PROSPECTUS
California Municipal 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
California Municipal Money Market Fund portfolio (the "Fund"), one
of a family of portfolios of the Trust.
The Fund's investment objective is to provide California
investors with as high a level of current income exempt from
federal income tax and, to the extent possible, from California
state personal income tax as is consistent with relative stability
of principal. All or a portion of the Fund's dividends may be a
specific preference item for purposes of the federal individual
and corporate alternative minimum taxes.
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 shares and
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
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: 010; Class B
shares code: 110; Class C shares code: 210); 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 (net of
applicable fee waivers)*
0
.
0
0
%
0
.
0
0
%
0
.
0
0
%
Rule 12b-1 fees
n
o
n
e
.
2
5
%
.
3
5
%
Other Expenses_including
Administration Fees (net of applicable fee
waivers and expense reimbursements)*
.
1
6
%
.
1
6
%
.
1
6
%
Total Fund Operating
Expenses (after fee waivers and expense
reimbursements)*
.
1
6
%
.
4
1
%
.
5
1
%
___________
* 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 Fund's 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 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 and reimbursement of expenses, the Total Fund Operating
Expenses of Class A, Class B and Class C are expected to be .37%,
.62% and .72%, 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
Net asset value,
beginning of period
$
1
.
0
0
$
1
.
0
0
Net investment income(1)
0
.
0
2
2
5
0
.
0
0
0
3
Dividends from net
investment income
(
0
.
0
2
2
5
)
(
0
.
0
0
0
3
)
Net asset value, end of
period
$
1
.
0
0
$
1
.
0
0
Total return(2)
2
.
2
9
%
_
(
3
)
Ratios to average net
assets/supplemental data:
Net assets, end of
period (in 000's)
$
9
,
5
7
5
_
(
4
)
Ratio of net investment
income to average net
assets(5)
2
.
3
1
%
2
.
0
6
%
Ratio of operating
expenses to average net
assets(5)(6)
0
.
0
9
%
0
.
3
4
%
___________
* The California Municipal Money Market Fund Class A and Class
B shares commenced operations on February 8, 1993 and January 6,
1994, 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 and Class B were $0.0058 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 January 6,
1994 and were redeemed on January 11, 1994, therefore total return
deemed not to be meaningful.
(4) Total net assets for Class B 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 and Class B were 1.80% and 2.05%,
respectively.
INVESTMENT OBJECTIVE AND POLICIES
In General
The Fund's investment objective is to provide investors with
as high a level of current income exempt from federal income tax
and, to the extent possible, from California state personal income
tax as is consistent with relative stability of principal. All or
a portion of the Fund's dividends may be a specific tax preference
item for purposes of the federal individual and corporate
alternative minimum taxes.
In pursuing its investment objective, the Fund, which
operates as a non-diversified investment company, invests
substantially all of its assets in debt obligations issued by or
on behalf of the State of California and other states, territories
and possessions of the United States, the District of Columbia and
their respective authorities, agencies, instrumentalities and
political sub-divisions, and tax-exempt derivative securities such
as tender option bonds, participations, beneficial interests in
trusts and partnership interests (collectively "Municipal
Obligations"). Dividends paid by the Fund that are derived from
interest on obligations that are exempt from taxation under the
Constitution or statutes of California ("California Municipal
Obligations") are exempt from regular federal income tax and
California state personal income tax. California Municipal
Obligations include municipal securities issued by the State of
California and its political sub-divisions. Dividends derived from
interest on Municipal Obligations other than California Municipal
Obligations are exempt from federal income tax but may be subject
to California state personal income tax. The Fund expects that,
except during temporary defensive periods, the Fund's assets will
be invested primarily in California Municipal Obligations,
although the amount of the Fund's assets invested in such
securities will vary from time to time. At least 50% of the Fund's
assets must be invested in such obligations and Federal
Obligations (as defined under "Taxes" below) at the close of each
quarter of its taxable year so as to permit the Fund to pay
dividends that are exempt from California state personal income
tax. Dividends, regardless of their source, may be subject to
local taxes.
Price and Portfolio Maturity. The Fund will not knowingly
purchase securities the interest on which is subject to regular
federal income tax. (See, however, "Taxes" below concerning
treatment of exempt-interest dividends paid by the Fund for
purposes of the federal alternative minimum tax applicable to
particular classes of investors.) Except during temporary
defensive periods, the Fund will invest substantially all, but in
no event less than 80%, of its total assets in Municipal
Obligations with remaining maturities of thirteen months or less
as determined in accordance with the rules of the Securities and
Exchange Commission. 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 it can do so on a continuing
basis. The Fund may hold uninvested cash reserves pending
investment during temporary defensive periods, including when
suitable tax-exempt obligations are unavailable. Uninvested cash
reserves will not earn income.
Portfolio Quality and Diversification. The Fund will purchase
only Municipal Obligations which are "Eligible Securities" (as
defined by the Securities and Exchange Commission) and which
present minimal credit risks as determined by the Investment
Adviser pursuant to guidelines approved by the Trust's Board of
Trustees. Eligible Securities consist of (i) instruments that are
rated at the time of purchase in one of the top two rating
categories by at least two unaffiliated nationally recognized
statistical rating organizations ("NRSROs"), (ii) instruments
rated in one of the top two rating categories by one such NRSRO
(if only one such organization rates the instrument),
(iii) instruments issued by issuers with short-term debt having
such ratings, and (iv) unrated instruments determined by the
Investment Adviser, pursuant to procedures approved by the Board
of Trustees, to be of comparable quality. The Appendix to the
Statement of Additional Information includes a description of
applicable NRSRO ratings.
Investment Limitations
There can be no assurance that the Fund will achieve its
investment objective. The Fund's investment objective and the
policies described herein may be changed by the Trust's Board of
Trustees without the affirmative vote of the holders of a majority
of the Fund's outstanding shares, except that the Fund's policy of
investing at least 80% of its assets in Municipal Obligations and
the following investment limitations are fundamental and may not
be changed without such a vote of shareholders. (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 exceeding 10% of the value of the Fund's
assets; or mortgage, pledge or hypothecate its 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 total 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 this
limitation shall not apply to Municipal Obligations or
governmental guarantees of Municipal Obligations; and provided
further that, for the purpose of this limitation only, industrial
development bonds that are considered to be issued by
non-governmental users (see the third investment limitation below)
shall not be deemed to be Municipal Obligations; and provided,
further, that there is no limitation with respect to investments
in U.S. government securities.
3. Purchase the securities of any issuer if as a result
more than 5% of the value of the Fund's assets would be invested
in the securities of such issuer, except that (a) up to 50% of the
value of the Fund's assets may be invested without regard to this
5% limitation; provided that no more than 25% of the value of the
Fund's assets are invested in the securities of any one issuer and
(b) this 5% limitation does not apply to U.S. government
securities. For purposes of this limitation, a security is
considered to be issued by the governmental entity (or entities)
whose assets and revenues back the security, or, with respect to a
private activity bond that is backed only by the assets and
revenues of a non-governmental user, by such non-governmental
user. In certain circumstances, the guarantor of a guaranteed
security may also be considered to be an issuer in connection with
such guarantee, except that a guarantee of a security shall not be
deemed to be a security issued by the guarantor when the value of
all securities issued and guaranteed by the guarantor and owned by
the Fund does not exceed 10% of the value of the Fund's total
assets.
Opinions relating to the validity of Municipal Obligations
and to the exemption of interest thereon from federal income tax
(and, with respect to California Municipal Obligations, to the
exemption of interest thereon from California state personal
income tax) are rendered by bond counsel to the respective issuers
at the time of issuance, and opinions relating to the validity of
and the tax-exempt status of payments received by the Fund from
tax-exempt derivatives are rendered by counsel to the respective
sponsors of such derivatives. The Fund and its Investment Adviser
will rely on such opinions and will not review independently the
underlying proceedings relating to the issuance of Municipal
Obligations, the creation of any tax-exempt derivatives or the
bases for such opinions.
Types of Municipal Obligations
The two principal classifications of Municipal Obligations
which may be held by the Fund are "general obligation" securities
and "revenue" securities. General obligation securities are
secured by the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and interest. Revenue
securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from
the proceeds of a special excise tax or other specific revenue
source such as the user of the facility being financed. Revenue
securities may include private activity bonds. Such bonds may be
issued by or on behalf of public authorities to finance various
privately operated facilities, and are not payable from the
unrestricted revenues of the issuer. As a result, the credit
quality of private activity bonds is frequently related directly
to the credit standing of private corporations or other entities.
The Tax Reform Act of 1986 substantially revised provisions
of prior law affecting the issuance and use of proceeds of certain
tax-exempt obligations. A new definition of private activity bonds
was applied to many types of bonds, including those which were
industrial development bonds under prior law. Interest on private
activity bonds is tax-exempt only if the bonds fall within certain
defined categories of qualified private activity bonds and meet
the requirements specified in those respective categories. The Act
generally did not change the tax treatment of bonds issued to
finance governmental operations. The changes generally apply to
bonds issued after August 15, 1986, with certain transitional
rule exemptions. As used in this Prospectus, the term "private
activity bonds" also includes industrial development revenue bonds
issued pursuant to the Internal Revenue Code of 1986, as amended.
The Fund's portfolio may also include "moral obligation"
securities, which are normally issued by special purpose public
authorities. If the issuer of moral obligation securities is
unable to meet its debt service obligations from current revenues,
it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality
that created the issuer.
Other Investment Practices
Municipal Obligations purchased by the Fund may include
variable rate demand notes. Such notes may not be rated by credit
rating agencies, but unrated notes purchased by the Fund will be
determined by the Fund's Investment Adviser to be of comparable
quality at the time of purchase to rated instruments purchasable
by the Fund. Where necessary to ensure that a note is an Eligible
Security, the Fund will require that the issuer's obligation to
pay the principal of the note be backed by a conditional bank
letter or line of credit, guarantee or commitment to lend. While
there may be no active secondary market with respect to a
particular variable rate demand note purchased by the Fund, the
Fund may, upon the notice specified in the note, demand payment of
the principal of the note at any time or during specified periods
not exceeding thirteen months, depending upon the instrument
involved, and may resell the note at any time to a third party.
The absence of such an active secondary market, however, could, in
some instances, make it difficult for the Fund to dispose of a
variable rate demand note if the issuer were to default on its
payment obligation or during periods that the Fund is not entitled
to exercise its demand rights, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. While,
in general, the Fund will invest only in securities that mature
within thirteen months of purchase, the Fund may invest in
variable rate demand notes which have nominal maturities in excess
of thirteen months, if such instruments carry demand features that
comply with conditions established by the Securities and Exchange
Commission.
The Fund may also purchase Municipal Obligations 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.
In addition, the Fund may acquire "stand-by commitments"
with respect to Municipal Obligations held in its portfolio. Under
a stand-by commitment, a dealer agrees to purchase at the Fund's
option specified Municipal Obligations at a specified price. The
Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes.
The Fund may purchase tender option bonds. A tender option
bond is a municipal obligation (generally held pursuant to a
custodial arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than
prevailing short-term tax-exempt rates, that has been coupled with
the agreement of a third party, such as a bank, broker-dealer or
other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face
value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the
difference between the municipal obligation's fixed coupon rate
and the rate, as determined by a remarketing or similar agent at
or near the commencement of such period, that would cause the
securities, coupled with the tender option, to trade at or near
par on the date of such determination. Thus, after payment of this
fee, the security holder effectively holds a demand obligation
that bears interest at the prevailing short-term tax exempt rate.
The Fund's Investment Adviser will consider on an ongoing basis
the creditworthiness of the issuer of the underlying municipal
obligation, of any Custodian and of the third party provider of
the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying
municipal obligations and for other reasons. Additionally, the
above description of tender option bonds is meant only to provide
an example of one possible structure of such obligations, and the
Fund may purchase tender option bonds with different types of
ownership, payment, credit and/or liquidity arrangements.
The Fund may acquire custodial receipts or certificates
underwritten by securities dealers or banks that evidence
ownership of future interest payments, principal payments or both,
on certain municipal obligations. The underwriter of these
certificates or receipts typically purchases municipal obligations
and deposits the obligations in an irrevocable trust or custodial
account with a custodian bank, which then issues receipts or
certificates that evidence ownership of the periodic unmatured
coupon payments and the final principal payment on the
obligations. Although under the terms of a custodial receipt, the
Fund would be typically authorized to assert its rights directly
against the issuer of the underlying obligation, the Fund could be
required to assert through the custodian bank those rights as may
exist against the underlying issuer. Thus, in the event the
underlying issuer fails to pay principal and/or interest when due,
the Fund may be subject to delays, expenses and risks that are
greater than those that would have been involved if the Fund had
purchased a direct obligation of the issuer. In addition, in the
event that the trust or custodial account in which the underlying
security has been deposited is determined to be an association
taxable as a corporation instead of a non-taxable entity, the
yield on the underlying security would be reduced in recognition
of any taxes paid.
The Fund may purchase from financial institutions tax-exempt
participation interests in Municipal Obligations. A participation
interest gives the Fund an undivided interest in the Municipal
Obligation in the proportion that the Fund's participation
interest bears to the total amount of the Municipal Obligation.
These instruments may have floating or variable rates of interest.
If the participation interest is unrated, it will be backed by an
irrevocable letter of credit or guarantee of a bank that the
Trust's Board of Trustees has determined meets certain quality
standards or the payment obligation otherwise will be
collateralized by obligations of the U.S. Government and its
agencies and instrumentalities. The Fund will have the right, with
respect to certain participation interests, to demand payment, on
a specified number of days' notice, for all or any part of the
Fund's interest in the Municipal Obligation, plus accrued
interest. The Fund will invest no more than 5% of its total assets
in participation interests.
The Fund will not knowingly invest more than 10% of the
value of its total net 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. The Fund's Investment Adviser will monitor the
liquidity of such restricted securities under the supervision of
the Board of Trustees. See "Investment Objective and
Policies_Additional Information and Investment Practices_Illiquid
Securities" in the Statement of Additional Information.
Risk Factors
The Fund intends to follow the diversification standards set
forth in the Investment Company Act of 1940, as amended (the "1940
Act"), except to the extent, in the judgment of the Investment
Adviser, that non-diversification is appropriate in order to
maximize the percentage of the Fund's assets that are California
Municipal Obligations. The investment return on a non-diversified
portfolio typically is dependent upon the performance of a smaller
number of issuers relative to the number of issuers held in a
diversified portfolio. In the event of changes in the financial
condition or in the market's assessment of certain issuers, the
Fund's maintenance of large positions in the obligations of a
small number of issuers may affect the value of the Fund's
portfolio to a greater extent than that of a diversified
portfolio.
Although the Fund does not presently intend to do so on a
regular basis, it may invest more than 25% of its assets in
Municipal Obligations the interest on which is paid solely from
revenues on similar projects if such investment is deemed
necessary or appropriate by the Fund's Investment Adviser. To the
extent that the Fund's assets are concentrated in Municipal
Obligations payable from revenues on similar projects, are issued
by issuers located in California or are private activity bonds,
the Fund will be subject to the particular risks presented by such
state, projects and bonds to a greater extent than it would be if
the Fund's assets were not so concentrated.
The Fund's ability to achieve its investment objective is
dependent upon various factors, including the ability of the
issuers of California Municipal Obligations to meet their
continuing payment obligations with respect to the municipal
obligations in a timely manner. Currently, the State of California
and many other issuers of California Municipal Obligations are
experiencing financial and budgetary problems which could affect
their ability to meet their financial obligations in a timely
manner. Any resulting reductions in the creditworthiness of
issuers of California Municipal Obligations could adversely affect
the market values and marketability of California Municipal
Obligations, and, consequently, the net asset value of the Fund's
portfolio.
On July 15, 1992 and July 6, 1992, respectively, Standard &
Poor's Corporation and Moody's Investors Service, Inc., citing the
State of California's deteriorating financial position, lowered
their ratings of the State's general obligation bonds from AA and
Aa2, respectively, to A+ and Aa, respectively.
Certain California constitutional amendments, legislative
measures, executive orders, administrative regulations and voter
initiatives could result in certain adverse consequences affecting
California Municipal Obligations. Significant financial and other
considerations relating to the Fund's investments in California
Municipal Obligations are summarized in the Statement of
Additional Information.
The value of the Fund's portfolio securities can be expected
to vary inversely with changes in prevailing interest rates.
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 by the Fund only on a day 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 (9:00 A.M., Pacific 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
prior to noon for which payment is received between noon and
4:00 P.M., Eastern time (1:00 P.M., Pacific time), will be
executed at 4:00 P.M., Eastern time. Orders received after noon,
and orders for which payment has not been received by 4:00 P.M.,
Eastern time (1:00 P.M., Pacific 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 in
connection with the investment of fiduciary funds 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 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 noon,
Eastern time (9:00 A.M., Pacific 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 redeemed shares
for which a redemption order is received by Lehman Brothers after
noon, Eastern time (9:00 A.M., Pacific time), on such a business
day is normally made in federal funds wired to the redeeming
shareholder on the next business day following redemption. 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 and/or sub-investment adviser, an earlier
payment could adversely affect the Fund.
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
judgement of the Investment Advisor, an earlier payment could
adversely affect the Fund. The Fund shall have the right to redeem
shares involuntarily 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 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 and 4:00 P.M., Eastern time (1:00 P.M.,
Pacific time) on each weekday, with the exception of those
holidays on which either the New York Stock Exchange or the
Federal Reserve Bank of Boston is closed. Currently, one or both
of these institutions are closed on 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 the Fund is
calculated by adding the value of all securities and other assets
belonging to the Fund, subtracting liabilities and dividing the
result by the number of the Fund's outstanding shares. Portfolio
securities are valued on the basis of amortized cost. Under this
method, the Fund values a portfolio security at cost on the date
of purchase and thereafter assumes a constant amortization of any
discount or premium until maturity of the security. As a result,
the value of the security for purposes of determining net asset
value normally does not change in response to fluctuating interest
rates. While the amortized cost method seems to provide certainty
in portfolio valuation, it may result in periods during which
values, as determined by amortized cost, are higher or lower than
the amount the Fund would receive if it sold the securities. The
Fund's net asset value for purposes of pricing purchase and
redemption orders is determined independently of the net asset
value 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 customers' 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 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 effected and continue to accrue
dividends through the day before such shares are redeemed.
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 expenses 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 investors may elect to have their dividends
reinvested in additional full and fractional shares of the same
class 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 with respect to dividends paid after its receipt by
TSSG.
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 and California 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 and
California franchise and income taxes on amounts distributed to
its shareholders. 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 the sum of 90%
of its exempt-interest income net of certain deductions and 90% of
its investment company taxable income for such year. Dividends
derived from exempt-interest income (known as "exempt-interest
dividends") may be treated by the Fund's investors as items of
interest excludable from their gross income under Section 103(a)
of the Code, unless under the circumstances applicable to the
particular investor the exclusion would be disallowed. (See the
Statement of Additional Information under "Additional Information
Concerning Taxes.")
The Fund may hold without limit certain private activity
bonds issued after August 7, 1986. Investors must include, as an
item of tax preference, the portion of dividends paid by the Fund
that is attributable to interest on such bonds in their federal
alternative minimum taxable income for purposes of determining
liability (if any) for the 24% alternative minimum tax applicable
to individuals and the 20% alternative minimum tax and the
environmental tax applicable to corporations. Corporate investors
must also take all exempt-interest dividends into account in
determining certain adjustments for alternative minimum and
environmental tax purposes. The environmental tax applicable to
corporations is imposed at the rate of .12% on the excess of the
corporation's modified federal alternative minimum taxable income
over $2,000,000. Investors receiving Social Security benefits or
Railroad Retirement Act benefits should note that all
exempt-interest dividends will be taken into account in
determining the taxability of such benefits.
Dividends that are paid by the Fund to non-corporate
investors and are derived from interest on California Municipal
Obligations (as defined above) or Federal Obligations are also
exempt from California state personal income tax. For this
purpose, Federal Obligations are obligations the interest on which
is excludable from gross income for state income tax purposes
under the Constitution or laws of the United States. However,
dividends paid to corporate investors subject to California state
franchise tax or California state corporate income tax will be
taxed as ordinary income to such investors, notwithstanding that
all or a portion of such dividends is exempt from California state
personal income tax. Moreover, to the extent that the Fund's
dividends are derived from interest on debt obligations other than
California Municipal Obligations or Federal Obligations, such
dividends will be subject to California state personal income tax,
even though such dividends may be exempt for federal income tax
purposes.
Except as noted with respect to California state personal
income tax, dividends and distributions paid to investors that are
derived from income on Municipal Obligations may be taxable income
under state or local law even though all or a portion of such
distributions may be derived from interest on tax-exempt
obligations that, if paid directly to investors, would be
tax-exempt income. To the extent, if any, that dividends paid to
investors are derived from taxable income or from long-term or
short-term capital gains, such dividends will not be exempt from
federal income tax or California state personal income tax,
whether paid in the form of cash or additional shares, and may
also be subject to other state and local taxes.
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 as well as the California state personal income
tax, status and consequences of dividends and distributions made
each year.
The foregoing is only a brief summary of some of the
important 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 advisors with specific reference to
their own tax situations.
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 Global Asset Management
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 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 the 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 to their 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 such servicing agreements with the Fund in connection
with its 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 of 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.
YIELDS
From time to time the "yields," "effective yields" and
"tax-equivalent yields" of its 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 week is assumed to be generated each week
over a 52-week 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 of Fund shares 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
"tax-equivalent yield" demonstrates the level of taxable yield
necessary to produce an after-tax yield equivalent to the Fund's
tax-free yield. It is calculated by increasing the Fund's yield
(calculated as above) by the amount necessary to reflect the
payment of federal and California income taxes at a stated rate.
The "tax-equivalent yield" will always be higher than the "yield."
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, or to the average yields reported by the Bank Rate Monitor
from money market deposit accounts offered by the 50 leading banks
and thrift institutions in the top five standard metropolitan
statistical areas. For example, such data are reported in national
financial publications such as IBC/Donoghue's Money Fund Report,
Ibbotson Associates of Chicago, The Wall Street Journal and The
New York Times, reports prepared by Lipper Analytical
Services, 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: 010; Class B shares code: 110; Class C shares code: 210) to
obtain current yield information.
DESCRIPTION OF SHARES
The Trust was organized as a Massachusetts business trust 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 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 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, 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 all 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 investors 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.
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
9
Dividends
1
1
Taxes
1
2
Management of the Fund
1
3
Yields
1
5
Description of Shares
1
6
California Municipal
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.
May 31, 1994
