<PAGE>
[LOGO]
Smith Barney
Institutional Cash
Management
Fund, Inc.
-------------
ANNUAL REPORT
-------------
May 31, 1998
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(SM)
<PAGE>
Smith Barney [PHOTO] [PHOTO]
Institutional Cash
Management HEATH B. PHYLLIS
Fund, Inc. MCLENDON ZAHORODNY
Chairman Vice President and
Investment Officer
[PHOTO] [PHOTO]
JOSEPH LAWRENCE T.
BENEVENTO MCDERMOTT
Investment Officer Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the annual report for Smith Barney Institutional Cash
Management Fund, Inc. ("Fund") for the fiscal year ended May 31, 1998. 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.
Performance Summary
The chart below provides the yields for the Cash, Government and Municipal
Portfolios ("Portfolio(s)") that make up the Fund for the year ended May 31,
1998.
Smith Barney Institutional Cash Management Fund Yields (Class A Shares)
<TABLE>
<CAPTION>
Portfolio 7-day Current Yield 30-day Yield
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash 5.46% 5.42%
Government 5.40% 5.34%
Municipal 3.67% 3.71%
</TABLE>
Please note that an investment in the Fund is neither insured nor guaranteed by
the U.S. government. Moreover, there can be no assurance that the Fund will be
able to maintain a stable net asset value ("NAV") of $1.00 per share.
Cash and Government Portfolio Updates and Strategies
As a result of Salomon Smith Barney's marketing efforts and updated technology
to enhance trade transactions, the Smith Barney Institutional Cash Management
Fund: Cash Portfolio has experienced extraordinary growth. Since the beginning
of 1998 the assets have climbed from $216 million to over $850 million.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 1
<PAGE>
The U.S. economic expansion remains intact as we enter the second half of 1998.
Strong consumer demand has fueled the U.S. economy for six straight quarters
with 3.0% or better gross domestic product ("GDP") growth. With little or no
evidence of inflation, the Federal Reserve Board ("Fed") has been able to keep
the fed funds rate steady at 5.5% since March 1997. However, robust employment
gains and the fear of wage pressures creeping up have kept the Fed on alert.
Counteracting strong U.S. economic growth are pressing questions from abroad.
The "Asia effect" (i.e. problems in Indonesia, Thailand, and South Korea) has
finally started to negatively affect our trade balance. Japan's banking problems
won't go away and their economy continues to teeter on the brink of depression.
In addition, the future of the Russian economy remains cloudy, at best.
Because of the extraordinary strength the U.S. economy has shown, Fed Chairman
Alan Greenspan shifted monetary policy from a neutral stance to a tightening
bias at the March 31, 1998, Federal Open-Market Committee meeting. However, the
lack of inflation has afforded Chairman Greenspan the opportunity to take a
"wait and see" approach. The fear is that a pre-emptive strike versus inflation
now could cause serious ramifications in the already unsettled Asian countries.
Record inventory accumulation in the first quarter, along with the problems
abroad, should help to moderate U.S. economic growth and allow Chairman
Greenspan to hold rates steady in the months ahead. However, any sign of rising
inflation could trigger a rate hike from the Fed.
We think that many more months of strong growth or higher than expected
inflation numbers would be needed for the Fed to raise rates. Therefore, we are
taking advantage of the positively sloping yield curve and targeting the average
maturity at 70 days for the Cash Portfolio and 45 days for the Government
Portfolio. Some of our banking and corporate names have been eliminated. As
replacements, we have added some top tier corporate names such as SBC
Communications Inc., GTE Corp, Ameritech Capital Funding Corp., and Province De
Quebec to the approved list.
Effective July 1, 1998 the Securities and Exchange Commission has adopted new
guidelines necessitating us to monitor our bank and insurance guarantees and
obligor concentrations with respect to our asset-backed commercial paper.
(Asset-backed commercial paper is paper whose repayment is reliant upon the cash
flows from various types of receivables generally accompanied by a partial
guarantee). All of our guarantors are rated A1/P1 or better and any name
concentrations will have to meet the same stringent credit standards we employ
before purchasing the program. We believe these new guidelines will further
strengthen the overall quality of the money fund industry.
Municipal Portfolio Update and Strategy
The growth in tax-exempt money market funds was dramatic over the first quarter
of 1998. As a result, the demand for high-quality, short-term municipal paper
has outpaced supply. Rates on variable rate demand obligations ("VRDOs"), the
largest portion of the tax-exempt money market, have been put under considerable
pressure
- --------------------------------------------------------------------------------
2 1998 Annual Report to Shareholders
<PAGE>
during this period. Historically VRDOs have traded at ratios of approximately
63% of the one-month London Interbank Offered Rate. During the first quarter of
1998, this ratio went as low as 50%, signifying that VRDOs were rich versus the
taxable market. These ratios continued until early April 1998 when VRDOs bounced
back to historical trading levels as a result of the tax-exempt money markets
experiencing redemptions relating to personal and corporate income tax payments.
For most state and local governments, June signals the end of the current fiscal
year and the pricing of a large portion of their annual note financings. With
strong state finances and higher tax collections, we anticipate a decrease in
supply during this year's note issuance season. In addition, a decrease in the
supply of the note market may add some pressure to the VRDO rate levels in the
months to come.
As a result, we plan to extend our average maturity to a 50 day range in the
Municipal Portfolio during the coming months. This will enable us to take
advantage of the municipal note supply scheduled to take place in June and July
and will allow us to decrease some of our exposure to VRDOs.
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 /s/ PHYLLIS M. ZAHORODNY
Heath B. McLendon Phyllis Zahorodny
Chairman Vice President and
Investment Officer
/s/ LAWRENCE T. MCDERMOTT /s/ JOSEPH BENEVENTO
Lawrence T. McDermott Joseph Benevento
Vice President and Investment Officer
Investment Officer
June 23, 1998
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 3
<PAGE>
================================================================================
Schedule of Investments May 31, 1998
================================================================================
<TABLE>
<CAPTION>
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================================
<S> <C> <C> <C>
COMMERCIAL PAPER -- 73.3%
$ 19,800,000 ABN AMRO Bank NV matures 7/6/98 5.54% $19,694,799
9,000,000 A.I. Credit matures 7/24/98 5.50 8,929,113
5,000,000 Alliance & Leicester Building Society
matures 6/4/98 5.56 4,997,714
10,000,000 American Express Credit Corp. matures 6/30/98 5.58 9,955,694
9,000,000 American Home Products matures 7/10/98 5.57 8,946,375
10,000,000 Aspen Funding matures 6/8/98 5.54 9,989,267
10,000,000 Bank of America matures 10/2/98 5.65 9,814,817
10,000,000 Bank of Montreal matures 6/22/98 5.52 9,968,395
5,000,000 Banque Nationale de Paris Canada matures 6/30/98 5.60 4,977,767
16,422,000 Barton Capital Corp. mature 6/1/98 to 6/5/98 5.53 to 5.61 16,418,354
20,000,000 BCI Funding Corp. mature 6/8/98 to 7/2/98 5.59 to 5.60 19,941,753
20,000,000 Bear Stearns mature 6/8/98 to 6/11/98 5.54 to 5.55 19,973,933
6,500,000 Beta Finance matures 8/10/98 5.60 6,430,233
10,000,000 Cades matures 6/10/98 5.87 9,985,750
20,000,000 CAFCO matures 6/1/98 5.70 20,000,000
16,000,000 Centauri (C.C. USA Inc.)
mature 6/22/98 to 7/28/98 5.59 to 5.62 15,892,998
20,420,000 Centric Capital Corp. mature 6/1/98 to 6/29/98 5.54 to 5.61 20,373,018
10,000,000 Credito Italiano Delaware Inc. matures 8/4/98 5.61 9,901,689
15,000,000 Cregum North America Inc. matures 6/8/98 5.56 14,984,002
15,000,000 Daimler-Benz North America Co. matures 7/24/98 5.54 14,879,646
18,000,000 Diageo PLC mature 7/6/98 to 8/31/98 5.55 to 5.59 17,836,002
8,000,000 E.I. duPont de Nemours matures 6/5/98 5.53 7,995,156
10,000,000 Enterprise Funding matures 6/5/98 5.54 9,993,856
5,000,000 Finnish Export Credit matures 7/31/98 5.70 4,954,000
15,000,000 Ford Motor Credit mature 6/8/98 to 6/17/98 5.53 to 5.57 14,970,174
30,000,000 General Electric Capital Corp.
mature 6/5/98 to 8/14/98 5.51 to 5.59 29,781,236
10,000,000 General Motors Acceptance Corp. matures 8/31/98 5.54 9,864,006
15,000,000 Generale Bank mature 7/9/98 to 7/30/98 5.54 to 5.55 14,898,011
15,000,000 Goldman, Sachs & Co. mature 7/10/98 to 10/8/98 5.60 to 5.70 14,773,983
19,000,000 GTE Corp. mature 6/17/98 to 6/25/98 5.57 to 5.59 18,940,733
12,700,000 GTE Funding mature 6/9/98 to 6/19/98 5.57 12,677,126
15,000,000 International Nederlanden US matures 6/9/98 5.59 to 5.85 14,981,233
24,000,000 J.P. Morgan & Co. mature 6/22/98 to 7/13/98 5.54 to 5.59 23,878,025
10,000,000 Krediet Bank National Finance matures 10/19/98 5.67 9,785,333
15,000,000 Lloyds Bank mature 6/11/98 to 7/7/98 5.56 to 5.85 14,937,511
15,000,000 Merrill Lynch mature 6/12/98 to 8/21/98 5.53 to 5.56 14,922,669
10,000,000 Morgan Stanley Dean Witter Discover
matures 6/19/98 5.58 9,972,500
15,000,000 National Australia Fund matures 6/15/98 5.56 14,968,033
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
4 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
===============================================================================================
<S> <C> <C> <C>
COMMERCIAL PAPER -- 73.3% (continued)
$ 20,000,000 NationsBank mature 8/20/98 to 9/9/98 5.53% to 5.60% $ 19,727,666
20,000,000 Province de Quebec mature
10/26/98 to 10/29/98 5.61 to 5.68 19,547,458
10,000,000 San Paolo US Finance matures 7/13/98 5.56 9,936,067
20,000,000 Standard Credit Card Trust Dakota
Certificate matures 8/7/98 5.60 19,794,533
20,000,000 Toronto Dominion Bank matures 8/18/98 5.51 19,767,733
15,000,000 Transamerica Finance Corp. matures 6/19/98 5.55 14,958,675
5,000,000 Woolwich Building Society matures 6/5/98 5.80 4,996,861
- -----------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $624,913,897) 624,913,897
===============================================================================================
DOMESTIC BANK OBLIGATIONS -- 5.0%
8,000,000 Bank of New York matures 3/26/99 5.78 7,988,380
30,000,000 First Union National Bank mature
8/17/98 to 11/6/98 5.52 to 5.65 30,000,000
5,000,000 Wachovia Bank matures 7/13/98 5.56 5,000,000
- -----------------------------------------------------------------------------------------------
TOTAL DOMESTIC BANK OBLIGATIONS
(Cost -- $42,988,380) 42,988,380
===============================================================================================
DOMESTIC CERTIFICATE OF DEPOSIT -- 1.2%
10,000,000 Chase Manhattan Bank matures 5/12/99
(Cost -- $9,993,664) 5.80 9,993,664
===============================================================================================
TIME DEPOSITS -- 4.1%
25,000,000 Chase Manhattan Bank USA Delaware matures 6/1/98 5.69 25,000,000
10,000,000 First Chicago matures 6/1/98 5.69 10,000,000
- -----------------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(Cost -- $35,000,000) 35,000,000
===============================================================================================
YANKEE CERTIFICATES OF DEPOSIT -- 14.6%
19,000,000 Bank of Nova Scotia mature 10/6/98 to 3/23/99 5.63 to 5.75 18,991,142
5,000,000 Banque Nationale de Paris (Canada)
matures 10/5/98 5.72 4,998,182
10,000,000 Canadian Imperial Bank matures 2/10/99 5.80 9,978,501
5,000,000 Credit Agricole Indosuez matures 4/16/99 5.78 4,997,907
10,000,000 Deutsche Bank matures 4/16/99 5.75 9,995,814
25,000,000 National Westminster Bank matures 8/5/98 5.52 25,000,126
10,000,000 Rabo Bank matures 5/5/99 5.81 9,997,257
15,000,000 Royal Bank of Canada mature 6/5/98 to 2/26/99 5.70 to 5.79 14,994,970
16,000,000 Societe Generale mature 3/23/99 to 4/19/99 5.75 to 5.80 15,993,359
10,000,000 Swiss Bank Corp. matures 4/5/99 5.75 9,997,575
- -----------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF DEPOSIT
(Cost -- $124,944,833) 124,944,833
===============================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 5
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
CASH PORTFOLIO
FACE
AMOUNT SECURITY VALUE
=============================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 1.8%
$ 15,176,000 Morgan Stanley Dean Witter Discover, 5.56% due 6/1/98;
Proceeds at maturity -- $15,183,032;
(Fully collateralized by U.S. Treasury Notes,
4.75% due 8/31/98; Market value -- $15,252,792)
(Cost -- $15,176,000) $ 15,176,000
=============================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $853,016,774*) $853,016,774
=============================================================================================
</TABLE>
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
=============================================================================================
<S> <C> <C> <C>
U.S. AGENCIES AND INSTRUMENTALITIES -- 93.9%
$25,147,000 Federal Farm Credit Bank
mature 6/1/98 to 10/13/98 5.39% to 5.53% $25,073,067
18,500,000 Federal Home Loan Bank
mature 6/1/98 to 11/13/98 5.40 to 5.51 18,398,448
22,685,000 Federal Home Loan Mortgage Corp.
mature 6/1/98 to 9/18/98 5.44 to 5.55 22,579,317
17,588,000 Federal National Mortgage Association
mature 6/9/98 to 11/23/98 5.42 to 5.70 17,398,886
- ---------------------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $83,449,718) 83,449,718
=============================================================================================
REPURCHASE AGREEMENTS -- 6.1%
2,000,000 Citibank, 5.54% due 6/1/98; Proceeds at maturity -- $2,000,923;
(Fully collateralized by U.S. Treasury Notes, 5.50% due 2/28/03;
Market value -- $2,042,719) 2,000,000
3,451,000 Morgan Stanley Dean Witter Discover, 5.56% due 6/1/98;
Proceeds at maturity -- $3,452,599; (Fully collateralized
by U.S. Treasury Notes, 4.75% due 10/31/98;
Market value -- $3,472,328) 3,451,000
- ---------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost -- $5,451,000) 5,451,000
=============================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $88,900,718*) $88,900,718
=============================================================================================
</TABLE>
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 7
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATINGS SECURITY VALUE
=============================================================================================
<S> <C> <C> <C>
Alabama -- 3.7%
$ 1,100,000 NR+ Cullman, AL IDR, (Pressac Project), 4.05%(a) $1,100,000
2,000,000 A-1+ Mobile, AL, (Infirmary Association),
Series 92A, TECP, 3.75% due 8/14/98 2,000,000
- ---------------------------------------------------------------------------------------------
3,100,000
- ---------------------------------------------------------------------------------------------
Arizona -- 4.8%
2,000,000 A-1+ Apache County, AZ IDR, (Tucson Electric Power),
Series 83B, 3.85%(a) 2,000,000
2,000,000 A-1 Pinal County, AZ IDR, (Magna Copper Co.),
Series 92, 3.90%(a) 2,000,000
- ---------------------------------------------------------------------------------------------
4,000,000
- ---------------------------------------------------------------------------------------------
California -- 7.8%
1,000,000 A-1+ California Higher Education Loan Authority Series 87A,
4.00% due 7/1/98(b) 1,000,012
1,000,000 A-1+ California State GO, PART, MBIA-Insured, 4.00%(a) 1,000,000
3,000,000 SP-1+ California State RAN, 4.50% due 6/30/98 3,001,165
500,000 SP-1+ Los Angeles, CA USD, TRAN, 4.50% due 7/1/98 500,277
1,000,000 SP-1+ Riverside County, CA TRAN, 4.50% due 6/30/98 1,000,419
- ---------------------------------------------------------------------------------------------
6,501,873
- ---------------------------------------------------------------------------------------------
Colorado -- 2.4%
2,000,000 A-1 Lakewood, CO MFH, (Marston Pointe
Apartments Project), 3.90%(a) 2,000,000
- ---------------------------------------------------------------------------------------------
Connecticut -- 2.4%
2,000,000 VMIG 1* Connecticut State PART, Series 96A, 3.80%(a) 2,000,000
- ---------------------------------------------------------------------------------------------
Georgia -- 4.7%
1,900,000 NR+ Decatur County & Bainbridge, GA Development
Authority (Thomas and Betts Project), 3.95%(a) 1,900,000
2,000,000 A-1+ Marietta, GA MFH Concept 21, 3.95%(a) 2,000,000
- ---------------------------------------------------------------------------------------------
3,900,000
- ---------------------------------------------------------------------------------------------
Illinois -- 7.9%
1,000,000 AAA Chicago, IL GO, (Pre-Refunded -- Escrowed with
U.S. government securities to 1/1/99 call @ 102),
7.50% due 11/1/17 1,041,841
1,000,000 A-1+ Elmhurst, IL (Joint Commission of Accredited
Healthcare), 3.95%(a) 1,000,000
2,500,000 A-1+ Lisle, IL MFH, (Ashley of Lisle Project), 3.90%(a) 2,500,000
2,000,000 A-1+ University of Illinois, (Health Services Facility
Systems), Series B, 3.85%(a) 2,000,000
- ---------------------------------------------------------------------------------------------
6,541,841
- ---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATINGS SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Indiana -- 2.4%
$ 1,000,000 SP-1+ Indiana Bond Bank, Series A-2, 4.00% due 1/20/99 $1,002,469
1,000,000 A-1+ Indiana Health Facility Authority, (Community
Hospitals), Series B, 3.90%(a) 1,000,000
- ----------------------------------------------------------------------------------------------
2,002,469
- ----------------------------------------------------------------------------------------------
Kentucky -- 2.4%
1,000,000 NR+ Hancock, KY PCR, (Southwire Co. Project),
Series 92B, 3.90%(a) 1,000,000
1,000,000 SP-1+ Kentucky Asset/Liability Community General
Fund Revenue, TRAN, Series A, 4.50% due 6/25/98 1,000,411
- ----------------------------------------------------------------------------------------------
2,000,411
- ----------------------------------------------------------------------------------------------
Louisiana -- 1.7%
1,400,000 P-1* Lake Charles Harbor, LA, (Citgo Petroleum Corp.), 3.90%(a) 1,400,000
- ----------------------------------------------------------------------------------------------
Maryland -- 1.2%
1,000,000 VMIG 1* Maryland HEFA, (Pooled Loan Program), Series A, 3.85%(a) 1,000,000
- ----------------------------------------------------------------------------------------------
Michigan -- 2.4%
1,000,000 SP-1+ Michigan Municipal Bond Authority Revenue,
Series B, 4.50% due 7/2/98 1,000,544
1,000,000 A-1 Michigan State Hospital Financial Authority,
(St. Mary Hospital of Livonia), 3.90%(a) 1,000,000
- ----------------------------------------------------------------------------------------------
2,000,544
- ----------------------------------------------------------------------------------------------
Minnesota -- 3.2%
2,000,000 VMIG 1* Minnesota State GO, PART, 3.825%(a) 2,000,000
700,000 A-1+ Rochester, MN Health Care Facility Revenue,
(Mayo Foundation Project), Series C, 4.05%(a) 700,000
- ----------------------------------------------------------------------------------------------
2,700,000
- ----------------------------------------------------------------------------------------------
Nebraska -- 1.2%
1,000,000 AAA Omaha Public Power District, Series A,
(Pre-Refunded-- Escrowed with U.S. government
securities to 2/1/99 call @ 100), 5.55% due 2/1/99 1,012,736
- ----------------------------------------------------------------------------------------------
Nevada -- 3.6%
1,000,000 AAA Clark County, NV (Las Vegas Convention & Visitors
Authority), MBIA-Insured, 5.40% due 7/1/98 1,001,430
2,000,000 A-1+ Nevada State GO, PART, 4.02%(a) 2,000,000
- ----------------------------------------------------------------------------------------------
3,001,430
- ----------------------------------------------------------------------------------------------
New Hampshire -- 1.2%
1,000,000 A-1+ New Hampshire State Business Finance Authority,
(Connecticut Light & Power), Series 82A, 3.90%(a) 1,000,000
- ----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 9
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATINGS SECURITY VALUE
============================================================================================
<S> <C> <C> <C>
New York -- 6.0%
$ 4,000,000 SP-1+ New York City, NY RAN, Series A, 4.50% due 6/30/98 $4,001,505
1,000,000 A-1+ New York City Municipal Water Finance Authority TECP,
Series 5A, 4.00% due 6/15/98 1,000,000
- --------------------------------------------------------------------------------------------
5,001,505
- --------------------------------------------------------------------------------------------
Ohio -- 7.4%
2,000,000 A-1+ Lake County, OH Hospital System Facility
Revenue, 3.95%(a) 2,000,000
2,000,000 NR+ Oakwood, OH Industrial Development,
(Sennett Steel Corp. Project), 3.85%(a) 2,000,000
2,180,000 VMIG 1* Toledo, OH Services Special Assessment
Notes 98, 3.90%(a) 2,180,000
- --------------------------------------------------------------------------------------------
6,180,000
- --------------------------------------------------------------------------------------------
Oregon -- 5.2%
2,400,000 VMIG 1* Hillsboro, OR Graduate Institute, 3.95%(a) 2,400,000
1,900,000 VMIG 1* Oregon State GO, Series 73H, 3.85%(a) 1,900,000
- --------------------------------------------------------------------------------------------
4,300,000
- --------------------------------------------------------------------------------------------
Pennsylvania -- 2.2%
1,800,000 VMIG 1* Quakertown, PA GO, Revenue Bonds
(Pooled Financing Program), Series A, 3.95%(a) 1,800,000
- --------------------------------------------------------------------------------------------
Tennessee -- 5.5%
2,000,000 VMIG 1* Montgomery County, TN Public Building Authority,
Pooled Financial Revenue, 3.90%(a) 2,000,000
2,600,000 NR+ Roane County, TN IDR,
Great Lakes Carbon Corp., 3.80%(a) 2,600,000
- --------------------------------------------------------------------------------------------
4,600,000
- --------------------------------------------------------------------------------------------
Texas -- 7.2%
Harris County Health Facilities:
2,000,000 VMIG 1* Buckner Retirement Services, 3.85%(a) 2,000,000
1,000,000 A-1+ Sister of Charity, Series C, 3.95%(a) 1,000,000
1,000,000 P-1* Midlothian, TX PCR, (Box Crew Cement Co.), 3.90%(a) 1,000,000
2,000,000 VMIG 1* Texas Small Business IDR, 3.95%(a) 2,000,000
- --------------------------------------------------------------------------------------------
6,000,000
- --------------------------------------------------------------------------------------------
Utah -- 3.7%
2,000,000 A-1 Intermountain Power Agency TECP, Series 97B2, 3.70% 2,000,000
1,000,000 AAA Salt Lake City, UT Hospital Revenue (Pre-Refunded --
Escrowed with U.S. government securities to
2/15/99 @ 102), 7.60% due 2/15/20 1,046,532
- --------------------------------------------------------------------------------------------
3,046,532
- --------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedule of Investments (continued) May 31, 1998
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL PORTFOLIO
FACE
AMOUNT RATINGS SECURITY VALUE
============================================================================================
<S> <C> <C> <C>
Virginia -- 2.6%
$ 2,100,000 A-1+ Brunswick County, VA Aegis Waste Solutions, 3.95%(a) $2,100,000
- --------------------------------------------------------------------------------------------
Washington -- 3.7%
3,100,000 NR+ Yakima County, WA Public Corp., IDR,
(John I Haas Project), 3.95% 3,100,000
- --------------------------------------------------------------------------------------------
West Virginia -- 1.1%
840,000 NR+ Harrison County, WV Nursing Facility,
(Salem Health Care Corp.), 4.00% due 9/1/98(b) 840,000
- --------------------------------------------------------------------------------------------
Wisconsin -- 2.4%
Wisconsin State Health & Educational Facilities
Authority, Felician Services, AMBAC-Insured:
1,000,000 A-1+ Series A, 3.95%(a) 1,000,000
1,000,000 A-1+ Series B, 3.95%(a) 1,000,000
- --------------------------------------------------------------------------------------------
2,000,000
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $83,129,341**) $83,129,341
============================================================================================
</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
& Poor's. 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.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 11
<PAGE>
================================================================================
Bond Ratings (unaudited)
================================================================================
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 (unaudited)
================================================================================
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 (unaudited)
================================================================================
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 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Statements of Assets and Liabilities May 31, 1998
================================================================================
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $853,016,774 $88,900,718 $83,129,341
Cash -- 665 74,282
Interest receivable 2,521,002 2,450 730,116
Prepaid registration fees 245,536 101,190 63,064
Receivable for securities sold -- -- 2,000,800
- -------------------------------------------------------------------------------
Total Assets 855,783,312 89,005,023 85,997,603
- -------------------------------------------------------------------------------
LIABILITIES:
Dividend payable 4,067,781 369,902 287,366
Management fees payable 878,384 127,727 25,532
Distribution fees payable 2,128 -- 352
Deferred compensation payable 1,293 551 498
Payable to bank 49 -- --
Accrued expenses 51,096 23,262 12,909
- -------------------------------------------------------------------------------
Total Liabilities 5,000,731 521,442 326,657
- -------------------------------------------------------------------------------
Total Net Assets $850,782,581 $88,483,581 $85,670,946
===============================================================================
NET ASSETS CONSIST OF:
Capital Stock
(25,000,000,000 shares
authorized for each Portfolio;
par value $0.00001 per share) $ 8,508 $ 885 $ 857
Capital paid in excess of
par value 850,774,073 88,482,696 85,671,446
Accumulated net realized loss
from security transactions -- -- (1,357)
- -------------------------------------------------------------------------------
Total Net Assets $850,782,581 $88,483,581 $85,670,946
===============================================================================
Shares Outstanding:
Class A 848,376,694 88,481,697 85,670,997
-----------------------------------------------------------------------------
Class B 2,400,335 -- --
-----------------------------------------------------------------------------
Net Asset Value $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 13
<PAGE>
================================================================================
Statement of Operations For the Year Ended May 31, 1998
================================================================================
<TABLE>
<CAPTION>
Cash Government Municipal
Portfolio Portfolio Portfolio
======================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $31,925,390 $6,676,829 $2,507,743
- --------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 1,505,040 325,002 186,349
Registration fees 205,535 13,496 27,735
Shareholder and system servicing fees 121,084 30,315 22,836
Custody 34,263 16,093 10,224
Audit and legal 25,018 13,852 12,015
Shareholder communications 22,629 4,174 1,550
Directors' fees 20,981 10,894 10,394
Distribution fees (Note 2) 3,003 -- 352
Rating service fees -- 47,000 --
Other 11,276 2,563 3,300
- --------------------------------------------------------------------------------------
Total Expenses 1,948,829 463,389 274,755
Less: Management fee waivers (Note 2 (664,988) (185,648) (121,457)
- --------------------------------------------------------------------------------------
Net Expenses 1,283,841 277,741 153,298
- --------------------------------------------------------------------------------------
Net Investment Income 30,641,549 6,399,088 2,354,445
- --------------------------------------------------------------------------------------
Net Realized Gain (Loss) From
Security Transactions 6,986 -- (1,067)
- --------------------------------------------------------------------------------------
Increase in Net Assets
From Operations $30,648,535 $6,399,088 $2,353,378
======================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
For the Years Ended May 31,
-----------------------------------
Cash Portfolio 1998 1997
================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 30,641,549 $ 11,336,049
Net realized gain (loss) 6,986 (8,615)
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 30,648,535 11,327,434
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (30,642,659) (11,327,434)
Net realized gain (324) --
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (30,642,983) (11,327,434)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 4,848,429,756 2,494,752,162
Net asset value of shares issued
for reinvestment of dividends 26,496,571 10,205,595
Cost of shares reacquired (4,240,204,283) (2,566,474,582)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 634,722,044 (61,516,825)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 634,727,596 (61,516,825)
NET ASSETS:
Beginning of year 216,054,985 277,571,810
- --------------------------------------------------------------------------------
End of year $ 850,782,581 $ 216,054,985
================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 15
<PAGE>
================================================================================
Statement of Changes in Net Assets (continued)
================================================================================
<TABLE>
<CAPTION>
For the Years Ended May 31,
--------------------------------
Government Portfolio 1998 1997
================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,399,088 $ 4,371,798
Net realized gain -- 935
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 6,399,088 4,372,733
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (6,397,204) (4,371,798)
Net realized gain -- (935)
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (6,397,204) (4,372,733)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 630,868,183 913,598,746
Net asset value of shares issued
for reinvestment of dividends 6,477,905 3,795,637
Cost of shares reacquired (700,704,603) (823,251,900)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (63,358,515) 94,142,483
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (63,356,631) 94,142,483
NET ASSETS:
Beginning of year 151,840,212 57,697,729
- -------------------------------------------------------------------------------
End of year $ 88,483,581 $ 151,840,212
===============================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Statement of Changes in Net Assets (continued)
================================================================================
<TABLE>
<CAPTION>
For the Years Ended May 31,
--------------------------------
Municipal Portfolio 1998 1997
================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,354,445 $ 1,449,724
Net realized gain (loss) (1,067) 150
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 2,353,378 1,449,874
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (2,353,139) (1,449,724)
Net realized gain (440) --
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,353,579) (1,449,724)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 780,950,264 475,271,011
Net asset value of shares issued
for reinvestment of dividends 2,114,140 1,332,993
Cost of shares reacquired (721,059,255) (512,246,550)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 62,005,149 (35,642,546)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 62,004,948 (35,642,396)
NET ASSETS:
Beginning of year 23,665,998 59,308,394
- -------------------------------------------------------------------------------
End of year $ 85,670,946 $ 23,665,998
===============================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 17
<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
Mutual Management Corp. ("MMC"), 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 year ended May 31, 1998, MMC waived management fees of $664,988,
$185,648 and $121,457 for the Cash, Government and Municipal Portfolios,
respectively.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor of
Fund shares.
- --------------------------------------------------------------------------------
18 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class B shares calculated at an annual rate of 0.25% of the average daily net
assets of each Portfolio's Class B shares. For the year ended May 31, 1998,
total Distribution Plan fees incurred were:
<TABLE>
<CAPTION>
Cash Government Municipal
================================================================================
<S> <C> <C> <C>
Distribution Plan Fees $3,003 -- $352
================================================================================
</TABLE>
All officers and one Director of the Fund are employees of SB.
3. Dividends, Exempt-Interest Dividends and Other Distributions
Each Portfolio declares and records a dividend of substantially all of its net
investment income on each business day. Such dividends are paid or reinvested
monthly in each respective Portfolio's shares on the payable date.
Furthermore, Municipal intends to satisfy conditions that will enable interest
from municipal securities, which are exempt from regular Federal income tax and
from designated state income taxes, to retain such status when distributed to
its shareholders.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Repurchase Agreements
The Fund purchases, and its custodian takes possession of, U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed-upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
5. Capital Shares
At May 31, 1998, 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.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 19
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
May 31, 1998 May 31, 1997
===============================================================================
<S> <C> <C>
Cash Portfolio -- Class A Shares
Shares sold 4,843,709,377 2,494,752,162
Shares issued on reinvestment 26,444,115 10,205,595
Shares redeemed (4,237,831,783) (2,566,474,582)
- -------------------------------------------------------------------------------
Net Increase (Decrease) 632,321,709 (61,516,825)
===============================================================================
Cash Portfolio -- Class B Shares (a)
Shares sold 4,720,379 --
Shares issued on reinvestment 52,456 --
Shares redeemed (2,372,500) --
- -------------------------------------------------------------------------------
Net Increase 2,400,335 --
===============================================================================
Government Portfolio
Shares sold 630,868,183 913,598,746
Shares issued on reinvestment 6,477,905 3,795,637
Shares redeemed (700,704,603) (823,251,900)
- -------------------------------------------------------------------------------
Net Increase (Decrease) (63,358,515) 94,142,483
===============================================================================
Municipal Portfolio -- Class A Shares
Shares sold 774,368,714 475,271,011
Shares issued on reinvestment 2,105,943 1,332,993
Shares redeemed (714,469,508) (512,246,550)
- -------------------------------------------------------------------------------
Net Increase (Decrease) 62,005,149 (35,642,546)
===============================================================================
Municipal Portfolio -- Class B Shares (b)
Shares sold 6,581,550 --
Shares issued on reinvestment 8,197 --
Shares redeemed (6,589,747) --
- -------------------------------------------------------------------------------
Net Increase -- --
===============================================================================
</TABLE>
(a) Transactions are for the period from October 28, 1997 (inception date) to
May 31, 1998.
(b) As of May 31, 1998, Class B shares were fully redeemed.
- --------------------------------------------------------------------------------
20 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class B
Class A Shares Shares
-------------------------------------------- ---------
Cash Portfolio 1998 1997 1996(1) 1998(2)
=========================================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (3) 0.055 0.052 0.053 0.031
Distributions from net investment income (0.055) (0.052) (0.053) (0.031)
Distributions from net realized gains (0.000)* -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Total Return 5.58% 5.35% 5.44%++ 3.13%++
- -------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $848,383 $216,055 $277,572 $2,400
- -------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (3)(4) 0.23% 0.23% 0.15%+ 0.47%+
Net investment income 5.43 5.23 5.43+ 5.21+
=========================================================================================================================
</TABLE>
(1) For the period from June 16, 1995 (inception date) to May 31, 1996.
(2) For the period from October 28, 1997 (inception date) to May 31, 1998.
(3) The Manager has waived a portion of its fees for thePortfolio for the years
ended May 31, 1998, 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 and B
shares would have been:
<TABLE>
<CAPTION>
Per Share
Decrease to Net Expense Ratio
Investment Income Without Fee Waiver
--------------------------- -------------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Class A $0.001 $0.001 $0.001 0.35% 0.36% 0.39%+
Class B 0.000* -- -- 0.48+ -- --
</TABLE>
(4) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets of the Portfolio will not exceed 0.80%.
* 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.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 21
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Government Portfolio 1998 1997 1996(1)
=============================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------
Net investment income (2) 0.053 0.052 0.052
Distributions from net investment income (0.053) (0.052) (0.052)
Distributions from net realized gains -- (0.000)* (0.000)*
- ---------------------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------
Total Return 5.46% 5.29% 5.36%++
- ---------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $88,484 $151,840 $57,698
- ---------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2)(3) 0.23% 0.21% 0.16%+
Net investment income 5.33 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
years ended May 31, 1998, 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
-------------------------------- ------------------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$0.002 $0.001 $0.002 0.39% 0.43% 0.55%+
</TABLE>
(3) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets of the Portfolio will not exceed 0.80%.
* 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 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Municipal Portfolio 1998 1997 1996(1)
===========================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------
Net investment income (2) 0.035 0.034 0.035
Distributions from net investment income (0.035) (0.034) (0.035)
Distributions from net realized gains (0.000)* -- --
- -------------------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------
Total Return 3.56% 3.40% 3.55%++
- -------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $85,671 $23,666 $59,308
- -------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2)(3) 0.23% 0.21% 0.15%+
Net investment income 3.50 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
years ended May 31, 1998, 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
-------------------------------- ------------------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$0.001 $0.004 $0.003 0.41% 0.41% 0.69%+
</TABLE>
(3) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets of the Portfolio will not exceed 0.80%.
* 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.
================================================================================
Tax Information (unaudited)
================================================================================
For Federal tax purposes the Fund hereby designates for the fiscal year ended
May 31, 1998:
-- 100.00% of the dividends paid by the Municipal Portfolio from net
investment income as tax-exempt for regular Federal income tax
purposes.
A total of 37.08% of the dividends paid by the Government Portfolio from net
investment income are derived from Federal obligations and may be exempt from
taxation at the state level.
- --------------------------------------------------------------------------------
Smith Barney Institutional Cash Management Fund, Inc. 23
<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, 1998, the
related statements of operations for the year then ended, and the statements of
changes in net assets for each of the years in the two-year period then ended
and financial highlights for each of the years in the two-year period 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, 1998, by correspondence with the custodian. As to securities sold but not
yet delivered, we performed other appropriate auditing procedures. 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, 1998, the results of their operations for
the year then ended, the changes in their net assets for each of the years in
the two-year period then ended and financial highlights for each of the years in
the two-year period then ended and for the period from June 16, 1995
(commencement of operations) to May 31, 1996, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
July 15, 1998
- --------------------------------------------------------------------------------
24 1998 Annual Report to Shareholders
<PAGE>
Smith Barney SMITH BARNEY
Institutional 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.
Allan G. Johnson, Emeritus Shareholder
John F. White, Emeritus Servicing Agent
First Data Investor Services Group, Inc.
Officers P.O. Box 9134
Heath B. McLendon Boston, MA 02205-9134
President and
Chief Executive Officer
This report is submitted for the general
Lewis E. Daidone information of the shareholders of Smith
Senior Vice President Barney Institutional Cash Management
and Treasurer Fund, Inc. It is not authorized for
distribution to prospective investors
Phyllis Zahorodny unless accompanied or preceded by an
Vice President and effective Prospectus for the Fund, which
Investment Officer contains information concerning the
Fund's investment policies and expenses
Lawrence T. McDermott as well as other pertinent information.
Vice President and
Investment Officer
Smith Barney
Joseph Benevento Institutional Cash Management Fund, Inc.
Investment Officer 388 Greenwich Street
New York, New York 10013
Irving P. David
Controller www.smithbarney.com
Christina T. Sydor
Secretary
FD2405 7/98
