<PAGE>
Annual Report
1996
1996
1996
1996
1996
Smith Barney
Institutional
Cash Management
Fund, Inc.
- -----------------------------------
May 31, 1996
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
Smith Barney Institutional Cash Management Fund, Inc.
Dear Shareholder:
We are pleased to provide you with the annual report for the Smith Barney
Institutional Cash Management Fund, Inc. for the fiscal year ended May 31, 1996.
For your convenience, we have summarized the period's prevailing economic and
market conditions below. In addition, a more detailed summary of performance and
current holdings can be found in the appropriate sections that follow in the
annual report.
Cash and Government Portfolio Updates.
The past year, and certainly the most recent six months, has been an interesting
period for the financial markets. The period from June 1995 through January 1996
was characterized by low inflation and somewhat weaker economic growth, and in
response to these conditions, the Federal Reserve Board (the Fed) lowered the
target for the fed funds rate in December and January from 5.75% to 5.25%. In
addition to lowering the fed funds target rate, the Fed lowered the discount
rate to 5% and cited reduced potential inflationary pressures as a reason for
its easing of monetary policy. Reaction in the money markets was euphoric and
the yield curve inverted in anticipation of lower rates. Interest rates on
short-term government securities declined, with one-year U.S. Treasury bills
trading as low as 4.78% and two-year U.S. Treasury notes declining to 4.79%.
However, since then, a number of events have reversed the direction of the money
markets and short-term interest rates have risen 80 and 125 basis points
respectively from those discussed previously. Moreover, since February 1996,
three-month insured, fixed-rate Certificates of Deposit have risen 40 basis
points to 5.50% and one-year CDs have risen 105 basis points to 6.08%. Hedge
fund selling, an oversupply of new issues from Treasury auctions, and concern
over the strength of U.S. economic growth have increased market uncertainty. For
example, economic data released between February and the end of May has
indicated that the U.S. economy is growing more rapidly than previously
expected, as evidenced by strong job creation and higher consumer spending. In
addition, inventories, especially in the automobile industry, have declined, and
will probably need to be replenished. New as well as existing home sales have
also shown continued solid momentum, with the Northeast region of the U.S. the
newest area to exhibit growth. As a result, expectations for second quarter GDP
growth are currently between an annual rate of 3.5% and 4%.
1
<PAGE>
Despite the apparent strength in the U.S. economy, the Federal Reserve left
short-term interest rates unchanged at its most recent Federal Open Market
Committee Meeting (FOMC). However, it is now widely anticipated that the Fed
will raise interest rates in the near future, especially if jobless claims
continue to stabilize or decline, consumer spending remains strong, and payroll
growth in the economy stays at a monthly level of approximately 200,000 new
jobs.
Cash and Government Portfolio Strategies.
During the first half of 1996, we shortened the Cash Portfolio's average
maturity from 68 to 45 days, reflecting our expectations for a steepening yield
curve and higher interest rates as the economy strengthened. As a result of our
strategy, both Portfolios have performed competitively against the major money
market indices. As of May 31, 1996, the seven-day SEC yield on the Cash
Portfolio was 5.12%, and all of the Portfolio's holdings have received one of
the two highest ratings from Standard and Poor's and Moody's. As of May 31,
1996, the seven-day SEC yield on the Government Portfolio was 5.10%, and over
94% of the Portfolio's investments were in U.S. government agency securities.
Given our outlook that economic growth will continue to remain above
expectations and interest rates should continue to rise, we are maintaining our
targeted average maturity on the Cash Portfolio at the 45 day range. The
Government Portfolio targets have been reduced from 50 days to 40 days.
Municipal Portfolio Update.
As May drew to a close, we expected to see a continued decline in yields on tax-
exempt variable bonds, which represent the bulk of the short-term tax-exempt
market. However, higher-than-expected gains in non-farm payrolls and consumer
spending, which caused the overall bond market to decline, also had a negative
impact on the short-term tax-exempt market. With increased expectations of a
shift in Federal Reserve monetary policy, we are seeing stronger investor
interest in variable rate bonds and shorter maturities in anticipation of
capturing higher yields in the future. Over the same period of time, we have
seen an increase in yields on the long end of this short-term tax-exempt yield
curve. Since February 1996, the yield on the bond buyer One-Year Note Index has
risen 51 basis points to 3.73%. However, shortages in the short-term tax-exempt
market have been created, largely due to the recent high number of called bonds
and coupon payments, strong investor demand, and a low supply of new issues. We
expect these factors to continue until late July when a number of municipalities
come to market with annual note financings.
2
<PAGE>
Municipal Portfolio Strategy.
In response to the pickup in U.S. economic activity over the past several
months, we have targeted the average maturity on the municipal portfolio at the
40-day range. As a large number of municipalities come to market and the new
supply of issues increases, we will continue to look for opportunities in fixed
rate municipal notes with a bias towards shorter maturities.
In closing, thank you for investing in the Smith Barney Institutional Cash
Management Fund. We hope the Fund has proven to be a convenient, economical and
competitive vehicle for your short-term assets.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
and Chief Executive Officer
June 28, 1996
3
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments May 31, 1996
CASH PORTFOLIO
<TABLE>
<CAPTION>
ANNUALIZED
FACE YIELD ON DATE
AMOUNT SECURITY OF PURCHASE VALUE
=========================================================================================
COMMERCIAL PAPER -- 65.8%
<S> <C> <C> <C>
$ 6,300,000 Abbey National North America
matures 11/20/96 5.43% $6,140,771
10,000,000 A. I. Credit
matures 6/3/96 5.45 9,996,972
5,000,000 Alliance & Leicester Building Society
matures 8/8/96 5.38 4,949,850
5,000,000 American Home Products
matures 7/19/96 5.38 4,964,467
5,000,000 American Home Products Foods
matures 6/25/96 5.31 4,982,367
5,000,000 Bank of America (Bankamerica Corp.)
matures 6/26/96 5.40 4,981,736
5,000,000 Banque Nationale De Paris Canada
matures 11/27/96 5.45 4,868,236
10,000,000 Barton Capital Corp.
matures 6/5/96 5.29 9,994,133
10,000,000 Cheltenham & Gloucester Building Society
matures 7/8/96 5.34 9,945,836
5,000,000 Credito Italiano
matures 8/27/96 5.12 4,939,704
5,000,000 Daimler-Benz North America Corp.
matures 9/3/96 5.36 4,931,067
10,000,000 Dakota Certificates Program
matures 6/11/96 5.36 9,985,194
5,000,000 Dean Witter/Discover & Co.
matures 8/13/96 5.37 4,946,264
5,750,000 Enterprise Funding Corp.
matures 6/24/96 5.32 5,730,530
5,000,000 General Electric Capital Corp.
matures 8/30/96 5.37 4,934,125
10,000,000 General Motors Acceptance Corp.
matures 6/4/96 5.30 9,995,583
5,000,000 Glaxo Holdings PLC
matures 7/24/96 5.35 4,961,133
5,000,000 International Nederlanden Group
matures 8/21/96 5.34 4,940,713
5,000,000 International Securitization Corp.
matures 8/28/96 5.36 4,935,344
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments (continued) May 31, 1996
CASH PORTFOLIO
<TABLE>
<CAPTION>
ANNUALIZED
FACE YIELD ON DATE
AMOUNT SECURITY OF PURCHASE VALUE
========================================================================================
COMMERCIAL PAPER -- 65.8% (continued)
<S> <C> <C> <C>
$ 5,000,000 Merrill Lynch
matures 6/5/96 5.28% $ 4,997,067
9,000,000 Morgan Stanley
mature 6/24/96 to 8/23/96 5.37 to 5.47 8,916,487
5,000,000 National & Provincial Building Society
matures 6/18/96 5.31 4,987,722
2,000,000 Ontario Hydro
matures 8/21/96 5.34 1,976,285
5,000,000 PHH Corp.
matures 7/17/96 5.31 4,966,331
5,200,000 Province of British Columbia
matures 6/10/96 5.44 5,193,110
5,000,000 Province of Ontario
matures 6/13/96 5.35 4,991,283
5,000,000 Receivables Capital Corp.
matures 6/13/96 5.31 4,991,167
3,300,000 Royal Bank of Canada
matures 6/17/96 5.44 3,292,227
4,000,000 Societe Generale NA Inc.
matures 7/15/96 5.27 3,974,871
5,000,000 Transamerica Finance Corp.
matures 7/15/96 5.36 4,967,672
8,000,000 Windmill Funding Corp.
matures 6/17/96 5.32 7,981,156
- ----------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $182,359,403) 182,359,403
========================================================================================
TIME DEPOSITS -- 7.2%
10,000,000 NationsBank
matures 6/3/96 5.43 10,000,000
10,000,000 Z-Landesbank Bank Austria AG
matures 6/3/96 5.43 10,000,000
- ----------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(Cost -- $20,000,000) 20,000,000
========================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 18.1%
10,000,000 Bayerische Landesbank
matures 8/1/96 4.98 10,000,474
10,000,000 Commerzbank
matures 6/6/96 5.07 10,000,014
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments (continued) May 31, 1996
CASH PORTFOLIO
<TABLE>
<CAPTION>
ANNUALIZED
FACE YIELD ON DATE
AMOUNT SECURITY OF PURCHASE VALUE
=======================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 18.1% (continued)
<S> <C> <C> <C>
$ 5,000,000 Credit Suisse
matures 7/29/96 5.19% $ 5,000,000
10,000,000 Dresdner Bank
matures 7/8/96 5.00 10,000,503
5,000,000 Lloyds Bank
matures 7/5/96 5.09 5,000,046
5,000,000 Swiss Bank Corp.
matures 6/3/96 5.52 5,000,010
5,000,000 Toronto Dominion
matures 1/17/97 5.13 5,001,059
- ---------------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES OF DEPOSIT
(Cost -- $50,002,106) 50,002,106
=======================================================================================
DOMESTIC CERTIFICATE OF DEPOSIT -- 3.6%
10,000,000 Morgan Guaranty
matures 8/20/96
(Cost -- $10,000,216) 5.00 10,000,216
- ---------------------------------------------------------------------------------------
U.S. AGENCIES AND INSTRUMENTALITIES -- 1.8%
5,000,000 Federal National Mortgage Association
matures 1/23/97
(Cost -- $4,997,511) 5.09 4,997,511
=======================================================================================
REPURCHASE AGREEMENT -- 3.5%
9,816,000 Morgan Stanley, 5.30% due 6/3/96;
Proceeds at maturity -- $9,820,335;
(Fully collateralized by U.S. Treasury Bills,
due 5/29/97; Market Value -- $9,872,654)
(Cost -- $9,816,000) 9,816,000
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $277,175,236*) $277,175,236
=======================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments (continued) May 31, 1996
GOVERNMENT PORTFOLIO
<TABLE>
<CAPTION>
ANNUALIZED
FACE YIELD ON DATE
AMOUNT SECURITY OF PURCHASE VALUE
=======================================================================================
U.S. AGENCIES AND INSTRUMENTALITIES -- 94.6%
<S> <C> <C>
$ 6,360,000 Federal Farm Credit Bank
mature 6/03/96 to 8/07/96 4.91% to 5.25% $ 6,327,503
14,190,000 Federal Home Loan Bank
mature 6/07/96 to 7/17/96 4.96 to 5.27 14,130,258
15,480,000 Federal Home Loan Mortgage Corp.
mature 6/05/96 to 9/06/96 5.20 to 5.31 15,399,838
14,400,000 Federal National Mortgage Association
mature 6/03/96 to 8/27/96 4.90 to 5.32 14,294,355
4,600,000 Student Loan Mortgage Association
mature 6/03/96 to 6/19/96 5.27 4,592,621
- ---------------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $54,744,575) 54,744,575
=======================================================================================
REPURCHASE AGREEMENTS -- 5.4%
2,000,000 Morgan Stanley, 5.30% due 6/03/96;
Proceeds at maturity -- $2,000,883;
(Fully collateralized by U.S. Treasury Bills,
due 2/06/97; Market value -- $2,012,161) 2,000,000
1,155,000 Citibank, 5.30% due 6/03/96; Proceeds
at maturity -- $1,155,510; (Fully
collateralized by U.S. Treasury Notes,
5.75% due 9/30/97; Market value --
$1,185,900) 1,155,000
- ---------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost -- $3,155,000) 3,155,000
=======================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $57,899,575*) $57,899,575
=======================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments (continued) May 31, 1996
Municipal Portfolio
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Arizona -- 14.0%
$1,700,000 VMIG 1 Apache County, AZ IDA IDR
Tucson Electric Power, Series 83A 3.65%+ $1,700,000
2,040,000 A-1+ Arizona Health Facilities Authority Revenue Arizona
Volunteer Hospital Federation, Series B 3.60%+ 2,040,000
1,500,000 P-1 Maricopa County, AZ PCR Public Service Company
New Mexico 3.60%+ 1,500,000
1,200,000 A-1+ Pima County, AZ IDA IDR Tucson Electric Series A
3.60%+ 1,200,000
1,800,000 VMIG 1 Pinal County, AZ IDR (Magma Copper Company
Project) 3.70%+ 1,800,000
- ---------------------------------------------------------------------------------------------------
8,240,000
- ---------------------------------------------------------------------------------------------------
California -- 1.5%
900,000 MIG 1 Los Angeles, CA USD TRAN 4.50% due 7/3/96 900,525
- ---------------------------------------------------------------------------------------------------
Delaware -- 2.1%
1,230,000 A-1+ Delaware State Economic Development Authority
Hospital Billing Collection Service, Series A 3.60%+ 1,230,000
- ---------------------------------------------------------------------------------------------------
Florida -- 6.4%
2,000,000 VMIG 1 Broward County, FL Housing Multi-Family Welleby
Apartments 3.70%+ 2,000,000
1,800,000 VMIG 1 St. John County, FL Hospital Revenue, Flager Hospital,
Series A 3.60%+ 1,800,000
- ---------------------------------------------------------------------------------------------------
3,800,000
- ---------------------------------------------------------------------------------------------------
Georgia -- 4.1%
Clayton County, GA Housing Authority Multi-Family
Housing Revenue:
1,200,000 A-1 Rainwood Development 3.82%+ 1,200,000
1,200,000 A-1+ Huntington Woods 3.50%+ 1,200,000
- ---------------------------------------------------------------------------------------------------
2,400,000
- ---------------------------------------------------------------------------------------------------
Idaho -- 2.5%
1,500,000 MIG 1 Idaho State TAN 4.50% due 6/27/96 1,500,752
- ---------------------------------------------------------------------------------------------------
Illinois -- 5.8%
1,400,000 VMIG 1 Chicago, IL Multi-Family Housing, Waveland Association,
Series E 3.60%+ 1,400,000
2,000,000 VMIG 1 Illinois Health Facility Authority Revenue, Gottlieb
Health 3.60%+ 2,000,000
- ---------------------------------------------------------------------------------------------------
3,400,000
- ---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments (continued) May 31, 1996
Municipal Portfolio
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
Louisiana -- 4.8%
<S> <C> <C> <C>
$2,000,000 A-1 Louisiana Public Facility Authority Hospital Revenue
(Willis-Knighton Medical Center Project) 3.60%+ $2,000,000
305,000 AAA Louisiana Public Facility Revenue Student Loan
5.70% due 1/1/97 309,160
500,000 AAA New Orleans, LA Exhibition Authority Hotel Occupancy
Tax Revenue 5.25% due 1/15/97 505,907
- ------------------------------------------------------------------------------------------------------
2,815,067
- ------------------------------------------------------------------------------------------------------
Michigan -- 3.0%
1,800,000 A-1+ Michigan State Housing Development Authority Rental
Housing Revenue Series C 3.65%+ 1,800,000
- ------------------------------------------------------------------------------------------------------
Minnesota -- 2.9%
1,690,000 A-1+ Moorehead, MN IDR Refunding (Super Value Store
Project) 4.20%+ 1,690,000
- ------------------------------------------------------------------------------------------------------
Missouri -- 6.4%
1,800,000 A-1+ Missouri State Health & Educational Facilities Authority
Health Facilities Revenue (Health Care Project)
Series C 3.60%+ 1,800,000
1,970,000 A-1+ Saint Louis County, MO IDA Multi-Family Housing
Revenue Westport Station Apartments 3.60%+ 1,970,000
- ------------------------------------------------------------------------------------------------------
3,770,000
- ------------------------------------------------------------------------------------------------------
Mississippi -- 3.2%
1,880,000 NR Jackson, MS IDR (McKesson Corp. Project) 3.60%+ 1,880,000
- ------------------------------------------------------------------------------------------------------
North Carolina -- 3.0%
1,800,000 A-1+ Raleigh Durham, NC Airport Authority Special Facilities
Revenue, American Airlines Series A 3.80%+ 1,800,000
- ------------------------------------------------------------------------------------------------------
Nebraska -- 2.5%
1,500,000 A-1+ Nebraska Higher Education Loan Program Income
Revenue Student Loan Program Series C 3.70%+ 1,500,000
- ------------------------------------------------------------------------------------------------------
New Hampshire -- 2.5%
1,500,000 A-1 New Hampshire State Housing Finance Authority
Multi-Family Manchester Series 1 3.80%+ 1,500,000
- ------------------------------------------------------------------------------------------------------
New Mexico -- 3.6%
2,100,000 MIG1 Dona Anna County, NM Foamex Production 3.55%+ 2,100,000
- ------------------------------------------------------------------------------------------------------
Nevada -- 3.6%
2,100,000 A-1+ Henderson, NV Public Improvement Trust Housing
Revenue Refunding Multi-Family 3.55%+ 2,100,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Schedules of Investments (continued) May 31, 1996
Municipal Portfolio
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
============================================================================================================
<S> <C> <C> <C>
New York -- 1.5%
$ 900,000 MIG 1 New York City, NY RAN Series B 4.75% due 6/28/96 $ 900,653
- ------------------------------------------------------------------------------------------------------------
Pennsylvania -- 4.2%
1,000,000 AAA Pennsylvania Intergovernmental Coop Authority Special
Tax Revenue Philadelphia Funding Program
5.00% due 6/15/97 1,013,071
1,500,000 MIG 1 Pennsylvania State TANS 4.50% due 6/28/96 1,500,860
- ------------------------------------------------------------------------------------------------------------
2,513,931
- ------------------------------------------------------------------------------------------------------------
Tennessee -- 10.2%
1,700,000 A-1 Clarksville Tennessee Public Building Authority 4.00%+ 1,700,000
2,100,000 A-1+ Metropolitan Nashville Airport Authority 4.00%+ 2,100,000
1,500,000 A-1+ Tennessee State IDA Revenue Series A 4.00% due 5/29/97 1,505,594
700,000 A-1+ Tennessee State School Board Authority Higher
Educational Facilities BAN 3.60%+ 700,000
- ------------------------------------------------------------------------------------------------------------
6,005,594
- ------------------------------------------------------------------------------------------------------------
Texas -- 5.8%
1,900,000 A-1+ Port Corpus Christi Authority Texas Nueces County
Marine Term Revenue Reynolds Metals Co. 3.65%+ 1,900,000
1,500,000 MIG 1 Texas State TRAN Series A 4.75% due 8/30/96 1,503,682
- ------------------------------------------------------------------------------------------------------------
3,403,682
- ------------------------------------------------------------------------------------------------------------
Utah -- 6.4%
1,300,000 VMIG 1 Salt Lake City, UT Revenue Pooled Class A 3.60%+ 1,300,000
2,500,000 A-1+ Utah State Board of Regents Student Loan Series B
3.55%+ 2,500,000
- ------------------------------------------------------------------------------------------------------------
3,800,000
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $59,050,204*) $59,050,204
============================================================================================================
</TABLE>
+ Variable rate obligation payable at par on demand at any time on no more than
seven days' notice.
* Aggregate cost for Federal income tax purposes is substantially the same.
See page 11 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
10
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Bond Ratings
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
Short-Term Securities Ratings
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
MIG 1 -- Moody's highest rate for short-term municipal obligations.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
NR -- Indicates that the bond is not rated by Moody's or Standard &
Poor's.
Security Descriptions
BAN -- Bond Anticipation Notes
EDC -- Economic Development Corporation
EFA -- Educational Facilities Authority
ETM -- Escrowed to Maturity
FRTC -- Floating Rate Trust Certificates
GO -- General Obligation
HDA -- Housing Development Authority
HEFA -- Health and Educational Facilities Authority
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Facilities Authority
RAN -- Revenue Anticipation Notes
RAW -- Revenue Anticipation Warrants
STEM -- Short-Term Extendable Maturity
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bond
TRAN -- Tax & Revenue Anticipation Notes
USD -- United School District
VHA -- Veterans Housing Authority
11
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Statements of Assets and Liabilities May 31, 1996
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
===============================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $277,175,236 $57,899,575 $59,050,204
Cash 507 117 --
Interest receivable 1,127,900 465 417,644
Receivable from manager -- 53,172 63,835
- -------------------------------------------------------------------------------
Total Assets 278,303,643 57,953,329 59,531,683
- -------------------------------------------------------------------------------
LIABILITIES:
Payable to bank -- -- 58,186
Dividends payable 600,070 213,415 121,969
Management fees payable 39,017 -- --
Accrued expenses 92,746 42,185 43,134
- -------------------------------------------------------------------------------
Total Liabilities 731,833 255,600 223,289
- -------------------------------------------------------------------------------
Total Net Assets $277,571,810 $57,697,729 $59,308,394
===============================================================================
NET ASSETS CONSIST OF:
Capital Stock
(25,000,000,000
shares authorized for
each Portfolio; par value
$0.00001 per share) $ 2,776 $ 577 $ 593
Capital paid in excess
of par value 277,569,034 57,697,152 59,307,801
- -------------------------------------------------------------------------------
Total Net Assets $277,571,810 $57,697,729 $59,308,394
===============================================================================
Shares Outstanding 277,571,810 57,697,729 59,308,394
- -------------------------------------------------------------------------------
Net Asset Value $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Statements of Operations
For the Period Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
==============================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $9,664,112 $2,075,094 $882,372
- ------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 130,059 30,310 17,858
Registration fees 77,810 37,366 43,327
Shareholder and system
servicing fees 38,539 5,762 3,740
Audit and legal 26,021 18,432 15,333
Directors' fees 22,668 15,305 13,954
Custody 19,893 8,027 3,000
Shareholder communications 16,995 2,909 4,350
Rating service fees 10,000 10,000 --
Other 17,030 15,990 16,707
- ------------------------------------------------------------------------------
Total Expenses 359,015 144,101 118,269
Less: Management fee waiver and
expense reimbursement (91,042) (83,482) (81,693)
- ------------------------------------------------------------------------------
Net Expenses 267,973 60,619 36,576
- ------------------------------------------------------------------------------
Net Investment Income 9,396,139 2,014,475 845,796
- ------------------------------------------------------------------------------
Net Realized Gain from Security
Transactions 4,721 1,574 --
- ------------------------------------------------------------------------------
Increase in Net Assets from
Operations $9,400,860 $2,016,049 $845,796
==============================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
13
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Statements of Changes in Net Assets
For the Period Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
--------------------------------------------
1996 1996 1996
=====================================================================================
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 9,396,139 $ 2,014,475 $ 845,796
Net realized gains 4,721 1,574 --
- -------------------------------------------------------------------------------------
Increase in Net Assets
From Operations 9,400,860 2,016,049 845,796
- -------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
(NOTE 3):
Net investment income (9,396,139) (2,014,475) (845,796)
Net realized gains (4,721) (1,574) --
- -------------------------------------------------------------------------------------
Decrease in Net Assets from
Distributions to Shareholders (9,400,860) (2,016,049) (845,796)
- -------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
(NOTE 5):
Proceeds from sale of shares 1,533,423,459 434,782,708 307,764,680
Net asset value of shares
issued for reinvestment
of dividends 8,039,265 1,684,998 668,104
Cost of shares reacquired (1,263,890,914) (378,769,977) (249,124,390)
- -------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 277,571,810 57,697,729 59,308,394
- -------------------------------------------------------------------------------------
Increase in Net Assets 277,571,810 57,697,729 59,308,394
NET ASSETS:
Beginning of period -- -- --
- -------------------------------------------------------------------------------------
End of period $ 277,571,810 $ 57,697,729 $ 59,308,394
=====================================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
14
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Notes to Financial Statements
1. Significant Accounting Policies.
Smith Barney Institutional Cash Management Fund, Inc. ("Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company. The Fund consists of
three separate investment portfolios ("Portfolios"): Cash Portfolio ("Cash"),
Government Portfolio ("Government") and Municipal Portfolio ("Municipal").
The significant accounting policies consistently followed by the Portfolios
are: (a) transactions in money market instruments and government obligations are
recorded on trade date; (b) the Fund uses the amortized cost method for valuing
investments; accordingly, the cost of securities plus accreted discount, or
minus amortized premium, approximates market value; (c) interest income is
recorded on the accrual basis; (d) direct expenses are charged to each portfolio
and each class; management fees and general fund expenses are allocated on the
basis of relative net assets; (e) the Portfolios intend to comply with the
applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make distributions of
taxable income sufficient to be relieved from substantially all Federal income
and excise taxes; and (f) estimates and assumptions are required to be made
regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ.
2. Management Agreement and Other Transactions.
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings, Inc. ("SBH"), acts as investment manager of the Fund. As
compensation for its services, each Portfolio pays SBMFM a management fee
calculated at the annual rate of 0.27% of the average daily net assets of each
Portfolio. This fee is calculated daily and paid monthly.
For the year ended May 31, 1996, SBMFM waived $91,042, $30,310 and $17,858 of
its management fees for Cash, Government and Municipal, respectively. In
addition, SBMFM has agreed to reimburse Government and Municipal for expenses of
$53,172 and of $63,835, respectively.
15
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Notes to Financial Statements (continued)
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares.
All officers and two Directors of the Fund are employees of SB.
3. Dividends, Exempt-Interest Dividends and Other
Distributions
Each Portfolio declares and records a dividend of substantially all of its net
investment income on each business day. Such dividends are paid or reinvested
monthly in each respective portfolio's shares on the payable date.
Furthermore, Municipal intends to satisfy conditions that will enable interest
from municipal securities, which are exempt from regular Federal income tax and
from designated state income taxes, to retain such status when distributed to
its shareholders.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Repurchase Agreements
The Fund purchases, and its custodian takes possession of, U.S. Government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed-upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
5. Capital Shares
At May 31, 1996, the Fund had 75,000,000,000 shares of capital stock
authorized with a par value of $0.00001 per share. The Fund has the ability to
issue multiple classes of shares within the Portfolios. Each share of a class
represents an identical interest and has the same rights, except that each class
bears certain direct expenses, including those specifically related to the
distribution of its shares.
16
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Notes to Financial Statements (continued)
Transactions in shares of each Portfolio were as follows:
Period Ended
Cash Portfolio May 31, 1996+
====================================================
Class A
Shares sold 1,533,423,459
Shares issued on reinvestment 8,039,265
Shares redeemed (1,263,890,914)
----------------------------------------------------
Net Increase 277,571,810
====================================================
Government Portfolio
====================================================
Class A
Shares sold 434,782,708
Shares issued on reinvestment 1,684,998
Shares redeemed (378,769,977)
----------------------------------------------------
Net Increase 57,697,729
====================================================
Municipal Portfolio
====================================================
Class A
Shares sold 307,764,680
Shares issued on reinvestment 668,104
Shares redeemed (249,124,390)
----------------------------------------------------
Net Increase 59,308,394
====================================================
+ Transactions are for the period from June 16, 1995
(commencement of operations) to May 31, 1996.
17
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Financial Highlights
For a share of each class of capital stock outstanding throughout the period:
Cash Portfolio 1996(1)
=====================================================
Net Asset Value, Beginning of Period $1.00
-----------------------------------------------------
Net investment income (2) 0.053
Dividends from net investment income (0.053)
Net realized gains (0.00)*
-----------------------------------------------------
Net Asset Value, End of Period $1.00
-----------------------------------------------------
Total Return++ 5.44%
-----------------------------------------------------
Net Assets, End of Period (000s) $277,572
-----------------------------------------------------
Ratios to Average Net Assets+:
Expenses (2) 0.15%
Net investment income 5.43
=====================================================
Government Portfolio 1996(1)
=====================================================
Net Asset Value, Beginning of Period $1.00
-----------------------------------------------------
Net investment income (2) 0.052
Dividends from net investment income (0.052)
-----------------------------------------------------
Net Asset Value, End of Period $1.00
-----------------------------------------------------
Total Return++ 5.36%
-----------------------------------------------------
Net Assets, End of Period (000s) $57,698
-----------------------------------------------------
Ratios to Average Net Assets+:
Expenses (2) 0.16%
Net investment income 5.28
=====================================================
(1) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
(2) The Manager has waived a portion of its fees for the Portfolio for the
period ended May 31, 1996. If the Manager had not agreed to the fee
waiver, the per share decrease in net investment income and the ratio of
expenses to average net assets would have been:
Per Share
Decrease in Net Expense Ratio
Investment Income Without Fee Waiver
----------------- ------------------
1996 1996
------ ------
Cash Portfolio $0.001 0.21%+
Government Portfolio 0.002 0.36+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
* Amount represents less than $0.01.
18
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Financial Highlights (continued)
For a share of each class of capital stock outstanding throughout the period:
Municipal Portfolio 1996(1)
====================================================
Net Asset Value, Beginning of Period $ 1.00
----------------------------------------------------
Net investment income (2) 0.035
Dividends from net investment income (0.035)
----------------------------------------------------
Net Asset Value, End of Period $ 1.00
----------------------------------------------------
Total Return++ 3.55%
----------------------------------------------------
Net Assets, End of Period (000s) $59,308
----------------------------------------------------
Ratios to Average Net Assets+:
Expenses (2) 0.15%
Net investment income 3.46
====================================================
(1) For the period from October 1, 1995 (commencement of operations) to May
31, 1996.
(2) The Manager has waived all of its fees for the Portfolio for the period
ended May 31, 1996. In addition, the Manager has agreed to reimburse the
Portfolio for $63,835 in expenses. If the Manager had not agreed to the
fee waiver and the expense reimbursement, the per share decrease in net
investment income and the ratio of expenses to average net assets would
have been:
Per Share Expense Ratio
Decrease in Net Without Fee Waiver
Investment Income and Reimbursement
----------------- ------------------
1996 1996
------ -----
Municipal Portfolio $0.003 0.35%+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
Tax Information (unaudited)
100% of the dividends paid by the Institutional Cash Management Fund, Inc.
from net investment income for the year ended April 30, 1996, were tax-exempt
for regular Federal income tax purposes.
19
<PAGE>
Smith Barney
Institutional Cash Management Fund, Inc.
Independent Auditors' Report
The Shareholders and Board of Directors of the
Smith Barney Institutional Cash Management Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Cash, Government and Municipal Portfolios of
Smith Barney Institutional Cash Management Fund, Inc. as of May 31, 1996, and
the related statements of operations, changes in net assets, and financial
highlights for the period from June 16, 1995 (commencement of operations) to May
31, 1996. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
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 and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of May 31, 1996 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Cash, Government and Municipal Portfolios of Smith Barney Institutional Cash
Management Fund, Inc. as of May 31, 1996, the results of their operations,
changes in their net assets, and financial highlights for the period from June
16, 1995 to May 31, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
New York, New York
July 17, 1996
20
<PAGE>
Smith Barney
Institutional
Cash Management
Fund, Inc.
Directors
Paul R. Ades
Herbert Barg
Alger B. Chapman
Dwight B. Crane
Allan R. Johnson
Frank G. Hubbard
Heath B. McLendon, Chairman
Ken Miller
Jerome Miller
John F. White
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Phyllis Zahorodny
Investment Officer
Lawrence T. McDermott
Investment Officer
Irving P. David
Controller
Christina T. Sydor
Secretary
SMITH BARNEY
- -------------------------------
A Member of TravelersGroup[ART]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank, N.A.
Shareholder
Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Institutional Cash Management Fund, Inc. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective Prospectus for the Fund, which contains information concerning the
Fund's investment policies and expenses as well as other pertinent information.
Smith Barney
Institutional
Cash Management
Fund, Inc.
388 Greenwich Street
New York, New York 10013
FD2405 7/96
