SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Lehman Brothers Institutional Funds Group Trust
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
P R E L I M I N A R Y C O P Y
LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST{PRIVATE }
PRIME VALUE MONEY MARKET FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 1996
A Special Meeting of the shareholders of the Prime Value Money Market Fund
(the "Fund"), a portfolio of Lehman Brothers Institutional Funds Group Trust
(the "Trust"), will be held at , on
---------------------------------------
November 13, 1996. A form of Proxy and Proxy Statement for the meeting are
furnished together with this notice. The purpose of the meeting is to consider
and vote on the following matters:
Approval of an investment advisory agreement between Federated Management and
the Trust with respect to the Fund;
Election of thirteen Trustees to serve until the next Annual Meeting of
Shareholders and until their successors have been elected and qualified;
Approval of a charge to a fundamental investment limitation concerning industry
concentration of investment; and
IV. Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Trustees has fixed October 5, 1996, as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Trustees
, 1996 Patricia L. Bickimer
- ------------------
Secretary
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY
TO AVOID ADDITIONAL EXPENSE.
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY
RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE
MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY
SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST{PRIVATE }
PRIME VALUE MONEY MARKET FUND
ONE EXCHANGE PLACE
53 STATE STREET
BOSTON, MASSACHUSETTS 02109
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of the
Prime Value Money Market Fund (the "Fund"), a portfolio of Lehman Brothers
Institutional Funds Group Trust (the "Trust"). The proxy is revocable at any
time before it is voted by sending written notice of the revocation to the Fund
or by appearing personally at the special meeting of shareholders to be held on
November 13, 1996 at p.m. (Eastern Standard Time) at
---------
(the "Special Meeting"). Proxies are solely
- ------------------------------
being solicited by mail without assistance from specially engaged employees or
paid solicitors.
On October 5, 1996, the Fund had outstanding shares
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( Class A Shares, Class B Shares, Class C Shares and
------- ------- ------ -----
Class E Shares) of beneficial interest (the "Shares"), each Share being entitled
to one vote. Only shareholders of record at the close of business on October 5,
1996 (the "Shareholders") will be entitled to notice of and the right to vote at
the Special Meeting. A majority of the outstanding Shares of the Fund,
represented in person or by proxy, shall be required to constitute a quorum at
the Special Meeting. Shares of all four classes of the Fund (A Shares,
B Shares, C Shares and E Shares) shall be voted as a single class of Shares for
purposes of Proposal 1, relating to the approval of an investment advisory
agreement. With respect to Proposal 2, relating to the election of Trustees,
all shares of the Trust shall be voted as a single class for the election of
Trustees.
The items submitted to the Shareholders at the Special Meeting are
undertaken as part of a business arrangement by and between Federated Investors
and Lehman Brothers Global Asset Management Inc. ("LBGAM") pursuant to which
LBGAM has entered into a non-compete agreement whereby LBGAM will discontinue
advising money market funds, subject to certain conditions. Following the
transactions, LBGAM will assist Federated Investors in providing services to
shareholders for which LBGAM will receive fees paid by Federated Investors
and/or mutual funds in which the Shareholders are invested. In addition, if
Shareholders approve the proposals outlined in this Proxy Statement, it is
anticipated that the name of Lehman Brothers Institutional Funds Group Trust
will change to "Money Market Obligations Trust II," which reflects the fact that
LBGAM no longer manages the various portfolios, including the Fund. The name of
the Fund is expected to change to Prime Value Obligations Fund.
If the accompanying proxy card is properly executed and returned in time to
be voted at the Special Meeting, the individuals named as proxies will vote your
Shares in accordance with your instructions. If you return your proxy with no
voting instructions, your Shares will be voted affirmatively for the Proposals
described in this proxy statement.
A prospectus for the appropriate class of Shares of the Fund, which
includes audited financial statements, has been previously mailed to
Shareholders. The Board of Trustees proposes to mail this proxy statement and
the enclosed notice of meeting and proxy card on or about October 17, 1996.
Copies of the Fund's 1996 annual report and semi-annual report as of January 31,
1996 and July 31, 1996, respectively, are available without charge upon request
made by telephone (800) 368-5556.
APPROVAL OF AN INVESTMENT ADVISORY AGREEMENT BETWEEN FEDERATED MANAGEMENT AND
THE TRUST WITH RESPECT TO THE PRIME VALUE FUND.
Shareholders are being asked to approve an investment advisory agreement
between the Fund and Federated Management.
The Fund's existing distributor is Lehman Brothers, a wholly-owned
subsidiary of Lehman Brothers Holdings, Inc., located at 3 World Financial
Center, New York, New York 10285. The Fund's administrator and transfer agent
is First Data Investor Services Corp. ("FDISC"), a wholly-owned subsidiary of
First Data Corporation, located at One Exchange Place, 53 State Street, Boston,
Massachusetts 02109. Currently, the Fund's investment adviser is LGBAM, a
New York corporation, located at 3 World Financial Center, New York, New York
10285. As part of a series of transactions between LBGAM and Federated
Investors which are further described below, LBGAM made a recommendation that
Federated Management, a Delaware business trust and an indirect wholly-owned
subsidiary of Federated Investors, be retained as the Fund's investment adviser.
The Trustees of the Trust, including Trustees who are not "interested persons,"
(the "Independent Trustees") under the Investment Company Act of 1940 (the "1940
Act"), then unanimously voted to recommend that the Shareholders of the Fund
approve an investment advisory agreement between Federated Management and the
Trust with respect to the Fund (the "Proposed Advisory Agreement").
COMPARISON OF THE PROPOSED ADVISORY AGREEMENT AND THE CURRENT ADVISORY AGREEMENT
The terms and conditions of the current advisory agreement between the
Trust and LBGAM (the "Current Advisory Agreement") are comparable in all
material respects to those of the Proposed Advisory Agreement. A copy of the
Proposed Advisory Agreement is attached as Exhibit A. The Current Advisory
Agreement of the Fund is dated February 1, 1996, and was last approved by the
Shareholders of the Fund on January 31, 1996.
Subject to the direction of the Board of Trustees of the Trust, the
Declaration of Trust, the Trust's By-Laws and Registration Statement and the
Fund's fundamental investment policies, under the Proposed Advisory Agreement,
Federated Management will be required to provide investment research and
supervision of the investments of the Fund and to conduct a continuous program
of investment evaluation and of appropriate sale or other disposition and
reinvestment of the Fund's assets. Under the Proposed Advisory Agreement,
Federated Management may appoint and employ or contract with such other persons,
including sub-advisers, at its own cost and expense as it shall determine, in
order to assist it in carrying out the Proposed Advisory Agreement.
The Proposed Advisory Agreement will, as does the Current Advisory
Agreement, provide that the investment adviser thereunder is not liable for any
act or omission connected with the rendering of services under the Proposed
Advisory Agreement, for any losses that may be sustained in the purchase,
holding or sale of any security in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties
under such Agreement. Federated Management is also put on notice by the terms
of the Proposed Advisory Agreement that the obligations of the Fund are limited
to the assets of the Fund and Federated Management agrees not to seek
satisfaction of any such obligation from the assets of any other fund of the
Trust, shareholders of any fund of the Trust, the Trustees, or officers,
employees or agents of the Trust. Similar notice is given to LBGAM under the
Current Advisory Agreement.
The Proposed Advisory Agreement will continue in effect for an initial term
of two years from the date of execution and for successive annual periods
thereafter, provided that the continuance is specifically approved at least
annually by either: (a) the vote of a majority of the Independent Trustees of
the Trust; or (b) the vote at an annual or special meeting of shareholders of a
majority of the outstanding voting securities of the Fund (a "1940 Act
Majority"), defined as (i) 67% or more of the voting securities present at such
meeting, if the holders of more than 50% of the outstanding securities are
present or represented by proxy, or (ii) more than 50% of the outstanding voting
securities of such Fund, whichever is less. The Current Advisory Agreement also
had an initial term of two years, but is now continued on a year-to-year basis
in the same manner as the Proposed Advisory Agreement. The Proposed Advisory
Agreement is terminable without penalty by the Trustees or by a 1940 Act
Majority on 60 days' written notice to Federated Management. The Proposed
Advisory Agreement is also terminable automatically in the event of its
"assignment" as defined in the 1940 Act.
The Proposed Advisory Agreement states that it will be governed in
accordance with the laws of the Commonwealth of Pennsylvania and that each
provision of such Agreement is independent of all other provisions.
THE ADVISORY FEE AND OTHER EXPENSES
The rate of the advisory fee payable pursuant to the Proposed Advisory
Agreement, as recommended for approval by the Shareholders of the Fund, is
identical to the rate of the advisory fees payable pursuant to the Current
Advisory Agreement. Both provide for a maximum fee, computed daily and paid
monthly, equal to 0.20% per annum of the Fund's average daily assets. During
the last fiscal year ended January 31, 1996, LBGAM was entitled to receive
$4,452,829 in advisory fees. Under the Current Advisory Agreement, LBGAM has
agreed to fee waivers and expense reimbursements in any year during which the
Fund's expenses exceed the limitation imposed by any state blue sky authority
having jurisdiction over the Fund. No such provision is contained in the
Proposed Advisory Agreement.
With respect to other expenses, under both Agreements, the Fund is
responsible for virtually all types of expenses associated with the Fund, but
only the Current Advisory Agreement provides for expense reimbursement in order
to meet Fund expense ratio limitations.
FEDERATED MANAGEMENT
Federated Management is an investment adviser registered under the
Investment Advisers Act of 1940. Federated Management acts as investment
adviser to 25 investment companies, many with multiple portfolios or series.
It is an indirect, wholly-owned subsidiary of Federated Investors, a Delaware
business trust which, together with its affiliates, has approximately
$70 billion in assets under management. Founded in 1955, Federated has been
serving the needs of investors for over 41 years. Federated has also been
managing the short-term assets of institutional investors for over 20 years,
having created one of the first institutional money market funds in 1976. All
of the Class A shares (voting) of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, his wife, and his son, J. Christopher
Donahue. Officers and Trustees of Federated Portfolios who own Class B shares
(non-voting) of Federated Investors, their positions with Federated Investors,
and the number of shares beneficially owned by such persons, are as follows:
John F. Donahue, Trustee, Chairman and Chief Executive Officer (1,823,547);
J. Christopher Donahue, Trustee, President and Chief Operating Officer
(1,051,483); Richard B. Fisher, Trustee, Executive Vice President and Assistant
Secretary (800,000); Edward C. Gonzales, Trustee, Vice Chairman and Treasurer
(400,000); John W. McGonigle, Trustee, Executive Vice President, General Counsel
and Secretary (1,000,000) and David M. Taylor, Trustee and Senior Vice President
(140,000).
Of the investment company series for which Federated Management has
investment adviser responsibility, two (2) are offered primarily to
institutional investors and have similar investment objectives to that of the
Fund. The following is a table by Fund size indicating the rate of compensation
paid to Federated Management by such funds.
FUND SIZE (MILLIONS) ADVISORY FEE WAIVER
Unrated Prime Fund/Retail with Sub-Accounts
Money Market Management $96 0.50% 0.00%
Unrated Prime Fund/Inst'l with Sub-Accounts
Prime Cash Series $2,033 0.50% 0.10%
The following table lists the name, current position with Federated
Management, address and principal occupation of each Trustee and of the
principal executive officer of Federated Management.
POSITION WITH
FEDERATED
NAME (AGE) ADDRESS MANAGEMENT;
PRINCIPAL
OCCUPATION
John F. Donahue (71) Federated Trustee and Chairman;
Investors Tower Chairman and Trustee,
Pittsburgh, Federated Investors
Pennsylvania
15222-3779
J. Christopher Federated Trustee, Chief
Donahue (46) Investors Tower Executive Officer and
(son of John F. Pittsburgh, Chief Operating
Donahue) Pennsylvania Officer; President and
15222-3779 Trustee, Federated
Investors.
John W. McGonigle Federated Trustee; Executive
(56) Investors Tower Vice President,
Pittsburgh, Secretary, General
Pennsylvania Counsel and Trustee,
15222-3779 Federated Investors.
Mark D. Olson (51) Wilson, Trustee; Partner,
Halbrook & Bayard Wilson Halbrook &
107 W. Market Bayard (law firm).
Street
Georgetown,
Delaware 19947
AFFILIATED BROKERS AND OTHER AFFILIATED PERSONS
Affiliated brokers and other "affiliated persons" of the Fund (as defined
in the 1940 Act) during the Trust's fiscal year ended January 31, 1996, received
no commissions or other payments from the Fund.
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees held on September 6, 1996, the
Trustees, including the Independent Trustees, unanimously voted to recommend
that the Shareholders of the Fund approve the Proposed Advisory Agreement. It
is anticipated that, if the proposals contained herein are approved, Federated
will request, and the Board of Trustees will vote to enter into new service
contracts for transfer agency, portfolio accounting and administrative services
with affiliates of Federated, as well as a new Distribution Agreement with
Federated Securities Corp. In deciding to recommend that the Shareholders
approve the Proposed Advisory Agreement, the Board took into consideration a
number of factors, including (1) the capabilities and resources of Federated
Management, (2) the comparative investment performance of similar funds managed
by Federated Management, (3) the commitment of Federated Management to maintain
and enhance its position in the money fund business and (4) the decision by
LBGAM to seek to discontinue managing money market funds.
The Board concluded to recommend that the shareholders of the Portfolio
vote to approve the Proposed Advisory Agreement. This conclusion was based on a
number of factors, including the following:
1. The change in investment adviser could permit the shareholders of the
Fund to pursue substantially the same investment goals in a larger fund based
upon the commitment of Federated Management to devote resources to seek to
attract a broader group of investors. A larger fund should enhance the ability
of portfolio managers to effect their portfolio transactions on more favorable
terms and give portfolio managers greater investment flexibility and the ability
to select a larger number of portfolio securities, with the attendant ability to
spread investment risks over a larger number of portfolio issues. In addition,
the larger aggregate net assets should enable the Fund to obtain the benefits of
economies of scale.
2. The change in investment adviser would provide the shareholders of the
Fund with the investment advisory services of Federated Management. Federated
Management and its affiliates manage over 100 mutual funds, including 48 money
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market funds with assets of $43 billion. Federated Investors is one of the
largest institutional service providers in the United States. Federated
Investors has been providing advisory services for over 41 years and has been
managing the short-term assets of institutional investors for over 20 years,
having created one of the first institutional money market funds in 1976.
3. LBGAM has undertaken to cap the Fund's total operating expense ratio
at .18%, which can be changed at any time. As a result of the approval of the
Proposed Advisory Agreement the expense ratio is expected to increase by .02%,
although the contractual advisory fee of Federated Management is the same as
that of LBGAM. Federated Management will enter into a similar voluntary
undertaking to cap the Fund's total operating expenses and, in addition, has
agreed, for the two-year period following the approval of the Proposed Advisory
Agreement, to cap the Fund's expense ratio at .35%, which is the same
contractual expense cap that is provided by LBGAM.
VOTE REQUIRED
The affirmative vote of a 1940 Act Majority (defined above) of the
outstanding voting securities of the Fund is required in order to approve the
Proposed Advisory Agreement.
ELECTION OF TRUSTEES
The Board of Trustees currently consists of six Trustees serving until the
election and qualification of their successors. It is proposed that thirteen
-13-
Trustees be added to the Board in connection with the change of the Fund's
investment adviser to Federated Management described in Proposal 1 above.
Current Trustees will not stand for re-election. Three of the nominees are
affiliated with Federated Investors as discussed further below. All of the
other nominees are Trustees or Directors of other investment companies managed
by Federated Management.
NOMINEES, TRUSTEES AND EXECUTIVE OFFICERS OF THE FUND
The following is a list of the nominees, Trustees and executive officers of
the Fund. Information provided regarding the name, age, current position with
the Fund and term of office, if any, principal occupation during the past five
years, family relationships and directorships is required by law.
NOMINEES FOR TRUSTEES
NAME, AGE AND RELATION TO FEDERATED INVESTORS
FAMILY OR ANY OF ITS SUBSIDIARIES
RELATIONSHIPS
John F. Donahue Trustee and Chairman of the Board of the
Age 71 Trust; Chairman and Trustee, Federated
Father of J. Investors, Federated Advisers, Federated
Christopher Donahue, Management; Chairman and Director,
President of the Trust Federated Research Corp. and Federated
Global Research Corp.; Chairman, Passport
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Research Ltd.; Chief Executive Officer and
Director, Trustee or Managing General
Partner of 74 investment companies for
which subsidiaries of Federated Investors
serve as investment adviser, administrator
and/or distributor (the ``Federated Fund
Complex'').
Thomas G. Bigley* Trustee of the Trust; Director, Ober
Age 61 Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh;
Director, Trustee, or Managing General
Partner of 74 investment companies within
the Federated Fund Complex; formerly,
Senior Partner Ernst & Young LLP.
John T. Conroy, Jr.* Trustee of the Trust; President,
Age 58 Investment Properties Corporation; Senior
Vice President, John R. Wood and
Associates, Inc., Realtors; President,
Northgate Village Development Corporation;
Partner or Trustee in private real estate
ventures in Southwest Florida; Director,
Trustee, or Managing General Partner of 74
investment companies within the Federated
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Fund Complex; formerly, President Naples
Property Management, Inc.
William J. Copeland* Trustee of the Trust; Director and member
Age 77 of the Executive Committee, Michael Baker,
Inc.; Director, Trustee or Managing
General Partner of 74 investment companies
within the Federated Fund Complex;
formerly, Vice Chairman and Director, PNC
Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
J. Christopher Donahue Trustee and President of the Trust,
Age 46 President and Trustee, Federated
Son of John F. Donahue, Investors, Federated Advisers, Federated
Chairman of the Trust Management and Federated Research;
President and Director, Federated Research
Corp. and Federated Global Research Corp.;
President Passport Research Ltd.; Trustee,
Federated Administrative Services,
Federated Services Company, and Federated
Shareholder Services; President or
Executive Vice President of the Funds;
Director, Trustee, or Managing General
Partner of certain investment companies
within the Federated Fund Complex.
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James E. Dowd* Trustee of the Trust; Attorney-at-law;
Age 73 Director, The Emerging Germany, Inc.,
Director, Trustee, or Managing General
Partner of 74 investment companies within
the Federated Fund Complex.
Lawrence D. Ellis, M.D. Trustee of the Trust; Professor of
Age 62 Medicine and Member Board of Trustees,
University of Pittsburgh Medical Center-
Downtown; Member, Board of Directors,
University of Pittsburgh Medical Center;
formerly Hematologist, Oncologist, and
Internist, Presbyertain and Montefiore
Hospitals; Director, Trustee, or Managing
General Partner of 74 investment companies
within the Federated Fund Complex.
Edward L. Flaherty, Trustee of the Trust; Attorney-at-law;
Jr.* Shareholder, Henny, Kochuba, Meyer and
Age 71 Flaherty; Director, Eat `N Park
Restaurants, Inc., and Statewide
Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of 74
investment companies within the Federated
Fund Complex; formerly, Counsel, Horizon
-17-
Financial, F.A., Western Region.
Peter E. Madden* Trustee of the Trust; Consultant; State
Age 53 Representative, Commonwealth of
Massachusetts; Director, Trustee, or
managing General Partner of 74 investment
companies within the Federated Fund
Complex; formerly President, State Street
Bank and Trust Company and State Street
Boston Corporation.
Gregor F. Meyer* Trustee of the Trust; Attorney-at-law;
Age 68 Shareholder, Henny, Kochuba, Meyer and
Flaherty; Chairman, Meritcare, Inc.;
Director, Eat `N Park Restaurants, Inc.;
Director, Trustee or Managing General
Partner of 74 investment companies within
the Federated Fund Complex.
John E. Murray, Jr.* Trustee of the Trust; President and Law
Age 62 Professor, Duquesne University; Consulting
Partner, Mollica, Murray and Hogue;
Director, Trustee or Managing General
Partner of 74 investment companies within
the Federated Fund Complex.
-18-
Wesley W. Posvar* Trustee of the Trust; Professor,
Age 70 International Politics and Management
Consultant; Trustee, Carnegie Endowment
for International Peace, RAND Corporation,
Online Computer Library Center, Inc., and
U.S. Space Foundation; Chairman, Czecho
Management Center; Director, Trustee or
Managing General Partner of 74 investment
companies within the Federated Fund
Complex; President Emeritus, University of
Pittsburgh, founding Chairman, National
Advisory Council for Environmental Policy
and Technology and Federal Emergency
Management Advisory Board.
Marjorie P. Smuts* Trustee of the Trust; Public
Age 60 relations/marketing consultant; Conference
Coordinator, Non-profit entities;
Director, Trustee, or Managing General
Partner of 74 investment companies within
the Federated Fund Complex.
The foregoing individuals are being nominated as Trustees in connection
with the transaction between LBGAM and Federated Investors referred to under
-19-
Proposal 1 whereby Federated Management would assume the role of the Fund's
investment adviser. If Federated Management becomes the Fund's investment
adviser, the Trustees believe that appointing representatives from other areas
within the Federated Investors' organization would help the transition run
smoothly. Furthermore, the Trustees consider the addition of personnel of
Federated Investors to be a means of facilitating day-to-day management of the
Fund.
As part of the overall business agreement between Federated Investors and
LBGAM, Federated Management has also been recommended to assume the role of
investment adviser with respect to two other portfolios of Lehman Brothers
Institutional Funds Group Trust, the Prime Money Market Fund and the Municipal
Money Market Fund. Also pursuant to that agreement, the assets of several
Lehman Brothers Institutional Funds Group Trust, the Government Obligations
Fund, Treasury Instruments Money Market Fund II and the Tax-Free Money Market
Fund, are proposed to be reorganized into Federated Investors portfolios which
are part of its Money Market Obligations Trust. A third part of the transaction
involves the transfer of assets from Lehman Brothers' retail money market funds
to similar funds of Federated Investors with similar objectives through a
negative consent process.
Some of the nominees for election as Trustees are both executive officers
of and employed by Federated Investors. To the extent that employees of
Federated will benefit from the entire transaction with LBGAM, the nominees may
be deemed to have an indirect material interest in such arrangement. Similarly,
Messrs. Carbone and Gordon, Trustees, and Messrs. Winters and Rabiecki,
-20-
Executive Officers, are employees of Lehman Brothers and LBGAM, respectively,
and as such may be deemed to have an indirect material interest in the
transaction.
TRUSTEES NOT STANDING FOR ELECTION
POSITIONS WITH RELATION TO
NAME AND AGE REGISTRANT AND FEDERATED INVESTORS
BUSINESS OR ANY OF ITS
EXPERIENCE SUBSIDIARIES
James A. Carbone, 43 Managing None
Director, Lehman
Brothers
Andrew Gordon, 42 Co-Chairman of None
the Board,
Trustee and
President of
Lehman Brothers
Institutional
Funds Group
Trust; Managing
Director, Lehman
Brothers
Charles Barber,* 79 Trustee*, Lehman None
Brothers
-21-
Institutional
Funds Group
Trust; former
Chairman of the
Board, ASARCO,
Inc.
Burt N. Dorsett,* 65 Trustee*, Lehman None
Brothers
Institutional
Funds Group
Trust; Managing
Partner, Dorsett
McCabe Capital
Management, Inc.,
an investment
counseling firm;
Director,
Research
Corporation
Technologies, a
non-profit
patent-clearing
and licensing
operation;
formerly
President,
-22-
Westinghouse
Pension
Investments
Corporation;
formerly
Executive Vice
President and
Trustee, College
Retirement
Equities Fund,
Inc., a variable
annuity fund; and
formerly
Investment
Officer,
University of
Rochester
Edward J. Kaier,* 50 Trustee*, Lehman None
Brothers
Institutional
Funds Group
Trust; Partner
with the law firm
of Hepburn,
Willcox,
Hamilton & Putnam
-23-
S. Donald Wiley,* 69 Trustee*, Lehman None
Brothers
Institutional
Funds Group
Trust; Vice
Chairman and
Trustee,
H.J. Heinz
Company
Foundation
* Independent Trustee
None of the nominees and none of the current Trustees, with the exception
of Messrs. Carbone and Gordon, have any material direct or indirect interest in
the Fund's current principal underwriter or administrator. As noted above,
however, if Shareholders approve the proposals described in this proxy
statement, the Board of Trustees is expected to vote to enter into new transfer
agency, portfolio accounting, administration and distribution agreements with
entities that are affiliated with Federated Management. None of the nominees
except John F. Donahue, J. Christopher Donahue and Lawrence D. Ellis, M.D. has
any material direct or indirect interest in the new administrator or principal
underwriter. Except as described above, none of the nominees has any material
direct or indirect interest in the investment adviser or any person controlling,
controlled by, or under common control with the investment adviser.
-24-
During the fiscal year ended January 31, 1996, the Trust's Board met four
times. All Trustees attended at least 75 percent of the meetings.
The Trust has a standing Audit Committee which consists of Messrs. Barber,
Dorsett, Kaier and Wiley, all of whom are Independent Trustees. The function of
the Audit Committee is to meet annually with the Trust's independent auditors to
review the financial statements of the Trust's portfolios. The Audit Committee
met one time during the fiscal year ended January 31, 1996.
The Trust also has a Nominating Committee consisting of Messrs. Barber,
Dorsett, Kaier and Wiley. Its function is is to nominate independent trustees
to fill vacancies that occur on the Board of Trustees of Lehman Brothers
Institutional Funds Group Trust. The Committee did not meet during the fiscal
year ended January 31, 1996.
EXECUTIVE OFFICERS
POSITIONS WITH RELATION TO
NAME AND AGE REGISTRANT AND FEDERATED INVESTORS
BUSINESS OR ANY OF ITS
EXPERIENCE SUBSIDIARIES
John M. Winters, 46 Vice President None
and Investment
Officer, Lehman
Brothers
-25-
Institutional
Funds Group
Trust; Investment
Officer, Senior
Vice President
and Senior Money
Market Portfolio
Manager, Lehman
Brothers Global
Asset Management,
Inc.; formerly
Product Manager
with Lehman
Brothers Capital
Markets Group
Nicholas Rabiecki Vice President None
III, 39 and Investment
Officer, Lehman
Brothers
Institutional
Funds Group
Trust; Vice
President and
Senior Portfolio
Manager, Lehman
Brothers Global
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Asset Management,
Inc.; formerly
Senior Fixed-
Income Portfolio
Manager with
Chase Private
Banking
Michael C. Kardok, Treasurer, Lehman None
36 Brothers
Institutional
Funds Group
Trust; Vice
President, First
Data Investor
Services Group,
Inc.; prior to
May 1994, Vice
President, The
Boston Company
Advisors, Inc.
Patricia L. Secretary, Lehman None
Bickimer, 42 Brothers
Institutional
Funds Group
Trust; Vice
President and
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Associate General
Counsel, First
Data Investor
Services Group,
Inc.; prior to
May 1994, Vice
President and
Associate General
Counsel, The
Boston Company
Advisors, Inc.
None of the executive officers was selected as such pursuant to any
agreements nor has any executive officer entered into an employment contract or
other compensatory agreement with the Fund.
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Fund unless it is finally adjudicated that they engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
their offices.
The following table describes the compensation paid during the fiscal year
ending January 31, 1996, to each member of the Board of Trustees of the Trust.
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COMPENSATION TABLE
The following table presents, for the fiscal year ended January 31, 1996,
the compensation paid to, or accrued for, each of the Trust's Trustees. None of
the Fund's most highly compensated executive officers had aggregate compensation
of over $60,000 during this period.
COMPENSATION TABLE
Total
Compensation
Pension or from Fund
Retirement Estimated and Fund
Benefits Annual Complex
Aggregate Accrued Benefits ( Funds)
----
Compensation as part of Upon Paid to
Name and Position From Fund Fund Retirement Directors
Expenses
James A. Carbone
Trustee and
Co-Chairman of the $0 $0 N/A $0
Board
Andrew Gordon
Trustee, Co-Chairman
of the Board and $0 $0 N/A $0
President
Charles Barber
Trustee $25,000 $0 N/A $25,000
Burt N. Dorsett
Trustee $25,000 $0 N/A $52,500
Edward J. Kaier
Trustee $25,000 $0 N/A $25,000
S. Donald Wiley
Trustee $25,000 $0 N/A $25,000
The Fund does not have any compensation plans, including pension or
retirement plans or any other defined benefit or actuarial plan in place.
Trustees who are "interested persons" receive no compensation from the Fund
for service as Trustees. Independent Trustees receive $20,000 in retainer fees
per year, plus $1,250 per regular or special Board meeting attended. Trustees
are also reimbursed for travel and out-of-pocket expenses.
VOTE REQUIRED
Approval of Proposal 2 with respect to the Fund requires the affirmative
vote of a 1940 Act Majority of outstanding voting securities of Lehman Brothers
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Institutional Funds Group Trust. The vote of Shareholders of the Fund will be
aggregated with the votes of the Shareholders of the other series of Lehman
Brothers Institutional Funds Group Trust in determining whether Proposal 2 is
approved.
APPROVAL OF A CHANGE TO A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING INDUSTRY
CONCENTRATION OF INVESTMENT.
Shareholders are being asked to approve a change to a fundamental
investment limitation. A fundamental investment limitation is one that may be
changed only with the approval of shareholders.
The prospectus for the Fund currently includes the following fundamental
investment limitation:
The Funds may not:
* * * *
Purchase any securities which would cause 25% or more of the value of
its total assets at the time of such purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry, except that Prime Value Money Market Fund will invest 25% or more
of the value of its total assets in obligations of issuers in the banking
-32-
industry or in obligations, such as repurchase agreements, secured by such
obligations (unless the Fund is in a temporary defensive position); provided
that there is no limitation with respect to investments in U.S. government
securities . . . .
The Board of Trustees believes that a change in the foregoing investment
limitation is desirable to allow the Fund to remove the requirement that it
concentrate its investments in the banking industry. The Board believes that
the investment limitation should be clarified to confirm that the concentration
limitations will not apply to the Fund with respect to bank instruments that are
issued or enhanced by approved banks. As revised by this proposal, the
fundamental investment limitation would read as follows:
The Funds may not:
Purchase any securities which would cause 25% or more of the value of
its total assets at the time of such purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry, except that . . . the Prime Value Money Market Fund intends to
invest 25% or more of the value of [its] total assets in obligations of issuers
in the banking industry; provided that there is no limitation with respect to
investments in U.S. government securities or in bank instruments issued or
enhanced by approved banks.
TRUSTEES' EVALUATION AND RECOMMENDATION
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At a meeting of the Board of Trustees held on September 6, 1996, the
Trustees, including the Independent Trustees, unanimously voted to recommend
that the Shareholders of the Fund approve the proposed modification of the
Fund's investment limitation.
VOTE REQUIRED
The affirmative vote of a 1940 Act Majority of the outstanding voting
securities of the Fund is required in order to approve the proposed modification
of the Fund's investment limitation.
INFORMATION RELATING TO VOTING MATTERS
QUORUM
In the event that a quorum is not present at the Special Meeting, or in the
event that a quorum is present at the Special Meeting, but sufficient votes to
approve the Proposals are not received, the persons named as proxies may propose
one or more adjournments of the Special Meeting to permit the further
solicitation of proxies. Any adjournment will require the affirmative vote of a
majority of Shares represented at the Special Meeting in person or by proxy. If
a quorum is present, the persons named as proxies will vote those proxies for
which they may vote "For" Proposal 1 in favor of adjournment, and they will vote
those proxies required to be voted "Against" Proposal 1 against the adjournment.
-34-
A quorum is constituted with respect to the Fund by the presence in person
or by proxy of holders of more than 50% of the outstanding Shares of the Fund.
Proxies properly executed and marked with a negative vote or an abstention will
be considered present at the Special Meeting for purposes of determining the
existence of a quorum. Broker non-votes and abstentions will be counted for
purposes of determining whether a quorum is present for purposes of convening
the meeting. With respect to each proposal, broker non-votes and abstentions
will both be considered to be abstentions.
NO DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the Fund have no appraisal rights under the Trust's
Declaration of Trust or under the laws of the Commonwealth of Massachusetts.
Shareholders have the right, however, to redeem their Fund shares at any time at
net asset value.
REJECTION OF A PROPOSAL
If Shareholders vote to reject either Proposal 1 or Proposal 2, the
Trustees will not authorize any action to be taken with respect to a Proposal
approved by Shareholders. Because the proposed adoption of a new advisory
contract and the election of Trustees are intended, together, to allow for a
change in the management of the Fund, the rejection of either Proposal would
frustrate the overall business plan.
OTHER MATTERS
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Management does not know of any matters to be presented at the Special
Meeting other than those described above. However, if any other matters
properly come before the meeting or any adjournment thereof, the holders of the
proxies are authorized to vote thereon at their discretion.
The Fund's principal accountant/independent auditor is Ernst & Young, LLP,
200 Clarendon Street, Boston, MA 02116-5072. Representatives of Ernst & Young
will not be present at the Special Meeting.
The following list indicates the beneficial ownership of shareholders who,
to the best knowledge of the Trust, are the beneficial owners of more than 5% of
the outstanding Shares of each of the four classes of Shares of the Fund as of
October 5, 1996. Also included are the amounts of beneficial ownership of the
Fund's Shares held by directors and executive officers of the Fund. Directors
or executive officers not listed do not have any beneficial ownership of the
Fund.
Title of Name and Amount and Percent
Class Address of Nature of of Class
Beneficial Beneficial
Owner Ownership
While the Special Meeting is called to act upon any other business that may
properly come before it, at the date of this proxy statement the only business
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which the Board of Trustees intends to present or knows that others will present
is the business mentioned in the notice of meeting. If any other matters
lawfully come before the Special Meeting, and as to all procedural matters at
the meeting, it is the intention that the enclosed proxy shall be voted in
accordance with the best judgment of the attorneys named therein, or their
substitutes, present and acting at the Special Meeting.
The cost of preparing and mailing the notice of meeting, this proxy
statement, proxy cards and any additional proxy material has been or is to be
borne by Federated.
If you do not expect to attend the Special Meeting, please sign your proxy
and return it in the enclosed envelope to avoid unnecessary expense and delay.
No postage is necessary.
By Order of the Trustees
, 1996 Patricia L. Bickimer
- --------------------------
Secretary
FIRST DATA INVESTOR LEHMAN BROTHERS INSTITUTIONAL
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SERVICES GROUP, INC. FUNDS GROUP TRUST
ONE EXCHANGE PLACE PRIME VALUE MONEY MARKET FUND
53 STATE STREET SPECIAL MEETING OF
BOSTON, MASSACHUSETTS SHAREHOLDERS
02109 NOVEMBER 13, 1996
KNOW ALL PERSONS BY THESE PRESENTS
that the undersigned Shareholder of
PRIME VALUE MONEY MARKET FUND, a
portfolio of Lehman Brothers
Institutional Fund Group Trust,
hereby appoints
or any of them, true and lawful
attorneys, with power of
substitution of each, to vote all
shares of PRIME VALUE MONEY MARKET
FUND, a portfolio of Lehman
Brothers Institutional Fund Group
Trust, which the undersigned is
entitled to vote, at the Special
Meeting of Shareholders to be held
on November 13, 1996, at
, at
--------------------------
.m., and at any
------ --
adjournment thereof.
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Discretionary authority is hereby
conferred as to all other manners
as may properly come before the
Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE ATTORNEYS NAMED
WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN ACCORDANCE WITH THE CHOICE
MADE ON THIS BALLOT. IF THIS PROXY IS RETURNED AND NO CHOICE IS INDICATED AS TO
ANY MATTER, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THE MATTER PRESENTED.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X KEEP THIS
PORTION FOR YOUR RECORDS
PRIME VALUE MONEY MARKET FUND DETACH AND RETURN THIS PORTION ONLY
{PRIVATE }
VOTE ON
PROPOSAL
FOR
AGAINST
-39-
ABSTAIN
" " " 1. APPROVAL OF AN INVESTMENT
ADVISORY AGREEMENT BETWEEN FEDERATED
MANAGEMENT AND THE TRUST WITH RESPECT TO
THE PRIME VALUE FUND.
" " " 2. ELECTION OF TRUSTEES TO SERVE
UNTIL THE NEXT ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS
HAVE BEEN ELECTED AND QUALIFIED. VOTE IS
MADE FOR THE ELECTION OF ALL NOMINATED
TRUSTEES LISTED EXCEPT THOSE WHOSE NAME IS
STRIKED OUT: J.F. DONAHUE, T.G. BIGLEY,
J.T. CONROY, JR., W.J. COPELAND, J.C.
DONAHUE, J.E. DOWD, L.D. ELLIS, M.D., E.L.
FLAHERTY, JR., P.E. MADDEN, G.F. MEYER,
J.E. MURRAY, JR., W.W. POSVAR, AND M.P.
SMUTS.
" " " 3. APPROVAL OF A CHANGE TO A
FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING INDUSTRY CONCENTRATION OF
INVESTMENT.
PLEASE SIGN EXACTLY S YOUR NAME(S) APPEAR BELOW. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, GUARDIAN, TRUSTEE, CUSTODIAN, ETC., PLEASE GIVE YOUR
FULL TITLE AS SUCH. IF A CORPORATION OR PARTNERSHIP, PLEASE SIGN THE FULL NAME
-40-
BY AN AUTHORIZED OFFICER OR PARTNER. IF SHARES ARE OWNED JOINTLY, ALL PARTIES
SHOULD SIGN.
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
