
Federal Reserve Bank). When orders for the
purchase of Fund shares are paid for in Federal
funds, or are placed by an investor with
sufficient Federal funds or cash balance in the
investor's brokerage account with Smith Barney or
the Introducing Broker, the order becomes
effective on the day of receipt if received prior
to 12 noon, New York time, on any day the Fund
calculates its net asset value. See "Valuation of
Shares". Purchase orders received after 12 noon
on any business day are effective as of the time
the net asset value is next determined. When
orders for the purchase of Fund shares are paid
for other than in Federal funds, TSSG, Smith
Barney or the Introducing Broker, acting on
behalf of the investor, will complete the
conversion into, or itself advance, Federal
funds, and the order will become effective on
the day following its receipt by TSSG, Smith
Barney or the Introducing Broker (as the case may
be). Shares purchased begin to accrue income
dividends on the business day the purchase order
becomes effective.
REDEMPTION OF SHARES
Upon receipt of a proper redemption request
(indicating the name and account number of the
shareholder, the name of the Portfolio and the
dollar amount of shares to be redeemed), each
Portfolio will redeem its shares at the next
determined net asset value on a day that the NYSE
is open for business. On days that the NYSE is
open for business, net asset value per share is
determined at 12:00 Noon (New York time). See
"Valuation of Shares". Shareholders may use
either the ordinary or, if they elect, the
expedited redemption procedure. If utilizing any
of the redemption procedures the shareholder
redeems all shares owned, his dividends accrued
for the month to date will be simultaneously
remitted by check.
Expedited Redemption Procedure
Shareholders meeting the requirements stated
below may initiate redemptions by submitting
their redemption requests by telephone or mail to
TSSG and have the proceeds sent by a Federal
Funds wire to a previously designated bank
account. A redemption request received prior to
12:00 Noon (New York time) will not earn a
dividend on the day the request is received and
payment will be made in Federal Funds wired on
the same business day. If an expedited
redemption request for which the redemption
proceeds will be wired is received after 12:00
Noon (New York time), and prior to the regular
close of trading on the NYSE on a day on which
TSSG is open for business, the redemption
proceeds will be wired on the next business day
following the redemption request that TSSG is
open for business. A redemption request received
after 12:00 Noon (New York time) will earn a
dividend on the day the request is received. If
an expedited redemption request is received after
the regular close of trading on the NYSE or on a
day that Smith Barney or TSSG is closed, the
redemption proceeds will be wired on the next
business day following receipt of the redemption
request. Therefore, a redeeming shareholder
will receive a dividend on the day the request is
received, but not on the day that shares are
redeemed out of his account.
To utilize the expedited redemption procedure,
an account application with the expedited section
properly completed must be on file with TSSG
before an expedited redemption request is
submitted. This form requires a shareholder to
designate the bank account to which its
redemption proceeds should be sent. Any change
in the bank account designated to receive the
proceeds must be submitted in proper form on a
new account application with signature
guaranteed. In making a telephone redemption
request, a shareholder must provide the
shareholder's name and account number, the
dollar amount of the redemption requested, and
the name of the bank to which the redemption
proceeds should be sent. If the information
provided by the shareholder does not correspond
to the information on the application, the
transaction will not be approved. If, because of
unusual circumstances, a shareholder is unable
to contact TSSG at the telephone number listed
above to make an expedited redemption request,
he may contact his Smith Barney financial
consultant to effect such a redemption, or
request redemption in writing as described under
"Ordinary Redemption Procedure" below.
Ordinary Redemption Procedure
If this method of redemption is used, the
shareholder may submit his redemption request in
writing to TSSG. A Portfolio will make payment
for shares redeemed pursuant to the ordinary
redemption procedure by check sent to the
shareholder at the address on such shareholder's
account application. Such checks will normally
be sent out within one business day, but in no
event more than seven business days after receipt
of the redemption request in proper form. A
shareholder's signature must be guaranteed by an
"eligible guarantor institution" as such term is
defined by Rule 17 Ad-15 of the Securities
Exchange Act of 1934, the existence and validity
of which may be verified by TSSG through use of
industry publications. A notary public is not an
acceptable guarantor. In certain instances, TSSG
may request additional documentation which it
believes necessary to insure proper authorization
such as, but not limited to: trust instruments,
death certificates, appointment of executor or
administrator, or certificates of corporate
authority. Shareholders having questions
regarding proper documentation should contact
TSSG.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to redeem
involuntarily any shareholder's account, if the
aggregate net asset value of the shares held in
the account in a Portfolio is less than $100,000
(if a shareholder has more than one account in a
Portfolio, each account must satisfy the minimum
account size.) Before the Directors of the Fund
elect to exercise such right, shareholders will
receive prior written notice and will be
permitted 60 days to bring accounts up to the
minimum to avoid involuntary redemption.
YIELD INFORMATION
The Portfolios may measure performance in several
ways, including "yield", "effective yield" and
"tax equivalent yield" (for the Municipal
Portfolio only). A Portfolio's yield is a way of
showing the rate of income the Portfolio earns on
its investments as a percentage of the
Portfolio's share price. Yield represents the
income, less expenses generated by the
investments, in the Portfolio over a seven-day
period expressed as an annual percentage rate.
Effective yield is similar in that it is
calculated over the same time frame, but instead
the net investment income is compounded and then
annualized. Due to the compounding effect, the
effective yield will normally be higher than the
yield. The Municipal Portfolio may also quote
its tax-equivalent yield, which shows the taxable
yield an investor would have to earn before taxes
to equal the Portfolio's tax-free yield.
Portfolio yield figures are base upon historical
earnings and are not intended to indicate future
performance.
From time to time in advertisements or sales
material, the Portfolios may discuss their
performance ratings or other information as
published by recognized statistical or rating
services, such as Lipper Analytical Services,
Inc., IBC/Donoghue's Money Fund Report,
Morningstar, or by publications of general
interest, such as Forbes or Money. In addition,
the Portfolios may compare their yields to those
of certain U.S. Treasury obligations or other
money market instruments.
MANAGEMENT OF THE FUND
Directors
Overall responsibility for management and
supervision of the Fund rests with its Directors.
The Directors approve all significant agreements
between the Fund and the companies that furnish
services to the Fund and each Portfolio,
including agreements with the Fund's distributor,
investment manager, custodian and transfer agent.
The day-to-day operations of each Portfolio are
delegated to the Portfolio's investment manager.
The Statement of Additional Information contains
background information regarding each Director
and executive officer of the Fund.
Investment Manager
Smith Barney Mutual Funds Management Inc.("SBMFM"
or the "Manager") manages the day to day
operations of each Portfolio pursuant to
management agreements entered into by the Fund on
behalf of each Portfolio, subject to the
direction of the Directors of the Fund. As
compensation for SBMFM's services to the
Portfolios, each Portfolio pays a monthly fee at
the annual rate of 0.27% of the value of that
Portfolio's average daily net assets.
SBMFM is a subsidiary of Smith Barney Holdings
Inc., which is a subsidiary of The Travelers,
Inc., a financial services holding company
engaged, through its subsidiaries, principally in
four business segments: Investment Services,
Consumer Finance Services, Life Insurance
Services and Property & Casualty Services. Smith
Barney and Smith Barney Holdings Inc. are each
located at 388 Greenwich Street, New York, New
York 10013.
The Manager was incorporated on March 12, 1968
under the laws of Delaware. As of January 31,
1995 the Manager had aggregate assets under
management of approximately $55 billion.
DISTRIBUTOR
Smith Barney serves as Principal Underwriter of
shares of the Fund. The Fund has adopted a
Distribution and Shareholder Servicing Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940
Act.
Service Organizations
The Plan permits the Fund to make payments to
institutional investors such as banks, savings
and loans associations and other financial
institutions ("service organizations") who are
purchasing Class B shares on behalf of their
customers, at an annual rate of 0.25% of that
Class' average daily net assets. Class B shares
bear certain additional service fees and enjoy
certain exclusive voting rights on matters
relating to these fees.
The Fund will enter into an agreement with each
service organization which purchases Class B
shares to provide certain services to the
beneficial owners of such shares. Such services
include aggregating and processing purchase and
redemption requests from customers and placing
net purchase and redemption orders with Smith
Barney; processing dividend payments from the
Fund on behalf of the customers; providing
information periodically to customers showing
their positions in shares; arranging for bank
wires; responding to customer inquiries relating
to the services provided by the service
organization and handling correspondence: and
acting as shareholder of record and nominee.
Under terms of the agreements, service
organizations are required to provide to their
customers a schedule of any fees that they may
charge customers in connection with their
investment in Class B Shares.
ADDITIONAL INFORMATION
The Fund, an open-end, management investment
company, was organized under the laws of the
State of Maryland on March 28, 1995. The
Directors have authorized the issuance of three
series of shares, each representing shares in one
of three separate Portfolios and may also
authorize the creation of additional series of
shares. Each share of a Portfolio represents an
equal proportionate interest in the net assets of
that Portfolio or Class with each other share of
the same Portfolio or Class and is entitled to
such dividends and distributions out of the net
income of that Portfolio or Class as are declared
in the discretion of the Directors. Shareholders
are entitled to one vote for each share held and
will vote in the aggregate and not by Portfolio
or Class except as otherwise required by the 1940
Act or Maryland General Corporation Law. As
described under "Voting Rights" in the Statement
of Additional Information, the Portfolio
ordinarily will not hold shareholder meetings;
however, shareholders have the right to call a
meeting upon a vote of 10% of the Portfolio's
outstanding shares for the purpose of voting to
remove Directors and the Fund will assist
shareholders in calling such a meeting as
required by the 1940 Act.
PNC Bank, National Association, located at 17th
and Chestnut Streets, Philadelphia, Pennsylvania
19103, is the custodian of each Portfolio's
assets.
TSSG, located at Exchange Place, Boston,
Massachusetts provides transfer agency and
shareholder services for the Fund.
The Fund sends to each shareholder a semi-annul
report and an audited annual report, each of
which includes a list of the investment
securities held by the Fund at the end of the
period covered.
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND INC.
388 Greenwich Street
New York, NY 10013
(800) 282-3505
Statement of Additional Information
June 19, 1995
The Cash Portfolio, the Government Portfolio and the
Municipal Portfolio.
The Cash Portfolio, the Government Portfolio and the
Municipal Portfolio are separate series of Smith
Barney Institutional Cash Management Fund Inc., a
Maryland corporation (the "Fund"). Each series of
the Fund represents shares of common stock in a
separate portfolio of securities and other assets
with its own objective and policies
(individually, a "Portfolio" and collectively,
the "Portfolios"). Each series is managed
separately by Smith Barney Mutual Funds
Management Inc. ("SBMFM" or the "Manager").
This Statement of Additional Information is not a
Prospectus and should be read in conjunction with
the Prospectus dated June 19, 1995, which is
incorporated by reference into this Statement of
Additional Information and may be obtained from
any Smith Barney Financial Consultant or from the
Fund at the above address. This Statement of
Additional Information contains additional and
more detailed information about the Portfolios'
operations and activities than the Prospectus.
Table of Contents
Investment Objectives 2
Investment Restrictions 2
Types of Securities and Investment Techniques 5
Yield Information 17
Determination of Net Asset Value 19
Management Agreement, Plan of Distribution and Other
Services 19
Counsel and
Auditors.........................................
.................................................
....21
Custodian, Transfer Agent and Dividend Disbursing Agent
21
Officers and Directors 21
Voting Rights
22
Appendix A - Description of Securities Ratings 24
Appendix B - Description of Municipal Securities 26
INVESTMENT OBJECTIVES
As discussed in the Prospectus, the investment objective of
each of the Cash Portfolio and the Government
Portfolio is to seek maximum current income to
the extent consistent with preservation of
capital and the maintenance of liquidity. The
investment objective of the Municipal Portfolio
is to seek maximum current income that is exempt
from Federal income taxes to the extent
consistent with preservation of capital and the
maintenance of liquidity. There can be no
assurance that a Portfolio will achieve its
investment objective or maintain a stable net
asset value of $1.00 per share. The investment
objectives of the Portfolios are fundamental and
may not be changed without shareholder approval.
INVESTMENT RESTRICTIONS
As indicated in the Prospectus, each Portfolio has adopted
certain fundamental investment restrictions that
cannot be changed without shareholder approval.
Shareholder approval means approval by the lesser
of (i) more than 50% of the outstanding voting
securities of the Fund (or a particular Portfolio
if a matter affects just that Portfolio), or (ii)
67% or more of the voting securities present at a
meeting if the holders of more than 50% of the
outstanding voting securities of the Fund (or a
particular Portfolio) are present or represented
by proxy.
As used in the restrictions set forth below and as used
elsewhere in this Statement of Additional
Information ("SAI"), the term "U.S. government
securities" shall have the meaning set forth in
the Investment Company Act of 1940, as amended
(the "1940 Act"). The 1940 Act defines U.S.
government securities as securities issued or
guaranteed by the United States government, its
agencies or instrumentalities and has been
interpreted to include repurchase agreements
collateralized and municipal securities refunded
with escrowed U.S. government securities ("U.S.
Government Securities").
If a percentage restriction described below is complied
with at the time of an investment, a later
increase or decrease in percentage resulting from
a change in values or assets will not constitute
a violation of such restriction. The
identification of the issuer of a Municipal
Obligation depends on the terms and conditions of
the obligation. If the assets and revenues of an
agency, authority, instrumentality or other
political subdivision are separate from those of
the government creating the issuing entity and a
security is backed only by the assets and
revenues of the entity, the entity would be
deemed to be the sole issuer of the security.
Similarly, in the case of a private activity
bond, if that bond is backed only by the assets
and revenues of the non-governmental user, then
the non-governmental user would be deemed to be
the sole issuer. If, however, in either case,
the creating government or some other entity
guarantees a security, such a guarantee would be
considered a separate security and would be
treated as an issue of such government or other
entity.
Each Portfolio may make commitments more restrictive than
the fundamental restrictions listed below so as
to permit the sale of Portfolio shares in
certain states. Should a Portfolio determine
that any such commitment is no longer in the best
interests of the Portfolio and its shareholders,
it will revoke the commitment by terminating
sales of its shares in the state involved.
The Portfolios have adopted the following fundamental
policies:
(1) With respect to 75% of its assets, a Portfolio may not
purchase a security other than a U.S. Government
Security, if, as a result, more than 5% of the
Portfolio's total assets would be invested in the
securities of a single issuer or the Portfolio
would own more than 10% of the outstanding voting
securities of any single issuer. (As noted in the
Prospectus, the Cash Portfolio and the Government
Portfolio are currently subject to the greater
diversification standards of Rule 2a-7, which are
not fundamental.)
(2) A Portfolio may not purchase securities if more than
25% of the value of a Portfolio's total assets
would be invested in the securities of issuers
conducting their principal business activities in
the same industry; provided that: (i) there is no
limit on investments in U.S. Government
Securities or in obligations of domestic or
foreign commercial banks (including U.S. branches
of foreign banks subject to regulations under
U.S. laws applicable to domestic banks and, to
the extent that its parent is unconditionally
liable for the obligation, foreign branches of
US. banks); (ii) this limitation shall not apply
to the Municipal Portfolio's investments in
municipal securities; (iii) there is no limit on
investments in issuers domiciled in a single
country; (iv) financial service companies are
classified according to the end users of their
services (for example, automobile finance, bank
finance and diversified finance are each
considered to be a separate industry); and (v)
utility companies are classified according to
their services (for example, gas, gas
transmission, electric, and telephone are each
considered to be a separate industry).
(3) A Portfolio may not act as an underwriter of securities
issued by others, except to the extent that a
Portfolio may be deemed an underwriter in
connection with the disposition of portfolio
securities of such Portfolio.
(4) A Portfolio may not make loans, except that this
restriction shall not prohibit (a) purchase and
holding of a portion of an issue of publicly
distributed debt securities, (b) the lending of
portfolio securities, or (c) entry into
repurchase agreements. A Portfolio may not lend
any security if, as a result, more than 20% of a
Portfolio's total assets would be lent to other
parties.
(5) A Portfolio may not purchase or sell real estate or any
interest therein, except that the Portfolio may
invest in debt obligations secured by real estate
or interests therein or securities issued by
companies that invest in real estate or interests
therein.
(6) A Portfolio may borrow money temporarily for emergency
purposes (not for leveraging) in an amount not
exceeding 33 1/3% of the value of its total
assets (including
the amount borrowed) less liabilities (other than
borrowings). If borrowings exceed 5% of the value
of a Portfolio's total assets by reason of a
decline in net assets, the Portfolio will reduce
its borrowings within three business days to the
extent necessary to comply with the 33 1/3%
limitation. Reverse repurchase agreements or the
segregation of assets in connection with such
agreements shall not be considered borrowing for
the purposes of this limit.
(7)Each Portfolio may, notwithstanding any other investment
policy or restriction (whether or not funda
mental), invest all of its assets in the
securities of a single open-end management
investment company with substantially the same
fundamental investment objectives, policies and
restrictions as that Portfolio.
Each Portfolio has adopted the following nonfundamental
investment restrictions that may be changed by
the Board of Directors (the "Directors") of the
Fund without shareholder approval:
(1) A Portfolio may not invest in securities or enter into
repurchase agreements with respect to any
securities if, as a result, more than 10% of the
Portfolio's net assets would be invested in
repurchase agreements not entitling the holder to
payment of principal within seven days and in
other securities that are not readily marketable
("illiquid securities"). The Directors, or the
Portfolio's investment adviser acting pursuant to
authority delegated by the Directors, may
determine that a readily available market exists
for certain securities such as securities
eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, or any successor to
such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such
securities may not be subject to the foregoing
limitation.
(2) A Portfolio may not purchase the securities of an
issuer if one or more of the Directors or
Officers of the Portfolio individually own
beneficially more that 1/2 of 1% of the
outstanding securities of such issuer or together
own beneficially more than 5% of such
securities.
(3) A Portfolio may not invest more than 15% of its assets
in the securities of any unseasoned issuer or in
illiquid securities solely for the purposes of
this paragraph, illiquid securities include
securities eligible for resale pursuant to Rule
144A.
(4) A Portfolio may not invest in the securities of another
investment company except in connection with a
merger, consolidation, reorganization, or
acquisition of assets.
(5) A Portfolio may not purchase securities on margin, or
make short sales of securities, except for short
sales against the box and the use of short-term
credit necessary for the clearance of purchases
and sales of portfolio securities.
(6) A Portfolio may not invest more than 5% of the value of
its total assets in the securities of any issuer
that has conducted continuous operations for less
than three
years, including operations of predecessors, except that
this shall not affect the Portfolio's ability to
invest in US Government Securities, fully
collateralized debt obligations, municipal
obligations, securities that are rated by at
least one nationally recognized statistical
rating organization and securities guaranteed as
to principal and interest by an issuer in whose
securities the Portfolio could invest.
(7) A Portfolio may not pledge, mortgage, hypothecate or
encumber any of its assets except to secure
permitted borrowings or in connection with
permitted short sales.
(8) A Portfolio may not invest directly in interests in oil
and gas or interests in other mineral exploration
or development programs or leases; however, the
Portfolio may own debt securities of companies
engaged in those businesses.
(9) A Portfolio may not invest in companies for the purpose
of exercising control of management.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
The Portfolios will invest only in eligible high-quality,
short-term money market instruments that present
minimal credit risks determined by SBMFM,
pursuant to procedures adopted by the Directors.
Each of the Portfolios may invest only in "eligible
securities" as defined in Rule 2a-7 adopted under
the 1940 Act. Generally, an eligible security is
a security that (i) is denominated in U S.
dollars and has a remaining maturity of 13 months
days or less (as calculated pursuant to Rule
2a-7); (ii) is rated, or is issued by an issuer
with short-term debt outstanding that is rated,
in one of the two highest rating categories by
any two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO (the
"Requisite NRSROs") or is unrated and of
comparable quality to a rated security, as
determined by SBMFM; and (iii) has been
determined by SBMFM to present minimal credit
risks pursuant to procedures approved by the
Directors. In addition, the Portfolios will
maintain a dollar-weighted average portfolio
maturity of 90 days or less. A description of the
ratings of some NRSROs appears in Appendix A.
Under Rule 2a-7, a Portfolio may not invest more than 5% of
its total assets in the securities of any one
issuer other than US. Government Securities,
provided that in certain cases a Portfolio may
invest more than 5% of its assets in a single
issuer for a period of up to three business days.
In the case of the Municipal Portfolio, up to 25%
of its assets may be invested without regard to
the foregoing limitations.
Pursuant to Rule 2a-7, each Portfolio (except the Municipal
Portfolio) will invest at least 95% of its total
assets in '"First-tier" securities. First-tier
securities are eligible securities that are
rated, or are issued by an issuer with short-term
debt outstanding that is rated, in the highest
rating category by the Requisite NRSROs or are
unrated and of comparable quality to a rated
security. In addition, a Portfolio may invest in
"second-tier" securities which are eligible
securities that are not first-tier securities.
However, a Portfolio (except for the Municipal
Portfolio) may not invest in a second-tier
security if immediately after the acquisition
thereof the Portfolio would have invested more
than (i) the greater of one percent of its total
assets or one million dollars in second-tier
securities issued by that issuer, or (ii) five
percent of its total assets in second-tier
securities.
The following discussion of types of securities in which
the Portfolios may invest supplements and should
be read in conjunction with the Prospectus.
Certain Portfolio Strategies
U.S. Government Securities. Securities issued or
guaranteed by the U.S. Government or one of its
agencies, authorities or instrumentalities in
which the Portfolios may invest include debt
obligations of varying maturities issued by the
U.S. Treasury or issued or guaranteed by an
agency or instrumentality of the U.S. Government,
including the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank
of the United States, Small Business
Administration, Government National Mortgage
Association, General Services Administration,
Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association, Maritime
Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Student Loan
Marketing Association and Resolution Trust
Corporation. Direct obligations of the U.S.
Treasury include a variety of securities that
differ in their interest rates, maturities and
dates of issuance. Because the U.S. Government
is not obligated by law to provide support to an
instrumentality that it sponsors, none of the
Portfolios will invest in obligations issued by
an instrumentality of the U.S. Government unless
SBMFM determines that the instrumentality's
credit risk does not make its securities
unsuitable for investment by the Portfolio.
Ratings as Investment Criteria. In general, the ratings of
NRSROs represent the opinions of those
organizations as to the quality of the securities
that they rate. It should be emphasized,
however, that such ratings are relative and
subjective, are not absolute standards of quality
and do not evaluate the market risk of
securities. These ratings will be used by the
Portfolios as initial criteria for the selection
of portfolio securities, but the Portfolios also
will rely upon the independent advice of SBMFM to
evaluate potential investments.
Subsequent to the purchase of a particular security by a
Portfolio, its rating may be reduced below the
minimum required for purchase by the Portfolio or
the issuer of the security may default on its
obligations with respect to the security. In
that event, the Portfolio will dispose of the
security as soon as practicable, consistent with
achieving an orderly disposition of the security,
unless the Directors determine that disposal of
the security would not be in the best interest of
the Portfolio. In addition, it is possible that
a security may cease to be rated or an NRSRO
might not timely change its rating of a
particular security to reflect subsequent events.
Neither of these events will necessarily require
the sale of the security by the Portfolio, but
the Directors will promptly consider such event
in its determination of whether the Portfolio
should continue to hold the security. In
addition, to the extent that the ratings change
as a result of changes in such organizations or
their rating systems, the Portfolio will attempt
to use comparable ratings as standards for its
investments in accordance with its investment
objective and policies.
Repurchase Agreements. Each of the Portfolios may engage
in repurchase agreement transactions with banks
which are issuers of instruments acceptable for
purchase by such Portfolio and with certain
dealers listed on the Federal Reserve Bank of New
York's list of reporting dealers. Repurchase
agreements are contracts under which the buyer of
a security simultaneously commits to resell the
security to the seller at an agreed-upon price
and date. Under each repurchase agreement, the
selling institution will be required to maintain
the value of the securities subject to the
repurchase agreement at not less than their
repurchase price. Repurchase agreements could
involve certain risks in the event of default or
insolvency of the other party, including possible
delays or restrictions upon the relevant
Portfolio's ability to dispose of the underlying
securities. SBMFM, acting under the supervision
of the Directors, reviews the value of the
collateral and the creditworthiness of those
banks and dealers with which a Portfolio enters
into repurchase agreements to evaluate potential
risks.
Lending of Portfolio Securities. Each Portfolio has the
ability to lend securities from its portfolio to
brokers, dealers and other financial
organizations. Such loans, if and when made,
will not exceed 20% of the Portfolio's total
assets, taken at value. A Portfolio may not lend
its portfolio securities to SBMFM or its
affiliates without specific authorization from
the SEC. Loans of portfolio securities by a
Portfolio will be collateralized by cash, letters
of credit or securities issued or guaranteed by
the U.S. Government or its agencies which will be
maintained at all times in an amount equal to at
least 100% of the current market value of the
loaned securities. From time to time, a
Portfolio may return a part of the interest
earned from the investment of collateral received
for securities loaned to the borrower and/or a
third party, which is unaffiliated with the
Portfolio or with SBMFM, and which is acting as a
"finder."
By lending portfolio securities, each Portfolio can
increase its income by continuing to receive
interest on the loaned securities as well as by
either investing the cash collateral in
short-term instruments or obtaining yield in the
form of interest paid by the borrower when
government securities are used as collateral.
Requirements of the SEC, which may be subject to
future modifications, currently provide that the
following conditions must be met whenever
portfolio securities are loaned: (a) the
Portfolio must receive at least 100% cash
collateral or equivalent securities from the
borrower; (b) the borrower must increase such
collateral whenever the market value of the
securities rises above the level of such
collateral; (c) the Portfolio must be able to
terminate the loan at any time; (d) the Portfolio
must receive reasonable interest on the loan, as
well as an amount equal to any dividends,
interest or other distributions on the loaned
securities and any increase in market value; (e)
the Portfolio may pay only reasonable custodian
fees in connection with the loan; and (f) voting
rights on the loaned securities may pass to the
borrower; however, if a material event adversely
affecting the investment occurs, the Directors of
the Fund must terminate the loan and regain the
right to vote the securities.
The limit of 20% of each Portfolio's total assets to be
committed to securities lending is a fundamental
policy of each Portfolio, which means that it
cannot be changed without approval of a majority
of a Portfolio's outstanding shares. See
"Investment Restrictions" above.
Floating Rate and Variable Rate Obligations Each Portfolio
may purchase floating rate and variable rate
obligations, including participation interests
therein. Floating rate or variable rate
obligations provide that the rate of interest is
set as a specific percentage of a designated base
rate (such as the prime rate at a major
commercial bank). Variable rate obligations
provide for a specified periodic adjustment in
the interest rate, while floating rate
obligations have an interest rate which changes
whenever there is a change in the external
interest rate. Each Portfolio may purchase
floating rate and variable rate obligations which
carry a demand feature that would permit the
Portfolio to tender them back to the issuer or
remarketing agent at par value prior to maturity.
Each Portfolio currently is permitted to purchase
floating rate and variable rate obligations with
demand features in accordance with requirements
established by the SEC, which, among other
things, permit such instruments to be deemed to
have remaining maturities of 13 months or less,
notwithstanding that they may otherwise have a
stated maturity in excess of 13 months.
Frequently, floating rate and variable rate
obligations are secured by letters of credit or
other credit support arrangements provided by
banks. As determined by SBMFM, under the
supervision of the Directors, the quality of the
underlying creditor or of the bank, as the case
may be, also must be equivalent to the quality
standards set forth above. In addition, SBMFM
will monitor on an ongoing basis the earning
power, cash flow and other liquidity ratios of
the issuers of the obligations, and similarly
will monitor the creditworthiness of the
institution responsible for paying the principal
amount of the obligation under the demand
feature.
Participation Interests. Each Portfolio may invest in
participation interests in floating rate or
variable obligations owned by banks. A
participation interest gives the purchaser an
undivided interest in the obligation in the
proportion that the Portfolio's participation
interest bears to the total principal amount of
the obligation and provides the demand repurchase
feature. Each participation is backed by an
irrevocable letter of credit or guarantee of a
bank that SBMFM, under the supervision of the
Directors, has determined meets the prescribed
quality standards of the Portfolio. Each
Portfolio has the right to sell the instrument
back to the issuing bank or draw on the letter of
credit on demand for all or any part of the
Portfolio's participation interest in the
obligation, plus accrued interest. Each
Portfolio currently is permitted to invest in
participation interests when the demand provision
complies with conditions established by the SEC.
Banks will retain or receive a service fee,
letter of credit fee and a fee for issuing
repurchase commitments in an amount equal to the
excess of the interest paid on the obligations
over the negotiated yield at which the
instruments were purchased by the Portfolio.
Participation interests in the form to be
purchased by Municipal Portfolio are relatively
new instruments, and no ruling of the Internal
Revenue Service has been secured relating to
their tax-exempt status. Each of Cash Portfolio
and Municipal Portfolio intends to purchase
participation interests based upon opinions of
counsel.
When-Issued Securities. Each Portfolio may purchase
securities on a when-issued basis, in which case
delivery of and payment for the securities
normally take place within 45 days after the date
of the commitment to purchase. The payment
obligation and the interest rate to be received
on the securities purchased on a when-issued
basis are each fixed when the buyer enters into a
commitment. Although each Portfolio will
purchase securities on a when-issued basis only
with the intention of actually acquiring the
securities, the Portfolio may sell these
securities before the settlement date if it is
deemed advisable as a matter of investment
strategy.
Securities purchased on a when-issued basis and the
securities held in a Portfolio's portfolio are
subject to changes in market value based upon the
public's perception of the creditworthiness of
the issuer and changes, real or anticipated, in
the level of interest rates (which generally will
result in similar changes in value, i.e., both
experiencing appreciation when interest rates
decline and depreciation when interest rates
rise). Therefore, to the extent a Portfolio
remains substantially fully invested at the same
time it has purchased securities on a when-issued
basis, there will be a greater possibility that
the market value of the Portfolio's assets will
vary from $1.00 per share. Purchasing securities
on a when-issued basis can involve a risk that
the yields available in the market when the
delivery takes place may actually be higher than
those obtained in the transaction.
A separate account consisting of cash of liquid debt
securities equal to the amount of the when-issued
commitments will be established with the Fund's
custodian with respect to a Portfolio's
when-issued obligations. When the time comes to
pay for when-issued securities, a Portfolio will
meet its obligations from then-available cash
flow, sale of securities held in the separate
account, sale of other securities or, although it
normally would not expect to do so, from the sale
of the when-issued securities themselves (which
may have a value greater or less than the
Portfolio's payment obligations). Sales of
securities to meet such obligations carries with
it a greater potential for the realization of
capital gains, which are not exempt from federal
income tax.
Municipal Leases. The Cash Portfolio and the Municipal
Portfolio may invest in municipal leases.
Municipal leases frequently have special risks
not normally associated with general obligation
or revenue bonds. Leases and installment purchase
or conditional sales contracts (which normally
provide for title to the leased asset to pass
eventually to the government issuer) have evolved
as a means for governmental issuers to acquire
property and equipment without meeting the
constitutional and statutory requirements for the
issuance of debt. The debt-issuance limitations
of many state constitutions and statutes are
deemed to be inapplicable because of the
inclusion in many leases or contracts of "non
appropriation" clauses that provide that the
governmental issuer has no obligation to make
future payments under the lease or contract
unless money is appropriated for such purpose by
the appropriate legislative body on a yearly or
other periodic basis. The Portfolios will only
purchase municipal leases subject to a
non-appropriation clause when the payment of
principal and accrued interest is backed by an
unconditional, irrevocable letter of credit, or
guarantee of a bank or other entity that meets
the criteria described in the Prospectus under
"Taxable Investments".
In evaluating municipal lease obligations, SBMFM will
consider such factors as it deems appropriate,
including: (a) whether the lease can be canceled;
(b) the ability of the lease obligee to direct
the sale of the underlying assets; (c) the
general creditworthiness of the lease obligor;
(d) the likelihood that the municipality will
discontinue appropriating funding for the leased
property in the event such property is no longer
considered essential by the municipality; (e) the
legal recourse of the lease obligee in the event
of such a failure to appropriate funding; (f)
whether the security is backed by a credit
enhancement such as insurance; and (g) any
limitations which are imposed on the lease
obligor's ability to utilize substitute property
or services other than those covered by the lease
obligation. If a lease is backed by an uncondi
tional letter of credit or other unconditional
credit enhancement, then SBMFM may determine that
a lease is an eligible security solely on the
basis of its evaluation of the credit
enhancement.
Municipal leases, like other municipal debt obligations,
are subject to the risk of non-payment. The
ability of issuers of municipal leases to make
timely lease payments may be adversely impacted
in general economic downturns and as relative
governmental cost burdens are allocated and
reallocated among federal, state and local
governmental units. Such non-payment would result
in a reduction of income to the Portfolio, and
could result in a reduction in the value of the
municipal lease experiencing non-payment and a
potential decrease in the net asset value of the
Portfolio.
The Cash Portfolio
Bank Obligations. Domestic commercial banks organized
under federal law ("national banks") are
supervised and examined by the U.S. Comptroller
of the Currency and are required to be members of
the Federal Reserve System and to be insured by
the Federal Deposit Insurance Corporation (the
"FDIC"). Domestic banks organized under state
law are supervised and examined by state banking
authorities but are members of the Federal
Reserve System only if they elect to join. Most
state banks are insured by the FDIC (although
such insurance may not be of material benefit to
the Portfolio, depending upon the principal
amount of certificates of deposit ("CDs") of each
bank held by the Portfolio) and are subject to
federal examination and to a substantial body of
federal law and regulation. As a result of
government regulations, domestic branches of
domestic banks are, among other things, generally
required to maintain specified levels of
reserves, and are subject to other supervision
and regulation designed to promote financial
soundness.
Obligations of foreign branches of domestic banks and of
foreign branches of foreign banks, such as CDs
and time deposits ("TDs"), may be general
obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of
a specific obligation or by governmental
regulation. Such obligations are subject to
different risks than are those of domestic banks
or domestic branches of foreign banks. These
risks include foreign economic and political
developments, foreign governmental restrictions
that may adversely affect payment of principal
and interest on the obligations, foreign exchange
controls and foreign withholding and other taxes
on interest income. Foreign branches of domestic
banks and foreign branches of foreign banks are
not necessarily subject to the same or similar
regulatory requirements that apply to domestic
banks, such as mandatory reserve requirements,
loan limitations, and accounting, auditing and
financial record keeping requirements. In
addition, less information may be publicly
available about a foreign branch of a domestic
bank or about a foreign bank than about a
domestic bank.
Obligations of domestic branches of foreign banks may be
general obligations of the parent bank in
addition to the issuing branch, or may be limited
by the terms of a specific obligation and by
governmental regulation as well as governmental
action in the country in which the foreign bank
has its head office. A domestic branch of a
foreign bank may or may not be subject to reserve
requirements imposed by the Federal Reserve
System or by the state in which the branch is
located if the branch is licensed in that state.
In addition, branches licensed by the Comptroller
of the Currency and branches licensed by certain
states ("State Branches") may or may not be
required to: (a) pledge to the regulator by
depositing assets with a designated bank within
the state, an amount of its assets equal to a
specific percentage of its total liabilities; and
(b) maintain assets within the state in an amount
equal to a specified percentage of the aggregate
amount of liabilities of the foreign bank payable
at or through all of its agencies or branches
within the state. The deposits of State Branches
may not necessarily be insured by the FDIC. In
addition, there may be less publicly available
information about a domestic branch of a foreign
bank than about a domestic bank.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign
branches of domestic banks, by domestic branches
of foreign banks or by foreign branches of
foreign banks, SBMFM will carefully evaluate such
investments on a case-by-case basis.
The Cash Portfolio may purchase a CD issued by a bank,
savings and loan association or similar
institution with less than $1 billion in assets
(a "Small Issuer CD") so long as (a) the issuer
is a member of the FDIC or Office of Thrift
Supervision and is insured by the Savings
Association Insurance Fund ("SAIF"), which is
administered by the FDIC and is backed by the
full faith and credit of the U.S. Government and
(b) the principal amount of the Small Issuer CD
is fully insured and is no more than $100,000. A
Portfolio will at any one time hold only one
Small Issuer CD from any one issuer.
Savings and loan associations whose CDs may be purchased by
the Cash Portfolio are supervised by the Office
of Thrift Supervision and are insured by SAIF.
As a result, such savings and loan associations
are subject to regulation and examination.
Custodial Receipts. The Cash Portfolio may acquire
custodial receipts that evidence ownership of
future interest payments, principal payments or
both on certain U.S. Government notes or bonds.
These notes and bonds are held in custody by a
bank on behalf of the owners. These custodial
receipts are known by various names, including
"Treasury Receipts," "Treasury Investors Growth
Receipts" ("TIGRs"), and "Certificates of Accrual
on Treasury Securities" ("CATS"). Custodial
receipts are not considered U.S. Government
securities.
Asset-Backed and Receivable-Backed Securities. The Cash
Portfolio may invest in asset-backed and
receivable-backed securities. Several types of
asset-backed and receivable-backed securities
have been offered to investors, including
"Certificates for Automobile Receivables"
("CARs") and interests in pools of credit card
receivables. CARs represent undivided fractional
interests in a trust, the assets of which consist
of a pool of motor vehicle retail installment
sales contracts and security interests in the
vehicles securing the contracts. Payments of
principal and interest on CARs are passed through
monthly to certificate holders and are guaranteed
up to certain amounts and for a certain time
period by a letter of credit issued by a
financial institution unaffiliated with the
trustee or originator of the trust. An
investor's return on CARs may be affected by
early prepayment of principal on the underlying
vehicle sales contracts. If the letter of credit
is exhausted, the trust may be prevented from
realizing the full amount due on a sales contract
because of state law requirements and
restrictions relating to foreclosure sales of
vehicles and the availability of deficiency
judgments following such sales, because of
depreciation, damage or loss of a vehicle,
because of the application of federal and state
bankruptcy and insolvency laws or other factors.
As a result, certificate holders may experience
delays in payment if the letter of credit is
exhausted. Consistent with the Portfolio's
investment objective and policies and, subject to
the review and approval of the Fund's Board of
Directors, the Portfolio also may invest in other
types of asset-backed and receivable-backed
securities.
Participation Interests. The Cash Portfolio may purchase
participation interests in loans with remaining
maturities of 13 months or less. These loans
must be made to issuers in whose obligations the
Portfolio may invest. Any participation
purchased by the Portfolio must be issued by a
bank in the United States with assets exceeding
$1 billion. Because the issuing bank does not
guarantee the participation in any way, they are
subject to the credit risks generally associated
with the underlying corporate borrower. In
addition, because it may be necessary under the
terms of the loan participation for the Portfolio
to assert through the issuing bank such rights as
may exist against the underlying corporate
borrower, in the event the underlying corporate
borrower fails to pay principal and interest when
due, the Portfolio may be subject to delays,
expenses and risks that are greater than those
that would have been involved if the Portfolio
had purchased a direct obligation, such as
commercial paper, of the borrower. Moreover,
under the terms of the loan participation, the
Portfolio may be regarded as a creditor of the
issuing bank, rather than of the underlying
corporate borrower, so that the Portfolio may
also be subject to the risk that the issuing bank
may become insolvent. Further, in the event of
the bankruptcy or insolvency of the corporate
borrower, the loan participation may be subject
to certain defenses that can be asserted by the
borrower as a result of improper conduct by the
issuing bank. The secondary market, if any, for
these loan participation is limited and any
participation interest may be regarded as
illiquid.
In the event that SBMFM does not believe that price
quotations currently obtainable from banks,
dealers or pricing services consistently
represent the market values of participation
interests, SBMFM will, following guidelines
established by the Board of Directors, value the
participation interests held by the Cash
Portfolio at fair value, which approximates
market value. In valuing a participation
interest, SBMFM will consider the following
factors, among others: (i) the characteristics of
the participation interest, including the cost,
size, interest rate, period until next interest
rate reset, maturity and base lending rate of the
participation interest, the terms and conditions
of the loan and any related agreements and the
position of the loan in the borrower's debt
structure; (ii) the nature, adequacy and value of
the collateral, including the Fund's rights,
remedies and interests with respect to the
collateral; (iii) the creditworthiness of the
borrower based on an evaluation of its financial
condition, financial statements and information
about the borrower's business, cash flows,
capital structure and future prospects; (iv) the
market for the participation interest, including
price quotations for and trading in the
participation interest and similar participation
interests or instruments and the market
environment and investor attitudes toward the
participation interest or participation interests
generally; (v) the quality and creditworthiness
of any intermediary participants; and
(vi) general economic or market conditions.
The Municipal Portfolio
Description of Municipal Obligations. Municipal
obligations in which the Municipal Portfolio may
invest are short-term debt obligations of states,
cities, counties, municipalities, municipal
agencies and regional districts (generally
referred to as "municipalities") that pay
interest which is excluded from gross income for
federal income tax purposes ("Municipal
Obligations"). The three principal
classifications of Municipal Obligations are
Municipal Bonds, Municipal Commercial Paper and
Municipal Notes.
Municipal Bonds. Municipal Bonds, which generally have a
maturity of more than one year when issued, have
two principal classifications: General
Obligation Bonds and Revenue Bonds. A private
activity bond is a particular kind of Revenue
Bond. The classifications of Municipal Bonds and
private activity bonds are discussed below.
1.
General Obligation Bonds. The proceeds of
these obligations are used to finance a wide
range of public projects including
construction or improvement of schools,
highways and roads, and water and sewer
systems. General Obligation Bonds are
secured by the issuer's pledge of its faith,
credit and taxing power for the payment of
principal and interest.
2.
Revenue Bonds. Revenue Bonds are issued to
finance a wide variety of capital projects,
including electric, gas, water and sewer
systems; highways, bridges and tunnels; port
and airport facilities; colleges and
universities; and hospitals. The principal
security for a Revenue Bond is generally the
net revenues derived from a particular
facility, group of facilities or, in some
cases, the proceeds of a special excise or
other specific revenue source. Although the
principal security behind these bonds may
vary, many provide additional security in
the form of a debt service reserve fund
whose money may be used to make principal
and interest payments on the issuer's
obligations. Some authorities provide
further security in the form of a state's
ability (without obligation) to make up
deficiencies in the debt service reserve
fund.
3. Private Activity
Bonds. Private activity bonds are
considered Municipal Bonds if the interest
paid on them is excluded from federal income
tax and are issued by or on behalf of public
authorities to raise money to finance, for
example, various privately operated
facilities for manufacturing and housing.
These bonds also are used to finance
facilities such as airports, docks, wharves
and mass commuting facilities. The payment
of the principal and interest on these bonds
is dependent solely on the ability of the
facility's user to meet its financial
obligations and the pledge, if any, of real
and personal property so financed as
security for such payment.
Municipal Commercial Paper. Issues of Municipal Commercial
Paper typically represent short-term, unsecured,
negotiable promissory notes. These obligations
are issued by agencies of state and local
governments to finance seasonal working capital
needs of municipalities or are refinanced with
long-term debt. In most cases, Municipal
Commercial Paper is backed by letters of credit,
lending agreements, note repurchase agreements or
other credit facility agreements offered by banks
or other institutions.
1.
Tax Anticipation Notes. Tax Anticipation
Notes are issued to finance working capital
needs of municipalities. Generally, they
are issued in anticipation of various
seasonal tax revenues, such as income,
sales, use and business taxes and are
payable from these specific future taxes.
2.
Revenue Anticipation Notes. Revenue
Anticipation Notes are issued in expectation
of receipt of other kinds of revenue, such
as federal revenues available under the
Federal Revenue Sharing Program.
3.
Bond Anticipation Notes. Bond Anticipation
Notes are issued to provide interim
financing until long-term financing can be
arranged. In most cases, the long-term
bonds provide the money for the repayment of
the Notes.
4.
Construction Loan Notes. Construction Loan
Notes are sold to provide construction
financing. Permanent financing, the
proceeds of which are applied to the payment
of Construction Loan Notes, is sometimes
provided by a commitment by the Government
National Mortgage Association ("GNMA") to
purchase the loan, accompanied by a
commitment by the Federal Housing
Administration to insure mortgage advances
thereunder. In other instances, permanent
financing is provided by commitments of
banks to purchase the loan. Municipal
Portfolio will purchase only construction
Loan Notes that are subject to GNMA or bank
purchase commitments.
There are a number of other types of Municipal Commercial
Paper issued for specified purposes and secured
in manners that may vary from those described
above.
Tender Option Bonds. The Municipal Portfolio may invest up
to 10% of the value of its assets in tender
option bonds. The Portfolio will not purchase
tender option bonds unless (a) the demand feature
applicable thereto is exercisable by the
Portfolio within 13 months of the date of such
purchase upon no more than 30 days' notice and
thereafter is exercisable by the Portfolio no
less frequently than annually upon no more than
30 days' notice and, (b) at the time of such
purchase, SBMFM reasonably expects that, (i)
based upon its assessment of current and
historical interest rate trends, prevailing
short-term tax-exempt rates will not exceed the
stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee
adjustment, and (ii) the circumstances which
might entitle the grantor of a tender option to
terminate the tender option would not occur prior
to the time of the next tender opportunity. At
the time of each tender opportunity, the
Portfolio will exercise the tender option with
respect to any tender option bonds unless SBMFM
reasonably expects that, (a) based upon its
assessment of current and historical interest
rate trends, prevailing short-term tax-exempt
rates will not exceed the stated interest rate on
the underlying Municipal Obligations at the time
of the next tender fee adjustment, and (b) the
circumstances which might entitle the grantor of
a tender option to terminate the tender option
would not occur prior to the time of the next
tender opportunity. The Portfolio will exercise
the tender feature with respect to tender option
bonds, or otherwise dispose of its tender option
bonds, prior to the time the tender option is
scheduled to expire pursuant to the terms of the
agreement under which the tender option is
granted. The Portfolio otherwise will comply
with the provisions of Rule 2a-7 under the 1940
Act in connection with the purchase of tender
option bonds, including, without limitation, the
requisite determination by the Board of Directors
that the tender option bonds in question meet the
quality standards described in Rule 2a-7. In the
event of a default of the Municipal Obligation
underlying a tender option bond, or the
termination of the tender option agreement, the
Portfolio would look to the maturity date of the
underlying security for purposes of compliance
with Rule 2a-7 and, if its remaining maturity was
greater than 13 months, the Portfolio would sell
the security as soon as would be practicable.
The Portfolio will purchase tender option bonds
only when it is satisfied that (a) the custodial
and tender option arrangements, including the fee
payment arrangements, will not adversely affect
the tax-exempt status of the underlying Municipal
Obligations and (b) payment of any tender fees
will not have the effect of creating taxable
income for the Portfolio. Based on the tender
option bond arrangement, the Portfolio expects to
value the tender option bond at par; however, the
value of the instrument will be monitored to
assure that it is valued at fair value.
Taxable Investments. Because the Municipal Portfolio's
objective is to provide income exempt from
federal income taxes, the Portfolio generally
will invest in taxable obligations only if and
when the Directors believe it would be in the
best interests of the Portfolio's shareholders to
do so.
Situations in which the Municipal Portfolio may invest up
to 20% of its total assets in taxable securities
include: (a) pending investment of proceeds of
sales of Portfolio shares or of portfolio
securities, (b) pending settlement of purchases
of portfolio securities or (c) when the Portfolio
is attempting to maintain liquidity for the
purpose of meeting anticipated redemptions. The
Portfolio temporarily may invest more than 20% of
its total assets in taxable securities to
maintain a defensive posture when, in the opinion
of Smith Barney, it is advisable to do so
because of adverse market conditions affecting
the market for Municipal Obligations.
Purchase of Securities with Stand-By Commitments. The
Municipal Portfolio may acquire stand-by
commitments with respect to Municipal Obligations
held in its portfolio. Under a stand-by
commitment, a broker-dealer, dealer or bank would
agree to purchase at the Portfolio's option a
specified Municipal Obligation at a specified
price. Thus, a stand-by commitment may be viewed
as the equivalent of a "put" option acquired by
the Portfolio with respect to a particular
Municipal Obligation held in the Portfolio's
portfolio.
The amount payable to the Municipal Portfolio upon its
exercise of a stand-by commitment normally would
be (a) the acquisition cost of the Municipal
Obligation (excluding any accrued interest the
Portfolio paid on the acquisition), less any
amortization market premium or plus any
amortization of market or original issue discount
during the period the Portfolio owned the
security, plus (b) all interest accrued on the
security since the last interest payment date
during the period that the security was owned by
the Portfolio. Absent unusual circumstances, the
Portfolio would value the underlying Municipal
Obligation at amortized cost. As a result, the
amount payable by the broker-dealer, dealer or
bank during the time a stand-by commitment is
exercisable would be substantially the same as
the value of the underlying Municipal Obligation.
The Municipal Portfolio's right to exercise a stand-by
commitment would be unconditional and
unqualified. Although the Portfolio could not
transfer a stand-by commitment, the Portfolio
could sell the underlying Municipal Obligation to
a third party at any time. It is expected that
stand-by commitments generally will be available
to the Portfolio without the payment of any
direct or indirect consideration. The Portfolio
may pay for stand-by commitments, however, if
such action is deemed necessary. In any event,
the total amount paid for outstanding stand-by
commitments held in the Portfolio's portfolio
would not exceed 1/2 of 1% of the value of the
Portfolio's total assets calculated immediately
after each stand-by commitment is acquired.
The Municipal Portfolio intends to enter into stand-by
commitments only with broker-dealers, dealers or
banks that Smith Barney believes present minimum
credit risks. The Portfolio's ability to
exercise a stand-by commitment will depend on the
ability of the issuing institution to pay for the
underlying securities at the time that the
stand-by commitment is exercised. The credit of
each institution issuing a stand-by commitment
to the Portfolio will be evaluated on an ongoing
basis by SBMFM in accordance with procedures
established by the Board of Directors.
The Municipal Portfolio intends to acquire stand-by
commitments solely to facilitate portfolio
liquidity and does not intend to exercise its
rights thereunder for trading purposes. The
acquisition of a stand-by commitment would not
affect the valuation of the underlying Municipal
Obligation, which will continue to be valued in
accordance with the amortized cost method. Each
stand-by commitment will be valued at zero in
determining net asset value. Should the
Portfolio pay directly or indirectly for a
stand-by commitment, its costs will be reflected
in realized gain or loss when the commitment is
exercised or expires. The maturity of a
Municipal Obligation purchased by the Portfolio
will not be considered shortened by any stand-by
commitment to which the obligation is subject.
Thus, stand-by commitments will not affect the
dollar-weighted average maturity of the
Portfolio's portfolio.
The Municipal Portfolio understands that the Internal
Revenue Service has issued a revenue ruling to
the effect that a registered investment company
will be treated for federal income tax purposes
as the owner of Municipal Obligations acquired
subject to a stand-by commitment and the interest
on the Municipal Obligations will be tax-exempt
to the Portfolio.
YIELD INFORMATION
A Portfolio may provide current annualized and effective
annualized yield quotations based on its daily
dividends. These quotations may from time to time
be used in advertisements, shareholder reports or
other communications to shareholders. All
performance information supplied by the
Portfolios in advertising is historical and is
not intended to indicate future returns.
In performance advertising, the Portfolios may compare any
of their performance information with data
published by independent evaluators such as
Morningstar, Inc., Lipper Analytical Services,
Inc., CDC/Wiesenberger, Donoghue's Money Fund
Report or other companies which track the
investment performance of investment companies
("Fund Tracking Companies"). The Portfolios may
also compare their performance information with
the performance of recognized stock, bond and
other indexes, including but not limited to the
Municipal Bond Buyers Indices, the Salomon
Brothers Bond Index, the Lehman Bond Index, the
Standard & Poor's 500 Composite Stock Price
Index, the Dow Jones Industrial Average, U.S.
Treasury bonds, bills or notes and changes in the
Consumer Price Index as published by the U.S.
Department of Commerce. The Portfolios may refer
to general market performance over past time
periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds,
Bills and Inflation Yearbook"). The Portfolios
may also refer in such materials to mutual fund
performance rankings and other data published by
Fund Tracking Companies. Performance advertising
may also refer to discussions of the Portfolios
and comparative mutual fund data and ratings
reported in independent periodicals, such as news
papers and financial magazines.
Any current yield quotation of a Portfolio which is used in
such a manner as to be subject to the provisions
of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized
historical yield, carried at least to the nearest
hundredth of one percent, based on a specific
seven calendar day period. The Portfolio's
current yield shall be calculated by (a)
determining the net change during a seven
calendar day period in the value of a
hypothetical account having a balance of one
share at the beginning of the period, (b)
dividing the net change by the value of the
account at the beginning of the period to obtain
a base period return, and (c) multiplying the
quotient by 365/7 (i.e., annualizing). For this
purpose, the net change in account value would
reflect the value of additional shares purchased
with dividends declared on the original share and
dividends declared on both the original share and
any such additional shares, but would not reflect
any realized gains or losses from the sale of
securities or any unrealized appreciation or
depreciation on portfolio securities. In
addition, the Portfolio may advertise effective
yield quotations. effective yield quotations are
calculated by adding 1 to the base period return,
raising the sum to a power equal to 365/7, and
subtracting 1 from the result (i.e.,
compounding).
The Municipal Portfolio's tax equivalent yield is the rate
an investor would have to earn from a fully
taxable investment in order to equal the
Portfolio's yield after taxes. Tax equivalent
yields are calculated by dividing the Municipal
Portfolio's yield by one minus the stated federal
or combined federal and state tax rate. If only a
portion of the Portfolio's yield is tax-exempt,
only that portion is adjusted in the calculation.
Although published yield information is useful to investors
in reviewing a Portfolio's performance, investors
should be aware that the Portfolio's yield
fluctuates from day to day and that the
Portfolio's yield for any given period is not an
indication or representation by the Portfolio of
future yields or rates of return on the
Portfolio's shares. Also, Processing
Organizations may charge their customers direct
fees in connection with an investment in a
Portfolio, which will have the effect of reducing
the Portfolio's net yield to those shareholders.
The yield of a Portfolio is not fixed or
guaranteed, and an investment in a Portfolio is
not insured. Accordingly, a Portfolio's yield
information may not necessarily be used to
compare Portfolio shares with investment
alternatives which, like money market instruments
or bank accounts, may provide a fixed rate of
interest. In addition, because investments in the
Portfolios are not insured or guaranteed, a
Portfolio's yield information may not necessarily
be used to compare the Portfolio with investment
alternatives which are insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
The Prospectus states that net asset value will be
determined on any day the New York Stock Exchange
is open. The New York Stock Exchange is closed
on the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Each Portfolio uses the "amortized cost method" for valuing
portfolio securities pursuant to a rule under the
Act. The amortized cost method of valuation of
the Portfolio's portfolio securities involves
valuing a security at its cost at the time of
purchase and thereafter assuming a constant
amortization to maturity of any discount or
premium, regardless of the impact of fluctuating
interest rates on the market value of the
instrument. The market value of portfolio
securities will fluctuate on the basis of the
creditworthiness of the issuers of such
securities and with changes in interest rates
generally. While the amortized cost method
provides certainty in valuation, it may result in
periods during which value, as determined by
amortized cost, is higher or lower than the price
the Portfolio would receive if it sold the
instrument. During such periods the yield to
investors in the Portfolio may differ somewhat
from that obtained in a similar company that uses
mark-to-market values for all its portfolio
securities. For example, if the use of amortized
cost resulted in a lower (higher) aggregate
portfolio value on a particular day, a
prospective investor in the Portfolio would be
able to obtain a somewhat higher (lower) yield
than would result from investment in such similar
company, and existing investors would receive
less (more) investment income. The purpose of
this method of valuation is to attempt to
maintain a constant net asset value per share,
and it is expected that the price of the
Portfolio's shares will remain at $1.00; however,
shareholders should be aware that despite
procedures that will be followed to have a
stabilized price, including maintaining a maximum
dollar-weighted average portfolio maturity of 90
days and investing in securities with remaining
maturities of only 13 months or less, there is no
assurance that at some future date there will not
be a rapid change in prevailing interest rates, a
default by an issuer or some other event that
could cause the Portfolio's price per share to
change from $1.00.
MANAGEMENT AGREEMENT, PLAN OF DISTRIBUTION AND OTHER
SERVICES
Manager
Smith Barney Mutual Funds Management Inc.
("SBMFM" or the "Manager") manages the day to day
operations of each Portfolio pursuant to
management agreements entered into by the Fund on
behalf of each Fund. Under the management
agreements, the Manager offers each Portfolio
advice and assistance with respect to the
acquisition, holding or disposal of securities
and recommendations with respect to other aspects
of the business and affairs of each Portfolio.
It also furnishes each Portfolio with executive
and other personnel; management, bookkeeping,
accounting and administrative services; office
space and equipment; and the services of the
officers and employees of the Fund.
Each Portfolio's management agreement provides that all
other expenses not specifically assumed by the
Manager under each management agreement are borne
by the Fund. Expenses payable by the Fund
include, but are not limited to, all charges of
custodians (including sums as custodian and sums
for keeping books, performing portfolio
valuations, and for rendering other services to
the Fund) and shareholder servicing agents,
filing fees and expenses relating to the
registration and qualification of the Fund's
shares under Federal or state securities laws and
maintaining such registrations and qualifications
(including the printing of the Fund's
registration statements and prospectuses),
expenses of preparing, printing and distributing
all proxy material, reports and notices to
shareholders, out-of-pocket expenses of directors
and fees of directors who are not "interested
persons" as defined in the Act, fees of auditors
and legal counsel, interest, taxes, fees and
commissions of every kind, expenses of issue,
repurchase or redemption of shares, and all other
costs incident to the Fund's corporate existence
and extraordinary expenses such as litigation and
indemnification expenses. Direct expenses are
charged to each Portfolio; the management fee and
general corporate expenses are allocated on the
basis of relative net assets. No sales or
promotion expenses are incurred by the Fund, but
expenses incurred in complying with laws
regulating the issue or sale of the Fund's shares
are not deemed sales or promotion expenses.
The Manager has agreed that if in any fiscal year the total
expenses of any Portfolio, exclusive of taxes,
brokerage, interest and (with the prior written
consent of the necessary state securities
commissions) extraordinary expenses exceed 0.8%
of the average daily net assets for that fiscal
year of the Portfolio, the Manager will reduce
its fee to the extent of such excess. The 0.8%
voluntary expense limitation shall be in effect
until it is terminated by 14 days' written notice
to shareholders and by supplement to the then
current prospectus.
Plan of Distribution
Service Organizations
Institutional investors who are purchasing shares on behalf
of their customers, such as banks, savings and
loans accounts and other financial institutions
("service organizations") may purchase Class B
shares. These shares are identical in all
respects to Class A shares except that they bear
certain additional service fees and enjoy certain
exclusive voting rights on matters relating to
these service fees.
The Fund will enter into an agreement with each service
organization that purchases Class B shares to
provide certain services to the beneficial owners
of such shares. Such services include
aggregating and processing purchase and
redemption request from customers and placing net
purchase and redemption orders with Smith Barney;
processing dividend payments from the Fund on
behalf of the customers; providing information
periodically to customers sharing positions in
shares; arranging for bank wires; responding to
customer inquiries relating to the services
provided by the service organization and handling
correspondence: and acting as shareholder of
record and nominee. Under terms of the
agreements, service organizations are required to
provide to their customers a schedule of any fees
that they may charge customers in connection with
their investment in Class B shares.
Class A shares are sold to institutions that have not
entered into servicing agreements with the Fund
in connection with their investments.
Brokerage
The Manager places orders for the purchase and
sale of securities for the portfolios of the
Portfolio. All of the Portfolio's portfolio
transactions are expected to be principal
transactions with major dealers in money market
instruments, on which no brokerage commissions
are paid. Purchases from or sales to dealers
serving as market-makers include the spread
between the bid and asked prices. No portfolio
transactions are handled by Smith Barney.
COUNSEL AND AUDITORS
Willkie Farr & Gallagher serves as legal counsel to the
Fund. The Directors who are not "interested
persons" of the Fund have selected Stroock &
Stroock & Lavan as their counsel.
KPMG Peat Marwick, LLP 345 Park Avenue, New York,
New York 10154, have been selected as independent
auditors for the Fund for its fiscal year ending
May 31, 1996, to examine and report on the
financial statements and financial highlights of
the Fund.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PNC Bank, National Association, a national banking
association with offices at 17th and Chestnut
Streets, Philadelphia, Pennsylvania (the
"Custodian"), serves as custodian of the Fund's
investments.
The Shareholders Services Group, Inc. ("TSSG") with offices
at Exchange Place, Boston, Massachusetts 02109,
serves as the Fund's dividend disbursing and
transfer agent.
OFFICERS AND DIRECTORS
The following are the names of the Directors and officers
of the Fund together with a brief description of
their principal occupations during the last five
years. Each Director who is an "interested
person" of the Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"),
is indicated by an asterisk.
Heath B. McLendon, Chairman of the Board and Investment
Officer (age 63). Managing Director of Smith
Barney, Chairman of SBSA and President of SBMFM;
prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc.
("Shearson Lehman Brothers"); Vice Chairman of
Shearson Asset Management, a Director of PanAgora
Asset Management, Inc. and PanAgora Asset
Management
Limited. His address is 388 Greenwich Street, New York,
New York 10013.
Lewis Daidone, Senior Vice President and Treasurer (age
37). Managing Director of Smith Barney; Chief
Financial Officer of the Smith Barney Mutual
Funds; Director and Senior Vice President of
SBMFM. His address is 388 Greenwich Street, New
York, New York 10013.
Christina T. Sydor, Director and Secretary (age 44).
Managing Director of Smith Barney and General
Counsel and Secretary of SBMFM. Her address is
388 Greenwich Street New York, New York, 10013.
Mr. McLendon also serves as a director, trustee and/or
general partner of certain other mutual funds for
which Smith Barney serves as distributor. As of
April , 1995, the Directors and officers of
the Fund, as a group, owned less than 1.00% of
the outstanding shares of common stock to each
Portfolio.
No officer, director or employee of Smith Barney or any
parent or subsidiary receives any compensation
from the Fund for serving as an officer or
Director of the Fund. The Fund pays each
Director who is not a director, officer or
employee of Smith Barney or any of its
affiliates, a fee of per annum plus
per meeting attended and reimburses them for
travel and out-of-pocket expenses.
The Directors are responsible for major decisions relating
to each Portfolio's objective, policies and
techniques. The Directors also supervise the
operation of the Portfolios by their officers and
review the investment decisions of the officers
although they do not actively participate on a
regular basis in making such decisions.
VOTING RIGHTS
The present Directors of the Fund were elected at a meeting
of shareholders held on
March ,1995. Under the By-Laws, each Director
will continue in office until the dissolution of
the Corporation or his earlier death,
resignation, bankruptcy, incapacity or removal.
Vacancies will be filled by a majority of the
remaining Directors, subject to the 1940 Act.
Therefore, no annual or regular meetings of
shareholders normally will be held, unless
otherwise required by the By-Laws or the 1940
Act. Subject to the foregoing, shareholders have the power
to vote to elect or remove Directors, to
terminate or reorganize their Portfolio, to amend
the By-Laws, to bring certain derivative actions
and on any other matters on which a shareholder
vote is required by the 1940 Act, the By-Laws or
the Directors.
Each share of each series of the Fund has one vote (and
fractional votes for fractional shares). Shares
of all series of the Fund have noncumulative
voting rights, which means that the holders of
more than 50 of the shares of all series of the
Fund voting for the election of Directors can
elect 100% of the Directors if they choose to do
so and, in such event, the holders of the
remaining shares will not be able to elect any
Directors. Each series of the Fund will vote
separately only with respect to those matters
that affect only that series.
Appendix A Description
Moody's and Standard and Poor's
Municipal and Corporate Bonds and Municipal Loans
The two highest ratings of Standard & Poor's Corporation
("S&P") for municipal and corporate bonds are AAA
and M. Bonds rated AAA have the highest rating
assigned by S&P to a debt obligation. Capacity to
pay interest and repay principal is extremely
strong. Bonds rated AA have a very strong
capacity to pay interest and repay principal and
differ from the highest rated issues only in a
small degree. The AA rating may be modified by
the addition of a plus (+) or minus (-) sign to
show relative standing within that rating
category
The two highest ratings of Moody's Investors Service, Inc.
("Moody's") for municipal and corporate bonds are
Aaa and Aa. Bonds rated Aaa are judged by Moody's
to be of the best quality. Bonds rated Aa are
judged to be of high quality by all standards.
Together with the Aaa group, they comprise what
are generally known as high-grade bonds. Moody's
states that Aa bonds are rated lower than the
best bonds because margins of protection or other
elements make long-term risks appear somewhat
larger than Aaa securities. The generic rating Aa
may be modified by the addition of the numerals
1, 2 or 3. The modifier 1 indicates that the
security ranks in the higher end of the Aa rating
category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the
issue ranks in the lower end of such rating
category
Short-Term Municipal Loans
S&P's highest rating for short-term municipal loans is SP-
1. S&P states that short-term municipal
securities bearing the SP- 1 designation have a
strong capacity to pay principal and interest.
Those issues rated SP- 1 which are determined to
possess a very strong capacity to pay debt
service will be given a plus (+) designation.
Issues rated SP-2 have satisfactory capacity to
pay principal and interest with some
vulnerability to adverse financial and economic
changes over the term of the notes.
Moody's highest rating for short-term municipal loans is
MIG- 1/VMIG- 1. Moody's states that short-term
municipal securities rated MIG- 1/VMIG- 1 are of
the best quality, enjoying strong protection from
established cash flows of funds for their
servicing or from established and broad-based
access to the market for refinancing, or both.
Loans bearing the MIG-2/1/MIG-2 designation are
of high quality, with margins of protection ample
although not so large as in the MIG- 1/1/MIG- 1
group.
Other Short-Term Debt Securities
Prime- 1 and Prime-2 are the two highest ratings assigned
by Moody's for other short-term debt securities
and commercial paper, and A- 1 and A-2 are the
two highest ratings for commercial paper assigned
by S&P. Moody's uses the numbers 1, 2 and 3 to
denote relative strength within its highest
classification of Prime, while S&P uses the
numbers 1, 2 and 3 to denote relative strength
within its highest classification of A. Issuers
rated Prime- 1 by Moody's have a superior ability
for repayment of senior short-term debt
obligations and have many of the following
characteristics: leading market positions in
well-established industries, high rates of return
on funds employed, conservative capitalization
structure with moderate reliance on debt and
ample asset protection, broad margins in earnings
coverage of fixed financial charges and high
internal cash generation, and well established
access to a range of financial markets and
assured sources of alternate liquidity. Issuers
rated Prime-2 by Moody's have a strong ability
for repayment of senior short-term debt
obligations and display many of the same
characteristics displayed by issuers rated Prime-
1, but to a lesser degree. Issuers rated A- 1 by
S&P carry a strong degree of safety regarding
timely repayment Those issues determined to
possess extremely strong safety characteristics
are denoted with a plus (+) designation. Issuers
rated A-2 by S&P carry a satisfactory degree of
safety regarding timely repayment.
Appendix B Description of Municipal Securities
Municipal Notes generally are used to provide for
short-term capital needs and usually have
maturities of one year or less. They include the
following:
1. Project Notes, which carry a U.S. government guarantee,
are issued by public bodies (called "local
issuing agencies") created under the laws of a
state, territory, or U.S. possession. They have
maturities that range up to one year from the
date of issuance. Project Notes are backed by an
agreement between the local issuing agency and
the Federal Department of Housing and Urban
Development. These Notes provide financing for a
wide range of financial assistance programs for
housing, redevelopment, and related needs (such
as low-income housing programs and renewal
programs).
2. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they
are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and
business taxes, and are payable from these
specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of
receipt of other types of revenues, such as
Federal revenues available under the Federal
Revenue Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be
arranged. In most cases, the long-term bonds then
provide the money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction
financing. After successful completion and
acceptance, many projects receive permanent
financing through the Federal Housing
Administration under the Federal National
Mortgage Association ("Fannie Mae") or the
Government National Mortgage Association ("Ginnie
Mae").
6. Tax-Exempt Commercial Paper is a short-term obligation
with a stated maturity of 365 days or less. It is
issued by agencies of state and local governments
to finance seasonal working capital needs or as
short-term financing in anticipation of longer
term financing.
Municipal Bonds, which meet longer term capital needs and
generally have maturities of more than one year
when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as
states, counties, cities, towns and regional
districts. The proceeds of these obligations are
used to fund a wide range of public projects,
including construction or improvement of schools,
highways and roads, and water and sewer systems.
The basic security behind General Obligation
Bonds is the issuer's pledge of its full faith
and credit and taxing power for the payment of
principal and interest. The taxes that can be
levied for the payment of debt service may be
limited or unlimited as to the rate or amount of
special assessments.
2. Revenue Bonds in recent years have come to include an
increasingly wide variety of types of municipal
obligations. As with other kinds of municipal
obligations, the issuers of revenue bonds may
consist of virtually any form of state or local
governmental entity, including states, state
agencies, cities, counties, authorities of
various kinds, such as public housing or
redevelopment authorities, and special districts,
such as water, sewer or sanitary districts.
Generally, revenue bonds are secured by the
revenues or net revenues derived from a
particular facility group of facilities, or, in
some cases, the proceeds of a special excise or
other specific revenue source. Revenue bonds are
issued to finance a wide variety of capital
projects including electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and
airport facilities; colleges and universities;
and hospitals. Many of these bonds provide
additional security in the form of a debt service
reserve fund to be used to make principal and
interest payments. Various forms of credit
enhancement, such as a bank letter of credit or
municipal bond insurance, may also be employed in
revenue bond issues. Housing authorities have a
wide range of security, including partially or
fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues
from housing or other public projects. Some
authorities provide further security in the form
of a state's ability (without obligation) to make
up deficiencies in the debt service reserve fund.
In recent years, revenue bonds have been issued in large
volumes for projects that are privately owned and
operated (see 3 below).
Private Activity Bonds are considered municipal bonds if
the interest paid thereon is exempt from Federal
income tax and are issued by or on behalf of
public authorities to raise money to finance
various privately operated facilities for
business and manufacturing, housing and health.
These bonds are also used to finance public
facilities such as airports, mass transit systems
and ports. The payment of the principal and
interest on such bonds is dependent solely on the
ability of the facility's user to meet its
financial obligations and the pledge, if any, of
real and personal property as security for such
payment.
While, at one time, the pertinent provisions of the
Internal Revenue Code permitted private activity
bonds to bear tax-exempt interest in connection
with virtually any type of commercial or
industrial project (subject to various
restrictions as to authorized costs, size
limitations, state per capita volume
restrictions, and other matters), the types of
qualifying projects under the Code have become
increasingly limited, particularly since the
enactment of the Tax Reform Act of 1986. Under
current provisions of the Code, tax-exempt
financing remains available, under prescribed
conditions, for certain privately owned and
operated rental multi-family housing facilities,
nonprofit hospital and nursing home projects,
airports, docks and wharves, mass commuting
facilities and solid waste disposal projects,
among others, and for the refunding (that is, the
tax-exempt refinancing) of various kinds of other
private commercial projects originally financed
with tax-exempt bonds. In future years, the types
of projects qualifying under the Code for
tax-exempt financing are expected to become
increasingly limited.
Because of terminology formerly used in the Internal
Revenue Code, virtually any form of private
activity bond may still be referred to as an
"industrial development bond,' but more and more
frequently revenue bonds have become classified
according to the particular type of facility
being financed, such as hospital revenue bonds,
nursing home revenue bonds, multi-family housing
revenues bonds, single family housing revenue
bonds, industrial development revenue bonds,
solid waste resource recovery revenue bonds, and
so on.
Other Municipal Obligations, incurred for a variety of
financing purposes, include: municipal leases,
which may take the form of a lease or an
installment purchase or conditional sale
contract, are issued by state and local
governments and authorities to acquire a wide
variety of equipment and facilities such as fire
and sanitation vehicles, telecommunications
equipment and other capital assets. Municipal
leases frequently have special risks not normally
associated with general obligation or revenue
bonds. Leases and installment purchase or
conditional sale contracts (which normally
provide for title to the leased asset to pass
eventually to the government issuers have evolved
as a means for governmental issuers to acquire
property and equipment without meeting the
constitutional and statutory requirements for the
issuance of debt. The debt-issuance limitations
of many state constitutions and statutes are
deemed to be inapplicable because of the
inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the
governmental issuer has no obligation to make
future payments under the lease or contract
unless money is appropriated for such purpose by
the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the
Fund will only purchase municipal leases subject
to a non-appropriation clause when the payment of
principal and
accrued interest is backed by an unconditional irrevocable
letter of credit, or guarantee of a bank or other
entity that meets the criteria described in the
Prospectus.
Tax-exempt bonds are also categorized according to whether
the interest is or is not includible in the
calculation of alternative minimum taxes imposed
on individuals, according to whether the costs of
acquiring or carrying the bonds are or are not
deductible in part by banks and other financial
institutions, and according to other criteria
relevant for Federal income tax purposes. Due to the
increasing complexity of Internal Revenue Code
and related requirements governing the issuance
of tax-exempt bonds, industry practice has
uniformly required, as a condition to the
issuance of such bonds, but particularly for
revenue bonds, an opinion of nationally
recognized bond counsel as to the tax-exempt
status of interest on the bonds.
Independent Auditors' Report
The Shareholder and Board of Directors of
Smith Barney Institutional Cash Management Fund
Inc.:
We have audited the accompanying statement of
assets and liabilities, including the schedule of
investments, of Smith Barney Institutional Cash
Management Fund Inc. (comprising the Cash,
Government and Municipal Portfolios) as of June
16, 1995 (commencement of operations). This
statement of assets and liabilities is the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 are free of
material misstatement. An audit also includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements. Our procedures included confirmation
of securities owned as of June 16, 1995, by
correspondence with the custodian. 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
audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred
to above present fairly, in all material
respects, the financial position of each of the
respective portfolios constituting Smith Barney
Institutional Cash Management Fund Inc. as of
June 16, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat
Marwick LLP
New York, New York
June 16, 1995
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND
INC.
STATEMENT OF ASSETS AND LIABILITIES
June 16, 1995
Cash Government Municipal
Portfolio Portfolio Portfolio
ASSETS
Cash 96,694 $ 928 (5,716)
Investments,
at cost 19,903,306 4,999,072 $5,000,000
Interest
Receivable 5,716
Total Net
Assets $20,000,000 $5,000,000 $5,000,000
NET ASSETS CONSIST OF:
Capital stock $ 200
$ 50 $ 50
(par value $.00001)
Capital paid in
excess of par value $19,999,800
$4,999,950 $4,999,950
Total net assets $20,000,000
$5,000,000 $5,000,000
Shares outstanding 20,000,000
5,000,000 5,000,000
Net asset value per share $ 1.00
1.00 1.00
Notes to statement of assets and liabilites
(1) Smith Barney Institutional Cash Management Fund
Inc. (The "Fund") was organized on March 28, 1995,
under the laws of the State of Maryland and is
registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management
investment company. The Fund has had no operations
other than organizational matters and the issuance
and sale of 30,000,000 shares of common stock on June
16, 1995, to Smith Barney Inc.
(2) Initial organizational expenses incurred
will be borned by Smith Barney Inc.
Cash Government
Municipal
Portfolio Portfolio
Portfolio
(3) Shares Issued
19,999,999 4,999,999 4,999,999
Class A
Class B 1 1 1
20,000,000 5,000,000 5,000,000
Total
SMITH BARNEY INSTITUTIONAL MONEY MARKET FUND,
INC.
CASH PORTFOLIO
Schedule of Investments
June 16, 1995
Annualized
Yield on
Date
of
Face Amount Security
Purchase Value
U.S. AGENCY-4.9%
$1,000,000 Federal National Mo.
mature 08/14/95 to 06/16/95
5.8500% $990,413
- -------------------------------------------------
- ---------------------------
COMMERCIAL PAPER-34.6%
1,000,000 Dean Witter, Discovery & Co.
mature 08/11/95 to 06/16/95
5.9300 990,775
1,000,000 Whirlpool Financial
mature 07/14/95 to 06/16/95
5.9700 995,357
1,000,000 Oesterrieichische
mature 08/31/95 to 06/16/95
5.8700 987,608
1,000,000 Preferred Receivable Funding
mature 07/19/95 to 06/16/95
5.9500 994,546
1,000,000 Transamerica Corp.
mature 11/13/95 to 06/16/95
5.7500 976,041
1,000,000 Goldman Sachs Group, L.P.
mature 11/24/95 to 16/16/95
5.7700 974,195
1,000,000 Philip Morris Lo., Inc.
mature 07/20/95 to 06/16/95
5.9600 994,371
TOTAL COMMERCIAL PAPER
6,912,894
- -------------------------------------------------
- ---------------------------
REPURCHASE AGREEMENT-60.0%
6,000,000 Merrill Lynch, 5.95% due 6/19/95
(Fully collateralized by U.S.
Treasury
Note 7 7/8% due 7/31/96; Market
Value $6 6,000,000
6,000,000 Goldman Sachs 5.95% due 6/19/95
(Fully collateralized by U.S.
Treasury
Note 13 1/4% due 5/15/14; Market
Value $ 6,000,000
TOTAL REPURCHASE AGREEMENT
12,000,000
Total Investments
19,903,306
Other Assets-.5%
96,694
Total Net Assets
20,000,000
SMITH BARNEY INSTITUTIONAL MONEY MARKET FUND,
INC.
GOVERNMENT PORTFOLIO
Schedule of Investments
June 16, 1995
Annualized
Yield on
Date of
Face Amount Security Purchase
Value
U.S. AGENCIES AND INSTRUMENTALITIES-89.6%
$500,000 Federal Farm Credit Bank
mature 06/23/95 5.90%
$499,426
500,000 Federal Home Loan Bank
mature 06/22/95 5.91%
499,508
1,000,000 Federal Home Loan Bank
mature 07/31/95 5.90%
992,625
500,000 Federal Home Loan Mortgage Corp.
mature 06/19/95 5.85%
499,756
500,000 Federal Home Loan Mortgage Corp.
mature 07/19/95 5.90%
497,296
500,000 Federal Home Loan Mortgage Corp.
mature 07/20/95 5.90%
497,214
500,000 Federal National Mortgage Agency
mature 07/11/95 5.90%
497,951
500,000 Federal National Mortgage Agency
mature 07/19/95 5.90%
497,296
- -------------------------------------------------
- -------------------------
Total U.S. Agencies and
Instrumentali 4,481,072
REPURCHASE AGREEMENT-10.4%
518,000 Merrill Lynch, 5.95% due 6/19/95
(Fully Collateralized by U.S.
Treasury Note 7 3/4%
due 3/31/96; Market value $534,188)
518,000
Total Investments
4,999,072
Other Assets
928
Total Net Assets
5,000,000
u:\flynn\sbdpmu1
SMITH BARNEY INSTITUTIONAL MONEY MARKET FUND,
INC.
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS
June 16, 1995
Annualized
Yield on
Date of
Face Amount Security Purchase
Value
MUNICIPAL BONDS-100%
$1,000,000 Deleware EDA (Hosp Bil)
mature 12/01/15
5.00% $1,000,000
1,000,000 Denver (Seasons Apt)
mature 10/01/06
5.00% 1,000,000
1,000,000 Jackson Co. GA IDA SER 85
mature 12/01/15
5.00% 1,000,000
1,000,000 Missouri St. Economic Dev. Auth
Ser "E"
mature 09/01/06
5.00% 1,000,000
1,000,000 Pima Az. Tucson Elec.
mature 05/01/25
5.00% 1,000,000 _____
_________________________________________________
_______________________ Total
Investments (cost $5,000,000)
5,000,000
Other Assets less
liabilities
- --
Total Net Assets 5,000,000
PART C
OTHER INFORMATION
Item 24.
Financial Statements and Exhibits
(a) Financial Statements:
Financial Statements (see p___ of Part B included
in this Registration Statement)*
(b) Exhibits:
Exhibit No. Description of
Exhibits
1 Articles of
Incorporation
of Registrant
(incorporated by reference to the Fund's
Registration Statement on Form N-1A filed
on April 5, 1995)
2 By-Laws of Registrant
(Filed herewith)
3 Not applicable
4 Specimen Stock
Certificate
5
Investment Advisory
Agreement between the
Registrant and Smith
Barney Mutual Funds
Management Inc. (Filed
herewith)
6
Distribution Agreement
between the Registrant
and Smith Barney Inc.
(Filed herewith)
7 Not applicable
8 Custody Agreement
between the Registrant and
PNC Bank, National
Association. (Filed herewith)
9 Form of Transfer
Agency Agreement between
and The Shareholder
Services Group, Inc. (Filed herewith)
10 (a) Opinion and consent of
Willkie
Farr & Gallagher
(Filed herewith)
10 (b) Opinion and
consent of Venable, Baetjer & Howard
Filed herewith)
11 Consent of KPMG Peat
Marwick LLP (Filed herewith)
12 Not applicable
13 Purchase Agreement
(Filed herewith)
14 Not applicable
15
Rule 12b-1
Distribution Plan
(Filed herewith)
16 Not Applicable
SIGNATURES
As required by the Securities Act of 1933, as
amended, and the Investment Company Act of 1940,
as amended, Registrant has duly caused this Pre-
Effective Amendment No. 1 to the Registration
Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the
City of New York, State of New York on the 15the
day of June, 1995.
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT
FUND, INC.
By: /s/ Heath B. McLendon
Heath B. McLendon
Chairman of the
Board
(Chief Executive
Officer)
As required by the Securities Act of 1933,
as amended, this Pre-Effective Amendment No. 1
to the Registrant's Registration Statement on
Form N-1A has been signed below by the following
persons in the capacities and on the dates
indicated.
Signature Title Date
/s/Heath B. Mc Lendon Chairman of the
Board 6/15/95
Heath B. Mc Lendon and Director
(Chief Executive
Officer)
/s/Jessica Bibliowicz President and
Director 6/15/95
Jessica Bibliowicz
/s/Lewis E. Daidone Senior Vice
President 6/15/95
Lewis E. Daidone and Treasurer
(Principal Financial
and
Accounting Officer
/s/Paul R. Ades* Director 6/15/95
Paul R. Ades
/s/Herbert Barg* Director 6/15/95
Herbert Barg
/s/Alger B. Chapman* Director 6/15/95
Alger Chapman
/s/Dwight B. Crane* Director 6/15/95
Dwight B. Crane
/s/Frank G. Hubbard* Director 6/15/95
Frank G. Hubbard
/s/Allan R. Johnson* Director 6/15/95
Allan R. Johnson
/s/Ken Miller* Director 6/15/95
Ken Miller
/s/John R. White* Director 6/15/95
John R. White
*By: /s/Robert A. Vegliante
Robert A. Vegliante
Attorney-in-Fact
BYLAWS
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND INC.
ARTICLE I
OFFICES
The principal office of the Corporation
shall be in the City of Baltimore, State of
Maryland.
The principal executive office of the
Corporation shall be at 388 Greenwich Street,
City of New York, State of New York.
The Corporation may have such other
offices in such places as the Board of Directors
may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Special Meetings. Special
meetings of the stockholders, unless otherwise
provided by law or by the Articles of
Incorporation, may be called for any purpose or
purposes by a majority of the Board of Directors
or the President, and, upon satisfaction of
statutory requirements, shall be called on the
written request of the holders of at least 25% of
the outstanding capital stock of the Corporation
entitled to vote at such meeting.
Section 2. Place of Meetings. The annual
meeting and any special meeting of the
stockholders shall be held at such place within
the United States as the Board of Directors may
from time to time determine.
Section 3. Notice of Meetings; Waiver of
Notice. Written notice of the place, date and
time of the holding of each annual and special
meeting of the stockholders and the purpose or
purposes of each special meeting shall be given
personally or by mail, not less than 10 nor more
than 90 days before the date of such meeting, to
each stockholder entitled to notice of the
meeting. Notice by mail shall be deemed to be
duly given when deposited in the United States
mail addressed to the stockholder at the
stockholders' address as it appears on the
records of the Corporation, with postage thereon
prepaid.
Notice of any meeting of stockholders
shall be deemed waived by any stockholder who
shall attend such meeting in person or by proxy,
or who shall, either before or after the meeting,
submit a signed waiver of notice which is filed
with the records of the meeting. When a meeting
is adjourned to another time and place, unless
after the adjournment the Board of Directors
shall fix a new record date for any adjourned
meeting or the adjournment is for more than
thirty days, notice of such adjourned meeting
need not be given if the time and place to which
the meeting shall be adjourned is announced at
the meeting at which the adjournment is taken.
Section 4. Quorum and Adjournment. At all
meetings of the stockholders, the holders of a
majority of the shares of stock of the
Corporation entitled to vote at the meeting
present in person or by proxy shall constitute a
quorum for the transaction of any business,
except as otherwise provided by statute or by the
Articles of Incorporation or these Bylaws. A
meeting of stockholders convened on the date for
which it was called may be adjourned as permitted
by Maryland Law. If a quorum shall not be
present or represented at such meeting of
stockholders, a majority of the stockholders
entitled to vote thereat present in person or
represented by proxy, shall have power to adjourn
the meeting. At any adjourned session of a
meeting at which a quorum shall be present or
represented, any business may be transacted that
might have been transacted at the meeting as
originally noticed. The absence from any meeting
of holders of the number of shares of stock of
the Corporation in excess of a majority thereof
which may be required by the laws of the State of
Maryland, the Investment Company Act of 1940 or
any other applicable statute, the Articles of
Incorporation, or these Bylaws, for action on any
given matter shall not prevent action at such
meeting on any other matter or matters which may
properly come before the meeting if there shall
be present thereat, in person or by proxy,
holders of the number of shares of stock of the
Corporation required for action in respect of
such other matter or matters.
Section 5. Organization. At each meeting
of the stockholders, the Chairman of the Board of
Directors (if one has been designated by the
Board), or in his absence or inability to act,
the President, or in the absence or inability to
act of the Chairman of the Board and the
President, a Vice-President shall act as chairman
of the meeting. The Secretary, or in the
Secretary's absence or inability to act, any
person appointed by the chairman of the meeting,
shall act as secretary of the meeting and keep
the minutes thereof.
Section 6. Order of Business. The order
of business at all meetings of the stockholders
shall be as determined by the chairman of the
meeting.
Section 7. Voting. Except as otherwise
provided by statute or the Articles of
Incorporation, each holder of record of shares of
stock of the Corporation having voting power
shall be entitled at each meeting of the
stockholders to one vote for every share of such
stock standing in the name of such stockholder on
the record of stockholders of the Corporation as
of the record date determined pursuant to Article
XV.
Each stockholder entitled to vote at any
meeting of stockholders may authorize another
person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-
fact. No proxy shall be valid after the
expiration of eleven months from the date
thereof, unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of
the stockholder executing it, except in those
cases where such proxy states that it is
irrevocable and where an irrevocable proxy is
permitted by law. Except as otherwise provided
by statute, the Articles of Incorporation or
these Bylaws, any corporate action to be taken by
vote of the stockholders shall be authorized by a
majority of the total votes cast at a meeting of
stockholders by the holders of shares present in
person or represented by proxy and entitled to
vote on such action.
If a vote shall be taken on any question
other than the election of directors, which shall
be by written ballot, then unless required by
statute or these Bylaws, or determined by the
chairman of the meeting to be advisable, any such
vote need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy,
and shall state the number of shares voted.
Section 8. Inspectors. The Board may, in
advance of any meeting of stockholders, appoint
one or more inspectors to act at such meeting or
any adjournment thereof. If the inspectors shall
not be so appointed or if any of them fail to
appear or act, the chairman of the meeting may,
and on the request of any stockholder entitled to
vote thereat shall, appoint inspectors.
Inspectors, before entering upon the discharge of
their duties, shall take and sign an oath to
execute faithfully the duties of inspector at
such meeting with strict impartiality and
according to the best of their ability. The
inspectors shall determine the number of shares
outstanding and the voting power of each, the
number of shares represented at the meeting, the
existence of a quorum, the validity and effect of
proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and
questions arising in connection with the right to
vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts
as are proper to conduct the election or vote
with fairness to all stockholders. On request of
the chairman of the meeting or any stockholder
entitled to vote thereat, the inspectors shall
make a report in writing of any challenge,
request or matter determined by them and shall
execute a certificate of any fact found by them.
No director or candidate for office of director
shall act as inspector of an election of
directors. Inspectors need not be stockholders.
Section 9. Consent of Stockholders in Lieu
of Meeting. Except as otherwise provided by
statute or the Articles of Incorporation, any
action required to be taken at any special
meeting of stockholders, or any action which may
be taken at any special meeting of such
stockholders, may be taken without a meeting,
without prior notice and without a vote, if the
following are filed with the records of
stockholders meetings: (i) a unanimous written
consent which sets forth the action and is signed
by each stockholder entitled to vote on the
matter and (ii) a written waiver of any right to
dissent signed by each stockholder entitled to
notice of the meeting but not entitled to vote
thereat.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Management of the Corporation.
The business and affairs of the Corporation shall
be managed under the direction of its Board of
Directors and all of the powers of the
Corporation may be exercised by or under
authority of the Board of Directors except as
conferred on or reserved to the stockholders by
law or by the Articles of Incorporation or by
these Bylaws.
Section 2. Number of Directors. The
number of directors of the Corporation shall,
until further action is taken by this Board of
Directors, be two. By vote of a majority of the
entire Board of Directors, the number of
directors fixed by the Articles of Incorporation
or by the Bylaws may be increased or decreased
from time to time up to a maximum of 12, but
shall never be less than two.
Section 3. Vacancies. Any vacancy
occurring in the Board of Directors for any cause
other than by reason of an increase in the number
of directors may be filled by a majority of the
remaining members of the Board of Directors,
although such majority is less than a quorum.
Any vacancy occurring by reason of an increase in
the number of directors may be filled by action
of a majority of the entire Board of Directors.
A director elected by the Board of Directors to
fill a vacancy shall be elected to hold office
until the next special meeting of stockholders or
until a successor is elected and qualifies.
At any special meeting of stockholders,
stockholders shall be entitled to elect directors
to fill any vacancies in the Board of Directors
that have arisen since the preceding annual
meeting of stockholders (whether or not any such
vacancy has been filled by election of a new
director by the Board of Directors) and any
director so elected by the stockholders shall
hold office for a term of one year and until his
successor shall be elected and shall qualify. In
the event such vacancy arose due to an increase
in the number of directors, any director so
elected to fill such vacancy by stockholders at a
special meeting shall hold office for a term of
one year and until his successor shall be elected
and shall qualify.
Section 4. Removal. A director may be
removed only for cause, and not without cause,
and only by action of the stockholders taken by
the holders of at least 75% of the shares of the
class of capital stock then entitled to vote for
such director in an election of directors.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place of Meetings. Meetings of
the Board of Directors, regular or special, may
be held at any place in or out of the State of
Maryland as the Board may from time to time
determine or as shall be specified in the notice
of such meeting.
Section 2. Annual Meeting. The first
meeting of each newly elected Board of Directors
shall be held as soon as practicable after the
meeting of stockholders at which the directors
were elected. No notice of such meeting shall be
necessary if held immediately after the
adjournment, and at the site, of the meeting of
stockholders.
Section 3. Regular Meetings. Regular
meetings of the Board of Directors may be held
without notice at such time and place as shall
from time to time be determined by the Board of
Directors.
Section 4. Special Meetings. Special
meetings of the Board of Directors may be called
at any time by two or more directors or by the
President.
Section 5. Notice of Meetings; Waiver of
Notice. Notice of the place and time of every
special meeting of the Board of Directors shall
be given to each director at least two days
before the date of the meeting. Notice to a
director may be given by mail, which shall be
deemed given when mailed, by telephone or
telegram or by leaving the same at the directors'
residence or usual place of business. Notice of
any special meeting need not be given to any
director who shall, either before or after the
meeting, sign a written waiver of notice or who
shall attend such meeting.
Section 6. Quorum. At all meetings of the
Board a majority of the entire Board of Directors
shall constitute a quorum for the transaction of
business and the action of a majority of the
directors present at any meeting at which a
quorum is present shall be the action of the
Board of Directors unless the concurrence of a
greater proportion is required for such action by
statute, the Articles of Incorporation or these
Bylaws, If a quorum shall not be present at any
meeting of directors, the directors present
thereat may by majority vote adjourn the meeting
from time to time, without notice other than
announcement at the meeting, until a quorum shall
be present.
Section 7. Consent of Directors in Lieu of
Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a
meeting, if a written consent to such action is
signed by all members of the Board or of such
committee, as the case may be, and such written
consent is filed with the minutes of proceedings
of the Board or committee.
ARTICLE V
COMMITTEES OF DIRECTORS
The Board of Directors may appoint from
among its members an Executive Committee and
other committees composed of two or more
directors, and may delegate to such committees
any or all of the powers of the Board of
Directors in the management of the business and
affairs of the Corporation except the power to
declare dividends or distributions on stock, to
issue stock, to recommend to stockholders any
action that requires stockholders' approval, to
fill a vacancy on the Board, to amend these
Bylaws or to approve any merger or share exchange
which does not require stockholder approval. In
the absence of any member of any such committee,
the members thereof present at any meeting,
whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act
in the place of such absent member. Committees
shall keep minutes of their proceedings and shall
report the same to the Board of Directors at the
meeting next succeeding, and any action by the
Committee shall be subject to revision and
alteration by the Board of Directors, provided
that no rights of third persons shall be affected
by any such revision or alteration.
ARTICLE VI
COMPENSATION OF DIRECTORS
Directors may receive compensation for
services to the Corporation in their capacities
as directors or otherwise in such manner and in
such amounts as may be fixed from time to time by
the Board of Directors.
ARTICLE VII
OFFICERS
Section 1. Executive Officers. The
executive officers of the Corporation shall be
elected by the Board of Directors. These may
include a Chairman of the Board (who shall be a
Director) and/or a Chairman of the Corporation
and shall include a President, one or more Vice-
Presidents (the number thereof to be determined
by the Board of Directors), a Secretary and a
Treasurer. The Board of Directors or the
Executive Committee may also in its discretion
appoint Assistant Secretaries, Assistant
Treasurers and other officers, agents and
employees, who shall have such authority and
perform such duties as the Board or the Executive
Committee may determine. The Board of Directors
may fill any vacancy which may occur in any
office. Any two offices, except those of
President and Vice-President, may be held by the
same person, but no officer shall execute,
acknowledge or verify any instrument in more than
one capacity, if such instrument is required by
law or these By-Laws to be executed, acknowledged
or verified by two or more officers.
Section 2. Term of Office. The term of
office of all officers shall be one year and
until their respective successors are elected and
qualified. Any officer may be removed from
office at any time with or without cause by the
vote of a majority of the whole Board of
Directors.
Section 3. Powers and Duties. The
officers of the Corporation shall have such
powers and duties as generally pertain to their
respective offices, as well as such powers and
duties as may from time to time be conferred by
the Board of Directors or the Executive
Committee.
ARTICLE VIII
CERTIFICATES OF STOCK
Each holder of stock of the Corporation
shall be entitled upon request to have a
certificate or certificates, in such form as
shall be approved by the Board, representing the
number of shares of stock of the Corporation
owned by such stockholder. The certificates
representing shares of stock shall be signed by
or in the name of the Corporation by the
President or a Vice-President or the Chairman of
the Board and by the Secretary or an Assistant
Secretary or the Treasurer and sealed with the
seal of the Corporation. Any or all of the
signatures or the seal on the certificate may be
by facsimile. In case any officer, transfer
agent or registrar who has signed or whose
facsimile signature has been placed upon a
certificate shall have ceased to be such officer,
transfer agent or registrar before such
certificate shall be issued, it may be issued by
the Corporation with the same effect as if such
officer, transfer agent or registrar were still
in office at the date of the issue.
The Board of Directors may make such
additional rules and regulations, not
inconsistent with these Bylaws, as it may deem
expedient concerning the issue, transfer and
registration of certificates for shares of stock
of the Corporation. It may appoint, or authorize
any officer or officers to appoint, one or more
transfer agents or one or more transfer clerks
and one or more registrars and may require all
certificates for shares of stock to bear the
signature or signatures of any of them.
ARTICLE IX
LOST, DESTROYED OR MUTILATED CERTIFICATES
The holder of any certificates
representing shares of stock of the Corporation
shall immediately notify the Corporation of any
loss, destruction or mutilation of such
certificate, and the Corporation may issue a new
certificate of stock in the place of any
certificate theretofore issued by it which the
owner thereof shall allege to have been lost or
destroyed or which shall have been mutilated, and
the Board of Directors may, in its discretion,
require such owner or such owner's legal
representatives to give to the Corporation a bond
in such sum, limited or unlimited, and in such
form and with such surety or sureties, as the
Board in its absolute discretion shall determine,
to indemnify the Corporation against any claim
that may be made against it on account of the
alleged loss or destruction of any such
certificate, or issuance of a new certificate.
Anything herein to the contrary notwithstanding,
the Board, in its absolute discretion, may refuse
to issue any such new certificate, except
pursuant to legal proceedings under the laws of
the State of Maryland.
ARTICLE X
STOCK LEDGER AND TRANSFER OF STOCK
The Corporation shall maintain at the
offices of its Transfer Agent an original stock
ledger containing the names and addresses of all
stockholders and the number of shares of each
class held by each stockholder. Such stock
ledger may be in written form or any other form
capable of being converted into written form
within a reasonable time for visual inspection.
The Corporation shall be entitled to
recognize the exclusive right of a person
registered on its books as the owner of shares
entitled to receive dividends and to vote as such
owner, and shall not be bound to recognize any
equitable or other claim to or interest in such
shares on the part of any other person, whether
or not it shall have received express or other
notice thereof, except as otherwise provided by
the laws of Maryland.
Transfers of shares of the Corporation
shall be made on the stock records of the
Corporation only by the registered holder
thereof, or by his attorney thereunto authorized
by power of attorney duly executed and filed with
the Secretary or with a transfer agent or
transfer clerk, and on surrender of the
certificate or certificates, if issued, for such
shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of
all taxes thereon.
ARTICLE XI
RECORD DATE
The Board of Directors may fix, in
advance, a date as the record date for the
purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive
payment of any dividend or the allotment of any
rights, or in order to make a determination of
stockholders for any other purpose. Such date in
any case shall be not more than 90 days, and in
case of a meeting of stockholders not less than
10 days, prior to the date on which the
particular action requiring such determination of
stockholders is to be taken.
ARTICLE XII
EXECUTION OF INSTRUMENTS
Checks, drafts, orders for payment of
money, notes and other evidences of indebtedness,
and other instruments shall be signed by the
Chairman or or such other officers as the Board
of Directors by resolution shall from time to
time designate.
ARTICLE XIII
FISCAL YEAR
The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
ARTICLE XIV
SEAL
The corporate seal shall have inscribed
thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal"
and "Maryland." The seal may be used by causing
it or a facsimile thereof to be impressed or
affixed or in any other manner reproduced.
ARTICLE XV
AMENDMENTS
The Board of Directors shall have the
power at any regular meeting, or at any special
meeting if notice thereof be included in the
notice of such special meeting, to alter or
repeal any bylaw of the Corporation and to make
new bylaws.
The stockholders shall have the power at
any annual meeting, or at any special meeting if
notice thereof be included in the notice of such
special meeting, to alter or repeal any bylaw of
the Corporation and to make new bylaws.
INVESTMENT MANAGEMENT AGREEMENT
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND
INC.
______, 1995
Smith Barney Mutual Fund Management, Inc.
388 Greenwich Street
New York, NY 10013
Dear Sirs:
Smith Barney Institutional Cash
Management Fund Inc. (the "Fund"), a corporation
organized under the laws of the State of
Maryland, on behalf of the Cash Portfolio, (the
"Portfolio") confirms its agreement with Smith
Barney Mutual Funds Management Inc. (the
"Adviser"), as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by
investing and reinvesting in investments of
the kind and in accordance with the
investment objective, policies and
limitations specified in its Articles of
Incorporation, as amended from time to time
(the "Charter"), in the Prospectus (the
"Prospectus"); and (iii) Statement of
Additional Information (the "Statement")
filed with the Securities and Exchange
Commission (the "SEC") as part of the Fund's
Registration Statement on Form N-lA, as
amended from time to time, (the
"Registration Statement")and in such manner
and to such extent as may from time to time
be approved by the Board of Directors of the
Fund (the "Board"). Copies of the
Prospectus, the Statement and the Charter
have been or will be submitted to the
Adviser. The Fund agrees to provide copies
of all amendments to the Registration
Statement and the Charter to the Adviser on
an on-going basis. The Fund desires to
employ and hereby appoints the Adviser to
act as the investment manager to the Fund.
The Adviser accepts the appointment and
agrees to furnish the services for the
compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction and
approval of the Board, the Adviser will: (a)
manage the Portfolio's holdings in
accordance with the Portfolio's investment
objective and policies as stated in the
Charter and the Registration Statement; (b)
make investment decisions for the Portfolio;
(c) place purchase and sale orders for
portfolio transactions for the Portfolio;
and (d) employ professional portfolio
managers and securities analysts to provide
research services to the Portfolio. In
providing those services, the Adviser will
conduct a continual program of investment,
evaluation and, if appropriate, sale and
reinvestment of the Portfolio's assets.
*Security and Growth Series 2000 is a separate
series of Smith Barney Principal Return Fund;
Growth Opportunity Fund and Managed Growth Fund
are both separate series of Smith Barney
Investment Funds Inc.
3. Services as Administrator
Subject to the supervision and direction of
the Board, the Adviser will: (a) superve
all aspects of the Portfolio's operations
under the direction of the Board and the
Portfolio's officers; (b) supply the
Portfolio with office facilities (which may
be in Adviser's own offices), statistical
and research data, data processing services,
clerical, accounting and bookkeeping
services, including, but not limited to, the
calculation of the net asset value of
shares of the Portfolio, internal auditing
and legal services, internal executive and
administrative services, and stationery and
office supplies; and (c) prepare reports to
shareholders of the Portfolio, tax returns
and reports to and filings with the SEC and
state blue sky authorities. The Adviser is
hereby authorized to retain third parties
and to delegate some or all of its duties
and obligations under this paragraph 3 to
such persons provided that such persons
shall remain under the general supervision
of the Adviser.
4. Compensation
In consideration of the services rendered
pursuant to this Agreement, the Fund will
pay the Adviser on the first business day of
each month, a fee for the previous month at
an annual rate of 0.27% of of the
Portfolio's average daily net assets. The
fee for the period from the Effective Date
(defined below) of this Agreement to the end
of the month during which the Effecitive
Date occurs shall be
pro-rated according to the proportion that
such period bears to the full monthly
period. Upon any termination of this
Agreement before the end of any month, the
fee for such part of that month shall be pro-
rated according to the proportion that such
period bears to the full monthly period and
shall be payable to the Adviser, the value
of the Portfolio's net assets shall be
computed at the times and in the manner
specified in the Registration Statement.
5. Expenses
The Adviser will bear all expenses in
connection with the performance of its
services under this Agreement. The Fund
will bear certain other expenses to be
incurred in its operation, including: the
fees payable under this Agreement; taxes,
interest, brokerage fees commissions, if
any; fees of the Board members of the Fund
who are not officers, directors or employees
of Smith Barney Inc. or any of its
affiliates; SEC fees and state blue sky
qualification fees; charges of custodians
and transfer and dividend disbursing agents;
the Fund's and its Board members'
proportionate share of insurance premiums,
professional associations, dues and/or
assessments; outside auditing and legal
expenses; costs of maintaining the Fund's
existence; costs attributable to investor
services
including without limitation, telephone and
personnel expenses; costs of preparing and
printing prospectuses and statements of
additional information for regulatory
purposes and for distribution to existing
shareholders; costs of shareholders, reports
and meetings of the officers or Board and
any extraordinary expenses.
.
6. Brokerage
In selecting brokers or dealers to execute
transactions on behalf of the Fund, the
Adviser will seek the best overall terms
available. In assessing the best overall
terms available for any transaction, the
Adviser will consider factors it deems
relevant, including, but not limited to, the
breadth of the market in the security, the
price of the security, the financial
condition and execution capability of the
broker or dealer and the reasonableness of
the commission, if any, for the specific
transaction and on a continuing basis. In
selecting brokers or dealers to execute a
particular transaction, and in evaluating
the best overall terms available, the
Adviser is authorized to consider the
brokerage and research services (as those
terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended)
provided to the Fund and/or other accounts
over which the Adviser or its affiliates
exercise investment discretion.
7. Information Provided to the Fund
The Adviser will keep the Fund informed of
developments materially affecting the
Portfolio's, holdings, and will, on its own
initiative, furnish the Fund from time to
time with whatever information the Adviser
believes is appropriate for this purpose.
8. Standard of Care
The Adviser shall exercise its best judgment
in rendering the services listed in
paragraphs 2,3,6 and 7 above. The Adviser
shall not be liable for any error of
judgment or mistake of law or for any loss
suffered by the Fund in connection with the
matters to which this Agreement relates,
provided that nothing in this Agreement
shall be deemed to protect or purport to
protect the Adviser against any liability to
the Fund or to its shareholders to which the
Adviser would otherwise be subject by reason
of willful malfeasance, bad faith or gross
negligence on its part in the performance of
its duties or by reason of the Adviser's
reckless disregard of its obligations and
duties under this Agreement.
9. Services to Other Companies or Accounts
The Fund understands that SBMFM now acts,
will continue to act and may act in the
future as: investment adviser to fiduciary
and other managed accounts, as well as to
other investment companies; and acts as
administator to one or more other investment
companies, and the Fund has no objection to
SBMFM's so acting, provided that whenever
the Fund and one or more other investment
companies advised by SBMFM have available
funds for investment, investments suitable
and appropriate for each will be allocated
in accordance with a formula believed to be
equitable to each company. The Fund
recognizes that in some cases this procedure
may adversely affect the size of the
position obtainable for the Fund. In
addition, the Fund understands that the
persons employed by SBMFM to assist in the
performance of SBMFM's duties under this
Agreement will not devote their full time to
such service and nothing contained in this
Agreement shall be deemed to limit or
restrict the right of SBMFM or any affiliate
of SBMFM to engage in and devote time and
attention to other businesses or to render
services of whatever kind or nature.
l1. Term of Agreement
This Agreement shall become effective as of
the date the Fund commences its investment
operations and continue for an initial two-
year term and shall continue thereafter so
long as such continuance is specifically
approved at least annually by (i) the Board
or (ii) a vote of a "majority" (as defined
in the Investment Company Act of 1940, as
amended (the "1940 Act") of the Fund's
outstanding voting securities, provided that
in either event the continuance is also
approved by a majority of the Board who are
not "interested persons" (as defined in the
1940 Act) of any party to this Agreement, by
vote cast in person or by proxy at a meeting
called for the purpose of voting on such
approval. This Agreement is terminable,
without penalty, on 60 days' written notice,
by the Board or by vote of holders of a
majority of the Fund's shares, or upon 90
days' written notice, by SBMFM. This
Agreement will also terminate automatically
in the event of its assignment (as defined
in the 1940 Act).
12. Representation by the Fund
The Fund represents that a copy of the
Master Trust Agreement is on file with the
Secretary of the Commonwealth of
Massachusetts and with the City of Boston.
13. Indemnification
The Fund agrees to indemnify SBMFM and its
officers, directors, employees, affiliates,
controlling persons, agents (including
persons to whom responsibilities are
delegated hereunder) against any loss,
claim, expense or cost of any kind
(including reasonable attorney's fees)
resulting or arising in connection with this
Agreement, or from the performance or
failure to perform any act hereunder,
provided that no such indemnification shall
be available if the indemnitee violated the
standard of care in paragraph 8 above. This
indemnification shall be limited by the 1940
Act and relevant state law. Each indemnitee
shall be entitled to advance of its expenses
in accordance with the requirements of the
1940 Act and the rules, regulations and
interpretations thereof as in effect from
time to time.
14. Limitation of Liability
The Fund and SBMFM agree that the
obligations of the Fund under this Agreement
shall not be binding upon any of the Board
members, shareholders, nominees, officers,
employees or agents, whether past, present
or future, of the Fund individually, but are
binding only upon the assets and property of
the Fund, as provided in the Master Trust
Agreement. The execution and delivery of
this Agreement have been duly authorized by
the Fund and SBMFM, and signed by an
authorized officer of each, acting as such.
Neither the authorization by the Board
members of the Fund, nor the execution and
delivery by the officer of the Fund shall be
deemed to have been made by any of them
individually or to impose any liability on
any of them personally, but shall bind only
the assets and property of the Fund as
provided in the Master Trust Agreement.
If the foregoing is in accordance with your
understanding, kindly indicate your acceptance
hereof by signing and returning the enclosed copy
of this Agreement to us.
Very truly yours,
Smith Barney Inc.
By:
Title:
Accepted:
Smith Barney Mutual Fund Management, Inc.
By
DISTRIBUTION AGREEMENT
, 1995
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
This is to confirm that, in consideration of
the agreements hereinafter contained, the
undersigned, SMITH BARNEY INSTITUTIONAL CASH
MANAGEMENT FUND (the "Fund") a Corporation under
the laws of the State of Maryland has agreed that
Smith Barney Inc.("Smith Barney") shall be, for
the period of this Agreement, the distributor of
shares (the "Shares") of the Fund.
1. Services as Distributor
1.1 Smith Barney will act as agent for
the distribution of Shares covered by the
registration statement, prospectus and statement
of additional information then in effect under
the Securities Act of 1933, as amended (the "1933
Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act").
1.2 Smith Barney agrees to use its
best efforts to solicit orders for the sale of
Shares and will undertake such advertising and
promotion as it believes is reasonable in
connection with such solicitation.
1.3 All activities by Smith Barney as
distributor of the Shares shall comply with all
applicable laws, rules, and regulations,
including, without limitation, all rules and
regulations made or adopted by the Securities and
Exchange Commission (the "SEC") or by any
securities association registered under the
Securities Exchange Act of 1934.
1.4 Smith Barney will provide one or
more persons during normal business hours to
respond to telephone questions concerning the
Fund.
1.5 Smith Barney will transmit any
orders received by it for purchase or redemption
of Shares to The Shareholder Services Group, Inc.
("TSSG"), the Fund's transfer and dividend agent,
(a) cost of payments made to Smith
Barney Financial Consultants and other
employees of Smith Barney or other broker-
dealers that engage in the distribution of
the Fund's Shares;
(b) payments made to, and expenses of,
persons who provide support services in
connection with the distribution of the
Fund's Shares, including, but not limited
to, office space and equipment, telephone
facilities, answering routine inquiries
regarding the Fund, processing shareholder
transactions and providing any other
shareholder services;
(c) costs relating to the formulation
and implementation of marketing and
promotional activities, including, but not
limited to, direct mail promotions and
television, radio, newspaper, magazine and
other mass media advertising;
(d) costs of printing and distributing
prospectuses and reports of the Fund to
prospective shareholders of the Fund;
(e) costs involved in preparing,
printing and distributing sales literature
pertaining to the Fund; and
(f) costs involved in obtaining
whatever information, analyses and reports
with respect to marketing and promotional
activities that the Fund may, from time to
time, deem advisable;
except that distribution expenses shall not
include any expenditures in connection with
services which Smith Barney, any of its
affiliates, or any other person have agreed to
bear without reimbursement.
1.9 Smith Barney shall prepare and deliver
reports to the Treasurer of the Fund and to the
sub-investment advisor and/or administrator of
the Fund on a regular, at least quarterly, basis,
showing the distribution expenses incurred
pursuant to this Agreement and the Plan and the
purposes therefor, as well as any supplemental
reports as the Trustees, from time to time, may
reasonably request.
2. Duties of the Fund
2.1 The Fund agrees at its own expense
to execute any and all documents, to furnish any
and all information and to take any other actions
that may be reasonably necessary in connection
with the qualification of the Shares for sale in
those states that Smith Barney may designate.
2.2 The Fund shall furnish from time
to time for use in connection with the sale of
the Shares, such information reports with respect
to the Fund and its Shares as Smith Barney may
reasonably request, all of which shall be signed
by one or more of the Fund's duly authorized
officers; and the Fund warrants that the
statements contained in any such reports, when so
signed by the Fund's officers, shall be true and
correct. The Fund shall also furnish Smith
Barney upon request with (a) annual audits of the
Fund's books and accounts made by independent
certified public 1accountants regularly retained
by the Fund; (b) semi-annual unaudited financial
statements pertaining to the Fund; (c) quarterly
earnings statements prepared by the Fund; (d) a
monthly itemized list of the securities in the
Fund's portfolio; (e) monthly balance sheets as
soon as practicable after the end of each month;
and (f) from time to time such additional
information regarding the Fund's financial
condition as Smith Barney may reasonably request.
3. Representations and Warranties
The Fund represents to Smith Barney that all
registration statements, prospectuses and
statements of additional information filed by the
Fund with the SEC under the 1933 Act and the 1940
Act with respect to the Shares have been
carefully prepared in conformity with the
requirements of the 1933 Act, the 1940 Act and
the rules and regulations of the SEC thereunder.
As used in this Agreement, the terms
"registration statement", "prospectus" and
"statement of additional information" shall mean
any registration statement, prospectus and
statement of additional information filed by the
Fund with the SEC and any amendments and
supplements thereto which at any time shall have
been filed with the SEC. The Fund represents and
warrants to Smith Barney that any registration
statement, prospectus and statement of additional
information, when such registration statement
becomes effective, will include all statements
required to be contained therein in conformance
with the 1933 Act, the 1940 Act and the rules and
regulations of the SEC; that all statements of
fact contained in any registration statement,
prospectus or statement of additional information
will be true and correct when such registration
statement becomes effective; and that neither any
registration statement nor any prospectus or
statement of additional information when such
registration statement becomes effective will
include an untrue statement of a material fact or
omit to state a material fact required to be
stated therein or necessary to make the
statements therein not misleading to a purchaser
of the Fund's Shares. The Fund may, but shall
not be obligated to, propose from time to time
such amendment or amendments to any registration
statement and such supplement or supplements to
any prospectus or statement of additional
information as, in the light of future
developments, may, in the opinion of the Fund's
counsel, be necessary or advisable. If the Fund
shall not propose such amendment or amendments
and/or supplement or supplements within fifteen
days after receipt by the Fund of a written
request from Smith Barney to do so, Smith Barney
may, at its option, terminate this Agreement.
The Fund shall not file any amendment to any
registration statement or supplement to any
prospectus or statement of additional information
without giving Smith Barney reasonable notice
thereof in advance; provided, however, that
nothing contained in this Agreement shall in any
way limit the Fund's right to file at any time
such amendments to any registration statement
and/or supplements to any prospectus or statement
of additional information, of whatever character,
as the Fund may deem advisable, such right being
in all respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes Smith Barney
and dealers to use any prospectus or statement of
additional information furnished by the Fund from
time to time, in connection with the sale of the
Shares. The Fund agrees to indemnify, defend and
hold Smith Barney, its several officers and
directors, and any person who controls Smith
Barney within the meaning of Section 15 of the
1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses
(including the cost of investigating or defending
such claims, demands or liabilities and any such
counsel fees incurred in connection therewith)
which Smith Barney, its officers and directors,
or any such controlling person, may incur under
the 1933 Act or under common law or otherwise,
arising out of or based upon any untrue
statement, or alleged untrue statement, of a
material fact contained in any registration
statement, any prospectus or any statement of
additional information or arising out of or based
upon any omission, or alleged omission, to state
a material fact required to be stated in any
registration statement, any prospectus or any
statement of additional information or necessary
to make the statements in any thereof not
misleading; provided, however, that the Fund's
agreement to indemnify Smith Barney, its officers
or directors, and any such controlling person
shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any
statements or representations made by Smith
Barney or its representatives or agents other
than such statements and representations as are
contained in any prospectus or statement of
additional information and in such financial and
other statements as are furnished to Smith Barney
pursuant to paragraph 2.2 of this Agreement; and
further provided that the Fund's agreement to
indemnify Smith Barney and the Fund's
representations and warranties herein before set
forth in paragraph 3 of this Agreement shall not
be deemed to cover any liability to the Fund or
its shareholders to which Smith Barney would
otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of Smith
Barney's reckless disregard of its obligations
and duties under this Agreement. The Fund's
agreement to indemnify Smith Barney, its officers
and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon the
Fund's being notified of any action brought
against Smith Barney, its officers or directors,
or any such controlling person, such notification
to be given by letter or by telegram addressed to
the Fund at its principal office in New York, New
York and sent to the Fund by the person against
whom such action is brought, within ten days
after the summons or other first legal process
shall have been served. The failure so to notify
the Fund of any such action shall not relieve the
Fund from any liability that the Fund may have to
the person against whom such action is brought by
reason of any such untrue, or alleged untrue,
statement or omission, or alleged omission,
otherwise than on account of the Fund's indemnity
agreement contained in this paragraph 4.1. The
Fund will be entitled to assume the defense of
any suit brought to enforce any such claim,
demand or liability, but, in such case, such
defense shall be conducted by counsel of good
standing chosen by the Fund and approved by Smith
Barney. In the event the Fund elects to assume
the defense of any such suit and retains counsel
of good standing approved by Smith Barney, the
defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel
retained by any of them; but if the Fund does not
elect to assume the defense of any such suit, or
if Smith Barney does not approve of counsel
chosen by the Fund, the Fund will reimburse Smith
Barney, its officers and directors, or the
controlling person or persons named as defendant
or defendants in such suit, for the fees and
expenses of any counsel retained by Smith Barney
or them. The Fund's indemnification agreement
contained in this paragraph 4.1 and the Fund's
representations and warranties in this Agreement
shall remain operative and in full force and
effect regardless of any investigation made by or
on behalf of Smith Barney, its officers and
directors, or any controlling person, and shall
survive the delivery of any of the Fund's Shares.
This agreement of indemnity will inure
exclusively to Smith Barney's benefit, to the
benefit of its several officers and directors,
and their respective estates, and to the benefit
of the controlling persons and their successors.
The Fund agrees to notify Smith Barney promptly
of the commencement of any litigation or
proceedings against the Fund or any of its
officers or trustees in connection with the
issuance and sale of any of the Fund's Shares.
4.2 Smith Barney agrees to indemnify,
defend and hold the Fund, its several officers
and Directors, and any person who controls the
Fund within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and
all claims, demands, liabilities and expenses
(including the costs of investigating or
defending such claims, demands or liabilities and
any counsel fees incurred in connection
therewith) that the Fund, its officers or
Directors or any such controlling person may
incur under the 1933 Act, or under common law or
otherwise, but only to the extent that such
liability or expense incurred by the Fund, its
officers or Directors, or such controlling
person resulting from such claims or demands
shall arise out of or be based upon any untrue,
or alleged untrue, statement of a material fact
contained in information furnished in writing by
Smith Barney to the Fund and used in the answers
to any of the items of the registration statement
or in the corresponding statements made in the
prospectus or statement of additional
information, or shall arise out of or be based
upon any omission, or alleged omission, to state
a material fact in connection with such
information furnished in writing by Smith Barney
to the Fund and required to be stated in such
answers or necessary to make such information not
misleading. Smith Barney's agreement to
indemnify the Fund, its officers or Directors,
and any such controlling person, as aforesaid, is
expressly conditioned upon Smith Barney being
notified of any action brought against the Fund,
its officers or Directors, or any such
controlling person, such notification to be given
by letter or telegram addressed to Smith Barney
at its principal office in New York, New York and
sent to Smith Barney by the person against whom
such action is brought, within ten days after the
summons or other first legal process shall have
been served. Smith Barney shall have the right
to control the defense of such action, with
counsel of its own choosing, satisfactory to the
Fund, if such action is based solely upon such
alleged misstatement or omission on Smith
Barney's part, and in any other event the Fund,
its officers or Directors or such controlling
person shall each have the right to participate
in the defense or preparation of the defense of
any such action. The failure to so notify Smith
Barney of any such action shall not relieve Smith
Barney from any liability that Smith Barney may
have to the Fund, its officers or Directors, or
to such controlling person by reason of any such
untrue, or alleged untrue, statement or omission,
or alleged omission, otherwise than on account of
Smith Barney's indemnity agreement contained in
this paragraph 4.2. Smith Barney agrees to
notify the Fund promptly of the commencement of
any litigation or proceedings against Smith
Barney or any of its officers or directors in
connection with the issuance and sale of any of
the Fund's Shares.
4.3 In case any action shall be
brought against any indemnified party under
paragraph 4.1 or 4.2, and it shall notify the
indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to
participate in, and, to the extent that it shall
wish to do so, to assume the defense thereof with
counsel satisfactory to such indemnified party.
If the indemnifying party opts to assume the
defense of such action, the indemnifying party
will not be liable to the indemnified party for
any legal or other expenses subsequently incurred
by the indemnified party in connection with the
defense thereof other than (a) reasonable costs
of investigation or the furnishing of documents
or witnesses and (b) all reasonable fees and
expenses of separate counsel to such indemnified
party if (i) the indemnifying party and the
indemnified party shall have agreed to the
retention of such counsel or (ii) the indemnified
party shall have concluded reasonably that
representation of the indemnifying party and the
indemnified party by the same counsel would be
inappropriate due to actual or potential
differing interests between them in the conduct
of the defense of such action.
5. Effectiveness of Registration
None of the Fund's Shares shall be offered
by either Smith Barney or the Fund under any of
the provisions of this Agreement and no orders
for the purchase or sale of the Shares under this
Agreement shall be accepted by the Fund if and so
long as the effectiveness of the registration
statement then in effect or any necessary
amendments thereto shall be suspended under any
of the provision of the 1933 Act or if and so
long as a current prospectus as required by
Section 5(b) (2) of the 1933 Act is not on file
with the SEC; provided, that nothing contained in
this paragraph 5 shall in any way restrict or
have an application to or bearing upon the Fund's
obligation to repurchase its Shares from any
shareholder in accordance with the provisions of
the Fund's prospectus, statement of additional
information or Articles of Incorporation dated
March 27, 1995, as amended from time to time.
6. Notice to Smith Barney
The Fund agrees to advise Smith Barney
immediately in writing:
(a) of any request
by the SEC for
amendments to the
registration statement,
prospectus or statement
of additional
information then in
effect or for additional
information;
(b) In the event
of the issuance by the
SEC of any stop order
suspending the
effectiveness of the
registration statement,
prospectus or statement
of additional
information then in
effect or the initiation
of any proceeding for
that purpose;
(c) of the
happening of any event
that makes untrue any
statement or a material
fact made in the
registration statement,
prospectus or statement
of additional
information then in
effect or that requires
the making of a change
in such registration
statement, prospectus or
statement of additional
information in order to
make the statements
therein not misleading;
and
(d) of all actions
of the SEC with respect
to any amendment to any
registration statement,
prospectus or statement
of additional
information which may
from time to time be
filed with the SEC.
7. Term of the Agreement
This Agreement shall become effective as of
the April , 1995 and continues for successive
annual periods thereafter so long as such
continuance is specifically approved at least
annually by (a) the Fund's Board of Directors or
(b) by a vote of a majority (as defined in the
1940 Act) of the Fund's outstanding voting
securities, provided that in either event the
continuance is also approved by a majority of the
Directors of the Fund who are not interested
persons (as defined in the 1940 Act) of any party
to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such
approval. This Agreement is terminable, without
penalty, on 60 days' notice by the Fund's Board
of Directors, by vote of the holders of a
majority of the Fund's Shares, or on 90 days'
notice by SB. This Agreement will also terminate
automatically in the event of its assignment (as
defined in the 1940 Act).
8. Miscellaneous
The Fund recognizes that directors, officers
and employees of Smith Barney may from time to
time serve as directors, trustees, officers and
employees of corporations and business trusts
(including other investment companies) and that
such other corporations and trusts may include
the name "Smith Barney" as part of their name,
and that Smith Barney or its affiliates may enter
into distribution or other agreements with such
other corporations and trusts. If Smith Barney
ceases to act as the distributor of the Shares,
the Fund agrees that, at Smith Barney's request,
the Fund's license to use the word ""Smith Barney
" will terminate and that the Fund will take all
necessary action to change the name of the Fund
to a name not including the words "Smith Barney".
If the foregoing is in accordance with your
understanding, kindly indicate your acceptance
of this Agreement by signing and returning to us
the enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY
INSTITUTIONAL CASH MANAGEMENT FUND
INC
By: _____________________
Chairman of the Board
Accepted:
SMITH BARNEY INC.
By: __________________________
Authorized Officer
FORM OF CUSTODIAN SERVICES AGREEMENT
This Agreement is made as of , 1995
by and between SMITH BARNEY INSTITUTIONAL CASH
MANAGEMENT FUND, INC., a Maryland corporation
(the "Fund") and PNC BANK, NATIONAL ASSOCIATION,
a national banking association ("PNC Bank").
The Fund is registered as an open-end
investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"). The
Fund wishes to retain PNC Bank to provide
custodian services and PNC Bank wishes to furnish
such services, either directly or through an
affiliate or affiliates, as more fully described
herein. In consideration of the premises and
mutual covenants herein contained, the parties
agree as follows:
1. Definitions.
(a) "Authorized Person". The term
"Authorized Person" shall mean any officer of the
Fund and any other person, who is duly authorized
by the Fund's Governing Board, to give Oral and
Written Instructions on behalf of the Fund. Such
persons are listed in the Certificate attached
hereto as the Authorized Persons Appendix, as
such Appendix may be amended in writing by the
Fund's Governing Board from time to time.
(b) "Book-Entry System". The term
"Book-Entry System" means Federal Reserve
Treasury book-entry system for United States and
federal agency securities, its successor or
successors, and its nominee or nominees and any
book-entry system maintained by an exchange
registered with the SEC under the 1934 Act.
(c) "CFTC". The term "CFTC" shall
mean the Commodities Futures Trading Commission.
(d) "Governing Board". The term
"Governing Board" shall mean the Fund's Board of
Directors if the Fund is a corporation or the
Fund's Board of Trustees if the Fund is a trust,
or, where duly authorized, a competent committee
thereof.
(e) "Oral Instructions". The term
"Oral Instructions" shall mean oral instructions
received by PNC Bank from an Authorized Person or
from a person reasonably believed by PNC Bank to
be an Authorized Person.
(f) "SEC". The term "SEC" shall mean
the Securities and Exchange Commission.
(g) "Securities and Commodities Laws".
The term "Securities and Commodities Laws" shall
mean the "1933 Act" which shall mean the
Securities Act of 1933, the "1934 Act" which
shall mean the Securities Exchange Act of 1934,
the 1940 Act, and the "CEA" which shall mean the
Commodities Exchange Act, as amended.
(h) "Shares". The term "Shares" shall
mean the shares of stock of any series or class
of the Fund, or, where appropriate, units of
beneficial interest in a trust where the Fund is
organized as a Trust.
(i) "Property". The term "Property"
shall mean:
(i) any and all
securities and other
investment items which the
Fund may from time to time
deposit, or cause to be
deposited, with PNC Bank or
which PNC Bank may from time
to time hold for the Fund;
(ii) all income in
respect of any of such
securities or other
investment items;
(iii) all proceeds
of the sale of any of such
securities or investment
items; and
(iv) all proceeds
of the sale of securities
issued by the Fund, which
are received by PNC Bank from
time to time, from or on
behalf of the Fund.
(j) "Written Instructions". The term
"Written Instructions" shall mean written
instructions signed by one Authorized Person and
received by PNC Bank. The instructions may be
delivered by hand, mail, tested telegram, cable,
telex or facsimile sending device.
2. Appointment. The Fund hereby appoints
PNC Bank to provide custodian services to the
Fund, and PNC Bank accepts such appointment and
agrees to furnish such services.
3. Delivery of Documents. The Fund has
provided or, where applicable, will provide PNC
Bank with the following:
(a) certified or authenticated copies
of the resolutions of the Fund's Governing Board,
approving the appointment of PNC Bank or its
affiliates to provide services;
(b) a copy of the Fund's most recent
effective registration statement;
(c) a copy of the Fund's advisory
agreement or agreements;
(d) a copy of the Fund's distribution
agreement or agreements;
(e) a copy of the Fund's
administration agreements if PNC Bank is not
providing the Fund with such services;
(f) copies of any shareholder servicing
agreements made in respect of the Fund; and
(g) certified or authenticated copies
of any and all amendments or supplements to the
foregoing.
4. Compliance with Government Rules and
Regulations. PNC Bank undertakes to comply with
all applicable requirements of the Securities and
Commodities Laws and any laws, rules and
regulations of governmental authorities having
jurisdiction with respect to all duties to be
performed by PNC Bank hereunder. Except as
specifically set forth herein, PNC Bank assumes
no responsibility for such compliance by the
Fund.
5. Instructions. Unless otherwise provided
in this Agreement, PNC Bank shall act only upon
Oral and Written Instructions. PNC Bank shall be
entitled to rely upon any Oral and Written
Instructions it receives from an Authorized
Person (or from a person reasonably believed by
PNC Bank to be an Authorized Person) pursuant to
this Agreement. PNC Bank may assume that any
Oral or Written Instructions received hereunder
are not in any way inconsistent with the
provisions of organizational documents or this
Agreement or of any vote, resolution or
proceeding of the Fund's Governing Board or of
the Fund's shareholders.
The Fund agrees to forward to PNC Bank
Written Instructions confirming Oral Instructions
so that PNC Bank receives the Written
Instructions by the close of business on the same
day that such Oral Instructions are received.
The fact that such confirming Written
Instructions are not received by PNC Bank shall
in no way invalidate the transactions or
enforceability of the transactions authorized by
the Oral Instructions.
The Fund further agrees that PNC Bank shall
incur no liability to the Fund in acting upon
Oral or Written Instructions provided such
instructions reasonably appear to have been
received from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PNC Bank
is in doubt as to any action it should or should
not take, PNC Bank may request directions or
advice, including Oral or Written Instructions,
from the Fund.
(b) Advice of Counsel. If PNC Bank
shall be in doubt as to any questions of law
pertaining to any action it should or should not
take, PNC Bank may request advice at its own cost
from such counsel of its own choosing (who may be
counsel for the Fund, the Fund's advisor or PNC
Bank, at the option of PNC Bank).
(c) Conflicting Advice. In the event
of a conflict between directions, advice or Oral
or Written Instructions PNC Bank receives from
the Fund, and the advice it receives from
counsel, PNC Bank shall be entitled to rely upon
and follow the advice of counsel.
(d) Protection of PNC Bank. PNC Bank
shall be protected in any action it takes or does
not take in reliance upon directions, advice or
Oral or Written Instructions it receives from the
Fund or from counsel and which PNC Bank believes,
in good faith, to be consistent with those
directions, advice or Oral or Written
Instructions.
Nothing in this paragraph shall be construed
so as to impose an obligation upon PNC Bank (i)
to seek such directions, advice or Oral or
Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral
or Written Instructions unless, under the terms
of other provisions of this Agreement, the same
is a condition of PNC Bank's properly taking or
not taking such action.
7. Records. The books and records
pertaining to the Fund which are in the
possession of PNC Bank, shall be the property of
the Fund. Such books and records shall be
prepared and maintained as required by the 1940
Act and other applicable securities laws, rules
and regulations. The Fund, or the Fund's
Authorized Persons, shall have access to such
books and records at all time during PNC Bank's
normal business hours. Upon the reasonable
request of the Fund, copies of any such books and
records shall be provided by PNC Bank to the Fund
or to an Authorized Person of the Fund, at the
Fund's expense.
8. Confidentiality. PNC Bank agrees to
keep confidential all records of the Fund and
information relative to the Fund and its
shareholders (past, present and potential),
unless the release of such records or information
is otherwise consented to, in writing, by the
Fund. The Fund agrees that such consent shall
not be unreasonably withheld and may not be
withheld where PNC Bank may be exposed to civil
or criminal contempt proceedings or when required
to divulge. The Fund further agrees that, should
PNC Bank be required to provide such information
or records to duly constituted authorities (who
may institute civil or criminal contempt
proceedings for failure to comply), PNC Bank
shall not be required to seek the Fund's consent
prior to disclosing such information.
9. Cooperation with Accountants. PNC Bank
shall cooperate with the Fund's independent
public accountants and shall take all reasonable
action in the performance of its obligations
under this Agreement to ensure that the necessary
information is made available to such accountants
for the expression of their opinion, as required
by the Fund.
10. Disaster Recovery. PNC Bank shall
enter into and shall maintain in effect with
appropriate parties one or more agreements making
reasonable provision for emergency use of
electronic data processing equipment to the
extent appropriate equipment is available. In
the event of equipment failures, PNC Bank shall,
at no additional expense to the Fund, take
reasonable steps to minimize service
interruptions but shall have no liability with
respect thereto.
11. Compensation. As compensation for
custody services rendered by PNC Bank during the
term of this Agreement, the Fund will pay to PNC
Bank a fee or fees as may be agreed to in writing
from time to time by the Fund and PNC Bank.
12. Indemnification. The Fund agrees to
indemnify and hold harmless PNC Bank and its
nominees from all taxes, charges, expenses,
assessment, claims and liabilities (including,
without limitation, liabilities arising under the
Securities and Commodities Laws and any state and
foreign securities and blue sky laws, and
amendments thereto, and expenses, including
(without limitation) attorneys' fees and
disbursements, arising directly or indirectly
from any action which PNC Bank takes or does not
take (i) at the request or on the direction of or
in reliance on the advice of the Fund or (ii)
upon Oral or Written Instructions. Neither PNC
Bank, nor any of its nominees, shall be
indemnified against any liability to the Fund or
to its shareholders (or any expenses incident to
such liability) arising out of PNC Bank's own
willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations
under this Agreement.
13. Responsibility of PNC Bank. PNC Bank
shall be under no duty to take any action on
behalf of the Fund except as specifically set
forth herein or as may be specifically agreed to
by PNC Bank, in writing. PNC Bank shall be
obligated to exercise care and diligence in the
performance of its duties hereunder, to act in
good faith and to use its best effort, within
reasonable limits, in performing services
provided for under this Agreement. PNC Bank
shall be responsible for its own negligent
failure to perform its duties under this
Agreement. Notwithstanding the foregoing, PNC
Bank shall not be responsible for losses beyond
its control, provided that PNC Bank has acted in
accordance with the standard of care set forth
above; and provided further that PNC Bank shall
only be responsible for that portion of losses or
damages suffered by the Fund that are
attributable to the negligence of PNC Bank.
Without limiting the generality of the
foregoing or of any other provision of this
Agreement, PNC Bank, in connection with its
duties under this Agreement, shall not be under
any duty or obligation to inquire into and shall
not be liable for (a) the validity or invalidity
or authority or lack thereof of any Oral or
Written Instruction, notice or other instrument
which conforms to the applicable requirements of
this Agreement, and which PNC Bank reasonably
believes to be genuine; or (b) delays or errors
or loss of data occurring by reason of
circumstances beyond PNC Bank's control,
including acts of civil or military authority,
national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection,
war, riots or failure of the mails,
transportation, communication or power supply.
Notwithstanding anything in this Agreement
to the contrary, PNC Bank shall have no liability
to the Fund for any consequential, special or
indirect losses or damages which the Fund may
incur or suffer by or as a consequence of PNC
Bank's performance of the services provided
hereunder, whether or not the likelihood of such
losses or damages was known by PNC Bank.
14. Description of Services.
(a) Delivery of the Property. The
Fund will deliver or arrange for delivery to PNC
Bank, all the property owned by the Fund,
including cash received as a result of the
distribution of its Shares, during the period
that is set forth in this Agreement. PNC Bank
will not be responsible for such property until
actual receipt.
(b) Receipt and Disbursement of Money.
PNC Bank, acting upon Written Instructions, shall
open and maintain separate account(s) in the
Fund's name using all cash received from or for
the account of the Fund, subject to the terms of
this Agreement. In addition, upon Written
Instructions, PNC Bank shall open separate
custodial accounts for each separate series,
class or portfolio of the Fund and shall hold in
such account(s) all cash received from or for the
accounts of the Fund specifically designated to
each separate series, class or portfolio. PNC
Bank shall make cash payments from or for the
account of the Fund only for:
(i) purchases of
securities in the name of the
Fund or PNC Bank or PNC
Bank's nominee as provided in
sub-paragraph j and for which
PNC Bank has received a copy
of the broker's or dealer's
confirmation or payee's
invoice, as appropriate;
(ii) purchase or
redemption of Shares of the
Fund delivered to PNC Bank;
(iii) payment of,
subject to Written
Instructions, interest,
taxes, administration,
accounting, distribution,
advisory, management fees or
similar expenses which are to
be borne by the Fund;
(iv) payment to,
subject to receipt of Written
Instructions, the Fund's
transfer agent, as agent for
the shareholders, an amount
equal to the amount of
dividends and distributions
stated in the Written
Instructions to be
distributed in cash by the
transfer agent to
shareholders, or, in lieu of
paying the Fund's transfer
agent, PNC Bank may arrange
for the direct payment of
cash dividends and
distributions to shareholders
in accordance with procedures
mutually agreed upon from
time to time by and among the
Fund, PNC Bank and the
Fund's transfer agent;
(v) payments, upon
receipt of Written
Instructions, in connection
with the conversion, exchange
or surrender of securities
owned or subscribed to by the
Fund and held by or delivered
to PNC Bank;
(vi) payments of
the amounts of dividends
received with respect to
securities sold short;
payments made to a
sub-custodian pursuant to
provisions in sub-paragraph c
of this Paragraph; and
(viii) payments, upon
Written Instructions made for
other proper Fund purposes.
PNC Bank is hereby authorized
to endorse and collect all
checks, drafts or other
orders for the payment of
money received as custodian
for the account of the Fund.
(c) Receipt of Securities.
(i) PNC Bank shall
hold all securities received
by it for the account of the
Fund in a separate account
that physically segregates
such securities from those of
any other persons, firms or
corporations, except for
securities held in a Book-
Entry System. All such
securities shall be held or
disposed of only upon
Written Instructions of the
Fund pursuant to the terms
of this Agreement. PNC Bank
shall have no power or
authority to assign,
hypothecate, pledge or
otherwise dispose of any such
securities or investment,
except upon the express terms
of this Agreement and upon
Written Instructions,
accompanied by a certified
resolution of the Fund's
Governing Board, authorizing
the transaction. In no case
may any member of the Fund's
Governing Board, or any
officer, employee or agent of
the Fund withdraw any
securities. At PNC Bank's
own expense and for its own
convenience, PNC Bank may
enter into sub-custodian
agreements with other banks
or trust companies to perform
duties described in this
sub-paragraph c. Such bank
or trust company shall have
an aggregate capital, surplus
and undivided profits,
according to its last
published report, of at least
one million dollars
($1,000,000), if it is a
subsidiary or affiliate of
PNC Bank, or at least twenty
million dollars ($20,000,000)
if such bank or trust company
is not a subsidiary or
affiliate of PNC Bank. In
addition, such bank or trust
company must agree to comply
with the relevant provisions
of the 1940 Act and other
applicable rules and
regulations. PNC Bank shall
remain responsible for the
performance of all of its
duties as described in this
Agreement and shall hold the
Fund harmless from PNC Bank's
own (or any sub-custodian
chosen by PNC Bank under the
terms of this sub-paragraph
c) acts or omissions, under
the standards of care
provided for herein.
(d) Transactions Requiring
Instructions. Upon receipt of Oral or Written
Instructions and not otherwise, PNC Bank,
directly or through the use of the Book-Entry
System, shall:
(i) deliver any
securities held for the Fund
against the receipt of
payment for the sale of such
securities;
(ii) execute and
deliver to such persons as
may be designated in such
Oral or Written Instructions,
proxies, consents,
authorizations, and any other
instruments whereby the
authority of the Fund as
owner of any securities may
be exercised;
(iii) deliver any
securities to the issuer
thereof, or its agent, when
such securities are called,
redeemed, retired or
otherwise become payable;
provided that, in any such
case, the cash or other
consideration is to be
delivered to PNC Bank;
(iv) deliver any
securities held for the Fund
against receipt of other
securities or cash issued or
paid in connection with the
liquidation, reorganization,
refinancing, tender offer,
merger, consolidation or
recapitalization of any
corporation, or the exercise
of any conversion privilege;
(v) deliver any
securities held for the Fund
to any protective committee,
reorganization committee or
other person in connection
with the reorganization,
refinancing, merger,
consolidation,
recapitalization or sale of
assets of any corporation,
and receive and hold under
the terms of this Agreement
such certificates of deposit,
interim receipts or other
instruments or documents as
may be issued to it to
evidence such delivery;
(vi) make such
transfer or exchanges of the
assets of the Fund and take
such other steps as shall be
stated in said Oral or
Written Instructions to be
for the purpose of
effectuating a duly
authorized plan of
liquidation, reorganization,
merger, consolidation or
recapitalization of the Fund;
(vii) release
securities belonging to the
Fund to any bank or trust
company for the purpose of a
pledge or hypothecation to
secure any loan incurred by
the Fund; provided, however,
that securities shall be
released only upon payment to
PNC Bank of the monies
borrowed, except that in
cases where additional
collateral is required to
secure a borrowing already
made subject to proper prior
authorization, further
securities may be released
for that purpose; and repay
such loan upon redelivery to
it of the securities pledged
or hypothecated therefor and
upon surrender of the note or
notes evidencing the loan;
(viii) release and
deliver securities owned by
the Fund in connection with
any repurchase agreement
entered into on behalf of the
Fund, but only on receipt of
payment therefor; and pay out
moneys of the Fund in
connection with such
repurchase agreements, but
only upon the delivery of the
securities;
(ix) release and
deliver or exchange
securities owned by the Fund
in connection with any
conversion of such
securities, pursuant to their
terms, into other securities;
(x) release and
deliver securities owned by
the Fund for the purpose of
redeeming in kind shares of
the Fund upon delivery
thereof to PNC Bank; and
(xi) release and
deliver or exchange
securities owned by the Fund
for other corporate purposes.
PNC Bank must also receive a
certified resolution
describing the nature of the
corporate purpose and the
name and address of the
person(s) to whom delivery
shall be made when such
action is pursuant to
sub-paragraph d above.
(e) Use of Book-Entry System. The Fund
shall deliver to PNC Bank certified resolutions
of the Fund's Governing Board approving,
authorizing and instructing PNC Bank on a
continuous and on-going basis, to deposit in the
Book-Entry System all securities belonging to the
Fund eligible for deposit therein and to utilize
the Book-Entry System to the extent possible in
connection with settlements of purchases and
sales of securities by the Fund, and deliveries
and returns of securities loaned, subject to
repurchase agreements or used as collateral in
connection with borrowings. PNC Bank shall
continue to perform such duties until it receives
Written or Oral Instructions authorizing contrary
actions(s).
To administer the Book-Entry System
properly, the following provisions shall apply:
(i) With respect
to securities of the Fund
which are maintained in the
Book-Entry system,
established pursuant to this
sub-paragraph e hereof, the
records of PNC Bank shall
identify by Book-Entry or
otherwise those securities
belonging to the Fund. PNC
Bank shall furnish the Fund a
detailed statement of the
Property held for the Fund
under this Agreement at least
monthly and from time to time
and upon written request.
(ii) Securities and
any cash of the Fund
deposited in the Book-Entry
System will at all times be
segregated from any assets
and cash controlled by PNC
Bank in other than a
fiduciary or custodian
capacity but may be
commingled with other assets
held in such capacities. PNC
Bank and its sub-custodian,
if any, will pay out money
only upon receipt of
securities and will deliver
securities only upon the
receipt of money.
(iii) All books and
records maintained by PNC
Bank which relate to the
Fund's participation in the
Book-Entry System will at all
times during PNC Bank's
regular business hours be
open to the inspection of the
Fund's duly authorized
employees or agents, and the
Fund will be furnished with
all information in respect of
the services rendered to it
as it may require.
(iv) PNC Bank will
provide the Fund with copies
of any report obtained by PNC
Bank on the system of
internal accounting control
of the Book-Entry System
promptly after receipt of
such a report by PNC Bank.
PNC Bank will also provide
the Fund with such reports on
its own system of internal
control as the Fund may
reasonably request from time
to time.
(f) Registration of Securities. All
Securities held for the Fund which are issued or
issuable only in bearer form, except such
securities held in the Book-Entry System, shall
be held by PNC Bank in bearer form; all other
securities held for the Fund may be registered in
the name of the Fund; PNC Bank; the Book-Entry
System; a sub-custodian; or any duly appointed
nominee(s) of the Fund, PNC Bank, Book-Entry
system or sub-custodian. The Fund reserves the
right to instruct PNC Bank as to the method of
registration and safekeeping of the securities of
the Fund. The Fund agrees to furnish to PNC Bank
appropriate instruments to enable PNC Bank to
hold or deliver in proper form for transfer, or
to register its registered nominee or in the name
of the Book-Entry System, any securities which it
may hold for the account of the Fund and which
may from time to time be registered in the name
of the Fund. PNC Bank shall hold all such
securities which are not held in the Book-Entry
System in a separate account for the Fund in the
name of the Fund physically segregated at all
times from those of any other person or persons.
(g) Voting and Other Action. Neither
PNC Bank nor its nominee shall vote any of the
securities held pursuant to this Agreement by or
for the account of the Fund, except in accordance
with Written Instructions. PNC Bank, directly or
through the use of the Book-Entry System, shall
execute in blank and promptly deliver all notice,
proxies, and proxy soliciting materials to the
registered holder of such securities. If the
registered holder is not the Fund then Written or
Oral Instructions must designate the person(s)
who owns such securities.
(h) Transactions Not Requiring
Instructions. In the absence of contrary Written
Instructions, PNC Bank is authorized to take the
following actions:
(i) Collection of
Income and Other Payments.
(A)
collect and receive for
the account of the Fund,
all income, dividends,
distributions, coupons,
option premiums, other
payments and similar
items, included or to be
included in the
Property, and, in
addition, promptly
advise the Fund of such
receipt and credit such
income, as collected, to
the Fund's custodian
account;
(B)
endorse and deposit for
collection, in the name
of the Fund, checks,
drafts, or other orders
for the payment of
money;
(C)
receive and hold for the
account of the Fund all
securities received as a
distribution on the
Fund's portfolio
securities as a result
of a stock dividend,
share split-up or
reorganization,
recapitalization,
readjustment or other
rearrangement or
distribution of rights
or similar securities
issued with respect to
any portfolio securities
belonging to the Fund
held by PNC Bank
hereunder;
(D)
present for payment and
collect the amount
payable upon all
securities which may
mature or be called,
redeemed, or retired, or
otherwise become payable
on the date such
securities become
payable; and
(E) take
any action which may be
necessary and proper in
connection with the
collection and receipt
of such income and other
payments and the
endorsement for
collection of checks,
drafts, and other
negotiable instruments.
(ii) Miscellaneous Transactions.
(A) PNC
Bank is authorized to
deliver or cause to be
delivered Property
against payment or other
consideration or written
receipt therefor in the
following cases:
(1) for
examination by a
broker or dealer
selling for the
account of the Fund
in accordance with
street delivery
custom;
(2) for the
exchange of interim
receipts or
temporary
securities for
definitive
securities; and
(3) for transfer
of securities into
the name of the
Fund or PNC Bank or
nominee of either,
or for exchange of
securities for a
different number of
bonds,certificates,
or other evidence,
representing the
same aggregate face
amount or number of
units bearing the
same interest rate,
maturity date and
call provisions, if
any; provided that,
in any such case,
the new securities
are to be delivered
to PNC Bank.
(B)
Unless and until PNC
Bank receives Oral or
Written Instructions to
the contrary, PNC Bank
shall:
(1) pay all income
items held by it
which call for
payment upon
presentation and
hold the cash
received by it upon
such payment for
the account of the
Fund;
(2) collect
interest and cash
dividends received,
with notice to the
Fund, to the Fund's
account;
(3) hold for the
account of the Fund
all stock
dividends, rights
and similar
securities issued
with respect to any
securities held by
PNC Bank; and
(4) execute as
agent on behalf of
the Fund all
necessary ownership
certificates
required by the
Internal Revenue
Code or the Income
Tax Regulations of
the United States
Treasury Department
or under the laws
of any State now or
hereafter in
effect, inserting
the Fund's name, on
such certificate as
the owner of the
securities covered
thereby, to the
extent it may
lawfully do so.
(i) Segregated Accounts.
(i) PNC Bank shall
upon receipt of Written or
Oral Instructions establish
and maintain segregated
account(s) on its records for
and on behalf of the Fund.
Such account(s) may be used
to transfer cash and
securities, including
securities in the Book-Entry
System:
(A) for
the purposes of
compliance by the Fund
with the procedures
required by a securities
or option exchange,
providing such
procedures comply with
the 1940 Act and any
releases of the SEC
relating to the
maintenance of
segregated accounts by
registered investment
companies; and
(B) Upon
receipt of Written
Instructions, for other
proper corporate
purposes.
(ii) PNC Bank may
enter into separate custodial
agreements with various
futures commission merchants
("FCMs") that the Fund uses
("FCM Agreement"). Pursuant
to an FCM Agreement, the
Fund's margin deposits in any
transactions involving
futures contracts and options
on futures contracts will be
held by PNC Bank in accounts
("FCM Account") subject to
the disposition by the FCM
involved in such contracts
and in accordance with the
customer contract between FCM
and the Fund ("FCM
Contract"), SEC rules and the
rules of the applicable
commodities exchange. Such
FCM Agreements shall only be
entered into upon receipt of
Written Instructions from
the Fund which state that:
(A) a
customer agreement
between the FCM and the
Fund has been entered
into; and
(B) the
Fund is in compliance
with all the rules and
regulations of the CFTC.
Transfers of initial
margin shall be made
into a FCM Account only
upon Written
Instructions; transfers
of premium and variation
margin may be made into
a FCM Account pursuant
to Oral Instructions.
Transfers of funds from
a FCM Account to the FCM
for which PNC Bank holds
such an account may only
occur upon certification
by the FCM to PNC Bank
that pursuant to the FCM
Agreement and the FCM
Contract, all conditions
precedent to its right
to give PNC Bank such
instructions have been
satisfied.
(iii) PNC Bank shall
arrange for the establishment
of IRA custodian accounts for
such share- holders holding
Shares through IRA accounts,
in accordance with the Fund's
prospectuses, the Internal
Revenue Code (including
regulations), and with such
other procedures as are
mutually agreed upon from
time to time by and among the
Fund, PNC Bank and the Fund's
transfer agent.
(j) Purchases of Securities. PNC Bank
shall settle purchased securities upon receipt of
Oral or Written Instructions from the Fund or its
investment advisor(s) that specify:
(i) the name of
the issuer and the title of
the securities, including
CUSIP number if applicable;
(ii) the number of
shares or the principal
amount purchased and accrued
interest, if any;
(iii) the date of
purchase and settlement;
(iv) the purchase
price per unit;
(v) the total
amount payable upon such
purchase; and
(vi) the name of
the person from whom or the
broker through whom the
purchase was made. PNC Bank
shall upon receipt of
securities purchased by or
for the Fund pay out of the
moneys held for the account
of the Fund the total amount
payable to the person from
whom or the broker through
whom the purchase was made,
provided that the same
conforms to the total amount
payable as set forth in such
Oral or Written Instructions.
(k) Sales of Securities. PNC Bank
shall settle sold securities upon receipt of Oral
or Written Instructions from the Fund that
specify:
(i) the name of the
issuer and the title of the
security, including CUSIP
number if applicable;
(ii) the number of
shares or principal amount
sold, and accrued interest,
if any;
(iii) the date of
trade, settlement and sale;
(iv) the sale price
per unit;
(v) the total
amount payable to the Fund
upon such sale;
(vi) the name of
the broker through whom or
the person to whom the sale
was made; and
(vii) the location
to which the security must be
delivered and delivery
deadline, if any. PNC Bank
shall deliver the securities
upon receipt of the total
amount payable to the Fund
upon such sale, provided that
the total amount payable is
the same as was set forth in
the Oral or Written
Instructions. Subject to the
foregoing, PNC Bank may
accept payment in such form
as shall be satisfactory to
it, and may deliver
securities and arrange for
payment in accordance with
the customs prevailing among
dealers in securities.
(l) Reports.
(i) PNC Bank shall
furnish the Fund the
following reports:
(A) such
periodic and special
reports as the Fund may
reasonably request;
(B) a
monthly statement
summarizing all
transactions and entries
for the account of the
Fund, listing the
portfolio securities
belonging to the Fund
with the adjusted
average cost of each
issue and the market
value at the end of such
month, and stating the
cash account of the Fund
including disbursement;
(C) the
reports to be furnished
to the Fund pursuant to
Rule 17f-4; and
(D) such
other information as may
be agreed upon from time
to time between the Fund
and PNC Bank.
(ii) PNC Bank shall
transmit promptly to the Fund
any proxy statement, proxy
material, notice of a call or
conversion or similar
communication received by it
as custodian of the Property.
PNC Bank shall be under no
other obligation to inform
the Fund as to such actions
or events.
(m) Collections. All collections of
monies or other property, in respect, or which
are to become part of the Property (but not the
safekeeping thereof upon receipt by PNC Bank)
shall be at the sole risk of the Fund. If
payment is not received by PNC Bank within a
reasonable time after proper demands have been
made, PNC Bank shall notify the Fund in writing,
including copies of all demand letters, any
written responses, memoranda of all oral
responses and telephonic demands thereto, and
await instructions from the Fund. PNC Bank shall
not be obliged to take legal action for
collection unless and until reasonably
indemnified to its satisfaction. PNC Bank shall
also notify the Fund as soon as reasonably
practicable whenever income due on securities is
not collected in due course.
15. Duration and Termination. This
Agreement shall continue until terminated by the
Fund or by PNC Bank on sixty (60) days' prior
written notice to the other party. In the event
this Agreement is terminated (pending appointment
of a successor to PNC Bank or vote of the
shareholders of the Fund to dissolve or to
function without a custodian of its cash,
securities or other property), PNC Bank shall not
deliver cash, securities or other property of the
Fund to the Fund. It may deliver them to a bank
or trust company of PNC Bank's choice, having an
aggregate capital, surplus and undivided profits,
as shown by its last published report, of not
less than twenty million dollars ($20,000,000),
as a custodian for the Fund to be held under
terms similar to those of this Agreement. PNC
Bank shall not be required to make any such
delivery or payment until full payment shall have
been made to PNC Bank of all of its fees,
compensation, costs and expenses. PNC Bank shall
have a security interest in and shall have a
right of setoff against Property in the Fund's
possession as security for the payment of such
fees, compensation, costs and expenses.
16. Notices. All notices and other
communications, including Written Instructions,
shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notice
shall be addressed (a) if to PNC Bank at PNC
Bank's address: Airport Business Center,
International Court 2, 200 Stevens Drive, Lester,
Pennsylvania 19113, marked for the attention of
the Custodian Services Department (or its
successor) (b) if to the Fund, at the address of
the Fund; or (c) if to neither of the foregoing,
at such other address as shall have been notified
to the sender of any such notice or other
communication. If notice is sent by confirming
telegram, cable, telex or facsimile sending
device, it shall be deemed to have been given
immediately. If notice is sent by first-class
mail, it shall be deemed to have been given five
days after it has been mailed. If notice is sent
by messenger, it shall be deemed to have been
given on the day it is delivered.
17. Amendments. This Agreement, or any
term hereof, may be changed or waived only by a
written amendment, signed by the party against
whom enforcement of such change or waiver is
sought. 18. Delegation. PNC Bank may
assign its rights and delegate its duties
hereunder to any wholly-owned direct or indirect
subsidiary of PNC Bank, National Association or
PNC Bank Corp., provided that (i) PNC Bank gives
the Fund thirty (30) days prior written notice;
(ii) the delegate agrees with PNC Bank to comply
with all relevant provisions of the 1940 Act; and
(iii) PNC Bank and such delegate promptly provide
such information as the Fund may request, and
respond to such questions as the Fund may ask,
relative to the assignment, including (without
limitation) the capabilities of the delegate.
19. Counterparts. This Agreement may be
executed in two or more counterparts, each of
which shall be deemed an original, but all of
which together shall constitute one and the same
instrument. 20. Further Actions. Each party
agrees to perform such further acts and execute
such further documents as are necessary to
effectuate the purposes hereof.
21. Miscellaneous. This Agreement embodies
the entire agreement and understanding between
the parties and supersedes all prior agreements
and understandings relating to the subject matter
hereof, provided that the parties may embody in
one or more separate documents their agreement,
if any, with respect to delegated duties and/or
Oral Instructions. The captions in this
Agreement are included for convenience of
reference only and in no way define or delimit
any of the provisions hereof or otherwise affect
their construction or effect.
This Agreement shall be deemed to be a
contract made in Pennsylvania and governed by
Pennsylvania law, without regard to principles of
conflicts of law. If any provision of this
Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties
hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their
officers designated below on the day and year
first above written.
PNC BANK, NATIONAL
ASSOCIATION
By:
Title:
SMITH BARNEY
INSTITUTIONAL CASH MANAGEMENT FUND
INC.
By:
Title:
AUTHORIZED PERSONS APPENDIX
NAME (Type)
SIGNATURE
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of between
Smith Barney ,(The "Fund" ), a
corporation organized under the laws of
Washington and having its principal place of
business at
,and THE SHAREHOLDER SERVICES GROUP, INC.
(MA) (the "Transfer Agent"), a corporation
organized under the laws of Massachusetts and
having its principal
offices at One Exchange Place, 53 State Street,
Boston, Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual
covenants and promises hereinafter set forth,
the Fund and the Transfer Agent agree as
follows:
1. Definitions. Whenever used in this
Agreement, the following words and phrases,
unless the context otherwise requires, shall
have the following meanings:
(a) "Articles of Incorporation" shall
mean the Articles of Incorporation, Declaration
of Trust, Partnership Agreement or similar
organizational document as the case may be of
the Fund as the same may be amended from time to
time.
(b) "Authorized Person" shall be
deemed to include any person, whether or not
such person is an officer or employee of the
Fund, duly authorized to give Oral Instructions
or Written Instructions on behalf of the Fund as
indicated in a certificate furnished to the
Transfer Agent pursuant to Section 4(c) hereof
as may be received by the Transfer Agent from
time to time.
(c) "Board of Directors" shall mean
the Board of Directors, Board of Trustees or, if
the Fund is a limited partnership, the General
Partner(s) of the Fund, as the case may be.
(d) "Commission" shall mean the
Securities and Exchange Commission.
(e) "Custodian" refers to any
custodian or subcustodian of securities and
other property which the Fund may from time to
time deposit, or cause to be deposited or held
under the name or account of such a custodian
pursuant to a Custodian Agreement.
(f) "Fund" shall mean the entity
executing this Agreement, and if it is a series
fund, as such term is used in the 1940 Act, such
term shall mean each series of the Fund
hereafter created, except that appropriate
documentation with respect to each series must
be presented to the Transfer Agent before this
Agreement shall become effective with respect to
each such series.
(g) "1940 Act" shall mean the
Investment Company Act of 1940.
(h) "Oral Instructions" shall mean
instructions, other than Written Instructions,
actually received by the Transfer Agent from a
person reasonably believed by the Transfer Agent
to be an Authorized Person;
(i) "Prospectus" shall mean the most
recently dated Fund Prospectus and Statement of
Additional Information, including any
supplements thereto if any, which has become
effective under the Securities Act of 1933 and
the 1940 Act.
(j) "Shares" refers collectively to
such shares of capital stock, beneficial
interest or limited partnership interests, as
the case may be, of the Fund as may be issued
from time to time and, if the Fund is a closed-
end or a series fund, as such terms are used in
the 1940 Act any other classes or series of
capital stock, shares of beneficial interest or
limited partnership interests that may be issued
from time to time.
(k) "Shareholder" shall mean a holder
of shares of capital stock, beneficial interest
or any other class or series, and also refers to
partners of limited partnerships.
(l) "Written Instructions" shall mean
a written communication signed by a person
reasonably believed by the Transfer Agent to be
an Authorized Person and actually received by
the Transfer Agent. Written Instructions shall
include manually executed originals and
authorized electronic transmissions, including
telefacsimile of a manually executed original or
other process.
2. Appointment of the Transfer Agent. The
Fund hereby appoints and constitutes the
Transfer Agent as transfer agent, registrar and
dividend disbursing agent for Shares of the Fund
and as shareholder servicing agent for the Fund
and as plan agent under the Fund's Dividend
Reinvestment Plan. The Transfer Agent accepts
such appointments and agrees to perform the
duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause
the Transfer Agent to be compensated for the
performance of its obligations hereunder in
accordance with the fees set forth in the
written schedule of fees annexed hereto as
Schedule A and incorporated herein. The
Transfer Agent will transmit an invoice to the
Fund as soon as practicable after the end of
each calendar month which will be detailed in
accordance with Schedule A, and the Fund will
pay to the Transfer Agent the amount of such
invoice within thirty (30) days after the Fund's
receipt of the invoice.
In addition, the Fund agrees to
pay, and will be billed separately for,
reasonable out-of-pocket expenses incurred by
the Transfer Agent in the performance of its
duties hereunder. Out-of-pocket expenses shall
include, but shall not be limited to, the items
specified in the written schedule of out-of-
pocket charges annexed hereto as Schedule B and
incorporated herein. Unspecified out-of pocket
expenses shall be limited to those out-of-pocket
expenses reasonably incurred by the Transfer
Agent in the performance of its obligations
hereunder. Reimbursement by the Fund for
expenses incurred by the Transfer Agent in any
month shall be made as soon as practicable but
no later than fifteen (15) days after the
receipt of an itemized bill from the Transfer
Agent.
(b) Any compensation agreed to
hereunder may be adjusted from time to time by
attaching to Schedule A, a revised fee schedule
executed and dated by the parties hereto.
4. Documents. In connection with the
appointment of the Transfer Agent, the Fund
shall deliver or cause to be delivered to the
Transfer Agent the following documents on or
before the date this Agreement goes into effect,
but in any case within a reasonable period of
time for the Transfer Agent to prepare to
perform its duties hereunder:
(a) If applicable, specimens of
certificates for Shares of the Fund;
(b) All account application forms and
other documents relating to Shareholder accounts
or to any plan, program or service offered by
the Fund;
(c) A signature card bearing the
signatures of any Authorized Person who will
sign Written Instructions or is authorized to
give Oral Instructions to the Transfer Agent on
behalf of the Fund;
(d) A certified copy of the Fund's
Articles of Incorporation, as amended;
(e) A certified copy of the By-laws
of the Fund, as amended;
(f) A copy of the resolution of the
Board of Directors authorizing the execution and
delivery of this Agreement;
(g) A certified list of Shareholders
of the Fund with the name, address and taxpayer
identification number of each Shareholder, and
the number of Shares of the Fund held by each,
certificate numbers and denominations (if any
certificates have been issued), lists of any
accounts against which stop transfer orders have
been placed, together with the reasons
therefore, and the number of Shares redeemed by
the Fund; and
(h) An opinion of counsel for the
Fund with respect to the validity of the Shares
and the status of such Shares under the
Securities Act of 1933, as amended.
5. Further Documentation. The Fund
will also furnish the Transfer Agent with copies
of the following documents promptly after the
same shall become available:
(a) each resolution of the Board of
Directors authorizing the issuance of Shares;
(b) any registration statements filed
on behalf of the Fund and all pre-effective and
post-effective amendments thereto filed with the
Commission;
(c) a certified copies of each
resolution of the Board of Directors or other
authorization designating Authorized Persons;
and
(d) certified copies of each
resolution of the Board of Directors or other
authorization designating Authorized Persons;
and
(e) such other certificates,
documents or opinions as the Transfer Agent may
reasonably request in connection with the
performance of its duties hereunder.
6. Representations of the Fund. The Fund
represents to the Transfer Agent that all
outstanding Shares are validly issued, fully
paid and non-assessable. When Shares are
hereafter issued in accordance with the terms of
the Fund's Articles of Incorporation and its
Prospectus, such Shares shall be validly issued,
fully paid and non-assessable.
7. Distributions Payable in Shares. In
the event that the Board of Directors of the
Fund shall declare a distribution payable in
Shares, the Fund shall deliver or cause to be
delivered to the Transfer Agent written notice
of such declaration signed on behalf of the Fund
by an officer thereof, upon which the Transfer
Agent shall be entitled to rely for all
purposes, certifying (i) the identity of the
Shares involved, (ii) the number of Shares
involved, and (iii) that all appropriate action
has been taken.
8. Duties of the Transfer Agent. The
Transfer Agent shall be responsible for
administering and/or performing those functions
typically performed by a transfer agent; for
acting as service agent in connection with
dividend and distribution functions and as plan
agent under the Fund's Dividend Reinvestment
Plan; and for performing shareholder account and
administrative agent functions in connection
with the issuance, transfer and redemption or
repurchase (including coordination with the
Custodian) of Shares in accordance with the
terms of the Prospectus and applicable law. The
operating standards and procedures to be
followed shall be determined from time to time
by agreement between the Fund and the Transfer
Agent and shall initially be as described in
Schedule C attached hereto. In addition, the
Fund shall deliver to the Transfer Agent all
notices issued by the Fund with respect to the
Shares in accordance with and pursuant to the
Articles of Incorporation or By-laws of the Fund
or as required by law and shall perform such
other specific duties as are set forth in the
Articles of Incorporation including the giving
of notice of any special or annual meetings of
shareholders and any other notices required
thereby.
9. Record Keeping and Other Information.
(a) The Transfer Agent shall create
and maintain all records required of it pursuant
to its duties hereunder and as set forth in
Schedule C in accordance with all applicable
laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. All
records shall be available during regular
business hours for inspection and use by the
Fund. Where applicable, such records shall be
maintained by the Transfer Agent for the periods
and in the places required by Rule 31a-2 under
the 1940 Act.
(b) Upon reasonable notice by the
Fund, the Transfer Agent shall make available
during regular business hours such of its
facilities and premises employed in connection
with the performance of its duties under this
Agreement for reasonable visitation by the Fund,
or any person retained by the Fund as may be
necessary for the Fund to evaluate the quality
of the services performed by the Transfer Agent
pursuant hereto.
10. Other Duties. In addition to the
duties set forth in Schedule C, the Transfer
Agent shall perform such other duties and
functions, and shall be paid such amounts
therefor, as may from time to time be agreed
upon in writing between the Fund and the
Transfer Agent. The compensation for such other
duties and functions shall be reflected in a
written amendment to Schedule A or B and the
duties and functions shall be reflected in an
amendment to Schedule C, both dated and signed
by authorized persons of the parties hereto.
11. Reliance by Transfer Agent;
Instructions.
(a) The Transfer Agent will have no
liability when acting upon Written or Oral
Instructions reasonably believed to have been
executed or orally communicated by an Authorized
Person and will not be held to have any notice
of any change of authority of any person until
receipt of a Written Instruction thereof from
the Fund pursuant to Section 4(c). The Transfer
Agent will also have no liability when
processing Share certificates which it
reasonably believes to bear the proper manual or
facsimile signatures of the officers of the Fund
and the proper countersignature of the Transfer
Agent.
(b) At any time, the Transfer Agent
may apply to any Authorized Person of the Fund
for Written Instructions and may seek advice
from legal counsel for the Fund, or its own
legal counsel, with respect to any matter
arising in connection with this Agreement, and
it shall not be liable for any action taken or
not taken or suffered by it in good faith in
accordance with such Written Instructions or in
accordance with the opinion of counsel for the
Fund or, with the consent of the Fund, counsel
for the Transfer Agent. Written Instructions
requested by the Transfer Agent will be provided
by the Fund within a reasonable period of time.
In addition, the Transfer Agent, its officers,
agents or employees, shall accept Oral
Instructions or Written Instructions given to
them by any person representing or acting on
behalf of the Fund only if said representative
is an Authorized Person. The Fund agrees that
all Oral Instructions shall be followed within
one business day by confirming Written
Instructions, and that the Fund's failure to so
confirm shall not impair in any respect the
Transfer Agent's right to rely on Oral
Instructions. The Transfer Agent shall have no
duty or obligation to inquire into, nor shall
the Transfer Agent be responsible for, the
legality of any act done by it upon the request
or direction of a person reasonably believed by
the Transfer Agent to be an Authorized Person.
(c) Notwithstanding any of the
foregoing provisions of this Agreement, the
Transfer Agent shall be under no duty or
obligation to inquire into, and shall not be
liable for: (i) the legality of the issuance or
sale of any Shares or the sufficiency of the
amount to be received therefor; (ii) the
legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
(iii) the legality of the declaration of any
dividend by the Board of Directors, or the
legality of the
issuance of any Shares in payment of any
dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent
will not be liable or responsible for delays or
errors by Acts of God or by reason of
circumstances beyond its control, including acts
of civil or military authority, national
emergencies, labor difficulties, mechanical
breakdown, insurrection, war, riots, or failure
or unavailability of transportation,
communication or power supply, fire, flood or
other castrophe.
13. Duty of Care and Indemnification.
Each party hereto (the "Indemnifying Party")
will indemnify the other party (the "Indemnified
Party") against and hold it harmless from any
and all losses, claims, damages, liabilities or
expenses of any sort or kind (including
reasonable counsel fees and expenses) resulting
from any claim, demand, action or suit or other
proceeding (a "Claim") under this Agreement,
unless such Claim has resulted from a negligent
failure to act or omission to act or bad faith
of the Indemnified Party in the performance of
its duties hereunder. In addition, the Fund
will indemnify the Transfer Agent against and
hold it harmless from any Claim, damages,
liabilities or expenses (including reasonable
counsel fees) that is a result of: (i) any
action taken in accordance with Written or Oral
Instructions, or any other instructions, or
share certificates reasonably believed by the
Transfer Agent to be genuine and to be signed,
countersigned or executed, or orally
communicated by an Authorized Person; (ii) any
action taken in accordance with written or oral
advice reasonably believed by the Transfer Agent
to have been given by counsel for the Fund or
its own counsel; or (iii) any action taken as a
result of any error or omission in any record
(including but not limited to magnetic tapes,
computer printouts, hard copies and microfilm
copies) delivered, or caused to be delivered by
the Fund to the Transfer Agent in connection
with this Agreement.
In any case in which the Indemnifying Party
may be asked to indemnify or hold the
Indemnified Party harmless, the Indemnifying
Party shall be advised of all pertinent facts
concerning the situation in question. The
Indemnified Party will notify the Indemnifying
Party promptly after indentifying any situation
which it believes presents or appears likely to
present a claim for indemnification against the
Indemnifying Party although the failure to do so
shall not prevent recovery by the Indemnified
Party. The Indemnifying Party shall have the
option to defend the Indemnified Party against
any Claim which may be the subject of this
indemnification, and, in the event that the
Indemnifying Party so elects, such defense shall
be conducted by counsel chosen by the
Indemnifying Party and satisfactory to the
Indemnified Party, and thereupon the
Indemnifying Party shall take over complete
defense of the Claim and the Indemnified Party
shall sustain no further legal or other expenses
in respect of such Claim. The Indemnified Party
will not confess any claim or make any
compromise in any case in which the Indemnifying
Party will be asked to provide indemnification,
except with the Indemnifying Party's prior
written consent. The obligations of the parties
hereto under this Section shall survive the
termination of this Agreement.
14. Consequential Damages. In no event
and under no circumstances shall either party
under this Agreement be liable to the other
party for indirect loss of profits, reputation
or business or
any other special damages under any provision of
this Agreement or for any act or failure to act
hereunder.
15. Term and Termination.
(a) This Agreement shall be effective
on the date first written above and thereafter
shall continue until September 14, 1994, and
thereafter shall automatically continue for
successive annual periods ending on the
anniversary of the date first written above,
provided that it may be terminated by either
party upon written notice given at least 60 days
prior to termination.
(b) In the event a termination notice
is given by the Fund, it shall be accompanied by
a resolution of the Board of Directors,
certified by the Secretary of the Fund,
designating a successor transfer agent or
transfer agents. Upon such termination and at
the expense of the Fund, the Transfer Agent will
deliver to such successor a certified list of
Shareholders of the Fund (with names and
addresses), and all other relevant books,
records, correspondence and other Fund records
or data in the possession of the Transfer Agent,
and the Transfer Agent will cooperate with the
Fund and any successor transfer agent or agents
in the substitution process.
16. Confidentiality. Both parties
hereto agree that any non public information
obtained hereunder concerning the other party is
confidential and may not be disclosed to any
other person without the consent of the other
party, except as may be required by applicable
law or at the request of the Commission or other
governmental agency. The parties further agree
that a breach of this provision would
irreparably damage the other party and
accordingly agree that each of them is entitled,
without bond or other security, to an injunction
or injunctions to prevent breaches of this
provision.
17. Amendment. This Agreement may only
be amended or modified by a written instrument
executed by both parties.
18. Subcontracting. The Fund agrees
that the Transfer Agent may, in its discretion,
subcontract for certain of the services
described under this Agreement or the Schedules
hereto; provided that the appointment of any
such Transfer Agent shall not relieve the
Transfer Agent of its responsibilities
hereunder.
19. Miscellaneous.
(a) Notices. Any notice or other
instrument authorized or required by this
Agreement to be given in writing to the Fund or
the Transfer Agent, shall be sufficiently given
if addressed to that party and received by it at
its office set forth below or at such other
place as it may from time to time designate in
writing.
To the Fund:
Smith Barney Shearson Fundamental Value
Fund
Two World Trade Center
New York, New York 10048
Attention: Richard Roelofs
To the Transfer Agent:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to Transfer Agent Counsel.
(b) Successors. This Agreement shall
extend to and shall be binding upon the parties
hereto, and their respective successors and
assigns, provided, however, that this Agreement
shall not be assigned to any person other than a
person controlling, controlled by or under
common control with the assignor without the
written consent of the other party, which
consent shall not be unreasonably withheld.
(c) Governing Law. This Agreement
shall be governed exclusively by the laws of the
State of New York without reference to the
choice of law provisions thereof. Each party
hereto hereby (i) the Supreme Court of New York
sitting in New York County shall have exclusive
jurisdiction over any and all disputes arising
hereunder; (ii) consents to the personal
jurisdiction of such court over the parties
hereto, hereby waiving any defense of lack of
personal jurisdiction; and (iii) appoints the
person to whom notices hereunder are to be sent
as agent for service of process.
(d) Counterparts. This Agreement may
be executed in any number of counterparts, each
of which shall be deemed to be an original; but
such counterparts shall, together, constitute
only one instrument.
(e) Captions. The captions of this
Agreement are included for convenience of
reference only and in no way define or delimit
any of provisions hereof or otherwise affect
their construction or effect.
(f) Use of Transfer Agent's Name. The
Fund shall not use the name of the Transfer
Agent in any Prospectus, shareholders' report,
sales literature or other material relating to
the Fund in a manner not approved prior thereto
in writing; provided, that the Transfer Agent
need only receive notice of all reasonable uses
of its name which merely refer in accurate terms
to its appointment hereunder or which are
required by any government agency or applicable
law or rule.
Notwithstanding the foregoing, any reference to
the Transfer Agent shall include a statement to
the effect that the Transfer Agent is a wholly
owned subsidiary of First Data Corporation.
(g) Use of Fund's Name The
Transfer Agent shall not use the name of the
Fund or material relating to the Fund on any
documents or forms for other than internal use
in a manner not approved prior thereto in
writing; provided, that the Fund need only
receive notice of all reasonable uses of its
name which merely refer in accurate terms to the
appointment of the Transfer Agent or which are
required by any government agency or applicable
law or rule.
(h) Independent Contractors. The
parties agree that they are independent
contractors and not partners or co-venturers.
(i) Entire Agreement; Severability.
This Agreement and the Schedules attached hereto
constitute the entire agreement of the parties
hereto relating to the matters covered hereby
and supersede any previous agreements. if any
provision is held to be illegal, unenforceable
or invalid for any reason, the remaining
provisions shall not be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed
by their duly authorized officers, as of the day
and year fist above written.
SMITH BARNEY SHEARSON
FUNDAMENTAL
VALUE FUND
By:______________________________________
RICHARD
ROELOFS
President
THE SHAREHOLDER
SERVICES GROUP, INC.
By:
______________________________________
Title:
_____________________________________
A-1
Transfer Agent Fee
Schedule A
Class A Shares
The Fund shall pay the Transfer Agent an
annualized fee of $11.00 per shareholder account
that is open during any monthly period. Such fee
shall be billed by the Transfer Agent monthly in
arrears on a prorated basis of 1/12 of the
annualized for all accounts that are open during
such a month.
The Fund shall pay the Transfer Agent an
additional fee of $.125 per closed account per
month applicable to those shareholder accounts
which close in a given month and remain closed
through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent
monthly in arrears.
Class B shares
The Fund shall pay the Transfer Agent an
annualized fee of $12.50 per shareholder account
that is open during any monthly period. Such fee
shall be billed by the Transfer Agent monthly in
arrears on a prorated basis of 1/12 of the
annualized fee for all accounts that are open
during such a month.
The Fund shall pay the Trnasfer Agent an
additional fee of $.125 per closed account per
month applicable to those shareholder accounts
which close in a given month and remain closed
through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent
monthly in arrears.
Class C shares
The Fund shall pay the Transfer Agent an
annualized fee of $8.50 per shareholder account
that is open during any monthly period. Such fee
shall be billed by the Transfer Agent monthly in
arrears on a prorated basis of 1/12 of the
annualized fee for all accounts that are open
during such a month.
The Fund shall pay the Transfer Agent an
additional fee of $.125 per closed account per
month applicable to those shareholder accounts
which close in a given month and remain closed
through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent
monthly in arrears.
Class D shares
The Fund shall pay the Transfer Agent an
annualized fee of $9.50 per shareholder account
that is open during any monthly period. Such fee
shall be billed by the Transfer Agent monthly in
arrears on a prorated basis of 1/12 of the
annualized fee for all accounts that are open
during such a month.
The Fund shall pay the Transfer Agent an
additional fee of $.125 per closed account per
month applicable to those shareholder accounts
which close in a given month and remain closed
through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent
monthly in arrears.
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent
monthly for applicable out-of-pocket expenses,
including, but not limited to the following
items:
- Microfiche/microfilm production
- Magnetic media tapes
- Printing costs, including
certificates, envelopes, checks and stationery
- Postage (bulk, pre-sort, ZIP+4, bar-
coding, first class) direct pass through
to the Fund
- Due diligence mailings
- Telephone and telecommunication
costs, including all lease, maintenance and line
costs
- Proxy solicitations, mailings and
tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight
mail and insurance
- Year-end form production and
mailings
- Terminals, communication lines,
printers and other equipment and any expenses
incurred in connection with such terminals and
lines
- Duplicating services
- Courier services
- Wire charges
- Federal Reserve charges for check
clearance
- Record retention, retrieval and
destruction costs, including, but not limited to
exit fees charged by third party
record keeping vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses
reasonably incurred by the Transfer Agent
in performing its duties and
responsibilities under this Agreement.
The Fund agrees that postage and mailing
expenses will be paid on the day of or prior to
mailing as agreed with the Transfer Agent. In
addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever
the Fund and the Transfer Agent mutually agree
that such expenses are not otherwise properly
borne by the Transfer Agent as part of its
duties and obligations under the Agreement.
C-1
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer
Agent or its agent shall maintain a record of
the number of Shares held by each holder of
record which shall include name, address,
taxpayer identification and which shall indicate
whether such Shares are held in certificates or
uncertificated form.
2. Shareholder Services. The
Transfer Agent or its agent will investigate all
inquiries from shareholders of the Fund relating
to Shareholder accounts and will respond to all
communications from Shareholders and others
relating to its duties hereunder and such other
correspondence as may from time to time be
mutually agreed upon between the Transfer Agent
and the Fund. The Transfer Agent shall provide
the Fund with reports concerning shareholder
inquires and the responses thereto by the
Transfer Agent, in such form and at such times
as are agreed to by the Fund and Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it
shall supply the Transfer Agent or its agent
with an adequate supply of blank share
certificates to meet the Transfer Agent's or its
agent's requirements therefor. Such Share
certificates shall be properly signed by
facsimile. The Fund agrees that,
notwithstanding the death, resignation, or
removal of any officer of the Fund whose
signature appears on such certificates, the
Transfer Agent or its agent may continue to
countersign certificates which bear such
signatures until otherwise directed by Written
Instructions.
(b) The Transfer Agent or its agent
shall issue replacement Share certificates in
lieu of certificates which have been lost,
stolen or destroyed, upon receipt by the
Transfer Agent or its agent of properly executed
affidavits and lost certificate bonds, in form
satisfactory to the Transfer Agent or its agent,
which the Fund and the Transfer Agent or its
agent as obligee under the bond.
(c) The Transfer Agent or its agent
shall also maintain a record of each certificate
issued, the number of Shares represented thereby
and the holder or record. With respect to
Shares held in open accounts or uncertificated
form, i.e., no certificate being issued with
respect thereto, the Transfer Agent or its agent
shall maintain comparable records of the record
holders thereof, including their names,
addresses and taxpayer identification. The
Transfer Agent or its agent shall further
maintain a stop transfer record on lost and/or
replaced certificates.
4. Mailing Communications to
Shareholders; Proxy Materials. The Transfer
Agent or its agent will address and mail to
Shareholders of the Fund, all reports to
Shareholders, dividend and distribution notices
and proxy material for the Fund's meetings of
Shareholders. In connection with meetings of
Shareholders, the Transfer Agent or its agent
will prepare Shareholder lists, mail and certify
as to the mailing of proxy materials, process
and tabulate returned proxy cards, report on
proxies voted prior to meetings, act as
inspector of election at meetings and certify
Shares voted at meetings.
5. Transfer and Repurchase
(a) Requirements for Transfer or
Repurchase of Shares. The Transfer Agent or
its agent shall process all requests to transfer
or redeem Shares in accordance with the transfer
or repurchase procedures set forth in the Fund's
Prospectus.
The Transfer Agent or its agent will
transfer or repurchase Shares upon receipt of
Oral or Written Instructions or otherwise
pursuant to the Prospectus and Share
certificates, if any, properly endorsed for
transfer or redemption, accompanied by such
documents as the Transfer Agent or its agent
reasonably may deem necessary.
The Transfer Agent or its agent
reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the
endorsement on the instructions is valid and
genuine. The Transfer Agent or its agent also
reserve the right to refuse to transfer or
repurchase Shares until it is satisfied that the
requested transfer or repurchase is legally
authorized, and it shall incur no liability for
the refusal, in good faith, to make transfers or
repurchases which the Transfer Agent or its
agent, in its good judgment, deems improper or
unauthorized, or until it is reasonably
satisfied that there is no basis to any claims
adverse to such transfer or repurchase.
(b) Notice to Custodian and Fund.
When Shares are redeemed, the Transfer Agent or
its agent shall, upon receipt of the
instructions and documents in proper form,
deliver to the Custodian and the Fund or its
designee a notification setting forth the number
of Shares to be repurchased. Such repurchased
shares shall be reflected on appropriate
accounts maintained by the Transfer Agent or its
agent reflecting outstanding Shares of the Fund
and Shares attributed to individual accounts.
(c) Payment of Repurchase Proceeds.
The Transfer Agent or its agent shall, upon
receipt of the moneys paid to it by the
Custodian for the repurchase of Shares, pay such
moneys as are received from the Custodian, all
in accordance with the procedures described in
the written instruction received by the Transfer
Agent or its agent from the Fund.
The Transfer Agent or its agent shall
not process or effect any repurchase with
respect to Shares of the Fund after receipt by
the Transfer Agent or its agent of notification
of the suspension of the determination of the
net asset value of the Fund.
6. Dividends
(a) Notice to Agent and Custodian.
Upon the declaration of each dividend and each
capital gains distribution by the Board of
Directors of the Fund with respect to Shares of
the Fund, the Fund shall furnish or cause to be
furnished to the Transfer Agent or its agent a
copy of a resolution of the Fund's Board of
Directors certified by the Secretary of the Fund
setting forth the date of the declaration of
such dividend or distribution, the ex-dividend
date, the date of payment thereof, the record
date as of which shareholders entitled to
payment shall be determined, the amount payable
per Share to the shareholders of record as of
that date, the total amount payable to the
Transfer Agent or its agent on the payment date
and whether such dividend or distribution is to
be paid in Shares of such class at net asset
value.
On or before the payment date
specified in such resolution of the Board of
Directors, the Custodian of the Fund will pay to
the Transfer Agent sufficient cash to make
payment to the shareholders of record as of such
payment date.
(b) Insufficient Funds for Payments.
If the Transfer Agent or its agent does not
receive sufficient cash from the Custodian to
make total dividend and/or distribution payments
to all shareholders of the Fund as of the record
date, the Transfer Agent or its agent will, upon
notifying the Fund, withhold payment to all
Shareholders of record as of the record date
until sufficient cash is provided to the
Transfer Agent or its agent.
7. Sales of Shares
(a) Suspension of Sale of Shares. The
Transfer Agent or its agent shall not be required
to issue any Shares of the Fund where it has
received a Written Instruction from the Fund or
official notice from the Fund or official notice
from any appropriate authority that the sale of
the Shares of the Fund has been suspended or
discontinued. The existence of such Written
Instructions or such official notice shall be
conclusive evidence of the right of the Transfer
Agent or its agent to rely on such Written
Instructions or official notice.
(b) Returned Checks. In the event that
any check or other order for the payment of money
is returned unpaid for any reason, the Transfer
Agent or its agent will:
(i) give prompt notice of such return to the Fund
or its designee; (ii) place a stop transfer order
against all Shares issued as a result of such
check or order; and (iii) take such actions as
the Transfer Agent may from time to time deem
appropriate.
Exhibit 1
to
Schedule C
Summary of Services
The service to be performed by the Transfer
Agent or its agent shall be as follows:
A. DAILY RECORDS
Maintain daily the following
information with respect to each
Shareholder account as received:
Name and Address (Zip Code)
Class of Shares
Taxpayer Identification Number
Balance of Shares held by Agent
Beneficial owner code: i.e., male,
female, joint tenant, etc.
Dividend code (reinvestment)
Number of Shares held in certificate
form
B. OTHER DAILY ACTIVITY
Answer written inquiries relating to
Shareholder accounts (matters
relating to portfolio management,
distribution of Shares and other
management policy questions will be
referred to the Fund).
Process dividends and disbursements
into established Shareholder
accounts in accordance with Written
Instruction from the Agent.
Upon receipt of proper instructions
and all required documentation,
process requests for repurchase of
Shares.
Identify redemption requests made
with respect to accounts in which
Shares have been purchased within an
agreed-upon period of time for
determining whether good funds have
been collected with respect to such
purchase and process as agreed by
the Transfer Agent in accordance
with written instructions set forth
by the Fund.
Examine and process all transfers of
Shares, ensuring that all transfer
requirements and legal documents
have been supplied.
Issue and mail replacement checks.
Open new accounts and maintain
records of exchanges between
accounts
C. DIVIDEND ACTIVITY
Calculate and process Share
dividends and distributions as
instructed by the Fund.
Compute, prepare and mail all
necessary reports to Shareholders or
various authorities as requested by
the Fund. Report to the Fund
reinvestment plan share purchases
and determination of the
reinvestment price.
D. MEETINGS OF SHAREHOLDERS
Cause to be mailed proxy and related
material for all meetings of
Shareholders. Tabulate returned
proxies (proxies must be adaptable
to mechanical equipment of the
Transfer Agent or its agents) and
supply daily reports when sufficient
proxies have been received.
Prepare and submit to the Fund an
Affidavit of Mailing.
At the time of the meeting, furnish
a certified list of Shareholders,
hard copy, microfilm or microfiche
and, if requested by the Fund,
Inspection of Election.
E. PERIODIC ACTIVITIES
Cause to be mailed reports,
Prospectuses, and any other
enclosures requested by the Fund
(material must be adaptable to
mechanical equipment of Agent or its
agents).
Receive all notices issued by the
Fund with respect to the Preferred Shares in
accordance with and pursuant to the Articles of
Incorporation and the Indenture and
perform such other specific duties as are set
forth in the Articles of Incorporation
including a giving of notice of a special
meeting and notice of redemption in the
circumstances and otherwise in accordance with
all relevant provisions of the
Articles of Incorporation.
Independent Auditors' Consent
The Shareholder and Board of Directors of
Smith Barney Institutional Cash Management Fund
Inc.:
We consent to the use of our report dated June
16, 1995 with respect to the Portfolios listed
below of the Smith Barney Institutional Cash
Management Fund Inc. included in this
Registration Statement on Form N-1A and to the
reference to our firm under the heading "Counsel
and Auditors" in the Statement of Additional
Information.
Portfolios
Cash Portfolio
Government Portfolio
Municipal Portfolio
KPMG Peat
Marwick LLP
New York, New York
June 16, 1995
SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND
INC.
PURCHASE AGREEMENT
Smith Barney Institutional Cash
Management Fund Inc. (the "Fund"), a corporation
formed under the laws of the State of Maryland,
and Smith Barney Inc. ("Smith Barney"), a
corporation organized under the laws of the State
of Delaware, agree as follows:
1. Offer and Purchase. The Fund
offers Smith Barney, and Smith Barney purchases
100,004 Class A and Class B shares of the Fund's
authorized shares of beneficial interest, $.00001
par value per share (the "Shares") representing
100,000 shares of the Cash Portfolio, 2 shares of
the Government Portfolio and 2 shares of the
Municipal Portfolio at a price of $1.00 per
share. Each of the Portfolios is an existing
series of the Fund. Smith Barney acknowledges
receipt of six certificates representing the
Shares and the Fund acknowledges receipt from
Smith Barney of $100,004.00 in full payment for
the Shares.
2. Representation by Smith
Barney. Smith Barney represents and warrants to
the Fund that the Shares are being acquired for
investment purposes and not with a view to resale
or further distribution.
3. No Right of Assignment.
Smith Barney's right under this PurchaseAgreement
to purchase the Shares is not assignable.
IN WITNESS WHEREOF, the parties
to this Agreement have executed this Agreement as
of the ______ day of ,1995.
SMITH BARNEY
INSTITUTIONAL
CASH MANAGEMENT
FUND INC.
By:__________________________
Name:
Title:
SMITH BARNEY INC.
By:________________
Name:
Title:
FORM OF DISTRIBUTION AND SERVICE PLAN
OF SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT
FUND INC.:
[NAME OF PORTFOLIO]
This Distribution and Service Plan (the "Plan")
is adopted in accordance with Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") by
Smith Barney Institutional Cash Management Fund
Inc. (the "Fund") on behalf of the [Name of
Portfolio] (the "Portfolio"), subjet to the
following terms and conditions:
1. The Fund has entered into a Distribution
Agreement with respect to the Portfolio with
Smith Barney Inc. (the "Distributor"), an
affiliate of Smith Barney Mutual Funds Management
Inc. (the "Manager"), under which the Distributor
uses all reasonable efforts, consistent with its
other business, to secure purchasers for the
Portfolio's shares of common stock ("shares").
Under the agreement, the Distributor pays the
expenses of printing and distributing any
prospectuses, reports and other literature used
by the Distributor, advertising, and other
promotional activities in connection with the
offering of shares of the Portfolio for sale to
the public.
2. The Manager directly, or through the
Distributor, may make payments to Smith Barney
Financial Consultants who engage in the sale of
Class A and Class B shares or who render
shareholder support services, including but not
limited to answering routine inquiries regarding
the Portfolio, processing shareholder
transactions and providing such other shareholder
services as the Fund may reasonably request. It
is understood that the Manager may reimburse the
Distributor for the expenses incurred from any
source available to it, including management fees
paid to it by the Portfolio.
To the extent that any payments made by the
Portfolio to the Manager, including payment of
management fees, should be deemed to be indirect
financing of any activity primarily intended to
result in the sale of Class A or Class B shares
of Portfolio within the context of Rule 12b-1
under the Act, then such payments shall be deemed
to be authorized by this Plan.
3. (a) With respect to Class A shares, the
Portfolio will not make separate payments as a
result of this Plan to the Adviser, Distributor
or any other party.
(b) With respect to Class B shares,
the Portfolio shall reimburse the Distributor for
payments to third parties for servicing
shareholder accounts at the rate of 0.25% per
annum of the average net assets of such Class.
The Distributor shall make payments to
institutional investors such as banks, savings
and loan associations and other financial
institutions ("service organizations") who are
purchasing Class B shares on behalf of their
customers. The Distributor will enter into an
agreement with each service organization which
purchases Class B shares to provide certain
services to the beneficial owners of such shares.
Such services shall include aggregating and
processing purchase and redemption requests from
customers and placing net purchase and redemption
orders with the Distributor; processing dividend
payments from the Fund on behalf of the
customers; providing information periodically to
customers showing their positions in shares;
arranging for bank wires; responding to customer
inquiries relating to the services provided by
the service organization and handling
correspondence; and acting as shareholder of
record and nominee. The Distributor shall
determine the amounts to be paid to the service
organization and the basis on which such payments
will be made. Payments to a service organization
shall be subject to compliance by the service
organization with the terms of any related Plan
agreement between the service organization and
the Distributor.
4. The Plan shall become effective with
respect to a Class upon its execution by an
authorized officer of the Fund following its
approval by votes of a majority of both (a) the
Board of Directors of the Fund and (b) those
directors of the Fund who are not "interested
persons"
of the Fund (as defined in the Act) and
have no direct or indirect financial interest in
the operation of the Plan or any agreements
related to it (the "Independent Directors"), cast
in person at a meeting (or meetings) called for
the purpose or voting on the Plan or any related
agreements, and its approval by a "vote of a
majority of the outstanding voting securities" of
the Class as defined in the Act (the "Effective
Date").
The Plan shall be deemed to have been
approved with respect to a Class so long as a
majority of the outstanding voting securities of
the Class votes for the approval of the Plan,
notwithstanding that: (a) the Plan has not been
approved by a majority of the outstanding voting
securities of any other Class, or (b) the Plan
has not been approved by a majority of the
outstanding voting securities of the Portfolio.
5. The Plan and any related agreements
shall remain in effect with respect to each Class
for one year form its Effective Date and may be
continued thereafter if it is approved each year
by a majority of the Board of Directors of the
Fund, including a majority of the Independent
Directors.
6. The Distributor shall provide to the
Board of Directors of the Fund and the Board of
Directors shall review, at least quarterly, a
written report of the amounts so expended and the
purposes for which such expenditures were made.
7. The Plan may be terminated at any time
with respect to a Class by vote of a majority of
the Independent Directors or by vote of a
majority of the outstanding voting securities of
such Class. The Plan may remain in effect with
respect to a particular Class even if the Plan
has been terminated in accordance with this
Section 7 with respect to any other Class.
8. The Plan may be amended at any time by
the Board of Directors of the Fund, provided that
(a) any amendment to authorize direct payments by
Class A to finance any activity primarily
intended to result in the sale of shares of the
Class or to increase materially the amount spent
by any Class for distribution shall be effective
only upon approval by a vote of a majority of the
outstanding voting securities of the particular
Class affected, and (b) any material amendments
to the Plan shall be effective only upon approval
in the manner provided for annual renewal in
paragraph 5 hereof.
9. While the Plan is in effect, the
selection and nomination of directors who are not
interested persons (as defined in the Act) of the
Fund shall be committed to the discretion of the
directors who are not interested persons.
10. The Fund shall preserve copies
of the Plan and any related agreements and all
reports made pursuant to paragraph 6 hereof, for
a period of not less than six years from the date
of the Plan, or such agreement or such report, as
the case may be, the first two years in an easily
accessible place.
IN WITNESS THEREOF, the Fund has executed
this Distribution and Service Plan on the day and
year set forth below in New York, New York.
DATED; June ,1995
SMITH BARNEY
INSTITUTIONAL
CASH MANAGEMENT
FUND INC.
By:_____________________________________
Heath B.
McLendon, Chief Executive Officer
_______________________________
Page: 3
1
<PAGE>1
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
June 15, 1995
Smith Barney Institutional
Cash Management Fund Inc.
388 Greenwich Street
New York, New York 10013
Re: Registration Statement on Form N-1A
Ladies and Gentlemen:
We have acted as counsel for Smith Barney Institutional Cash Management Fund
Inc., a Maryland corporation (the "Fund"), in connection with the organization
of the Fund and the issuance of Class A and Class B Common Stock of its Cash
Portfolio, Government Portfolio and Municipal Portfolio, all with a par value
of $.00001 per share (collectively, the "Common Stock").
As counsel for the Fund, we are familiar with its Charter and Bylaws. We have
examined the prospectus included in its Registration Statement on Form N-1A,
File Nos. 33-90952; 811-9012 (the "Registration Statement"), substantially in
the form in which it is to become effective (the "Prospectus").
We have also examined and relied upon such corporate records of the Fund and
other documents and certificates with respect to the factual matters as we
have deemed necessary to render the opinion expressed herein. We have
assumed, without independent verification, the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with originals of all documents submitted to us as copies. As to
matters governed by the laws of the State of Maryland, we have relied solely
on the opinion of Venable, Baetjer and Howard, LLP with respect to the matters
addressed therein, which is satisfactory to us in form and scope, a copy of
which is annexed hereto.
Based on such examination, we are of the opinion and so advise you that:
1. The Fund is duly organized and validly existing as a corporation in
good standing under the laws of the State of Maryland.
<PAGE>2
Smith Barney Institutional
Cash Management Fund Inc.
June 15, 1995
Page 2
2. The 50,000 shares of presently issued and outstanding Class A of the
Fund's Cash Portfolio, the 50,000 shares of presently issued and
outstanding Class B of its Cash Portfolio, one share of presently
issued and outstanding Class A of its Government Portfolio, one
share of presently issued and outstanding Class B of its Government
Portfolio, one share of presently issued and outstanding Class A of
its Municipal Portfolio and one share of presently issued and
outstanding Class B of its Municipal Portfolio, respectively, have
been validly and legally issued and are fully paid and
nonassessable.
3. The shares of Common Stock of the Fund to be offered for sale
pursuant to the Prospectus are, to the extent of the number of
shares of each of the Class A and Class B Common Stock of its Cash
Portfolio, Government Portfolio and Municipal Portfolio,
respectively, authorized to be issued by the Fund in its Charter,
duly authorized and, when sold, issued and paid for as contemplated
by the Prospectus, will have been validly and legally issued and
will be fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the references to us in the Statement of Additional
Information included as part of the Registration Statement and to the filing
of this opinion as an exhibit to any application made by or on behalf of the
Fund or any distributor or dealer in connection with the registration or
qualification of the Fund or the Common Stock under the securities laws of any
state or other jurisdiction.
This opinion is furnished by us as counsel to the Fund, is solely for the
benefit of the Fund and its governing board and may not be relied upon for any
other purpose or by any other person.
Very truly yours,
/s/ Willkie Farr & Gallagher
86160298
June , 1995
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: Smith Barney Institutional Cash Management Fund
Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Smith Barney
Institutional
Cash Management Fund Inc., a Maryland corporation (the "Fund"), in connection
with the
organization of the Fund and the issuance of Class A and Class B Common Stock
of its Cash
Portfolio, Government Portfolio and Municipal Portfolio, all with a par value
of $.
00001 per share (collectively, the "Common Stock").
As Maryland counsel for the Fund, we are familiar with its
Charter and
Bylaws. We have examined the prospectus included in its Registration
Statement on Form N-
1A, File Nos. 33-90952; 811-9012 (the "Registration Statement"), substantially
in the form
in which it is to become effective (the "Prospectus"). We have further
examined
and relied upon a certificate of the Maryland State Department of
Assessments and Taxation to the effect that the Fund is duly
incorporated and existing under the laws of the State of Maryland and is
in good standing and duly authorized to transact business in the State
of Maryland.
We have also examined and relied upon such corporate records
of the Fund
and other documents and certificates with respect to the factual matters
as we have deemed
necessary to render the opinion expressed herein. We have assumed,
without independent
verification, the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, and the conformity with originals
of all documents submitted
to us as copies.
Based on such examination, we are of the opinion and so
advise you that:
1. The Fund is duly organized and validly existing as a corporation
in good standing
under the laws of the State of Maryland.
2. The 50,000 shares of presently issued and outstanding Class A of
the Fund's Cash Portfolio, the 50,000 shares of presently issued
and outstanding Class B of the Fund's Cash Portfolio, one share of
<PAGE>
presently issued and outstanding Class A of the Fund's Government Portfolio,
one
share of presently issued and outstanding Class B of the Fund's Government
Portfolio, one
share of presently issued and outstanding Class A of the Fund's Municipal
Portfolio and one
share of presently issued and outstanding Class B of the Fund's
Municipal Portfolio, respectively, have been validly and
legally issued and are fully paid and
nonassessable.
3. The shares of Common Stock of the Fund to be offered for sale
pursuant to the
Prospectus are, to the extent of the number of shares of each of the Class A
and Class B
Common Stock of the Fund's Cash Portfolio, Government Portfolio and
Municipal Portfolio,
respectively, authorized to be issued by the Fund in its Charter,
duly authorized and
, when sold, issued and paid for as contemplated by the Prospectus, will
have been validly
and legally issued and will be fully paid and nonassessable.
This letter expresses our opinion with
respect to the Maryland General Corporation Law governing
matters such as due organization and authorization and
issuance of stock. It does not extend to the securities or
"blue sky" laws of Maryland, to federal securities laws or
other laws.
You may rely upon our foregoing opinion in
rendering
your opinion
to the Fund
that is to
be filed as
an exhibit
to the
Registration
Statement.
We consent
to the
filing of
the opinion
as an
exhibit to
the
Registration
Statement.
Very truly
yours,
- -2-
