PROSPECTUS
Prime Money Market Fund
An Investment Portfolio Offered By
Lehman Brothers Institutional Funds Group Trust
Lehman Brothers Institutional Funds Group Trust (the
"Trust") is a no-load, open-end, management investment company.
The shares described in this Prospectus represent interests in the
Prime Money Market Fund portfolio (the "Fund"), one of a family of
portfolios of the Trust.
The Fund's investment objective is to provide current income
and stability of principal. The Fund invests in a portfolio
consisting of a broad range of short-term instruments, including
U.S. government and U.S. bank and commercial obligations and
repurchase agreements relating to such obligations.
Fund shares may not be purchased by individuals directly,
but institutional investors may purchase shares for accounts
maintained by individuals. The Fund currently offers three classes
of shares. In addition to Class A shares, institutional investors
may purchase on behalf of their customers Class B or Class C
shares which accrue daily dividends in the same manner as Class A
shares but bear all fees payable by the Fund to institutional
investors for certain services they provide to the beneficial
owners of such shares. See "Management of the Fund_Service
Organizations."
Lehman Brothers Inc. ("Lehman Brothers") sponsors the Fund
and acts as Distributor of its shares. Lehman Brothers Global
Asset Management Inc. serves as the Fund's Investment Adviser.
The address of the Fund is One Exchange Place, Boston,
Massachusetts 02109. The Fund can be contacted as follows: for
purchase and redemption orders only call 1-800-851-3134; for yield
information call 1-800-238-2560 (Class A shares code: 001; Class B
shares code: 101; Class C shares code: 201); for other information
call 1-800-368-5556.
This Prospectus briefly sets forth certain information about
the Fund that investors should know before investing. Investors
are advised to read this Prospectus and retain it for future
reference. Additional information about the Fund, contained in a
Statement of Additional Information dated May 31, 1994, as amended
or supplemented from time to time, has been filed with the
Securities and Exchange Commission and is available to investors
without charge by calling the Fund's Distributor at
1-800-368-5556. The Statement of Additional Information is
incorporated in its entirety by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and such shares are not
federally insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other government agency. Shares
of the Fund involve certain investment risks, including the
possible loss of principal. 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 its net asset
value of $1.00 per share.
___________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________
LEHMAN BROTHERS
BACKGROUND AND EXPENSE INFORMATION
The following Expense Summary lists the costs and expenses
that an investor in the Fund can expect to incur during the Fund's
current fiscal year ending January 31, 1995. The Fund offers three
separate classes of shares. Shares of each class represent equal,
pro rata interests in the Fund and accrue daily dividends in the
same manner except that Class B and Class C shares bear fees
payable by the Fund (at the rate of .25% and .35% per annum,
respectively) to institutions for services they provide to the
beneficial owners of such shares. See "Management of the
Fund_Service Organizations."
Expense Summary
C
l
a
s
s
A
S
h
a
r
e
s
C
l
a
s
s
B
S
h
a
r
e
s
C
l
a
s
s
C
S
h
a
r
e
s
Annual Fund Operating Expenses
(as a percentage of average net assets)
Advisory Fees
0
.
1
0
%
0
.
1
0
%
0
.
1
0
%
Rule 12b-1 fees
n
o
n
e
.
2
5
%
.
3
5
%
Other Expenses_including
Administration Fees
(net of applicable fee waivers)*
0
.
0
6
%
0
.
0
6
%
0
.
0
6
%
Total Fund Operating
Expenses (after fee waivers)*
.
1
6
%
.
4
1
%
.
5
1
%
_____
_Fn_
* The Expense Summary above has been restated to reflect current
expected fees and the Fund's Investment Adviser's and Administrator's
voluntary fee waiver and expense reimbursement arrangements in effect for
the Fund's fiscal year ending January 31, 1995.
In order to maintain a competitive expense ratio during
1994, the Funds' Investment Adviser and Administrator have
voluntarily agreed to waive fees and reimburse expenses if and to
the extent that total operating expenses (other than taxes,
interest, brokerage fees and commissions, Rule 12b-1 fees and
extraordinary expenses) exceed .16% of average daily net assets
through December 31, 1994. For 1995 and thereafter, the Investment
Adviser and Administrator intend to continue voluntarily to waive
fees and reimburse expenses to the extent necessary to maintain an
annualized expense ratio at a level no greater than .18% of
average daily net assets. The voluntary fee waiver and fee
reimbursement arrangements described above will not be changed
unless shareholders are provided at least 60 days' advance notice.
The maximum annual contractual fees payable to the Investment
Adviser and Administrator total .20% of average daily net assets.
Absent fee waivers, the Total Fund Operating Expenses of Class A,
Class B and Class C are expected to be .24%, .49% and .59%,
respectively, of the Fund's average daily net assets.
_____
Example: An investor would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at
the end of each time period with respect to the following shares:
1
Y
e
a
r
3
Y
e
a
r
s
5
Y
e
a
r
s
1
0
Y
e
a
r
s
Class A shares:
$
2
$
5
$
9
$
2
0
Class B shares:
$
4
$
1
3
$
2
3
$
5
2
Class C shares:
$
5
$
1
6
$
2
9
$
6
4
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF ACTUAL
EXPENSES AND RATES OF RETURN, WHICH MAY BE GREATER OR LESSER THAN
THOSE SHOWN.
The purpose of the foregoing table is to assist an investor
in understanding the various costs and expenses that an investor
in the Fund will bear directly or indirectly. Certain Service
Organizations (as defined below) also may charge their clients
fees in connection with investments in Fund shares, which fees are
not reflected in the table. For more complete descriptions of the
various costs and expenses, see "Management of the Fund" in this
Prospectus and the Statement of Additional Information.
FINANCIAL HIGHLIGHTS
The following financial highlights for the fiscal year ended
January 31, 1994 is derived from the Fund's Financial Statements
audited by Ernst & Young, independent auditors, whose report
thereon appears in the Trust's Annual Report dated January 31,
1994. This information should be read in conjunction with the
financial statements and notes thereto that also appear in the
Trust's Annual Report, which are incorporated by reference into
the Statement of Additional Information.
P
e
r
i
o
d
E
n
d
e
d
1
/
3
1
/
9
4
*
C
l
a
s
s
A
P
e
r
i
o
d
E
n
d
e
d
1
/
3
1
/
9
4
*
C
l
a
s
s
B
P
e
r
i
o
d
E
n
d
e
d
1
/
3
1
/
9
4
*
C
l
a
s
s
C
Net asset value,
beginning of period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Net investment
income(1)
0
.
0
3
1
0
0
.
0
1
1
0
0
.
0
0
0
1
Dividends from net
investment income
(
0
.
0
3
1
0
)
(
0
.
0
1
1
0
)
(
0
.
0
0
0
1
)
Net asset value, end
of period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Total return(2)
3
.
1
4
%
0
.
9
9
%
_
(
3
)
Ratios to average net
assets/supplemental data:
Net assets, end of
period (in 000's)
$
2
,
8
6
6
,
3
5
3
$
3
5
0
,
6
6
6
_
(
4
)
Ratio of net
investment income to average
net assets(5)
3
.
1
6
%
2
.
9
1
%
2
.
8
1
%
Ratio of operating
expenses to average net
assets(5)(6)
0
.
1
1
%
0
.
3
6
%
0
.
4
6
%
_Fn_
*
The Prime Money Market Fund Class A, Class B and Class C Shares
commenced operations on February 8, 1993, September 2, 1993 and
December 27, 1993, respectively.
(
1
)
Net investment income before waiver of fees by the Investment Adviser,
Administrator, Custodian and Transfer Agent and expenses reimbursed by
the Investment Adviser and Administrator for Class A, Class B and
Class C were $0.0289, $0.0102 and $0.0001, respectively.(2)Total
return represents aggregate total return for the period
indicated.(3)Full amount of shares offered to the public on
December 27, 1993 and were redeemed on December 28, 1993, therefore,
total return deemed not to be meaningful.(4)Total net assets for
Class C was $100 at January 31, 1994.(5)Annualized.(6)Annualized
expense ratio before waiver of fees by the Investment Adviser,
Administrator, Custodian and Transfer Agent and expenses reimbursed by
the Investment Adviser and Administrator for Class A, Class B and
Class C were 0.33%, 0.58% and 0.68%, respectively.
INVESTMENT OBJECTIVE AND POLICIES
In General
The Fund's investment objective is to provide current income
and stability of principal. In pursuing its investment objective,
the Fund, which operates as a diversified investment portfolio,
invests in a broad range of short-term instruments, including U.S.
government and U.S. bank and commercial obligations and repurchase
agreements relating to such obligations.
Price and Portfolio Maturity. The Fund invests only in
securities that are purchased with and payable in U.S. dollars and
that have (or, pursuant to regulations adopted by the Securities
and Exchange Commission, will be deemed to have) remaining
maturities of thirteen months or less at the date of purchase by
the Fund. The Fund maintains a dollar-weighted average portfolio
maturity of 90 days or less. The Fund follows these policies to
maintain a constant net asset value of $1.00 per share, although
there is no assurance that it can do so on a continuing basis.
Portfolio Quality and Diversification. The Fund will limit its
portfolio investments to securities that the Trust's Board of
Trustees determines present minimal credit risks and which are
"First Tier Eligible Securities" at the time of acquisition by the
Fund. The term First Tier Eligible Securities includes securities
rated by the "Requisite NRSROs" in the highest short-term rating
categories, securities of issuers that have received such ratings
with respect to other short-term debt securities and comparable
unrated securities. "Requisite NRSROs" means (a) any two
nationally recognized statistical rating organizations ("NRSROs")
that have issued a rating with respect to a security or class of
debt obligations of an issuer, or (b) one NRSRO, if only one NRSRO
has issued such a rating at the time that the Fund acquires the
security. Currently, there are six NRSROs: Standard & Poor's
Corporation, Moody's Investors Service, Inc., Fitch Investors
Services, Inc., Duff and Phelps, Inc., IBCA Limited and its
affiliate, IBCA, Inc. and Thomson Bankwatch. A discussion of the
ratings categories of the NRSROs is contained in the Appendix to
the Statement of Additional Information. The Fund generally may
not invest more than 5% of its total assets in the securities of
any one issuer, except for U.S. government securities.
The following descriptions illustrate the kinds of
instruments in which the Fund invests:
The Fund may purchase U.S. bank and bank holding company
obligations such as commercial paper, notes, certificates of
deposit, bankers' acceptances and time deposits, including
instruments issued or supported by the credit of domestic banks or
savings institutions having total assets at the time of purchase
in excess of $1 billion. The Fund may also make interest- bearing
savings deposits in commercial and savings banks in amounts not in
excess of 5% of the Fund's assets.
The Fund may invest in commercial paper and other short-term
obligations. The Fund may not invest in commercial paper or
obligations of foreign issuers.
The Fund may purchase variable or floating rate notes, which
are unsecured instruments that provide for adjustments in the
interest rate on certain reset dates or whenever a specified
interest rate index changes, respectively. Such notes may not be
actively traded in a secondary market, but, in some cases, the
Fund may be able to resell such notes in the dealer market.
Variable and floating notes typically are rated by credit rating
agencies, and their issuers must satisfy the same quality criteria
as set forth above. The Fund invests in variable or floating rate
notes only when the Investment Adviser deems the investment to
involve minimal credit risk.
The Fund may purchase instruments from financial
institutions, such as banks and broker- dealers, subject to the
seller's agreement to repurchase them at an agreed upon time and
price ("repurchase agreements"). The seller under a repurchase
agreement will be required to maintain the value of the securities
subject to the agreement at not less than the repurchase price.
Default by the seller would, however, expose the Fund to possible
loss because of adverse market action or delay in connection with
the disposition of the underlying obligations.
The Fund may also purchase securities on a "when-issued"
basis. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and
yield. The Fund will generally not pay for such securities or
start earning interest on them until they are received. Securities
purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general
level of interest rates. The Fund expects that commitments to
purchase when-issued securities will not exceed 25% of the value
of its total assets absent unusual market conditions. The Fund
does not intend to purchase when-issued securities for speculative
purposes but only in furtherance of its investment objective.
The Fund may purchase obligations issued or guaranteed by
the U.S. government or its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S.
government are backed by the full faith and credit of the United
States. Others are backed by the right of the issuer to borrow
from the U.S. Treasury or are backed only by the credit of the
agency or instrumentality issuing the obligation.
In addition, the Fund may, when deemed appropriate in light
of the Fund's investment objective, invest in high quality,
short-term obligations issued by the state and local governmental
issuers which carry yields that are competitive with those of
other types of money market instruments of comparable quality.
The Fund will not knowingly invest more than 10% of the
value of its total assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than
seven days. Securities that have readily available market
quotations are not deemed illiquid for purposes of this limitation
(irrespective of any legal or contractual restrictions on resale).
The Fund may invest in commercial obligations issued in reliance
on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended
("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended,
but which can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the
federal securities laws, and generally is sold to institutional
investors such as the Fund who agree that they are purchasing the
paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional
investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in the Section
4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If
a particular investment in Section 4(2) paper or Rule 144A
securities is not determined to be liquid, that investment will be
included within the 10% limitation on investment in illiquid
securities.
There can be no assurance that the Fund will achieve its
investment objective.
Investment Limitations
The Fund's investment objective and the policies described
above are not fundamental and may be changed by the Trust's Board
of Trustees without a vote of shareholders. If there is a change
in the investment objective, investors should consider whether the
Fund remains an appropriate investment in light of their then
current financial position and needs. The Fund's investment
limitations summarized below may not be changed without the
affirmative vote of the holders of a majority of its outstanding
shares. (A complete list of the investment limitations that cannot
be changed without a vote of shareholders is contained in the
Statement of Additional Information under "Investment Objective
and Policies.")
The Fund may not: 1.Borrow money, except from banks for temporary
purposes and then in amounts not in excess of 10% of the value of
the Fund's assets at the time of such borrowing; or pledge any
assets except in connection with any such borrowing and in amounts
not in excess of the lesser of the dollar amounts borrowed or 10%
of the value of the Fund's assets at the time of such borrowing.
Additional investments will not be made when borrowings exceed 5%
of the Fund's assets. 2.Purchase any securities which would cause
25% or more of the value of its total assets at the time of
purchase to be invested in the securities of issuers conducting
their principal business activities in the same industry, provided
that there is no limitation with respect to investments in U.S.
government obligations and obligations of domestic banks.
PURCHASE AND REDEMPTION OF SHARES
Purchase Procedures
Shares of the Fund are sold at the net asset value per share
of the Fund next determined after receipt of a purchase order by
Lehman Brothers, the Distributor of the Fund's shares. Purchase
orders for shares are accepted only on days on which both Lehman
Brothers and the Federal Reserve Bank of Boston are open for
business and must be transmitted to Lehman Brothers, by telephone
at 1-800-851-3134. Orders received prior to noon, Eastern time,
for which payment has been received by Boston Safe Deposit and
Trust Company ("Boston Safe"), the Fund's Custodian, will be
executed at noon. Orders received between noon and 3:00 P.M.,
Eastern time, will be executed at 3:00 P.M., Eastern time, if
payment has been received by Boston Safe by 3:00 P.M. and will be
executed at 4:00 P.M. if payment has been received by 4:00 P.M.
Orders received after 3:00 P.M., and orders for which payment has
not been received by 4:00 P.M., Eastern time, will not be
accepted, and notice thereof will be given to the institution
placing the order. Payment for Fund shares may be made only in
federal funds immediately available to Boston Safe. (Payment for
orders which are not received or accepted by Lehman Brothers will
be returned after prompt inquiry to the sending institution.) The
Fund may in its discretion reject any order for shares.
The minimum aggregate initial investment by an institution
in the investment portfolios that comprise the Trust is $1 million
(with not less than $25,000 invested in any one investment
portfolio offered by the Trust); however, broker-dealers and other
institutional investors may set a higher minimum for their
customers. To reach the minimum Trust-wide initial investment,
purchases of shares may be aggregated over a period of six months.
There is no minimum subsequent investment.
Conflict of interest restrictions may apply to an
institution's receipt of compensation paid by the Fund on
fiduciary funds that are invested in Class B or Class C shares.
See also "Management of the Fund_Service Organizations."
Institutions, including banks regulated by the Comptroller of the
Currency and investment advisers and other money managers subject
to the jurisdiction of the Securities and Exchange Commission, the
Department of Labor or state securities commissions, are urged to
consult their legal advisers before investing fiduciary funds in
Class B or Class C shares.
Subaccounting Services. Institutions are encouraged to open
single master accounts. However, certain institutions may wish to
use the Transfer Agent's subaccounting system to minimize their
internal recordkeeping requirements. The Transfer Agent charges a
fee based on the level of subaccounting services rendered.
Institutions holding Fund shares in a fiduciary, agency, custodial
or similar capacity may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees.
They may also charge fees for other services provided which may be
related to the ownership of Fund shares. This Prospectus should,
therefore, be read together with any agreement between the
customer and the institution with regard to the services provided,
the fees charged for those services and any restrictions and
limitations imposed.
Redemption Procedures
Redemption orders must be transmitted to Lehman Brothers by
telephone at 1-800-851-3134. Payment for redeemed shares for which
a redemption order is received by Lehman Brothers before
3:00 P.M., Eastern time, on a day that both Lehman Brothers and
the Federal Reserve Bank of Boston are open for business is
normally made in federal funds wired to the redeeming shareholder
on the same business day. Payment for redemption orders which are
received between 3:00 P.M. and 4:00 P.M., Eastern time, is
normally wired in federal funds on the next business day following
redemption.
Shares are redeemed at the net asset value per share next
determined after Lehman Brothers' receipt of the redemption order.
While the Fund intends to use its best efforts to maintain its net
asset value per share at $1.00, the proceeds paid to an investor
upon redemption may be more or less than the amount invested
depending upon a share's net asset value at the time of
redemption. To allow the Fund's Investment Adviser to manage the
Fund effectively, investors are strongly urged to initiate all
investments or redemptions of Fund shares as early in the day as
possible and to notify Lehman Brothers at least one day in advance
of transactions in excess of $5 million.
The Fund reserves the right to wire redemption proceeds
within seven days after receiving the redemption order if, in the
judgment of the Investment Adviser, an earlier payment could
adversely affect the Fund. The Fund shall have the right to redeem
involuntarily shares in any account at their net asset value if
the value of the account is less than $10,000 after 60 days' prior
written notice to the investor. Any such redemption shall be
effected at the net asset value per share next determined after
the redemption order is entered. If during the 60-day period the
investor increases the value of its account to $10,000 or more, no
such redemption shall take place. In addition, the Fund may redeem
shares involuntarily or suspend the right of redemption as
permitted under the Investment Company Act of 1940, as amended
(the "1940 Act"), or under certain special circumstances described
in the Statement of Additional Information under "Additional
Purchase and Redemption Information."
Valuation of Shares_Net Asset Value
The Fund's net asset value per share for purposes of pricing
purchase and redemption orders is determined by the Fund's
Administrator as of noon, 3:00 P.M. and 4:00 P.M., Eastern time,
on each weekday, with the exception of those holidays on which
either Lehman Brothers or the Federal Reserve Bank of Boston is
closed. Currently, one or both of these institutions are closed on
the customary national business holidays of New Year's Day, Martin
Luther King, Jr's. Birthday (observed), Presidents' Day
(Washington's Birthday), Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day (observed), Veterans Day,
Thanksgiving Day and Christmas Day, and on the preceding Friday or
subsequent Monday when one of these holidays falls on a Saturday
or Sunday, respectively. The net asset value per share of Fund
shares is calculated by adding the value of all securities and
other assets of the Fund, subtracting liabilities, and dividing
the result by the total number of the Fund's outstanding shares
(irrespective of class or sub-class). In computing net asset
value, the Fund uses the amortized cost method of valuation as
described in the Statement of Additional Information under
"Additional Purchase and Redemption Information." The Fund's net
asset value per share for purposes of pricing purchase and
redemption orders is determined independently of the net asset
values of the shares of the Trust's other investment portfolios.
Other Matters
Fund shares are sold and redeemed without charge by the
Fund. Institutional investors purchasing or holding Fund shares
for their customer accounts may charge customers fees for cash
management and other services provided in connection with their
accounts. A customer should, therefore, consider the terms of its
account with an institution before purchasing Fund shares. An
institution purchasing or redeeming Fund shares on behalf of its
customers is responsible for transmitting orders to Lehman
Brothers in accordance with its customer agreements.
DIVIDENDS
Investors of the Fund are entitled to dividends and
distributions arising only from the net investment income and
capital gains, if any, earned on investments held by the Fund. The
Fund's net investment income is declared daily as a dividend to
shares held of record at the close of business on the day of
declaration. Shares begin accruing dividends on the day the
purchase order for the shares is executed and continue to accrue
dividends through, and including, the day before the redemption
order for the shares is executed. Dividends are paid monthly by
wire transfer, within five business days after the end of the
month or within five business days after a redemption of all of an
investor's shares of a particular class. The Fund does not expect
to realize net long-term capital gains.
Dividends are determined in the same manner and are paid in
the same amount for each Fund share, except that Class B and
Class C shares bear all the expense of fees paid to Service
Organizations. As a result, at any given time, the net yield on
Class B and Class C shares will be .25% and .35%, respectively,
lower than the net yield on Class A shares.
Institutional shareholders may elect to have their dividends
reinvested in additional full and fractional shares of the same
class of shares with respect to which such dividends are declared
at the net asset value of such shares on the payment date.
Reinvested dividends receive the same tax treatment as dividends
paid in cash. Such election, or any revocation thereof, must be
made in writing to the Fund's Distributor, at 260 Franklin Street,
15th Floor, Boston, Massachusetts 02110-9624, and will become
effective after its receipt by the Distributor, with respect to
dividends paid.
The Shareholder Services Group, Inc. ("TSSG"), as Transfer
Agent, will send each investor or its authorized representative an
annual statement designating the amount of any dividends and
capital gains distributions, if any, made during each year and
their federal tax qualification.
TAXES
The Fund qualified in its last taxable year and intends to
qualify in future years as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code"). A
regulated investment company is exempt from federal income tax on
amounts distributed to its investors.
Qualification as a regulated investment company under the
Code for a taxable year requires, among other things, that the
Fund distribute to its investors at least 90% of its investment
company taxable income for such year. In general, the Fund's
investment company taxable income will be its taxable income
(including dividends and short-term capital gains, if any) subject
to certain adjustments and excluding the excess of any net
long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. The Fund intends
to distribute substantially all of its investment company taxable
income each year. Such distributions will be taxable as ordinary
income to Fund investors who are not currently exempt from federal
income taxes, whether such income is received in cash or
reinvested in additional shares. It is anticipated that none of
the Fund's distributions will be eligible for the dividends
received deduction for corporations. The Fund does not expect to
realize long-term capital gains and, therefore, does not
contemplate payment of any "capital gain dividends" as described
in the Code.
Dividends declared in October, November or December of any
year payable to investors of record on a specified date in such
months will be deemed to have been received by the investors and
paid by the Fund on December 31 of such year in the event such
dividends are actually paid during January of the following year.
Investors will be advised at least annually as to the
federal income tax status of distributions made to them each year.
The foregoing discussion is only a brief summary of some of
the important federal tax considerations generally affecting the
Fund and its investors. No attempt is made to present a detailed
explanation of the federal, state or local income tax treatment of
the Fund or its investors, and this discussion is not intended as
a substitute for careful tax planning. Accordingly, potential
investors in the Fund should consult their tax advisers with
specific reference to their own tax situation.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the
direction of the Trust's Board of Trustees. The Trustees approve
all significant agreements between the Trust and the persons or
companies that furnish services to the Fund, including agreements
with its Distributor, Investment Adviser, Administrator, Custodian
and Transfer Agent. The day-to-day operations of the Fund are
delegated to the Fund's Investment Adviser and Administrator. The
Statement of Additional Information relating to the Fund contains
general background information regarding each Trustee and
executive officer of the Trust.
Distributor
Lehman Brothers, located at 3 World Financial Center, New
York, New York 10285, is the Distributor of the Fund's shares.
Lehman Brothers is a wholly-owned subsidiary of Lehman Brothers
Holdings Inc. ("Holdings"). Prior to May 31, 1994, all of the
issued and outstanding common stock (representing 92% of the
voting stock) of Holdings was held by American Express Company. On
May 31, 1994, American Express distributed to holders of common
stock of American Express all outstanding shares of common stock
of Holdings. As of May 31, 1994, Nippon Life Insurance Company
owned 11.2% of the outstanding voting securities of Holdings.
Lehman Brothers, a leading full service investment firm, meets the
diverse financial needs of individuals, institutions and
governments around the world. Lehman Brothers has entered into a
Distribution Agreement with the Trust pursuant to which it has the
responsibility for distributing shares of the Fund.
Investment Adviser_Lehman Brothers Global Asset Management Inc.
Lehman Brothers Global Asset Management Inc. ("LBGAM"),
located at 3 World Financial Center, New York, New York 10285,
serves as the Fund's Investment Adviser. LBGAM is a wholly owned
subsidiary of Holdings. LBGAM, together with the other Lehman
Brothers investment advisory affiliates serves as Investment
Adviser to investment companies and private accounts and has
assets under management of approximately $15 billion as of March
31, 1994.
As Investment Adviser to the Fund, LBGAM will among other
things, participate in the formulation of the Fund's investment
policies, analyze economic trends affecting the Fund and monitor
and evaluate the Fund's investment objective and policies and the
Fund's investment performance. For its services LBGAM is entitled
to receive a monthly fee from the Fund at the annual rate of .10%
of the value of the Fund's average daily net assets. For the
period February 8, 1993 (commencement of operations) to
January 31, 1994, LBGAM received no advisory fees from the Fund.
Administrator and Transfer Agent_The Shareholder Services
Group, Inc.
The Shareholder Services Group, Inc. ("TSSG"), located at
One Exchange Place, 53 State Street Boston, Massachusetts 02109,
serves as the Fund's Administrator and Transfer Agent. TSSG is a
wholly owned subsidiary of First Data Corporation. As
Administrator, TSSG calculates the net asset value of the Fund's
shares and generally assists in all aspects of the Fund's
administration and operation. As compensation for TSSG's services
as Administrator, TSSG is entitled to receive from the Fund a
monthly fee at the annual rate of .10% of the value of the Fund's
average daily net assets. TSSG is also entitled to receive a fee
from the Fund for its services as Transfer Agent. TSSG pays Boston
Safe, the Fund's Custodian, a portion of its monthly
administration fee for custody services rendered to the Fund.
Custodian_Boston Safe Deposit and Trust Company
Boston Safe, a wholly owned subsidiary of The Boston
Company, Inc., located at One Boston Place, Boston, Massachusetts
02108, serves as the Fund's Custodian.
Service Organizations
Financial institutions, such as banks, savings and loan
associations and other such institutions ("Service Organizations")
and/or institutional customers of Service Organizations may
purchase Class B or Class C shares. These shares are identical in
all respects to Class A shares except that they bear the fees
described below and enjoy certain exclusive voting rights on
matters relating to these fees. The Fund will enter into an
agreement with each Service Organization whose customers
("Customers") are the beneficial owners of Class B or Class C
shares that requires the Service Organization to provide certain
services to Customers in consideration of the Fund's payment of
service fees at the annual rate of .25% or .35%, respectively, of
the average daily net asset value of the respective Class
beneficially owned by Customers. Such services, which are
described more fully in the Statement of Additional Information
under "Management of the Fund_Service Organizations," may include
aggregating and processing purchase and redemption requests from
Customers and placing net purchase and redemption orders with
Lehman Brothers; processing dividend payments from the Fund on
behalf of Customers; providing information periodically to
Customers showing their positions in shares; arranging for bank
wires; responding to Customer inquiries relating to the services
provided by the Service Organization and handling correspondence;
acting as shareholder of record and nominee; and providing
reasonable assistance in connection with the distribution of
shares to Customers. Services provided with respect to Class B
shares will generally be more limited than those provided with
respect to Class C shares. Under the terms of the agreements,
Service Organizations are required to provide to their Customers a
schedule of any fees that they may charge Customers in connection
with their investments in Class B or Class C shares. Class A
shares are sold to financial institutions that have not entered
into servicing agreements with the Fund in connection with their
investments. A salesperson and any other person entitled to
receive compensation for selling or servicing shares of the Fund
may receive different compensation for selling or servicing one
Class of shares over another Class.
Expenses
The Fund bears all its own expenses. The Fund's expenses
include taxes, interest, fees and salaries of the Trust's trustees
and officers who are not directors, officers or employees of the
Fund's service contractors, Securities and Exchange Commission
fees, state securities qualification fees, costs of preparing and
printing prospectuses for regulatory purposes and for distribution
to investors, advisory and administration fees, charges of the
custodian, transfer agent and dividend disbursing agent, Service
Organization fees, certain insurance premiums, outside auditing
and legal expenses, costs of shareholder reports and shareholder
meetings and any extraordinary expenses. The Fund also pays for
brokerage fees and commissions (if any) in connection with the
purchase and sale of portfolio securities. In order to maintain a
competitive expense ratio during 1994, LBGAM and TSSG have agreed
voluntarily to reimburse the Fund if and to the extent that the
Fund's total operating expenses (other than taxes, interest,
brokerage fees and commissions, Rule 12b-1 fees under the 1940 Act
and extraordinary expenses) exceed .16% of average daily net
assets through December 31, 1994. The Investment Adviser and
Administrator intend to continue voluntarily to waive fees to the
extent necessary to maintain an annualized expense ratio at a
level no greater than .18% of average daily net assets thereafter.
This voluntary reimbursement will not be changed unless investors
are provided at least 60 days' advance notice. In addition, these
service providers have agreed to reimburse the Fund to the extent
required by applicable state law for certain expenses that are
described in the Statement of Additional Information relating to
the Fund. Any fees charged by Service Organizations or other
institutional investors to their customers in connection with
investments in Fund shares are not reflected in the Fund's
expenses.
May 31, 1994
YIELDS From time to time the "yields" and "effective yields" for
Class A, Class B and Class C shares may be quoted in
advertisements or in reports to investors. Yield quotations are
computed separately for each Class of shares. The "yield" quoted
in advertisements for a particular class or sub-class of shares
refers to the income generated by an investment in such shares
over a specified period (such as a seven-day period) identified in
the advertisement. This income is then "annualized;" that is, the
amount of income generated by the investment during that period is
assumed to be generated each such period over a 52-week or
one-year period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in a particular
class or sub-class is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The Fund's yields may be compared to those of other mutual
funds with similar objectives, to other relevant indices, or to
rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual
funds. For example, such data are reported in national financial
publications such as IBC/Donoghue's Money Fund Report, The Wall
Street Journal and The New York Times, reports prepared by Lipper
Analytical Service, Inc. and publications of a local or regional
nature.
The Fund's yield figures for a Class of shares represent
past performance, will fluctuate and should not be considered as
representative of future results. The yield of any investment is
generally a function of portfolio quality and maturity, type of
investment and operating expenses. Since holders of Class B or
Class C shares bear the service fees for services provided by
Service Organizations, the net yield on such shares can be
expected at any given time to be lower than the net yield on
Class A shares. Any fees charged by Service Organizations or other
institutional investors directly to their customers in connection
with investments in Fund shares are not reflected in the Fund's
expenses or yields. The methods used to compute the Fund's yields
are described in more detail in the Statement of Additional
Information. Investors may call 1-800-238-2560 (Class A shares
code: 001; Class B shares code: 101; Class C shares code: 201) to
obtain current yield information.
DESCRIPTION OF SHARES The Trust is a Massachusetts business trust
established on November 25, 1992.
The Trust's Declaration of Trust authorizes the Board of
Trustees to issue an unlimited number of full and fractional
shares of beneficial interest in the Trust and to classify or
reclassify any unissued shares into one or more additional classes
of shares. The Trust is an open-end management investment company,
which offers thirteen portfolios: Prime Money Market Fund
(Class A, Class B and Class C), Prime Value Money Market Fund
(Class A, Class B, Class C and Class D), Government Obligations
Money Market Fund (Class A, Class B, Class C and Class D), 100%
Government Obligations Money Market Fund (Class A, Class B and
Class C), Treasury Instruments Money Market Fund (Class A, Class B
and Class C), Treasury Instruments Money Market Fund II (Class A,
Class B and Class C), 100% Treasury Instruments Money Market Fund
(Class A, Class B and Class C), Tax-Free Money Market Fund
(Class A, Class B and Class C), Municipal Money Market Fund
(Class A, Class B, Class C and Class D), California Municipal
Money Market Fund (Class A, Class B and Class C), New York
Municipal Money Market Fund (Class A, Class B and Class C),
Floating Rate U.S. Government Fund (Premier and Select Shares) and
Short Duration U.S. Government Fund (Premier and Select Shares).
Shares of the New York Municipal Money Market Fund are not
currently sold to the public. The Declaration of Trust further
authorizes the Trustees to classify or reclassify any class of
shares into one or more sub-classes.
The Trust does not presently intend to hold annual meetings
of shareholders except as required by the 1940 Act or other
applicable law. The Trust will call a meeting of shareholders for
the purpose of voting upon the question of removal of a member of
the Board of Trustees upon written request of shareholders owning
at least 10% of the outstanding shares of the Trust entitled to
vote.
Each Fund share represents an equal, proportionate interest
in the assets belonging to the Fund. Each share, which has a par
value of $.001, has no preemptive or conversion rights. When
issued for payment as described in this Prospectus, Fund shares
will be fully paid and non- assessable.
Holders of the Fund's shares will vote in the aggregate and
not by class on all matters, except where otherwise required by
law and except that only Class B or Class C shares, as the case
may be, will be entitled to vote on matters submitted to a vote of
shareholders pertaining to the Fund's arrangements with Service
Organizations with respect to the relevant Class. Further,
shareholders of the Fund and of the Trust's other portfolios will
vote in the aggregate and not by portfolio except as otherwise
required by law or when the Board of Trustees determines that the
matter to be voted upon affects only the interests of the
shareholders of a particular portfolio. (See the Statement of
Additional Information under "Additional Description Concerning
Fund Shares" for examples where the 1940 Act requires voting by
portfolio.) Shareholders of the Trust are entitled to one vote for
each full share held (irrespective of class or portfolio) and
fractional votes for fractional shares held. Voting rights are not
cumulative; and, accordingly, the holders of more than 50% of the
aggregate shares of the Trust may elect all of the Trustees.
For information concerning the redemption of Fund shares and
possible restrictions on their transferability, see "Purchase and
Redemption of Shares."
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION
INCORPORATED HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY
THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND
OTHER MATTERS RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN
SIMILAR INFORMATION REGARDING THE TRUST'S OTHER PORTFOLIOS MAY
OBTAIN SEPARATE PROSPECTUSES DESCRIBING THEM BY CONTACTING LEHMAN
BROTHERS AT 1-800-368-5556.
TABLE OF CONTENTS
Page
LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST
Prime Money Market Fund
Prime Value Money Market Fund
Government Obligations Money Market Fund
100% Government Obligations Money Market Fund
Treasury Instruments Money Market Fund
Treasury Instruments Money Market Fund II
100% Treasury Instruments Money Market Fund
Municipal Money Market Fund
Tax-Free Money Market Fund
California Municipal Money Market Fund
New York Municipal Money Market Fund
_________
Floating Rate U.S. Government Fund
Short Duration U.S. Government Fund
_________
No person has been authorized to give any information or to make
any representations not contained in this Prospectus, or in the
Fund's Statement of Additional Information incorporated herein by
reference, in connection with the offering made by this Prospectus
and, if given or made, such information or representations must
not be relied upon as having been authorized by the Trust or its
Distributor. This Prospectus does not constitute an offering by
the Trust or by the Distributor in any jurisdiction in which such
offering may not lawfully be made.
TABLE OF CONTENTS
P
a
g
e
Background and Expense Information
2
Financial Highlights
3
Investment Objective and Policies
4
Purchase and Redemption of Shares
6
Dividends
8
Taxes
9
Management of the Fund
9
Yields
1
2
Description of Shares
1
2
Prime Money
Market Fund
PROSPECTUS
May 31, 1994
LEHMAN BROTHERS
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION
INCORPORATED HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY
THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND
OTHER MATTERS RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN
SIMILAR INFORMATION REGARDING THE TRUST'S OTHER PORTFOLIOS MAY
OBTAIN SEPARATE PROSPECTUSES DESCRIBING THEM BY CONTACTING LEHMAN
BROTHERS AT 1-800-368-5556.
