================================================================================
SEMI-ANNUAL REPORT
================================================================================
SMITH BARNEY
INSTITUTIONAL
CASH
MANAGEMENT
FUND, INC.
--------------------------------------------
November 30, 1997
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
=====================================================
Smith Barney Institutional Cash Management Fund, Inc.
=====================================================
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith Barney
Institutional Cash Management Fund, Inc. ("Fund") for the six months ended
November 30, 1997. 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 that follow.
Performance Summary
The chart below provides the yields for the Cash, Government and Municipal
Portfolios ("Portfolio(s)") that make up the Fund for the six months ended
November 30, 1997.
Smith Barney Institutional Cash Management Fund Yields (Class A Shares)
<TABLE>
<CAPTION>
Portfolio Seven-day Current Yield 30-day Yield
- ---------------------------------------------------------------------------
<S> <C> <C>
Cash 5.47% 5.46%
Government 5.36% 5.34%
Municipal 3.66% 3.64%
</TABLE>
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
Cash and Government Portfolio Updates
Despite the recent troubles in the global stock markets, it has been relatively
quiet in the money markets so far this year. The Federal Reserve Board ("Fed")
has stayed patient and has kept its monetary policy unchanged. The Fed's
approach has helped the U.S. economy to grow moderately while inflation remains
subdued. The Federal Open Market Committee last raised interest rates in late
March 1997. Since then, both long- and short-term interest rates have traded in
a narrow range and investors who were long and fully invested have been
rewarded.
Fed Chairman Alan Greenspan recently testified before the Joint Economic
Committee of Congress where he discussed the financial turmoil in Asia and its
possible effects on the U.S. markets. As a result of events in Asia, Chairman
Greenspan expects some slowing in U.S. economic growth. In addition, the Fed
Chairman reiterated many points that we have raised throughout the year: namely,
that inflation remains low, labor markets are tight and labor
1
<PAGE>
productivity continues to improve. Greenspan also noted that the U.S. stock
market drop of late October 1997 was "salutary" for the U.S. economy because it
could possibly dampen consumer demand and bring stock valuations back down from
lofty levels.
The U.S. economy is still growing above its potential. Real gross domestic
product rose at a 3.5% annual rate in the third quarter of 1997 after rising
3.3% in the second quarter of 1997. In our view, the key to prolonging the
current economic expansion is low inflation. However, we have seen a slight
pick-up in labor costs recently. The employment cost index increased 0.8% in the
third quarter of 1997, and is running at a 3.0% rate for the twelve months ended
September 1997 versus 2.8% for the comparable period in 1996.
Cash and Government Portfolio Strategies
We think that the emerging market crisis should help to keep inflation low.
However, the degree to which it slows the capital spending of U.S. corporations
remains an open question. Weak demand in Asia and a stronger U.S. dollar will
have some modest effect (although negative) on U.S. economic growth in 1998. The
Fed will most likely wait to see the impact of all of these events before
changing its monetary policy.
The yield curve remains fairly flat and over the next six months we expect
relatively little interest rate volatility. We will continue to invest across
the yield curve when we identify good value. In addition, we will target the
average maturities for the Cash and Government Portfolios at around 65 days and
50 days, respectively.
As you have probably read in the major financial newspapers, many big U.S.
banks, brokerage firms and multinational corporations have exposure to Asia.
However, these companies have had several years of excellent profitability and
reserve building among the issuers we purchase for the Portfolios. We believe
that no major downgradings will occur that will impair any of our approved
issuers.
The Japanese banking system remains in turmoil with major downgradings and some
bankruptcies occurring. Spreads between top European bank certificates of
deposit ("CDs") and Japanese bank CDs have widened by as much as 100 basis
points and are now currently 60 basis points. We currently hold no Japanese bank
exposure in the Portfolios.
Municipal Portfolio Update
Over the past six months, variable rate demand obligations ("VRDOs") have
provided some of the most attractive rates on the municipal money market curve.
The VRDO sector of the market has seen a substantial increase in
2
<PAGE>
supply, which currently has outpaced demand in the marketplace. While this
segment of the market has provided the Portfolio with attractive yields as
compared to tax-exempt commercial paper and municipal notes, we expect the
current imbalance to abate as issuance slows and we continue to see growth in
tax-exempt money market assets. During the reporting period, we believed that
the variable rate demand obligation sector was more attractive than the
municipal note sector and increased our VRDO holdings. Yet we will monitor
market conditions closely and shift our emphasis back to municipal notes if that
sector appears more attractive on a relative basis.
Municipal Portfolio Strategy
The Municipal Portfolio seeks to provide investors with income exempt from
federal income tax by investing in a portfolio of high-quality, short-term
municipal obligations selected for liquidity and stability of principal.
Currently the Portfolio's average maturity is in the 55-day range. As noted,
over the coming months, we will continue to monitor economic data closely and
assess its impact on inflation and how that relates to tax-exempt money markets.
If doing so seems prudent, we will look to the fixed-rate municipal note market
to extent the Portfolio's average maturity slightly.
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 /s/ Phyllis Zahorodny
Heath B. McLendon Phyllis Zahorodny
Chairman Vice President and
Investment Officer
/s/ Lawrence T. McDermott
Lawrence T. McDermott
Vice President and
Investment Officer
December 22, 1997
3
<PAGE>
================================================================================
Schedules of Investments (unaudited) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
==================================================================================================
<S> <C> <C> <C>
BANK NOTES -- 2.3%
$ 5,000,000 FCC National matures 3/12/98 5.90% $ 4,999,336
5,000,000 First Union National Bank matures 1/12/98 5.70 5,000,000
- --------------------------------------------------------------------------------------------------
TOTAL BANK NOTES
(Cost -- $9,999,336) 9,999,336
==================================================================================================
COMMERCIAL PAPER -- 76.6%
13,750,000 Abbey National North America mature
1/21/98 to 2/25/98 5.68 to 5.71 13,614,292
15,000,000 Alliance & Leicester Bld. mature
12/5/97 to 4/28/98 5.60 to 5.70 14,768,767
3,700,000 American Express Credit Corp. matures 12/3/97 5.55 3,698,865
15,000,000 American Home Products Robbins mature
12/3/97 to 2/12/98 5.54 to 5.69 14,940,166
5,000,000 Asset Securitization matures 1/29/98 5.69 4,954,029
5,000,000 Bank Austriaengesellschaft matures 12/8/97 5.55 4,994,653
8,000,000 Bank of Montreal matures 1/26/98 5.66 7,930,560
10,000,000 Bank of New York matures 12/5/97 5.56 9,993,844
5,000,000 Bayerische Landesbank matures 2/26/98 5.72 4,999,765
5,000,000 BCI Funding matures 12/8/97 5.61 4,994,624
10,000,000 Bear Stearns mature 2/5/98 to 2/20/98 5.64 to 5.70 9,886,383
10,000,000 Cades matures 5/7/98 5.70 9,758,394
4,000,000 CC USA Inc. matures 1/14/97 5.72 3,972,818
13,500,000 Centric Capital Corp. mature 12/8/97 to 12/12/97 5.60 to 5.62 13,480,222
4,500,000 CIT Group Holdings Inc. matures 1/20/98 5.60 4,465,563
3,000,000 Citicorp matures 2/9/98 5.75 2,967,392
5,000,000 Credito Italiano Delaware, Inc. matures 12/22/97 5.58 4,983,871
10,000,000 Cregum North America matures 2/9/97 5.68 9,891,111
5,000,000 Daimler-Benz North America Corp. matures 4/1/98 5.71 4,906,897
5,000,000 Den Danske Corp. matures 4/6/98 5.67 4,903,575
4,200,000 Ford Motor Credit matures 12/17/97 5.55 4,189,715
10,000,000 General Electric Capital Corp. mature
2/25/98 to 3/23/97 5.69 to 5.71 9,847,089
5,000,000 General Motors Acceptance Corp. matures 5/8/98 5.75 4,877,331
10,000,000 Generale Bank matures 4/28/98 5.70 9,771,833
5,000,000 Goldman, Sachs & Co. matures 4/30/98 5.71 4,884,375
5,000,000 Grand Metro Cap. Corp. matures 3/31/98 5.65 4,908,333
6,000,000 Halifax Building Society matures 12/8/97 5.63 5,993,560
5,000,000 Internationall Nederlanden US matures 12/18/97 5.56 4,987,014
10,000,000 J.P. Morgan & Co. matures 12/23/97 5.55 9,966,389
11,000,000 Lloyds Bank mature 12/8/97 to 1/5/98 5.57 to 5.70 10,966,606
9,540,000 Lucent Technologies matures 12/18/97 5.56 9,515,223
8,000,000 Merrill Lynch mature 12/8/97 to 5/22/98 5.82 to 5.83 7,861,726
10,000,000 National Bank of Canada Finance USA
matures 2/2/98 5.72 9,901,300
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
==================================================================================================
<S> <C> <C> <C>
COMMERCIAL PAPER -- 76.6% (continued)
$10,000,000 National Bank of Detroit matures 1/12/98 5.59% $ 9,935,775
10,000,000 NationsBank matures 12/10/97 5.59 9,986,175
6,000,000 Ontario Hydro matures 12/15/97 5.55 5,987,143
5,000,000 Panasonic Finance Inc. matures 3/6/98 5.63 4,927,431
4,075,000 Province of British Columbia matures 1/26/98 5.66 4,040,073
10,000,000 Societe Generale NA Inc. matures 12/18/97 5.59 9,973,792
15,000,000 Svenska Handelsbanken mature
12/19/97 to 1/30/98 5.56 to 5.66 14,925,950
4,597,000 Toronto Dominion Holdings USA matures 1/20/98 5.69 4,561,692
10,000,000 Transamerica Finance Corp. matures 12/5/97 5.55 9,993,866
6,900,000 USAA Cap Corp. matures 1/7/98 5.75 6,860,357
- --------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $332,968,539) 332,968,539
==================================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 8.2%
8,000,000 Deutsche Bank mature 1/6/98 to 1/30/98 5.74 to 5.85 7,999,646
2,500,000 Hessiche Landesbank matures 4/7/98 5.65 2,502,614
9,000,000 Rabo Bank mature 12/4/97 to 2/3/98 5.54 to 5.70 9,000,242
5,000,000 Royal Bank of Canada matures 1/7/98 5.80 4,999,700
3,000,000 Societe Generale NY matures 1/12/98 5.70 2,999,580
8,000,000 Swiss Bank matures 2/12/98 5.75 8,000,080
- --------------------------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES OF DEPOSIT
(Cost -- $35,501,862) 35,501,862
==================================================================================================
MEDIUM TERM NOTES -- 1.6%
2,000,000 Ford Motor Credit Corp. PLC matures 2/26/98 5.55 2,001,870
5,000,000 Merrill Lynch matures 1/26/98 5.84 4,999,833
- --------------------------------------------------------------------------------------------------
TOTAL MEDIUM TERM NOTES
(Cost -- $7,001,703) 7,001,703
==================================================================================================
TIME DEPOSITS -- 2.3%
10,000,000 First Chicago matures 12/1/97
(Cost -- $10,000,000) 5.75 10,000,000
==================================================================================================
REPURCHASE AGREEMENT -- 9.0%
39,364,000 Morgan Stanley Dean Witter Discover & Co., 5.700% due 12/1/97;
Proceeds at maturity -- $39,382,698; (Fully collateralized by U.S.
Treasury Bill due 12/26/97; Market value -- $40,357,533)
(Cost -- $39,364,000) 39,364,000
==================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $434,835,440**) $434,835,440
==================================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
==================================================================================================
<S> <C> <C> <C>
U.S. AGENCIES AND INSTRUMENTALITIES -- 90.9%
$30,920,000 Federal Farm Credit Bank
mature 12/1/97 to 5/15/98 5.44% to 5.60% $30,851,200
30,250,000 Federal Home Loan Bank
mature 12/2/98 to 5/1/97 5.44 to 5.60 29,976,022
28,000,000 Federal Home Loan Mortgage Corp.
mature 12/1/97 to 5/1/98 5.49 to 5.63 27,847,664
28,940,000 Federal National Mortgage Association
mature 12/8/97 to 3/30/98 5.55 to 5.69 28,746,051
- --------------------------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $117,420,937) 117,420,937
==================================================================================================
REPURCHASE AGREEMENTS -- 9.1%
5,800,000 Citibank, 5.68% due 12/1/97;
Proceeds at maturity -- $5,802,745;
(Fully collateralized by U.S. Treasury Notes,
5.68% due 4/30/01; Market value -- $5,921,850) 5,800,000
6,007,000 Morgan Stanley Dean Witter Discover & Co.,
5.70% due 12/1/97;
Proceeds at maturity -- $6,009,853;
(Fully collateralized by U.S. Treasury Bill
due 12/26/97; Market value -- $6,166,410) 6,007,000
- --------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost -- $11,807,000) 11,807,000
==================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $129,227,937**) $129,227,937
==================================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
Alabama -- 3.9%
$1,100,000 NR++ Cullman, AL IDR, (Pressac Project), 4.10%(a) $1,100,000
2,000,000 A-1+ Mobile, AL (Infirmary Association), Series 92A, TECP,
3.80% due 1/20/98 2,000,000
- --------------------------------------------------------------------------------------------------
3,100,000
- --------------------------------------------------------------------------------------------------
Alaska -- 2.4%
900,000 VMIG 1* Alaska State Housing Finance Corp., AMBAC-Insured,
PART, 4.00%(a) 900,000
1,000,000 SP-1+ Anchorage, AK TAN, 4.00% due 12/17/97 1,000,043
- --------------------------------------------------------------------------------------------------
1,900,043
- --------------------------------------------------------------------------------------------------
Arizona -- 2.1%
1,700,000 A-1+ Apache County, AZ IDA, IDR, (Tucson Electric Power),
Series 83B, 3.90%(a) 1,700,000
- --------------------------------------------------------------------------------------------------
California -- 4.4%
1,000,000 A-1+ California Higher Education Loan Authority, Series A,
4.00% due 7/1/97(b) 1,000,082
1,000,000 SP-1+ California State RAN, 4.50% due 6/30/98 1,003,639
500,000 SP-1+ Los Angeles, CA USD, TRAN, 4.50% due 7/1/98 501,957
1,000,000 SP-1+ Riverside County, CA Series 87A, 4.50% due 6/30/98 1,003,048
- --------------------------------------------------------------------------------------------------
3,508,726
- --------------------------------------------------------------------------------------------------
Colorado -- 3.1%
1,500,000 A-1+ Colorado Health Facilities Authority,
(Sisters of Charity Health), 3.90%(a) 1,500,000
975,000 NR++ Colorado Postsecondary Educational Facilities Authority,
(Regis Jesuit High School Project), 3.95%(a) 975,000
- --------------------------------------------------------------------------------------------------
2,475,000
- --------------------------------------------------------------------------------------------------
District of Columbia -- 1.3%
1,000,000 VMIG 1* District of Columbia, FGIC-Insured, Series 93C,
PART, 4.15%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
Florida -- 7.4%
1,500,000 A-1+ Jacksonville, FL PCR, ( Florida Power and Light),
TECP, 3.80% due 1/26/98 1,500,000
500,000 A-1+ Palm Beach County, FL (Pooled Hospital), MBIA-Insured,
TECP, 3.75% due 1/14/98 500,000
1,200,000 VMIG 1* Pasco County, FL HFA, (Carlton Arms Project 85), 4.07%(a) 1,200,000
780,000 VMIG 1* Sunshine State Government Finance Committee,
Series 86, TECP, 3.80% due 12/10/97 780,000
900,000 VMIG 1* West Orange Memorial Hospital, Subseries 1991A,
TECP, 3.75% due 1/21/98 900,000
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
Florida -- 7.4% (continued)
$1,000,000 VMIG 1* West Orange Memorial Hospital, Subseries 1991A2,
TECP, 3.80% due 1/13/98 $1,000,000
- --------------------------------------------------------------------------------------------------
5,880,000
- --------------------------------------------------------------------------------------------------
Georgia -- 3.2%
1,000,000 A-1 Clayton County, GA MFH, Rainwood Development,
Series 1985, 4.07%(a) 1,000,000
1,500,000 A-1+ Cobb County, GA MFH, (Greenhouse Project),
Series 1996, 3.95%(a) 1,500,000
- --------------------------------------------------------------------------------------------------
2,500,000
- --------------------------------------------------------------------------------------------------
Hawaii -- 1.3%
1,000,000 VMIG 1* Hawaii State Housing Finance and Development Revenue,
Affordable Rental Housing, Series 1993A, 3.90%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
Illinois -- 6.9%
1,500,000 VMIG 1* Chicago, IL MFH, (Waveland Association),
Series D, 3.85%(a) 1,500,000
Illinois Development Finance Authority:
1,000,000 A-1+ Commonwealth Edison, Series C, 3.90%(a) 1,000,000
1,000,000 A-1+ Foundation For Safety, 3.95%(a) 1,000,000
1,000,000 A-1+ Illinois Educational Facility Authority Revenue,
(Adler Planetarium), 3.85%(a) 1,000,000
1,000,000 A-1+ Illinois Health Facility Authority Revenue Bonds,
MBIA-Insured, TECP, 3.80% due 1/15/98 1,000,000
- --------------------------------------------------------------------------------------------------
5,500,000
- --------------------------------------------------------------------------------------------------
Indiana -- 1.5%
1,210,000 VMIG 1* Richmond, IN Economic Development Revenue, IDR,
(Beverly Enterprises), 3.85%(a) 1,210,000
- --------------------------------------------------------------------------------------------------
Kentucky -- 1.3%
1,000,000 SP-1+ Kentucky Asset / Liability Community General Fund
Revenue, TRAN, Series A, 4.50% due 6/25/98 1,003,531
- --------------------------------------------------------------------------------------------------
Louisiana -- 3.8%
1,600,000 A-1+ Ascension, LA PCR, (Shell Oil Project), 3.85%(a) 1,600,000
1,400,000 P-1* Lake Charles Harbor, (Citgo Petroleum Corp.), 3.90%(a) 1,400,000
- --------------------------------------------------------------------------------------------------
3,000,000
- --------------------------------------------------------------------------------------------------
Maryland -- 2.5%
1,000,000 A-1+ Baltimore PCR, (Modal SCM Plants Project), 3.90%(a) 1,000,000
1,000,000 VMIG 1* Maryland Health and Higher Educational Facility
Authority Revenue, (Pooled Loan Program),
Series A, 3.85%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
2,000,000
- --------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
Michigan -- 2.5%
$1,000,000 SP-1+ Michigan Municipal Bond Authority Revenue, Series B,
4.50% due 7/2/98 $1,003,737
1,000,000 A-1+ Michigan State Underground, Series 1, TECP,
3.70% due 12/1/97 1,000,000
- --------------------------------------------------------------------------------------------------
2,003,737
- --------------------------------------------------------------------------------------------------
Minnesota -- 2.5%
1,000,000 A-1+ Cap Realty Investors, Series 1, PART, 4.10%(a) 1,000,000
1,000,000 A-1+ Rochester, MN Health Care Facility Revenue,
(Mayo Foundation Project), 4.15%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
2,000,000
- --------------------------------------------------------------------------------------------------
Missouri -- 1.3%
1,000,000 A-1+ Missouri State Health and Educational Facility
Authority Revenue, (Sister of Mercy), Series B, 3.85%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
New Jersey -- 2.5%
1,000,000 AAA Camden County Municipal Utilities Authority
Sewer Revenue (Pre-Refunded -- Escrowed
with U.S. government securities to 12/1/97 Call @102),
8.25% due 12/1/97 1,020,000
1,000,000 A-1+ New Jersey TRAN, Series 98A, TECP, 3.75% due 12/9/97 1,000,000
- --------------------------------------------------------------------------------------------------
2,020,000
- --------------------------------------------------------------------------------------------------
New Mexico -- 2.0%
1,500,000 SP-1+ New Mexico State TRAN, 4.50% due 6/30/98 1,505,729
- --------------------------------------------------------------------------------------------------
New York -- 6.9%
1,000,000 SP-1 Nassau County, NY BAN, Series A, 4.00% due 3/17/98 1,000,750
1,000,000 SP-1 Nassau County, NY RAN, Series B, 4.50% due 4/10/98 1,002,410
2,500,000 A-1+ New York City, NY Municipal Water Finance Authority,
Series 1, TECP, 3.80% due 1/13/98 2,500,000
1,000,000 SP-1+ New York City, NY RAN, Series A, 4.50% due 6/30/98 1,003,693
- --------------------------------------------------------------------------------------------------
5,506,853
- --------------------------------------------------------------------------------------------------
Oregon -- 1.3%
1,000,000 P-1* Oregon State EDC, IDR, (Eagle - Picher), 4.15%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
Pennsylvania -- 7.0%
1,600,000 A-1+ Delaware County, PA IDA, General Electric,
Series G, 3.85%(a) 1,600,000
800,000 A-1+ Montgomery County, PA IDA, PCR, (Peco Energy),
TECP, 3.80% due 1/21/98 800,000
1,150,000 AAA Pennsylvania State Turnpike, Commonwealth Revenue,
Series J, FGIC-Insured, 6.00% due 12/1/97 1,150,000
1,000,000 VMIG 1* Quakertown, PA Hospital Authority Revenue
(Pooled Financing Program), 4.05%(a) 1,000,000
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
Pennsylvania -- 7.0% (continued)
$1,000,000 VMIG 1* Quakertown, PA GO, Revenue Bonds
(Pooled Financing Program), Series A, 4.05%(a) $1,000,000
- --------------------------------------------------------------------------------------------------
5,550,000
- --------------------------------------------------------------------------------------------------
South Carolina -- 2.0%
1,700,000 P-1* Horry County, SC (Carolina Treatment), Series 95, 3.95%(a) 1,700,000
- --------------------------------------------------------------------------------------------------
Tennessee -- 2.7%
1,100,000 VMIG 1* Sevier County Public Building Authority,
(Local Government Public Improvements II-B),
AMBAC-Insured, 3.90%(a) 1,100,000
1,000,000 SP-1+ Tennessee State Local Development Authority,
BAN, Series A, 4.25% due 5/28/98 1,001,639
- --------------------------------------------------------------------------------------------------
2,101,639
- --------------------------------------------------------------------------------------------------
Texas -- 10.0%
600,000 VMIG 1* Harris County Health Facilities,
(Buckner Retirement Services), 3.95%(a) 600,000
2,000,000 A-1+ Houston, TX GO, Series A, TECP, 3.80% due 2/6/98 2,000,000
1,000,000 A-1+ Hunt County, TX IDC, (Trico Indudtries), 4.00%(a) 1,000,000
1,500,000 A-1+ Board of Regents (Texas A&M University), Series B, TECP,
3.75% due 1/22/98 1,500,000
3,000,000 SP-1+ Texas State TRAN, Series A, 4.75% due 8/31/98 3,019,730
- --------------------------------------------------------------------------------------------------
8,119,730
- --------------------------------------------------------------------------------------------------
Utah -- 2.5%
2,000,000 VMIG 1* Intermountain Power Agency, Series A, TECP,
3.75% due 1/09/98 2,000,000
- --------------------------------------------------------------------------------------------------
Virginia -- 4.5%
2,000,000 A-1 Fairfax County, VA IDA, (Nova Health Systems),
Series 1993, TECP, 3.75% due 1/21/98 2,000,000
1,500,000 AAA Virginia State Public School Authority
(Pre-Refunded -- Escrowed with
U.S. government securities to 8/1/97 Call @ 102),
7.00% due 8/1/10 1,560,302
- --------------------------------------------------------------------------------------------------
3,560,302
- --------------------------------------------------------------------------------------------------
Washington -- 2.0%
1,600,000 NR++ Yakima County, WA Public Corp., IDR,
(John I Haas Project), 4.05%(a) 1,600,000
- --------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
West Virginia -- 2.4%
$ 840,000 NR++ Harrison County, WV Nursing Facility,
(Salem Health Care Corp.), 4.00% due 9/1/98(b) $ 840,000
1,090,000 A-1+ West Virginia State Hospital Financing Authority,
(Mid-Atlantic States Inc.), AMBAC-Insured, 3.90%(a) 1,090,000
- --------------------------------------------------------------------------------------------------
1,930,000
- --------------------------------------------------------------------------------------------------
Wyoming -- 1.3%
1,000,000 A-1+ Sweetwater County, WY PCR, (Pacificorp), TECP,
3.85% due 2/9/98 1,000,000
- --------------------------------------------------------------------------------------------------
Miscellaneous -- 1.3%
1,000,000 A-1 Puttable Pooled Float Option, 4.15%(a) 1,000,000
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $79,375,290**) $79,375,290
==================================================================================================
</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 or Standard
& Poors. 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 12 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
11
<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.
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
================================================================================
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
12
<PAGE>
================================================================================
Statements of Assets and Liabilities (unaudited) November 30, 1997
================================================================================
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $434,835,440 $129,227,937 $79,375,290
Cash -- 573 13,086
Interest receivable 1,885,324 5,596 610,120
Prepaid registration fees 435,825 101,190 85,905
Other assets -- 23,500 --
- --------------------------------------------------------------------------------
Total Assets 437,156,589 129,358,796 80,084,401
================================================================================
LIABILITIES:
Dividends payable 1,946,389 551,136 280,961
Management fees payable 622,574 88,312 3,525
Deferred compensation payable 8,213 4,070 3,390
Payable to bank 4,064 -- --
Distribution fees payable 226 -- --
Accrued expenses 20,102 9,595 4,317
- --------------------------------------------------------------------------------
Total Liabilities 2,601,568 653,113 292,193
- --------------------------------------------------------------------------------
Total Net Assets $434,555,021 $128,705,683 $79,792,208
================================================================================
NET ASSETS CONSIST OF:
Capital Stock
(25,000,000,000 shares
authorized for each Portfolio;
par value $0.00001 per share) $4,346 $1,287 $798
Capital paid in excess of
par value 434,550,675 128,704,396 79,790,970
Accumulated net realized gain
from security transactions -- -- 440
- --------------------------------------------------------------------------------
Total Net Assets $434,555,021 $128,705,683 $79,792,208
================================================================================
Shares Outstanding:
Class A 433,554,160 128,705,683 79,791,768
Class B 1,000,861 -- --
- --------------------------------------------------------------------------------
Net Asset Value:
Class A $1.00 $1.00 $1.00
Class B $1.00 -- --
================================================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
================================================================================
Statements of Operations (unaudited)
================================================================================
For the Six Months Ended November 30, 1997
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
===================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $9,853,662 $3,938,187 $1,158,499
- -----------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 469,367 192,241 82,798
Shareholder and system servicing fees 44,196 18,272 5,023
Custody 21,485 10,477 4,768
Audit and legal 20,900 7,046 6,345
Registration fees 12,165 5,460 4,360
Directors' fees 9,511 3,395 7,497
Shareholder communications 9,076 1,600 1,676
Rating service fees -- 23,500 --
Other 834 795 1,200
- -----------------------------------------------------------------------------------
Total Expenses 587,534 262,786 113,667
Less: Management fee waivers (Note 2) (195,073) (97,944) (44,776)
- -----------------------------------------------------------------------------------
Net Expenses 392,461 164,842 68,891
- -----------------------------------------------------------------------------------
Net Investment Income 9,461,201 3,773,345 1,089,608
- -----------------------------------------------------------------------------------
Net Realized Gain From
Security Transactions -- -- 290
- -----------------------------------------------------------------------------------
Increase in Net Assets
From Operations $9,461,201 $3,773,345 $1,089,898
===================================================================================
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
================================================================================
Statements of Changes in Net Assets
================================================================================
For the Six Months Ended November 30, 1997 (unaudited)
and the Year Ended May 31, 1997
<TABLE>
<CAPTION>
Cash
Portfolio
----------------------------------
November 30, May 31,
===============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,461,201 $ 11,336,049
Net realized gain (loss) -- (8,615)
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 9,461,201 11,327,434
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income 9,461,201 (11,327,434)
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (9,461,201) (11,327,434)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 2,131,723,733 2,494,752,162
Net asset value of shares issued
for reinvestment of dividends 8,296,469 10,205,595
Cost of shares reacquired (1,921,520,166) (2,566,474,582)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 218,500,036 (61,516,825)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 218,500,036 (61,516,825)
NET ASSETS:
Beginning of period 216,054,985 277,571,810
- -------------------------------------------------------------------------------
End of period $ 434,555,021 $ 216,054,985
===============================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
================================================================================
Statements of Changes in Net Assets (continued)
================================================================================
For the Six Months Ended November 30, 1997 (unaudited)
and the Year Ended May 31, 1997
<TABLE>
<CAPTION>
Government
Portfolio
-------------------------------
November 30, May 31,
===============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,773,345 $ 4,371,798
Net realized gain -- 935
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 3,773,345 4,372,733
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (3,773,345) (4,371,798)
Net realized gains -- (935)
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (3,773,345) (4,372,733)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 365,651,698 913,598,746
Net asset value of shares issued
for reinvestment of dividends 3,693,317 3,795,637
Cost of shares reacquired (392,479,544) (823,251,900)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (23,134,529) 94,142,483
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (23,134,529) 94,142,483
NET ASSETS:
Beginning of period 151,840,212 57,697,729
- -------------------------------------------------------------------------------
End of period $ 128,705,683 $ 151,840,212
===============================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
================================================================================
Statements of Changes in Net Assets (continued)
================================================================================
For the Six Months Ended November 30, 1997 (unaudited)
and the Year Ended May 31, 1997
<TABLE>
<CAPTION>
Municipal
Portfolio
-------------------------------
November 30, May 31,
===============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,089,608 $ 1,449,724
Net realized gain 290 150
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 1,089,898 1,449,874
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (1,089,608) (1,449,724)
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,089,608) (1,449,724)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 366,297,905 475,271,011
Net asset value of shares issued
for reinvestment of dividends 876,667 1,332,993
Cost of shares reacquired (311,048,652) (512,246,550)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 56,125,920 (35,642,546)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 56,126,210 (35,642,396)
NET ASSETS:
Beginning of period 23,665,998 59,308,394
- -------------------------------------------------------------------------------
End of period $ 79,792,208 $ 23,665,998
===============================================================================
</TABLE>
See Notes to Financial Statements.
17
<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 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
Mutual Management Corp. ("MMC"), formerly known as Smith Barney Mutual
Funds Management Inc., a subsidiary of Salomon Smith Barney Holdings, Inc.
("SSBH"), acts as investment manager of the Fund. As compensation for its
services, each Portfolio pays MMC 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 six months ended November 30, 1997, MMC waived management fees of
$195,073, $97,944 and $44,776 for the Cash, Government and Municipal Portfolios,
respectively.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor
of Fund shares.
All officers and one Director of the Fund are employees of SB.
18
<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, 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.
19
<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, 1997(a) May 31, 1997
================================================================================
<S> <C> <C>
Cash Portfolio -- Class A Shares
Shares sold 2,130,723,733 2,494,752,162
Shares issued on reinvestment 8,295,609 10,205,595
Shares redeemed (1,921,520,166) (2,566,474,582)
- --------------------------------------------------------------------------------
Net Increase (Decrease) 217,499,176 (61,516,825)
================================================================================
Cash Portfolio -- Class B Shares
Shares sold 1,000,000 --
Shares issued on reinvestment 861 --
Shares redeemed -- --
- --------------------------------------------------------------------------------
Net Increase 1,000,861 --
================================================================================
Government Portfolio
Shares sold 365,651,698 913,598,746
Shares issued on reinvestment 3,693,317 3,795,637
Shares redeemed (392,479,544) (823,251,900)
- --------------------------------------------------------------------------------
Net Increase (Decrease) (23,134,529) 94,142,483
================================================================================
Municipal Portfolio
Shares sold 366,297,905 475,271,011
Shares issued on reinvestment 876,667 1,332,993
Shares redeemed (311,048,652) (512,246,550)
- --------------------------------------------------------------------------------
Net Increase (Decrease) 56,125,920 (35,642,546)
================================================================================
</TABLE>
(a) For Cash Portfolio -- Class B shares, transactions are for the period from
October 28, 1997 (inception date) to November 30, 1997.
20
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class A Shares Class B
----------------------------------------------- Shares
Cash Portfolio 1997(1) 1997 1996(2) 1997(3)
==================================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------
Net investment income (4)(5) 0.027 0.052 0.053 0.005
Distributions from net investment income (0.027) (0.052) (0.053) (0.005)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------
Total Return 2.77%++ 5.35% 5.44%++ 2.63%++
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $433,554 $216,055 $277,572 $1,001
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (4)(5) 0.23%+ 0.23% 0.15%+ 0.47%+
Net investment income 5.44+ 5.23 5.43+ 5.21+
==================================================================================================================
</TABLE>
(1) For the six months ended November 30, 1997 (unaudited).
(2) For the period from June 16, 1995 (inception date) to May 31, 1996.
(3) For the period from October 28, 1997 (inception date) to November 30, 1997
(unaudited).
(4) The Manager has waived a portion of its fees for the Portfolio for the six
months ended November 30, 1997, 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 for Class A shares would have been:
<TABLE>
<CAPTION>
Per Share
Decrease to Net Expense Ratio
Investment Income Without Fee Waiver
---------------------------- ---------------------------
1997(1) 1997 1996(2) 1997(1) 1997 1996(2)
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Class A $0.000* $0.001 $0.001 0.34%+ 0.36% 0.39%+
</TABLE>
(5) The Manager has waived a portion of its fees for the Portfolio for the
period ended November 30, 1997. 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 for Class B shares would have been:
<TABLE>
<CAPTION>
Per Share
Decrease to Net Expense Ratio
Investment Income Without Fee Waiver
----------------- ------------------
1997(3) 1997(3)
-------- -------
<S> <C> <C>
Class B $0.000* 0.47%+
</TABLE>
* 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.
21
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Government Portfolio 1997(1) 1997 1997(2)
================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------
Net investment income (3) 0.026 0.052 0.052
Distributions from net investment income (0.026) (0.052) (0.052)
Distributions from net realized gains -- (0.000)* (0.000)*
- ------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------
Total Return 2.69%++ 5.29% 5.36%++
- ------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $128,706 $151,840 $57,698
- ------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (3) 0.23%+ 0.21% 0.16%+
Net investment income 5.30+ 5.18 5.28+
================================================================================================
</TABLE>
(1) For the six months ended November 30, 1997 (unaudited).
(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, 1997, 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:
<TABLE>
<CAPTION>
Per Share
Decrease to Net Expense Ratio
Investment Income Without Fee Waiver
------------------------- -------------------------
1997(1) 1997 1996(2) 1997(1) 1997 1996(2)
------- ------ ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Government Portfolio $0.001 $0.001 $0.002 0.39%+ 0.43% 0.55%+
</TABLE>
* 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.
22
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Municipal Portfolio 1997(1) 1997 1996(2)
==========================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------
Net investment income (3) 0.018 0.034 0.035
Dividends from net investment income (0.018) (0.034) (0.035)
- ------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------
Total Return 1.78%++ 3.40% 3.55%++
- ------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $79,792 $23,666 $59,308
- ------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (3) 0.22%+ 0.21% 0.15%+
Net investment income 3.55+ 3.34 3.46+
==========================================================================================
</TABLE>
(1) For the six months ended November 30, 1997 (unaudited).
(2) For the period from June 16, 1995 (commencement of operations) to May 31,
1996.
(3) The Manager has waived all or part of its fees for the Portfolio for the
six months ended November 30, 1997, the year ended May 31, 1997 and the
period ended May 31, 1996. In addition, the Manager 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
---------------------------- --------------------------
1997(1) 1997 1996(2) 1997(1) 1997 1996(2)
------ ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Municipal Portfolio $0.001 $0.004 $0.003 0.37%+ 0.41% 0.69%+
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
23
<PAGE>
[This page intentionally left blank]
<PAGE>
SMITH BARNEY
INSTITUTIONAL SMITH BARNEY
CASH MANAGEMENT --------------------------------
FUND, INC. A Member of TravelersGroup[LOGO]
Directors Investment Manager
Paul R. Ades Mutual Management Corp.
Herbert Barg
Dwight B. Crane Distributor
Frank G. Hubbard Smith Barney Inc.
Heath B. McLendon, Chairman
Jerome Miller Custodian
Ken Miller PNC Bank, N.A.
John F. White
Shareholder
Officers Servicing Agent
Heath B. McLendon First Data Investor Services Group, Inc.
President and P.O. Box 9134
Chief Executive Officer Boston, MA 02205-9134
Lewis E. Daidone This report is submitted for the general
Senior Vice President information of the shareholders of Smith
and Treasurer Barney Institutional Cash Management
Fund, Inc. It is not authorized for
Phyllis Zahorodny distribution to prospective investors
Vice President and unless accompanied or preceded by an
Investment Officer effective Prospectus for the Fund, which
contains information concerning the
Lawrence T. McDermott Fund's investment policies and expenses
Vice President and as well as other pertinent information.
Investment Officer
Irving P. David SMITH BARNEY
Controller INSTITUTIONAL
CASH MANAGEMENT
Christina T. Sydor FUND, INC.
Secretary 388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD2405 1/98
