Annual Report
1997
1997
1997
1997
1997
SMITH BARNEY
INSTITUTIONAL
CASH
MANAGEMENT
FUND, INC.
- -------------
May 31, 1997
LOGO SMITH BARNEY MUTUAL FUNDS
Investing for your future.
Every day.
<PAGE>
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Smith Barney Institutional Cash Management Fund, Inc.
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Dear Shareholder:
We are pleased to provide the annual report for Smith Barney Institutional Cash
Management Fund, Inc. for the fiscal year ended May 31, 1997. 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.
Cash and Government Portfolio Updates
During the past year, anticipating Federal Reserve Board ("Fed") monetary policy
was the focal point for short-term money market investors. As we entered the
third quarter of 1996, U.S. economic growth remained robust and an interest-rate
increase was widely anticipated by the market. However, the Fed chose not to
tighten monetary policy, stating its belief that economic growth would slow, and
that decision in turn caused the market to rally.
However, strong economic growth in the fourth quarter of 1996 (3.8% annual rate
of growth) and first quarter of 1997 (5.8% annual rate of growth) came as a
surprise to the Fed. Because economic growth was higher than Fed Chairman Alan
Greenspan expected, causing concerns about potential wage inflation pressures,
the Fed made a preemptive move and raised the federal funds rate from 5.25% to
5.50% in March of 1997. (The federal funds rate is the interest rate banks
charge each other for overnight loans and a closely watched indicator of the
direction of interest rates.)
Since that time, the overall economic picture in the U.S. has remained bright.
Employment growth is healthy and the rate of unemployment stands at roughly
4.8%. Over the last three months, an average of 214,000 new jobs per month have
been created. In our opinion, capital spending by corporations continues to be
the main engine fueling the economy. And while economic growth continues to be
strong, we believe higher labor productivity, a strong dollar and stiff overseas
competition have been the main factors that have kept inflation in check. The
tone of the financial markets is positive. In addition, as the federal budget
deficit narrows, the supply of Treasuries in the short and long end of the yield
curve has been reduced.
Cash and Government Portfolio Strategies
The market has been extremely choppy and Fed policy has provided us with little
or no clear direction. Given the market's recent turbulence, higher investor
uncertainty and anticipating no meaningful increase in inflation (as reflected
in recent bond market yields that are hovering below 7%), we intend to invest
1
<PAGE>
across the short-term yield curve when we think the market's risk/reward ratio
offers value. Over the next several months, we expect the targeted average
maturity of the Cash and Government Portfolios to be approximately 50 days.
Municipal Portfolio Update
During the reporting period, a strong national economy has been beneficial for
most state finances. New job creation, higher labor productivity and increased
corporate profits have helped push state tax collections way above budget
revenue estimates. In fact, during the first half of fiscal year 1997, state tax
collections have increased by about 6%. With few spending pressures looming,
current state budgets could have large budget surpluses in fiscal year 1998.
June signals the end of the current fiscal year for most state and local
governments. A large number of municipalities will come to market with their
annual note financing. Currently, one year municipal notes are trading at 67% of
the comparable U.S. Treasury bill yield. There appears to be quite a bit of
interest from both money market funds and corporate buyers at this current yield
ratio. However, with a majority of municipal note supply scheduled to be placed
in the market during the later part of June through mid July, we are uncertain
that this strong demand in the market will persist.
Municipal Portfolio Strategy
As a large number of municipalities come to market with their annual note
supply, we will look for opportunities to extend the Municipal Portfolio's
average maturity to the 55-day range. Moreover, because June and July have
historically brought large cash inflows into the tax-exempt money market arena,
we expect to see lower rates in the variable rate demand market during these
months. To mitigate some of the technical factors in the variable rate demand
market, we will look to decrease our variable rate position during the months of
June and July.
In closing, thank you for investing in the Smith Barney Institutional Cash
Management Fund, Inc. 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
June 19, 1997
2
<PAGE>
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Schedules of Investments May 31, 1997
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CASH PORTFOLIO
<TABLE>
<CAPTION>
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
========================================================================================
<S> <C> <C> <C>
BANK NOTE -- 2.3%
$5,000,000 FCC National matures 3/12/98
(Cost -- $4,998,133) 5.90% $4,998,133
========================================================================================
COMMERCIAL PAPER -- 40.8%
3,200,000 Banque Nationale De Paris Canada
matures 6/19/97 5.64 3,191,104
5,000,000 Credit Suisse/First Boston matures 7/8/97 5.51 4,972,199
5,000,000 Cregum North America matures 8/12/97 5.71 4,943,700
7,027,000 Delaware Funding Corp. matures 6/2/97 5.53 7,025,923
5,000,000 Dresdner U.S. Finance Inc. matures 6/5/97 5.57 4,996,911
5,000,000 General Motors Acceptance Corp.
matures 8/25/97 5.48 4,937,076
3,000,000 Goldman Sachs & Co. matures 6/20/97 5.43 2,991,656
4,800,000 Merrill Lynch & Co.
mature 6/4/97 to 6/6/97 5.45 to 5.53 4,797,275
5,000,000 Morgan Stanley Group matures 7/8/97 5.68 4,971,068
7,500,000 Nynex matures 6/6/97 5.52 7,494,260
5,000,000 Ontario Hydro matures 8/21/97 5.66 4,937,225
5,000,000 Osterreichische Kontrollbank
matures 9/25/97 5.75 4,910,019
8,000,000 Phillip Morris Co. matures 6/2/97 5.65 7,998,744
5,000,000 San Paolo U.S. Finance Corp.
matures 6/6/97 5.45 4,996,264
10,000,000 Union Bank of Switzerland
matures 6/2/97 5.65 9,998,431
5,000,000 USAA Capital Corp. matures 6/24/97 5.38 4,983,133
- ----------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $88,144,988) 88,144,988
========================================================================================
DOMESTIC CERTIFICATES OF DEPOSIT -- 5.6%
5,000,000 Bank of America Canada matures 8/26/97 5.70 5,000,000
7,000,000 Morgan Guaranty matures 9/18/97 5.47 7,006,073
- ----------------------------------------------------------------------------------------
TOTAL DOMESTIC CERTIFICATES OF DEPOSIT
(Cost -- $12,006,073) 12,006,073
========================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 25.8%
10,000,000 Canadian Imperial Bank matures 6/11/97 5.45 10,000,000
8,000,000 Deutsche Bank mature 1/6/98 to 1/30/98 5.73 to 5.85 7,998,133
9,000,000 Rabo Bank mature 12/4/97 to 2/3/98 5.54 to 5.70 9,000,750
5,000,000 Royal Bank of Canada matures 1/7/98 5.80 4,998,215
10,000,000 Societe Generale NY
mature 7/11/97 to 11/24/97 5.45 to 5.85 10,000,697
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
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Schedules of Investments (continued) May 31, 1997
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CASH PORTFOLIO
<TABLE>
<CAPTION>
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
========================================================================================
<S> <C> <C> <C>
FOREIGN CERTIFICATES OF DEPOSIT -- 25.8% (continued)
$5,800,000 Swiss Bank matures 6/23/97 5.53% $5,800,070
8,000,000 Westdeutsche Landesbank
mature 7/10/97 to 11/24/97 5.65 to 5.82 8,000,168
- ----------------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES OF DEPOSIT
(Cost -- $55,798,033) 55,798,033
========================================================================================
MEDIUM TERM NOTES -- 3.3%
2,000,000 Ford Motor Credit Corp. matures 2/26/98 5.65 2,005,804
5,000,000 Merrill Lynch matures 1/26/98 5.71 4,999,284
- ----------------------------------------------------------------------------------------
TOTAL MEDIUM TERM NOTES
(Cost -- $7,005,088) 7,005,088
========================================================================================
TIME DEPOSITS -- 22.2%
10,000,000 Bank Austriaengesellschaft matures 6/2/97 5.63 10,000,000
7,942,000 Chase Manhattan Bank matures 6/2/97 5.63 7,942,000
10,000,000 Credit Agricole matures 6/2/97 5.63 10,000,000
10,000,000 NationsBank matures 6/2/97 5.63 10,000,000
10,000,000 Republic National Bank matures 6/2/97 5.63 10,000,000
- ----------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(Cost -- $47,942,000) 47,942,000
========================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $215,894,315**) $215,894,315
========================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
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Schedules of Investments (continued) May 31, 1997
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GOVERNMENT PORTFOLIO
<TABLE>
<CAPTION>
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
========================================================================================
<S> <C> <C> <C>
U.S. AGENCIES AND INSTRUMENTALITIES -- 96.8%
$37,000,000 Federal Farm Credit Bank
mature 6/2/97 to 7/31/97 5.36% to 5.45% $36,966,503
39,000,000 Federal Home Loan Bank
mature 6/2/97 to 7/31/97 5.35 to 5.61 38,952,190
33,105,000 Federal Home Loan Mortgage Corp.
mature 6/2/97 to 8/27/97 5.36 to 5.53 33,028,767
38,690,000 Federal National Mortgage Association
mature 6/2/97 to 11/24/97 5.33 to 5.66 38,505,144
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TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $147,452,604) 147,452,604
========================================================================================
REPURCHASE AGREEMENT -- 3.2%
4,842,000 Morgan Stanley, 5.48% due 6/2/97;
Proceeds at maturity -- $4,844,211;
(Fully collateralized by U.S. Treasury Notes,
6.50% due 5/15/02; Market value --
$4,946,122) (Cost -- $4,842,000) 4,842,000
========================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $152,294,604**) $152,294,604
========================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
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Schedules of Investments (continued) May 31, 1997
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MUNICIPAL PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE SECURITY VALUE
====================================================================================
<S> <C> <C> <C>
Alaska -- 3.9%
$ 900,000 VMIG 1* Alaska HFA Part, AMBAC-Insured, 3.95%(a) $ 900,000
- ------------------------------------------------------------------------------------
Arizona -- 13.7%
Apache County, AZ IDA IDR (Tucson Electric Power):
1,000,000 VMIG 1* Series 1981A, 3.90%(a) 1,000,000
1,200,000 VMIG 1* Series 1983A, 3.90%(a) 1,200,000
1,000,000 VMIG 1* Series 1983B, 3.95%(a) 1,000,000
- ------------------------------------------------------------------------------------
3,200,000
- ------------------------------------------------------------------------------------
California -- 4.3%
1,000,000 SP-1+ California State RAN, Series A, 4.50% due 6/30/97 1,000,405
- ------------------------------------------------------------------------------------
Colorado -- 9.4%
1,200,000 VMIG 1* Colorado Health Facilities Authority,
(National Benevolent Association), 3.95%(a) 1,200,000
1,000,000 A-1+ Denver Colorado City and County MFH,
(Seasons Apartments Project), 4.00%(a) 1,000,000
- ------------------------------------------------------------------------------------
2,200,000
- ------------------------------------------------------------------------------------
Delaware -- 2.1%
500,000 A-1+ Delaware State EDA, (Hospital Billing Collection
Service), MBIA-Insured, Series A, 4.00%(a) 500,000
- ------------------------------------------------------------------------------------
Florida -- 9.4%
1,000,000 VMIG 1* Broward County, FL MFH, (Welleby Apartments Project),
4.00%(a) 1,000,000
500,000 A-1+ Palm Beach County, FL TECP, (Pooled Hospital),
MBIA-Insured, 3.85% due 7/30/97 500,000
700,000 VMIG 1* West Orange Memorial Hospital Subseries 1991A,
TECP, 3.65% due 8/21/97 700,000
- ------------------------------------------------------------------------------------
2,200,000
- ------------------------------------------------------------------------------------
Georgia -- 4.7%
1,100,000 A-1 Clayton County, GA MFH,
Rainwood Development, 4.08%(a) 1,100,000
- ------------------------------------------------------------------------------------
Louisiana -- 2.2%
500,000 AAA Louisiana State GO Series A, FSA-Insured,
6.60% due 8/1/97 502,140
- ------------------------------------------------------------------------------------
Massachusetts -- 4.3%
1,000,000 SP-1 Massachusetts State GO, Series A, 4.25% due 6/10/97 1,000,095
- ------------------------------------------------------------------------------------
Michigan -- 7.3%
700,000 A-1+ Michigan State Building Authority TECP, Series 1,
3.80% due 9/4/97 700,000
1,000,000 A-1+ Michigan State HDA, Series C, 3.90%(a) 1,000,000
- ------------------------------------------------------------------------------------
1,700,000
- ------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) May 31, 1997
- --------------------------------------------------------------------------------
MUNICIPAL PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE SECURITY VALUE
====================================================================================
<S> <C> <C> <C>
New York -- 6.4%
$ 500,000 A-1+ Municipal Assistant Corp. New York Series F, TECP,
AMBAC-Insured, 3.85% due 8/7/97 $ 500,000
1,000,000 SP-1+ New York City RAN, Series B, 4.50% due 6/30/97 1,000,732
- ------------------------------------------------------------------------------------
1,500,732
- ------------------------------------------------------------------------------------
Oklahoma -- 4.9%
1,145,000 NR Adair County Oklahoma IDR (Baldor Electric Co.
Project), 3.95%(a) 1,145,000
- ------------------------------------------------------------------------------------
Pennsylvania -- 6.4%
500,000 A-1 Pennsylvania Commonwealth GO BAN Series 1997A,
TECP, 3.80% due 7/28/97 500,000
1,000,000 AAA Pennsylvania Intergovernmental Co-op Authority
Special Tax Revenue, (Philadelphia Funding
Program), FGIC-Insured, 5.00% due 6/15/97 1,000,483
- ------------------------------------------------------------------------------------
1,500,483
- ------------------------------------------------------------------------------------
Tennessee -- 4.3%
1,000,000 VMIG 1* Tennessee State Local Development Authority BAN,
Series A, 4.25% due 5/28/98 1,003,323
- ------------------------------------------------------------------------------------
Texas -- 8.6%
1,000,000 A-1+ Hunt County Texas IDC (Trico Industries), 3.90%(a) 1,000,000
1,000,000 SP-1+ Texas State TRAN, Series A, 4.75% due 8/29/97 1,002,876
- ------------------------------------------------------------------------------------
2,002,876
- ------------------------------------------------------------------------------------
Utah -- 4.3%
1,000,000 VMIG 1* Salt Lake County, Utah Housing Authority
(Sandy Retirement Center), 3.85%(a) 1,000,000
- ------------------------------------------------------------------------------------
West Virginia -- 3.8%
885,000 NR# Harrison County West Virginia Nursing Facility
(Salem Health Care Corp.), 4.00% due 9/1/97(b) 884,398
- ------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $23,339,452**) $23,339,452
====================================================================================
</TABLE>
(a) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(b) Variable rate obligation payable at par on demand on the date indicated.
# Security has not been rated by either Moody's Investors Service, Inc. or
Standard & Poor's Ratings Service. However, the Board of Directors has
determined this security to be considered as a first tier quality issue
due to enhancement features; such as insurance and/or an irrevocable
letter of credit.
** Aggregate cost for Federal income tax purposes is substantially the
same.
See page 8 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except that 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:
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 Security 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.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
NR -- Indicates that the bond is not rated by Moody's or Standard & Poor's.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
EDC -- Economic Development Corporation
EFA -- Educational Facilities Authority
ETM -- Escrowed to Maturity
FGIC -- Financial Guaranty Insurance Company
FRTC -- Floating Rate Trust Certificates
FSA -- Financial Security Assurance
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
MBIA -- Municipal Bond Investor's Assurance Corporation
MFH -- Multi-Family Housing
PART -- Partnership Structure
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
8
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities May 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $215,894,315 $152,294,604 $23,339,452
Cash 279 424 39,525
Interest receivable 1,182,346 1,474 249,387
Receivable from manager -- 11,625 34,497
Prepaid registration fees 435,825 101,190 85,905
Other receivables 11,182 -- --
- --------------------------------------------------------------------------------
Total Assets 217,523,947 152,409,317 23,748,766
================================================================================
LIABILITIES:
Dividend payable 1,104,953 545,553 71,702
Management fee payable 348,280 -- --
Accrued expenses 15,729 23,552 11,066
- --------------------------------------------------------------------------------
Total Liabilities 1,468,962 569,105 82,768
- --------------------------------------------------------------------------------
Total Net Assets $216,054,985 $151,840,212 $23,665,998
================================================================================
NET ASSETS CONSIST OF:
Capital Stock
(25,000,000,000 shares
authorized for each Portfolio;
par value $0.00001 per share) $ 2,161 $ 1,518 $ 237
Capital paid in excess
of par value 216,052,824 151,838,694 23,665,611
Accumulated net realized gain
from security transactions -- -- 150
- --------------------------------------------------------------------------------
Total Net Assets $216,054,985 $151,840,212 $23,665,998
================================================================================
Shares Outstanding 216,054,985 151,840,212 23,665,848
- --------------------------------------------------------------------------------
Net Asset Value $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended May 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $11,834,022 $4,551,017 $1,539,659
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 585,305 227,516 117,100
Shareholder and system servicing fees 54,198 18,360 16,200
Audit and legal 34,000 17,354 15,700
Custody 33,645 15,000 8,500
Shareholder communications 22,500 10,038 3,797
Directors' fees 17,600 15,500 11,000
Rating service fees 16,500 23,170 --
Registration fees 6,750 37,750 5,400
Other 3,517 500 --
- --------------------------------------------------------------------------------
Total Expenses 774,015 365,188 177,697
Less: Management fee waiver (276,042) (185,969) (87,762)
- --------------------------------------------------------------------------------
Net Expenses 497,973 179,219 89,935
- --------------------------------------------------------------------------------
Net Investment Income 11,336,049 4,371,798 1,449,724
- --------------------------------------------------------------------------------
Net Realized Gain (Loss) From
Security Transactions (8,615) 935 150
- --------------------------------------------------------------------------------
Increase in Net Assets From
Operations $11,327,434 $4,372,733 $1,449,874
================================================================================
</TABLE>
See Notes to Financial Statements
10
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended May 31, 1997
and the Period Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Cash
Portfolio
--------------------------------
1997 1996(a)
=============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 11,336,049 $ 9,396,139
Net realized gain (loss) (8,615) 4,721
- -----------------------------------------------------------------------------
Increase in Net Assets From Operations 11,327,434 9,400,860
- -----------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (11,327,434) (9,396,139)
Net realized gains -- (4,721)
- -----------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (11,327,434) (9,400,860)
- -----------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares 2,494,752,162 1,533,423,459
Net asset value of shares issued
for reinvestment of dividends 10,205,595 8,039,265
Cost of shares reacquired (2,566,474,582) (1,263,890,914)
- -----------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions (61,516,825) 277,571,810
- -----------------------------------------------------------------------------
Increase (Decrease) in Net Assets (61,516,825) 277,571,810
NET ASSETS:
Beginning of year 277,571,810 --
- -----------------------------------------------------------------------------
End of year $ 216,054,985 $ 277,571,810
=============================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended May 31, 1997
and the Period Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Government
Portfolio
------------------------------
1997 1996(a)
============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,371,798 $ 2,014,475
Net realized gain 935 1,574
- ----------------------------------------------------------------------------
Increase in Net Assets From Operations 4,372,733 2,016,049
- ----------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (4,371,798) (2,014,475)
Net realized gains (935) (1,574)
- ----------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (4,372,733) (2,016,049)
- ----------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares 913,598,746 434,782,708
Net asset value of shares issued
for reinvestment of dividends 3,795,637 1,684,998
Cost of shares reacquired (823,251,900) (378,769,977)
- ----------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 94,142,483 57,697,729
- ----------------------------------------------------------------------------
Increase in Net Assets 94,142,483 57,697,729
NET ASSETS:
Beginning of year 57,697,729 --
- ----------------------------------------------------------------------------
End of year $ 151,840,212 $ 57,697,729
============================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended May 31, 1997
and the Period Ended May 31, 1996(a)
<TABLE>
<CAPTION>
Municipal
Portfolio
-----------------------------
1997 1996(a)
=========================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,449,724 $ 845,796
Net realized gain 150 --
- -------------------------------------------------------------------------
Increase in Net Assets From Operations 1,449,874 845,796
- -------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (1,449,724) (845,796)
- -------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,449,724) (845,796)
- -------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares 475,271,011 307,764,680
Net asset value of shares issued
for reinvestment of dividends 1,332,993 668,104
Cost of shares reacquired (512,246,550) (249,124,390)
- -------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions (35,642,546) 59,308,394
- -------------------------------------------------------------------------
Increase (Decrease) in Net Assets (35,642,396) 59,308,394
NET ASSETS:
Beginning of year 59,308,394 --
- -------------------------------------------------------------------------
End of year $ 23,665,998 $ 59,308,394
=========================================================================
</TABLE>
(a) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
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
accounted for on trade date; (b) the Portfolios use the amortized cost method
for valuing investments; accordingly, the cost of securities plus accreted
discount, or minus amortized premium, approximates value; (c) interest income is
recorded on an 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 an 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, 1997, SBMFM waived a portion of its management fees
for the Cash, Government and Municipal Portfolios, 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.
14
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (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 May 31, 1997, 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.
15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
May 31, 1997 May 31, 1996(a)
==============================================================================
<S> <C> <C>
Cash Portfolio
Shares sold 2,494,752,162 1,533,423,459
Shares issued on reinvestment 10,205,595 8,039,265
Shares redeemed (2,566,474,582) (1,263,890,914)
- -----------------------------------------------------------------------------
Net Increase (Decrease) (61,516,825) 277,571,810
=============================================================================
Government Portfolio
Shares sold 913,598,746 434,782,708
Shares issued on reinvestment 3,795,637 1,684,998
Shares redeemed (823,251,900) (378,769,977)
- -----------------------------------------------------------------------------
Net Increase 94,142,483 57,697,729
=============================================================================
Municipal Portfolio
Shares sold 475,271,011 307,764,680
Shares issued on reinvestment 1,332,993 668,104
Shares redeemed (512,246,550) (249,124,390)
- -----------------------------------------------------------------------------
Net Increase (Decrease) (35,642,546) 59,308,394
=============================================================================
</TABLE>
(a) Transactions are for the period from June 16, 1995 (commencement of
operations) to May 31, 1996.
16
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Cash Portfolio 1997 1996(1)
=============================================================================
<S> <C> <C>
Net Asset Value, Beginning of Year $ 1.00 $ 1.00
- -----------------------------------------------------------------------------
Net investment income (2) 0.052 0.053
Distributions from net investment income (0.052) (0.053)
Distributions from net realized gains -- (0.000)*
- -----------------------------------------------------------------------------
Net Asset Value, End of Year $ 1.00 $ 1.00
- -----------------------------------------------------------------------------
Total Return 5.35% 5.44%++
- -----------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 216,055 $ 277,572
- -----------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2) 0.23% 0.15%+
Net investment income 5.23 5.43+
=============================================================================
</TABLE>
(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 year
ended May 31, 1997 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
----------------- ------------------
1997 1996(1) 1997 1996(1)
---- ------- ---- -------
Cash Portfolio $0.001 $0.001 0.36% 0.39%+
* 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.
17
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Government Portfolio 1997 1996(1)
================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00
- --------------------------------------------------------------------------------
Net investment income (2) 0.052 0.052
Distributions from net investment income (0.052) (0.052)
Distributions from net realized gains (0.000)* (0.000)*
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00
- --------------------------------------------------------------------------------
Total Return 5.29% 5.36%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $151,840 $57,698
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2) 0.21% 0.16%+
Net investment income 5.18 5.28+
================================================================================
</TABLE>
(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 year
ended May 31, 1997 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
----------------- ------------------
1997 1996(1) 1997 1996(1)
------ ------- ------ -------
Government Portfolio $0.001 $0.002 0.43% 0.55%+
* 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.
18
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
<S> <C> <C>
Municipal Portfolio 1997 1996(1)
================================================================================
Net Asset Value, Beginning of Year $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Net investment income (2) 0.034 0.035
Dividends from net investment income (0.034) (0.035)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Total Return 3.40% 3.55%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 23,666 $ 59,308
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2) 0.21% 0.15%+
Net investment income 3.34 3.46+
================================================================================
</TABLE>
(1) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
(2) The Manager has waived all or part of its fees for the Portfolio for the
year ended May 31, 1997 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:
Per Share Expense Ratio
Decrease to Net Without Fee Waiver
Investment Income and Reimbursement
----------------- ------------------
1997 1996(1) 1997 1996(1)
------ ------- ------ -------
Municipal Portfolio $0.004 $0.003 0.41% 0.69%+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
May 31, 1997:
o 100.00% of the dividends paid by the Municipal Portfolio from net
investment income as tax-exempt for regular Federal income tax purposes.
Percentage of dividends paid by the Fund from net investment income derived
from Federal obligations that may be exempt from taxation at the state level:
o Cash Portfolio 1.47%
o Government Portfolio 86.24%
19
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of Smith
Barney Institutional Cash Management Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Cash, Government and Municipal
Portfolios of Smith Barney Institutional Cash Management Fund, Inc. as of May
31, 1997, the related statements of operations for the year then ended, and the
statements of changes in net assets and financial highlights for the year then
ended and 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1997, 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Cash, Government and Municipal Portfolios of Smith Barney Institutional Cash
Management Fund, Inc. as of May 31, 1997, the results of their operations for
the year then ended, and the changes in their net assets and financial
highlights for the year then ended and 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 14, 1997
20
<PAGE>
Smith Barney
Institutional
Cash Management
Fund, Inc.
Directors
Paul R. Ades
Herbert Barg
Dwight B. Crane
Frank G. Hubbard
Heath B. McLendon, Chairman
Jerome Miller
Ken Miller
John F. White
Officers
Heath B. McLendon
Chief Executive Officer
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 7/97
