SEMI-ANNUAL REPORT
SMITH BARNEY
INSTITUTIONAL
CASH
MANAGEMENT
FUND, INC.
- -----------------
November 30, 1996
[LOGO] SMITH BARNEY MUTUAL FUNDS
Investing for your future.
Every day.
<PAGE>
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SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND, INC.
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith Barney
Institutional Cash Management Fund, Inc. for the six months ended November 30,
1996. For your convenience, we have summarized the period's prevailing economic
and market conditions. In addition, a comprehensive summary of performance and
current holdings can be found in the appropriate sections of this report.
Cash and Government Portfolio Updates
During the first nine months of 1996, the U.S. economy grew at a robust pace.
However, there were little signs of inflation, positive employment gains and
generally upbeat consumers. These economic conditions posed a dilemma for both
the Federal Reserve Board (the Fed) and investors. During the first three
quarters of 1996, it had been widely anticipated by investors that the Fed would
raise interest rates, but instead it chose to remain on the sidelines and left
interest rates unchanged as statistics showing a slowing U.S. economy were
released. Yet, despite making few changes to its existing policy, the Fed has
signaled its willingness to act decisively at any signs of inflationary
pressures in the U.S. economy.
During the third quarter, U.S. economic growth, as measured by Gross Domestic
Product (GDP), rose at a 2.2% annual rate after the second quarter's 4.7% annual
rate. Most of this increase in GDP came not from higher consumer spending but
from a build-up in inventories. This was a departure since U.S. economic growth
in recent quarters has primarily come from investments by businesses and
consumers.
In our view, the U.S. economy appears to be operating at a sustainable level.
Inventories are under control and real estate prices are fairly stable. Although
job creation remains strong, many U.S. consumers have begun to save more and
consumer spending has slowed down from early 1996. Given these conditions, we do
not believe a recession is likely. However, given the fact that the U.S. economy
is now in its sixth year of expansion, it is unlikely that the economy can post
two or three quarters of 3 1/2% growth; a scenario which would worry the Fed and
cause them to tighten.
1
<PAGE>
In light of the current state of the U.S. economy, we believe short-term
interest rates will stay in a narrow trading range over the next few months.
Federal Reserve Board Chairman Alan Greenspan's widely circulated comments about
too much speculation in the equity market suggest to us that the Fed is
uncomfortable with the stock market's historically high levels and will stay
vigilant with respect to any signs of inflation. We believe Greenspan's latest
comments in large part have temporarily halted the bond market's recent rally.
Cash and Government Portfolio Strategies
During the reporting period, our Portfolios remained short and their average
maturity was 45 days until the end of the third quarter. By late September, the
short-term yield curve had steepened and priced in a Fed tightening from 5.25%
to 5.50%. It appeared at that time that mixed signals from the Fed and
statistics showing subdued inflation would cause Fed policy to remain unchanged.
Short-term rates rallied 30 basis points and the yield curve flattened after the
lack of Fed action.
As a result, we extended the Cash Portfolio to 68 days and the Government
Portfolio to 50 days to lock in attractive yields. As of November 30, 1996, the
seven-day SEC yield on the Cash Portfolio was 5.23% and all of the Portfolio's
holdings have received one of the two highest ratings from Standard & Poor's
Corporation and Moody's Investors Service, Inc., two major credit reporting and
bond rating agencies. As of November 30, 1996, the seven-day SEC yield on the
Government Portfolio was 5.21% and S&P and Moody's have reaffirmed the AAA-
rating of the Portfolio.
Municipal Portfolio Update
Primary municipal note activity is extremely slow and we believe it should
remain that way through 1997. At the present time, one-year municipal notes are
trading at roughly 67% of the comparable yield on the one-year U.S. Treasury
bill. A combination of thin supply and approaching year-end technical factors
relating to large January coupon and call inflow should probably push ratios to
the 60%-65% range by the end of 1996.
A recurring concern of the short-term tax-exempt market has been the proposal to
eliminate the 2% de minimus rule under which corporations with outstanding debt
benefit from the tax exempt status of municipal bonds. In effect, the
elimination of the de minimus rule would reduce corporate demand for municipal
debt. However, given the high demand for short-term municipal issues by tax
exempt money funds and fairly limited supply in the market, the overall effects
of such a rule elimination should be minimal. Yet, volatility should be expected
in the yields of variable rate demand obligations (VRDOs)
2
<PAGE>
if corporate participation in this market is reduced. Corporations have
traditionally provided some stability to the VRDO market by buying during money
fund redemption periods when ratios are favorable compared to taxable securities
and selling during money fund demand periods when ratios become unfavorable
compared to taxable securities.
Municipal Portfolio Strategy
With all recent economic evidence pointing to modest economic growth coupled
with positive technical factors in the market, we have extended the Portfolio's
average maturity target from 10 days to a range of 60 days. In addition, in
preparation of year-end special tax redemptions and corporate tax payment dates,
the Municipal Portfolio has emphasized highly liquid names.
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 and
Chief Executive Officer
December 16, 1996
3
<PAGE>
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Schedules of Investments (unaudited) November 30, 1996
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CASH PORTFOLIO
<TABLE>
<CAPTION>
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
==============================================================================================
<S> <C> <C> <C>
BANK NOTES -- 4.4%
$ 5,000,000 FCC National matures 5/22/96 5.53% $ 5,001,115
5,000,000 Bank of America matures 2/5/97 5.36 4,999,801
- ----------------------------------------------------------------------------------------------
TOTAL BANK NOTES
(Cost -- $10,000,916) 10,000,916
==============================================================================================
COMMERCIAL PAPER -- 68.7%
5,000,000 American Home Products (AHP Robins)
matures 12/5/96 5.31 4,997,067
5,000,000 Asset Securitization matures 1/23/97 5.40 4,960,839
5,000,000 Banc One Corp. matures 2/14/97 5.37 4,944,792
5,000,000 Bank Brussels Lambert matures 1/22/97 5.71 4,959,628
5,000,000 Bank of New York matures 1/14/97 5.40 4,967,367
2,600,000 Banque Nationale De Paris Canada
matures 3/13/97 5.60 2,559,778
5,000,000 Barton Capital Corp. matures 12/5/96 5.30 4,997,067
5,000,000 Bear Stearns matures 3/4/97 5.41 4,931,412
5,000,000 Cheltenham & Gloucester Building Society
matures 1/15/97 5.40 4,966,750
5,000,000 Commerzbank US Finance matures 1/6/97 5.71 4,972,000
5,000,000 Credito Italiano matures 1/9/97 5.41 4,971,075
5,000,000 Dean Witter/Discover & Co. matures 2/21/97 5.36 4,939,753
1,000,000 Den Danske Corp. matures 1/27/97 5.37 991,577
5,000,000 Enterprise Funding Corp. matures 12/16/96 5.34 4,988,917
6,000,000 Ford Motor Credit Corp.
mature 1/30/97 to 2/18/97 5.36 to 5.39 5,933,074
5,000,000 General Electric Capital Corp. matures 3/10/97 5.82 4,922,312
9,000,000 General Motors Acceptance Corp.
mature 2/18/97 to 5/20/97 5.46 to 5.62 8,826,611
5,000,000 Glaxo Holdings PLC mature 1/8/97 to 1/17/97 5.39 to 5.40 4,967,911
5,000,000 Goldman Sachs matures 1/17/97 5.51 4,964,618
5,000,000 GTE Corp. matures 12/4/96 5.36 4,997,771
3,000,000 Halifax Building Society matures 3/13/97 5.75 2,952,400
10,000,000 Merrill Lynch mature 1/23/97 to 2/12/97 5.42 to 5.56 9,905,942
5,000,000 Morgan Stanley matures 12/4/96 5.56 4,997,716
5,000,000 National Bank of Canada Finance USA
matures 3/3/97 5.41 4,932,150
5,000,000 NationsBank Corp. matures 12/17/96 5.64 4,987,822
5,000,000 Norwest Corp. matures 2/7/97 5.36 4,949,945
8,000,000 Phillip Morris Co., Inc. matures 12/2/96 5.77 7,998,718
5,000,000 Saint Gobain (Compagnie de) matures 3/31/97 5.38 4,912,000
1,000,000 Sheffield Receivables Corp. matures 1/9/97 5.42 994,172
5,000,000 Transamerica Finance Corp. matures 1/16/97 5.40 4,966,011
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
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Schedules of Investments (unaudited) (continued) November 30, 1996
- -------------------------------------------------------------------------------
CASH PORTFOLIO
<TABLE>
<CAPTION>
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
==========================================================================================
<S> <C> <C> <C>
COMMERCIAL PAPER -- 68.7% (continued)
$ 1,220,000 Walt Disney Co. matures 3/3/97 5.37% $ 1,203,507
5,000,000 WMX Technologies, Inc. matures 4/8/97 5.61 4,903,111
- ------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $155,463,813) 155,463,813
==========================================================================================
DOMESTIC CERTIFICATE OF DEPOSIT -- 2.2%
5,000,000 Chase Manhattan Bank Corp. matures 2/25/96
(Cost -- $5,000,000) 5.37 5,000,000
==========================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 13.1%
5,000,000 Credit Agricole matures 2/6/97 5.43 5,000,524
5,000,000 Royal Bank of Canada matures 10/17/97 5.70 5,001,013
8,000,000 Societe Generale NY mature 4/3/97 to 10/7/97 5.40 to 5.71 8,002,921
6,700,000 Swiss Bank Corp. matures 12/19/96 5.55 6,699,889
5,000,000 Toronto Dominion matures 1/17/97 5.13 5,000,216
- ------------------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES OF DEPOSIT
(Cost -- $29,704,563) 29,704,563
==========================================================================================
U.S. AGENCIES AND INSTRUMENTALITIES -- 2.2%
5,000,000 Federal National Mortgage Association
matures 1/23/97
(Cost -- $4,999,441) 5.13 4,999,441
==========================================================================================
REPURCHASE AGREEMENT -- 9.4%
21,304,000 Morgan Stanley, 5.60% due 12/2/96;
Proceeds at maturity -- $21,313,942;
(Fully collateralized by U.S. Treasury Notes,
6.00% due 11/30/97; Market value -- $21,838,569)
(Cost -- $21,304,000) 21,304,000
==========================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $226,472,733*) $226,472,733
==========================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
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Schedules of Investments (unaudited) (continued) November 30, 1996
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GOVERNMENT PORTFOLIO
<TABLE>
<CAPTION>
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
==========================================================================================
<S> <C> <C> <C>
U.S. AGENCIES AND INSTRUMENTALITIES -- 94.5%
$27,780,000 Federal Farm Credit Bank
mature 12/2/96 to 7/31/97 5.29% to 5.49% $27,582,863
17,450,000 Federal Home Loan Bank
mature 12/4/96 to 3/11/97 5.25 to 5.61 17,338,536
19,000,000 Federal Home Loan Mortgage Corp.
mature 12/2/96 to 3/18/97 5.21 to 5.70 18,960,595
28,250,000 Federal National Mortgage Association
mature 12/2/96 to 3/17/97 5.28 to 5.65 28,095,158
- ------------------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $91,977,152) 91,977,152
==========================================================================================
REPURCHASE AGREEMENTS -- 5.5%
3,000,000 Citibank, 5.67% due 12/2/96; Proceeds
at maturity -- $3,001,418; (Fully
collateralized by U.S. Treasury Notes,
7.88% due 1/15/98; Market value -- $3,064,775) 3,000,000
2,304,000 Morgan Stanley, 5.60% due 12/2/96;
Proceeds at maturity -- $2,305,075;
(Fully collateralized by U.S. Treasury Notes,
6.50% due 8/15/97; Market value -- $2,365,534) 2,304,000
- ------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost -- $5,304,000) 5,304,000
==========================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $97,281,152*) $97,281,152
==========================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
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Schedules of Investments (unaudited) (continued) November 30, 1996
- --------------------------------------------------------------------------------
MUNICIPAL PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
Alaska -- 2.3%
$1,190,000 A-1 Alaska Individual Development and Export Authority
(Spenard Builders) 3.55%+ $ 1,190,000
- -----------------------------------------------------------------------------------------------
Arizona -- 7.9%
2,000,000 VMIG 1* Apache County, AZ IDA IDR Tucson Electric Power,
Series 81A 3.60%+ 2,000,000
2,000,000 VMIG 1* Pima County, AZ IDR Tucson Electric Series A 3.60%+ 2,000,000
- -----------------------------------------------------------------------------------------------
4,000,000
- -----------------------------------------------------------------------------------------------
Arkansas -- 2.0%
1,000,000 Aa2* Sheridan Arkansas IDR (Kohler Project) 3.50%+ 1,000,000
- -----------------------------------------------------------------------------------------------
California -- 3.9%
1,000,000 MIG 1* California RAN Series A 4.50% due 6/30/97 1,002,946
1,000,000 MIG 1* Contra Costa California Community College District
TRAN 4.50% due 6/30/97 1,003,895
- -----------------------------------------------------------------------------------------------
2,006,841
- -----------------------------------------------------------------------------------------------
Delaware -- 3.8%
1,930,000 VMIG 1* Delaware State Economic Development Authority
Hospital Billing Collection Service, Series A 3.50%+ 1,930,000
- -----------------------------------------------------------------------------------------------
Florida -- 5.5%
1,000,000 SP-1+ Palm Beach County, FL School District TAN
4.50% due 9/26/97 1,004,723
1,800,000 VMIG 1* St. Johns County, FL Hospital Revenue,
Flager Hospital, Series A 3.50%+ 1,800,000
- -----------------------------------------------------------------------------------------------
2,804,723
- -----------------------------------------------------------------------------------------------
Georgia -- 9.8%
Clayton County, GA Housing Authority Multi-Family
Housing Revenue:
1,000,000 VMIG 1* Huntington Woods Series A 3.50%+ 1,000,000
2,000,000 A-1 Rainwood Development 3.58%+ 2,000,000
2,000,000 NR+++ Richmond County, GA Development Authority Revenue
(General Signal Corporate Project) 3.55%+ 2,000,000
- -----------------------------------------------------------------------------------------------
5,000,000
- -----------------------------------------------------------------------------------------------
Illinois -- 8.4%
1,900,000 VMIG 1* Illinois Development Finance Authority Pollution Control
Revenue (Illinois Power Company Project)
Series B 3.55%+ 1,900,000
1,200,000 A-1+ Illinois Development Finance Authority Revenue
(Foundation for Safety) 3.55%+ 1,200,000
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=======================================================================================================
<S> <C> <C> <C>
Illinois -- 8.4% (continued)
$1,200,000 VMIG 1* Illinois Health Facility Authority Revenue
(Swedish Covenant Hospital Project) 3.55%+ $1,200,000
- -------------------------------------------------------------------------------------------------------
4,300,000
- -------------------------------------------------------------------------------------------------------
Iowa -- 2.6%
1,300,000 A-1+ Iowa Housing Finance Authority (Small Business-
Multi-Family Housing) Series A 3.60%+ 1,300,000
- -------------------------------------------------------------------------------------------------------
Louisiana -- 4.5%
1,000,000 VMIG 1* Louisiana Public Facility Authority Health Care System
TECP 3.55% due 1/14/97 1,000,000
305,000 AAA Louisiana Public Facility Revenue Student Loan 5.70%
due 1/1/97 305,603
500,000 AAA Louisiana State GO Series A 6.60% due 8/1/97 508,526
500,000 AAA New Orleans, LA Exhibition Authority Hotel Occupancy
TAN 5.25% due 1/15/97 501,166
- -------------------------------------------------------------------------------------------------------
2,315,295
- -------------------------------------------------------------------------------------------------------
Maryland -- 4.3%
2,200,000 VMIG 1* Maryland State Health & Higher Education Facilities
Authority Revenue (Pooled Loan Program)
Series A 3.60%+ 2,200,000
- -------------------------------------------------------------------------------------------------------
Massachusetts -- 2.0%
1,000,000 MIG 1* Massachusetts State Notes Series A 4.25% due 6/10/97 1,002,015
- -------------------------------------------------------------------------------------------------------
Michigan -- 3.9%
2,000,000 A-1+ Michigan State Housing Development Authority Rental
Housing Revenue Series C 3.65%+ 2,000,000
- -------------------------------------------------------------------------------------------------------
Minnesota -- 3.0%
1,500,000 A-1+ Becker, MN Pollution Control Revenue TECP (Northern State
Power Company) Series 1993-B 3.45% due 1/21/97 1,500,000
- -------------------------------------------------------------------------------------------------------
Missouri -- 7.5%
2,000,000 A-1+ Kansas City Missouri IDA Multi-Family Housing Revenue
(Willow Creek IV Apartments) 3.55%+ 2,000,000
1,790,000 VMIG 1* Missouri Economic Development Authority Series E 3.60%+ 1,790,000
- -------------------------------------------------------------------------------------------------------
3,790,000
- -------------------------------------------------------------------------------------------------------
New Hampshire -- 3.8%
1,925,000 A-1 New Hampshire State Housing Finance Authority
Multi-Family Manchester Series 1 3.55%+ 1,925,000
- -------------------------------------------------------------------------------------------------------
New Jersey -- 2.0%
1,000,000 A-1+ New Jersey TECP 3.55% due 4/17/97 1,000,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
====================================================================================================
<S> <C> <C> <C>
New York -- 3.0%
$ 1,500,000 MIG 1* Nassau County, NY BAN Series C
4.25% due 3/14/97 $ 1,501,817
- ----------------------------------------------------------------------------------------------------
North Carolina -- 2.0%
1,000,000 P-1* North Carolina Municipal Catawba Project 1 TECP
3.45% due 1/21/97 1,000,000
- ----------------------------------------------------------------------------------------------------
Pennsylvania -- 6.9%
1,310,000 AAA Colonial, PA School District Series A (Pre-Refunded --
Escrowed with U.S. Government Securities to
9/1/97 Call @ 100) 5.50% due 9/1/98 1,325,012
1,000,000 AAA Pennsylvania Intergovernmental Coop Authority Special Tax
Revenue Philadelphia Funding Program 5.00% due 6/15/97 1,006,760
1,150,000 AAA Pennsylvania State Turnpike Series J 6.00% due 12/1/97 1,176,646
- ----------------------------------------------------------------------------------------------------
3,508,418
- ----------------------------------------------------------------------------------------------------
South Carolina -- 3.3%
1,700,000 P-1* Horry County, SC Revenue (Carolina Treatment) 3.60%+ 1,700,000
- ----------------------------------------------------------------------------------------------------
Texas -- 3.9%
1,000,000 VMIG 1* Plano, TX Health Facility Development Corp. TECP
(Hospital Revenue) 3.55% due 1/14/97 1,000,000
1,000,000 MIG 1* Texas State TRAN Series A 4.75% due 8/29/97 1,005,719
- ----------------------------------------------------------------------------------------------------
2,005,719
- ----------------------------------------------------------------------------------------------------
West Virginia -- 3.7%
1,885,000 NR+++ Harrison County, WV Nursing Facility Revenue
(Salem Health Care Corporation) 4.00% due 9/1/97 1,883,811
- ----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $50,863,639**) $50,863,639
====================================================================================================
</TABLE>
+ Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
+++ Security has not been rated by either Moody's Investors Service or
Standard & Poor's, however, the manager has determined the equivalent
rating to be A-1+/VMIG 1 due to enhancement features such as insurance
and/or irrevocable letters of credit.
** Aggregate cost for Federal income tax purposes is substantially the same.
See page 10 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except those identified by an asterisk (*) are rated by Moody's Investors
Service Inc. ("Moody's"). The definitions of the applicable rating symbols are
set forth below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus () sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa," where 1 is the highest and 3 the lowest ranking
within its generic category.
Aa -- Bonds that are 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. They are rated lower than the
best bonds because margins of protection may not be as large in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in "Aaa" securities.
- --------------------------------------------------------------------------------
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
10
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
===============================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $226,472,733 $97,281,152 $50,863,639
Cash 20,932 636 110,130
Interest receivable 773,827 1,662 317,780
Receivable from manager 103,856 34,596 66,734
Prepaid registration fees 435,825 130,610 85,905
Other assets 10,083 10,000 --
- -------------------------------------------------------------------------------
Total Assets 227,817,256 97,458,656 51,444,188
===============================================================================
LIABILITIES:
Payable for securities purchased -- -- 1,177,221
Dividends payable 639,477 303,438 98,490
Accrued expenses 33,416 12,132 13,209
- -------------------------------------------------------------------------------
Total Liabilities 672,893 315,570 1,288,920
- -------------------------------------------------------------------------------
Total Net Assets $227,144,363 $97,143,086 $50,155,268
===============================================================================
NET ASSETS CONSIST OF:
Capital Stock
(25,000,000,000 shares
authorized for each Portfolio;
par value $0.00001 per share) $ 2,271 $ 971 $ 502
Capital paid in excess
of par value 227,142,092 97,142,115 50,158,030
Accumulated net realized loss
on security transactions -- -- (3,264)
- -------------------------------------------------------------------------------
Total Net Assets $ 227,144,363 $97,143,086 $50,155,268
===============================================================================
Shares Outstanding 227,144,363 97,143,086 50,158,532
- -------------------------------------------------------------------------------
Net Asset Value $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended November 30, 1996
Cash Government Municipal
Portfolio Portfolio Portfolio
==============================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $4,857,709 $2,231,075 $826,782
- ------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 242,620 112,047 63,812
Audit and legal 16,044 9,551 8,851
Transfer agent fees 16,044 6,471 4,020
Directors' fees 12,534 4,927 4,927
Custody 10,779 5,305 5,027
Shareholder communications 10,287 6,548 6,548
Rating service fees 8,000 8,000 --
Shareholder and system servicing fees 3,250 3,000 1,200
Registration fees 1,504 -- 350
Other -- 1,397 72
- ------------------------------------------------------------------------------
Total Expenses 321,062 157,246 94,807
Less: Management fee waiver (151,012) (78,088) (50,099)
- ------------------------------------------------------------------------------
Net Expenses 170,050 79,158 44,708
- ------------------------------------------------------------------------------
Net Investment Income 4,687,659 2,151,917 782,074
- ------------------------------------------------------------------------------
Net Realized Gain (Loss) From
Security Transactions 324 933 (3,264)
- ------------------------------------------------------------------------------
Increase in Net Assets From
Operations $4,687,983 $2,152,850 $778,810
==============================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended November 30, 1996 (unaudited)
and the Year Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Cash
Portfolio
-----------------------------------
1996 1996(a)
===================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,687,659 $ 9,396,139
Net realized gain 324 4,721
- -----------------------------------------------------------------------------------
Increase in Net Assets From Operations 4,687,983 9,400,860
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (4,687,659) (9,396,139)
Net realized gains (324) (4,721)
- -----------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (4,687,983) (9,400,860)
- -----------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares 1,070,427,556 1,533,423,459
Net asset value of shares issued
for reinvestment of dividends 4,162,496 8,039,265
Cost of shares reacquired (1,125,017,499) (1,263,890,914)
- -----------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions (50,427,447) 277,571,810
- -----------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (50,427,447) 277,571,810
NET ASSETS:
Beginning of period 277,571,810 --
- -----------------------------------------------------------------------------------
End of period $ 227,144,363 $ 277,571,810
===================================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended November 30, 1996 (unaudited)
and the Year Ended May 31, 1996(a)
Government
Portfolio
-----------------------------
1996 1996(a)
==============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,151,917 $ 2,014,475
Net realized gain 933 1,574
- ------------------------------------------------------------------------------
Increase in Net Assets From Operations 2,152,850 2,016,049
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (2,151,917) (2,014,475)
Net realized gains (933) (1,574)
- ------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,152,850) (2,016,049)
- ------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares 464,806,213 434,782,708
Net asset value of shares issued
for reinvestment of dividends 1,851,370 1,684,998
Cost of shares reacquired (427,212,226) (378,769,977)
- ------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 39,445,357 57,697,729
- ------------------------------------------------------------------------------
Increase in Net Assets 39,445,357 57,697,729
NET ASSETS:
Beginning of period 57,697,729 --
- ------------------------------------------------------------------------------
End of period $ 97,143,086 $ 57,697,729
==============================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended November 30, 1996 (unaudited)
and the Year Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Municipal
Portfolio
-------------------------------
1996 1996(a)
=========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 782,074 $ 845,796
Net realized loss (3,264) --
- -----------------------------------------------------------------------------------------
Increase in Net Assets From Operations 778,810 845,796
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (782,074) (845,796)
- -----------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (782,074) (845,796)
- -----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares 219,907,564 307,764,680
Net asset value of shares issued
for reinvestment of dividends 683,739 668,104
Cost of shares reacquired (229,741,165) (249,124,390)
- -----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions (9,149,862) 59,308,394
- -----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (9,153,126) 59,308,394
NET ASSETS:
Beginning of period 59,308,394 --
- -----------------------------------------------------------------------------------------
End of period $ 50,155,268 $ 59,308,394
=========================================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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
accounted for 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) 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 period ended November 30, 1996, SBMFM waived $151,012, $78,088 and
$50,099 of its management fees for Cash, Government and Municipal, respectively.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of Fund
shares.
All officers and one Director of the Fund are employees of SB.
16
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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 November 30, 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.
17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
November 30, 1996 May 31, 1996+
===============================================================================
<S> <C> <C>
Cash Portfolio
Shares sold 1,070,427,556 1,533,423,459
Shares issued on reinvestment 4,162,496 8,039,265
Shares redeemed (1,125,017,499) (1,263,890,914)
- -------------------------------------------------------------------------------
Net Increase (Decrease) (50,427,447) 277,571,810
===============================================================================
Government Portfolio
Shares sold 464,806,213 434,782,708
Shares issued on reinvestment 1,851,370 1,684,998
Shares redeemed (427,212,226) (378,769,977)
- -------------------------------------------------------------------------------
Net Increase 39,445,357 57,697,729
===============================================================================
Municipal Portfolio
Shares sold 219,907,564 307,764,680
Shares issued on reinvestment 683,739 668,104
Shares redeemed (229,741,165) (249,124,390)
- -------------------------------------------------------------------------------
Net Increase (Decrease) (9,149,862) 59,308,394
===============================================================================
</TABLE>
+ Transactions are for the period from June 16, 1995 (commencement of
operations) to May 31, 1996.
18
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a share of each class of capital stock outstanding throughout each period:
Cash Portfolio 1996(1) 1996(2)
=====================================================================
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
- ---------------------------------------------------------------------
Net investment income (3) 0.026 0.053
Distributions from net investment income (0.026) (0.053)
Distributions from net realized gains (0.000)* (0.000)*
- ---------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00
- ---------------------------------------------------------------------
Total Return+++ 2.64% 5.44%
- ---------------------------------------------------------------------
Net Assets, End of Period (000s) $227,144 $277,572
- ---------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses (3) 0.19% 0.15%
Net investment income 5.11 5.43
=====================================================================
Government Portfolio 1996(1) 1996(2)
=====================================================================
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
- ---------------------------------------------------------------------
Net investment income (3) 0.026 0.052
Distributions from net investment income (0.026) (0.052)
Distributions from net realized gains (0.000)* (0.000)*
- ---------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00
- ---------------------------------------------------------------------
Total Return+++ 2.62% 5.36%
- ---------------------------------------------------------------------
Net Assets, End of Period (000s) $ 97,143 $ 57,698
- ---------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses (3) 0.19% 0.16%
Net investment income 5.00 5.28
=====================================================================
</TABLE>
(1) For the period from June 1, 1996 to November 30, 1996.
(2) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
(3) The Manager has waived a portion of its fees for the Portfolio for the six
months ended November 30, 1996 and the period ended May 31, 1996. If the
Manager had not agreed to the fee waiver, the per share effect on net
investment income and the ratio of expenses to average net assets would
have been:
Per Share
Decrease to Net Expense Ratio
Investment Income Without Fee Waiver
------------------ -------------------
1996(1) 1996(2) 1996(1) 1996(2)
------- ------- ------- -------
Cash Portfolio $0.002 $0.001 0.36%+ 0.21%+
Government Portfolio 0.002 0.002 0.37+ 0.36+
* Amount represents less than $0.001.
+++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
19
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Municipal Portfolio 1996(1) 1996(2)
================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Net investment income (3) 0.016 0.035
Dividends from net investment income (0.016) (0.035)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Total Return+++ 1.66% 3.55%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $50,155 $59,308
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses (3) 0.20% 0.15%
Net investment income 3.10 3.46
================================================================================
</TABLE>
(1) For the period from June 1, 1996 to November 30, 1996.
(2) For the period from October 1, 1995 (commencement of operations) to May 31,
1996.
(3) The Manager has waived all of its fees for the Portfolio for the six months
ended November 30, 1996 and the period ended May 31, 1996. In addition, the
Manager has agreed to reimburse the Portfolio for $63,835 in expenses for
the period ended May 31, 1996. If the Manager had not agreed to the fee
waiver and the expense reimbursement, the per share effect on net
investment income and the ratio of expenses to average net assets would
have been:
<TABLE>
<CAPTION>
Per Share Expense Ratio
Decrease to Net Without Fee Waiver
Investment Income and Reimbursement
------------------ -------------------
1996(1) 1996(2) 1996(1) 1996(2)
------- ------ ------ ------
<S> <C> <C> <C> <C>
Municipal Portfolio $0.002 $0.003 0.40%+ 0.35%+
</TABLE>
+++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
20
<PAGE>
SMITH BARNEY
INSTITUTIONAL
CASH MANAGEMENT
FUND, INC.
DIRECTORS
Paul R. Ades
Herbert Barg
Alger B. Chapman
Dwight B. Crane
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[LOGO]
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 1/97
