<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
The Galaxy Fund
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of filing fee (Check the appropriate box):
/ / $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:
- --------------------------------------------------------------------------------
/x/ Fee paid previously with preliminary 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:
- --------------------------------------------------------------------------------
<PAGE> 2
THE GALAXY FUND
------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE INTERNATIONAL EQUITY FUND
------------
July 19, 1996
To the Shareholders of the
International Equity Fund of
The Galaxy Fund
A Special Meeting of Shareholders of the International Equity
Fund (the "Fund") of The Galaxy Fund (the "Trust") will be held on August 9,
1996, at 10:00 a.m. Eastern Time, at the offices of First Data Investor
Services Group, Inc., 4400 Computer Drive, Westboro, Massachusetts 01581-5108,
for the following purposes:
(1) The approval or disapproval of a new
Sub-Advisory Agreement between Fleet Investment Advisors Inc.
and Oechsle International Advisors, L.P., with respect to the
Fund; and
(2) The transaction of such other business as may
properly come before the meeting or any adjournment thereof.
The proposal referred to above is discussed in the Proxy
Statement attached to this Notice. Each shareholder is invited to attend the
Special Meeting of Shareholders in person. Shareholders of record at the close
of business on June 28, 1996 have the right to vote at the meeting. If you
cannot be present at the meeting, we urge you to fill in, sign and promptly
return the enclosed proxy in order that the meeting can be held and a maximum
number of shares may be voted.
W. BRUCE McCONNEL, III
Secretary
<PAGE> 3
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY
LAW, THE SPECIAL MEETING OF SHAREHOLDERS OF THE TRUST'S INTERNATIONAL EQUITY
FUND SCHEDULED FOR AUGUST 9, 1996 WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING
ANY BUSINESS IF LESS THAN A MAJORITY OF THE SHARES ELIGIBLE TO VOTE ARE
REPRESENTED. IN THAT EVENT, THE TRUST WOULD CONTINUE TO SOLICIT VOTES IN AN
ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL IN ALLOWING
THE TRUST TO HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD
IMMEDIATELY.
<PAGE> 4
THE GALAXY FUND
4400 COMPUTER DRIVE
WESTBORO, MASSACHUSETTS 01581-5108
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Trustees of The Galaxy Fund (the
"Trust") for use at a Special Meeting of Shareholders of the Trust's
International Equity Fund (the "Fund") to be held at the offices of the Trust's
administrator and transfer agent, First Data Investor Services Group, Inc.,
4400 Computer Drive, Westboro, Massachusetts 01581-5108 on August 9, 1996, at
10:00 a.m. Eastern Time (such meeting and any adjournments thereof referred to
as the "Meeting").
It is expected that the solicitation of proxies will be
primarily by mail. In connection with the solicitation, the Trust's service
contractors have retained Proxy Advantage, a service provided by Applied
Mailing Systems, Inc., a wholly-owned subsidiary of First Data Investor
Services Group, Inc., to assist in the solicitation of proxies by mail and to
tabulate votes returned at an estimated cost of $17,000 plus out-of-pocket
expenses. The Trust's officers and service contractors may also solicit
proxies by telephone, facsimile or personal interview. Oechsle International
Advisors, L.P., the proposed new sub-adviser for the Fund as described in this
Proxy Statement, has agreed to bear all proxy solicitation costs up to $50,000.
The Trust will bear all proxy solicitation costs in excess of $50,000, if any.
Any shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to the Trust a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person. This Proxy Statement and the enclosed Proxy are
expected to be distributed to shareholders on or about July 19, 1996.
A proxy is enclosed with respect to the shares you own in the
Fund. If the proxy is executed properly and returned, the shares represented
by it will be voted at the Meeting in accordance with the instructions thereon.
Each full share is entitled to one vote and each fractional share to a
proportionate fractional vote. If you do not expect to be present at the
Meeting and wish your shares to be voted, please complete the enclosed proxy
and mail it in the enclosed reply envelope.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT DESCRIBED IN THIS PROXY
STATEMENT.
<PAGE> 5
INTRODUCTION
At a special meeting of the Board of Trustees of the Trust held on June
4, 1996, Fleet Investment Advisors Inc. ("Fleet"), the Fund's investment
adviser, recommended that Oechsle International Advisors, L.P. ("Oechsle" or
the "Sub-Adviser") be engaged to serve as the new sub-adviser to the Fund.
Fleet advised the Board that retaining a new sub-adviser would be in the best
interests of the Fund, and the Board accepted Fleet's recommendation. Fleet's
recommendation was based on both its confidence in Oechsle's managerial style
and the fact that Fleet and Oechsle share similar investment philosophies and
strategies. As a result, Fleet stated that there would be a more cohesive
working relationship between the Fund's adviser and sub-adviser. Oechsle has
been providing international investment advisory services to its clients since
1986. As of May 31, 1996, Oechsle had discretionary management authority with
respect to approximately $9.4 billion of assets, including $2.0 billion of
assets of registered investment companies. At the Board meeting, a new
sub-advisory agreement (the "New Agreement") for the Fund between Fleet and
Oechsle was approved by a majority of the Board of Trustees, as well as by a
majority of those members of the Board of Trustees who were not "interested
persons" (as that term is defined in the Investment Company Act of 1940 (the
"1940 Act")) of any party to the New Agreement, subject to shareholder approval
at the Meeting. THE ADVISORY FEES PAID BY SHAREHOLDERS OF THE FUND WILL NOT
CHANGE AS A RESULT OF APPROVAL OF THE NEW AGREEMENT, ALTHOUGH THE SUB-ADVISORY
FEES PAYABLE BY FLEET TO THE FUND'S SUB-ADVISER WILL CHANGE.
A copy of the New Agreement is attached to this Proxy
Statement as Exhibit A. Except as set forth below, the New Agreement is
substantially the same as the Fund's current sub-advisory agreement. The
description of the New Agreement that follows is qualified in its entirety by
Exhibit A.
If the New Agreement is approved by shareholders at the
Meeting, Fleet, which has principal offices located at 50 Kennedy Plaza,
Providence, Rhode Island 02903, will continue to serve as the Fund's investment
adviser under its existing advisory agreement dated as of May 19, 1994, and
Oechsle will replace Wellington Management Company ("Wellington Management") as
the Fund's sub-adviser. Wellington Management currently serves as the Fund's
sub-adviser under a sub-advisory agreement dated as of February 1, 1991 (the
"Current Agreement").
Oechsle's headquarters are in Boston, Massachusetts with
branch offices located in London, Frankfurt, and Tokyo. Oechsle is a Delaware
limited partnership. The general partner of Oechsle is Oechsle Group, L.P.
The managing general partner of Oechsle Group, L.P. is Walter Oechsle.
Oechsle is an independent money management organization
dedicated to providing international investment management to institutional and
private investors. Oechsle's investment process focuses on the application of
fundamental research
-2-
<PAGE> 6
analysis performed by experienced investment professionals. Oechsle believes
that this investment approach is distinctive in that the individuals involved
in portfolio management continue to perform original research.
DESCRIPTION OF THE NEW AGREEMENT
TERMS AND FEES. Except as set forth below, the terms and
conditions of the New Agreement with Oechsle are substantially the same as
those in the Current Agreement.
As investment adviser, Fleet has agreed, subject to the
general supervision of the Trust's Board of Trustees and in accordance with the
Fund's investment objective and policies, either directly or through a
sub-adviser, to provide a continuous investment program for the Fund, including
investment research and management with respect to all securities and
investments and cash equivalents in the Fund.
The New Agreement provides that, subject to the general
supervision of the Trust's Board of Trustees, Oechsle will assist Fleet in
providing a continuous investment program for the Fund in accordance with the
Fund's investment objective, policies and restrictions. In the New Agreement,
Oechsle agrees that it will, among other things, (i) prepare, subject to
Fleet's approval, lists of foreign countries for investment by the Fund and
determine from time to time what securities and other investments will be
purchased, retained or sold for the Fund, including, with the assistance of
Fleet, the Fund's investments in futures and forward currency contracts; (ii)
manage in consultation with Fleet the Fund's temporary investments in
securities; (iii) place orders for the Fund either directly with the issuer or
with any broker or dealer; (iv) manage the Fund's overall cash position, and
determine from time to time what portion of the Fund's assets will be held in
different currencies; (v) provide Fleet with foreign broker research, a
quarterly review of international economic and investment developments, and
occasional "White Papers" on international investment issues; (vi) attend
regular business and investment-related meetings with the Trust's Board of
Trustees and Fleet if requested to do so by the Trust and/or Fleet; and (vii)
maintain books and records with respect to the securities transactions for the
Fund, furnish to Fleet and the Trust's Board of Trustees such periodic and
special reports as they may request with respect to the Fund, and provide in
advance to Fleet all reports to the Board of Trustees for examination and
review within a reasonable time prior to Trust Board meetings.
The advisory fees payable by the Fund to Fleet will not change
as a result of approval of the New Agreement, although the sub-advisory fees
payable by Fleet to the Fund's sub-adviser will change. The annual advisory
fee rate payable by the Fund to
-3-
<PAGE> 7
Fleet is 1.15% of the first $50 million of the Fund's average daily net
assets, plus .95% of the next $50 million of such assets, plus .85% of net
assets in excess of $100 million, computed daily and payable monthly. Under the
Current Agreement, the annual sub-advisory fee rate payable by Fleet to
Wellington Management is .50% of the first $50 million of the Fund's average
daily net assets, plus .30% of the next $50 million of such assets, plus .20%
of all net assets in excess of $100 million, computed daily and payable
quarterly. Under the New Agreement, the annual sub-advisory fee rate payable
by Fleet to Oechsle is .40% of the first $50 million of the Fund's average
daily net assets, plus .35% of all net assets in excess of $50 million,
computed daily and payable quarterly. As of June 28, 1996, the Fund's net
assets totaled approximately $189 million. Based on the Fund's net assets as of
such date, the annual sub-advisory fees paid under the Current Agreement would
be $577,356, whereas the annual sub-advisory fees paid under the New Agreement
would be $685,373. The sub-advisory fees payable by Fleet to Wellington
Management under the Current Agreement, as well as the sub-advisory fees to be
paid by Fleet to Oechsle under the New Agreement, are the responsibility of
Fleet and do not represent an additional charge to the Fund.
The aggregate investment advisory and sub-advisory fees (net
of waivers and/or expense reimbursements) paid with respect to the Fund for the
fiscal year ended October 31, 1995 were $850,924 and $423,376, respectively,
and the corresponding effective rates of the advisory and sub-advisory fees
(net of waivers and/or expense reimbursements) paid with respect to the Fund
during the fiscal year ended October 31, 1995 were .77% and .38%, respectively,
of the Fund's average daily net assets. If the sub-advisory fees proposed
under the New Agreement had been in effect during the Fund's fiscal year ended
October 31, 1995, the sub-adviser would have earned $412,961 in fees, or 97.54%
of the sub-advisory fees actually paid to Wellington Management during the
fiscal year.
The New Agreement provides that Oechsle will pay all expenses
incurred by it in connection with its activities under the New Agreement other
than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for the
Fund.
Under the Current Agreement, Wellington Management is
obligated to use its best efforts to obtain the best net price and most
favorable execution of orders. Consistent with this obligation, when the
execution and price offered by two or more brokers and dealers are comparable,
Wellington Management, in its discretion, may purchase and sell portfolio
securities from and to brokers and dealers who provide Wellington Management
with research advice and other services that may be useful to Wellington
Management in managing its accounts, including the Fund.
-4-
<PAGE> 8
Under the New Agreement, in executing portfolio transactions
and selecting brokers or dealers, Oechsle will use its best efforts to seek on
behalf of the Fund the best overall terms available. In assessing the best
overall terms available for any transaction, Oechsle shall consider all factors
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker or dealer to execute a
particular transaction, Oechsle may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Fund and other accounts over which
Oechsle or any affiliate of Oechsle exercises investment discretion. Oechsle
is authorized, subject to the prior approval of Galaxy's Board of Trustees, to
pay to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if, but only if, Oechsle determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer--viewed in
terms of that particular transaction or in terms of the overall
responsibilities of Oechsle to the Fund and to the Trust.
Investment decisions for the Fund will be made by Oechsle
independently from those for any other investment companies and accounts
advised or managed by Oechsle. The Fund and such other investment companies
and accounts may, however, invest in the same securities. When a purchase or
sale of the same security is made at substantially the same time on behalf of
the Fund and/or another investment company or account, the transaction will be
averaged as to price, and available investments will be allocated as to amount,
in a manner which Oechsle believes to be equitable to the Fund and such other
investment company or account. While in some cases this practice could have a
detrimental effect on the price paid or received by the Fund or the size of the
position obtained or sold by the Fund, in other cases it may be beneficial to
the Fund. To the extent permitted by law, Oechsle may aggregate the securities
to be sold or purchased for the Fund with those to be sold or purchased for
other investment companies or accounts in order to obtain best execution.
The New Agreement further provides that, except to the extent
permitted by the Securities and Exchange Commission ("SEC") or by applicable
law, portfolio securities will not be purchased from or sold to Fleet, Oechsle,
the Fund's distributor or any "affiliated person" of either the Trust, Fleet,
Oechsle or the Fund's distributor.
-5-
<PAGE> 9
The New Agreement provides that Oechsle shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust or Fleet in connection with its performance under the New Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of Oechsle in the
performance of its duties or from reckless disregard by it of its obligations
and duties under the New Agreement.
If approved by shareholders of the Fund, it is expected that
the New Agreement will become effective as promptly as practicable after the
Meeting, and will thereafter continue in effect until August 10, 1997.
Thereafter, the New Agreement would continue in effect for successive annual
periods, provided that such continuance is approved at least annually (i) by
the vote of a majority of those members of the Board of Trustees who are not
parties to the New Agreement or "interested persons" (as that term is defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board of Trustees or by the
vote of a majority of the outstanding shares of the Fund.
The New Agreement provides that it is terminable at any time,
without the payment of any penalty, by Fleet or by the Trust (by the Trust's
Board of Trustees or by the vote of a majority of the outstanding shares of the
Fund) on 60 days' written notice to Oechsle. Similarly, the New Agreement
provides that Oechsle may terminate the New Agreement at any time, without the
payment of any penalty, upon 90 days' written notice to the Trust and Fleet.
The New Agreement will automatically terminate in the event of its assignment
or upon the termination of the advisory agreement between Fleet and the Trust
with respect to the Fund.
The New Agreement also provides that it may not be amended
without the approval of the shareholders of the Fund.
EVALUATION BY THE BOARD OF TRUSTEES OF THE TRUST. The New
Agreement was approved by a majority of the Trust's Board of Trustees and by a
majority of those members of the Board of Trustees who were not "interested
persons" (as that term is defined in the 1940 Act) of any party to the New
Agreement at a meeting held on June 4, 1996. The Trustees considered that the
New Agreement is substantially identical to the Current Agreement, and Fleet's
recommendation that the New Agreement be approved. In reaching their decision,
the Trustees evaluated Oechsle's capabilities and resources and the experience
of Mr. Oechsle and other portfolio personnel in international equity
management. The Trustees also considered Oechsle's style of investment
management, its research and investment practices and considered the benefits
which Oechsle may derive from the New
-6-
<PAGE> 10
Agreement, including receipt of investment research and information in return
for allocating portfolio brokerage. The Board considered each of these factors
to be material and of equal importance in connection with its recommendation of
the New Agreement. In particular, the Board concluded that the appointment of
Oechsle as sub-adviser to the Fund would result in a closer working
relationship between the adviser and sub-adviser to the Fund based on the fact
that Fleet and Oechsle share common investment philosophies and styles. Based
on their consideration, analysis and evaluation of the above factors and other
information deemed by them to be relevant, the Board has concluded that the
approval of the New Agreement would be in the best interests of the Fund and
its shareholders.
Bradford S. Wellman, a member of the Trust's Board of
Trustees, and certain members of his immediate family own shares of Fleet
Financial Group, Inc., the ultimate parent of Fleet.
VOTING PROCEDURES. The approval of the New Agreement requires
the affirmative vote of the holders of a "majority of the outstanding shares"
of the Fund (as defined by the 1940 Act), which means the lesser of (a) the
holders of 67% or more of the shares of the Fund present at the Meeting if the
holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund.
If the New Agreement is approved, then the Fund's Current
Agreement will terminate upon execution of the New Agreement. If the New
Agreement is not approved by the shareholders of the Fund, Fleet will consider
other alternatives, including the possible recommendation of another
sub-adviser.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE NEW AGREEMENT
VOTING INFORMATION
RECORD DATE. Only shareholders of record at the close of
business on June 28, 1996 will be entitled to vote at the Meeting. On that
date, there were 10,815,500.648 Class G - Special Series 1 shares (Trust Shares)
and 2,445,460.784 Class G -Special Series 2 shares (Retail A Shares) of the Fund
outstanding and entitled to be voted at the Meeting. All shares of the Fund
will vote in the aggregate and not by class at the Meeting.
QUORUM. A quorum is constituted with respect to the Fund by
the presence in person or by proxy of the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at the Meeting. For purposes
of determining the presence of a quorum for transacting business at the
Meeting, abstentions, but not broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees
-7-
<PAGE> 11
do not have discretionary power), will be treated as shares that are present at
the Meeting but which have not been voted. Abstentions and broker "non-votes"
will have the effect of a "no" vote for purposes of obtaining the requisite
approval of the New Agreement.
In the event that a quorum is not present at the Meeting, or
in the event that a quorum is present at the Meeting but sufficient votes to
approve the proposal are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit the
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares affected by the adjournment that
are represented at the Meeting in person or by proxy. If a quorum is present,
the persons named as proxies will vote those proxies which they are entitled to
vote FOR the proposal in favor of such adjournments, and will vote those
proxies required to be voted AGAINST the proposal against any adjournment.
OTHER SHAREHOLDER INFORMATION. At the record date for the
Meeting, Fleet and its affiliates held of record 19.86% of the outstanding
shares of the Fund in a fiduciary or other representative capacity for the
benefit of their customers. Fleet has advised the Trust that it and its
affiliates intend to vote the shares of the Fund over which they possess
voting power at the Meeting FOR the approval of the New Agreement. At that
date, the name, address and share ownership of each person who may have
possessed sole or shared voting or investment power with respect to more than
5% of the outstanding shares of the Fund's share classes were as follows:
<TABLE>
<CAPTION>
Percentage Percentage of
Class of of Class Fund Shares
Name and Address Shares Owned Owned Owned
---------------- ------------ ---------- -------------
<S> <C> <C> <C>
FFG Retirement & Pension
Equity Trust 16.58% 13.52%
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Fleet Savings Plus Plan Trust 6.70% 5.46%
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
</TABLE>
ADDITIONAL INFORMATION
OECHSLE. Oechsle, a Delaware limited partnership with
principal offices at One International Place, Boston, Massachusetts 02110-2424,
is registered as an investment adviser under the Investment Advisers Act of
1940. Oechsle has been providing international investment advisory services to
its clients since 1986.
-8-
<PAGE> 12
The name of the general partner of Oechsle as of June 19,
1996 was Oechsle Group, L.P., a Delaware limited partnership, with principal
offices at One International Place, Boston, Massachusetts 02110-2424. The
name and principal occupation of the general partners of Oechsle Group, L.P. as
of June 19, 1996, were as follows: Walter Oechsle, Managing General Partner;
Singleton Dewey Keesler, Jr., General Partner, Chief Investment Officer and
Portfolio Manager; and Lawrence Sean Roche, General Partner, Chief Operations
Officer and Portfolio Manager. All of the above persons may be reached at
Oechsle International Advisors, L.P., One International Place, Boston,
Massachusetts 02110-2424.
Oechsle also serves as investment adviser or sub-adviser to
the following registered investment companies, which have investment objectives
similar to the Fund. These investment companies, their approximate net assets
(at May 31, 1996) and the annual advisory or sub-advisory fees payable by these
investment companies to Oechsle are as follows:
-9-
<PAGE> 13
<TABLE>
<CAPTION>
Name of Approximate Annual
Investment Company Net Fee
------------------ Assets Rate
-------------- -------
<S> <C> <C>
Jamestown International Equity Fund, a series $ 22,102,746 .50% of average daily net
of the Williamsburg Investment Trust assets
MFS World Growth Fund (international portion) $160,906,770 effectively .41% of average
daily net assets (1)
World Growth Series, a series of MFS/Sun Life $ 63,709,837 effectively .42% of average
Series Trust (international portion) daily net assets (2)
International Equity Investments, a portfolio $421,264,871 .40% of average daily net
of Consulting Group Capital Markets Funds, assets
Ltd.
International Securities Fund, a portfolio of $122,695,932 .50% of the first
Frank Russell Investment Company $20,000,000; .42% of the next
$30,000,000; 40% of the next
$50,000,000; and .35% of
assets in excess of
$100,000,000
</TABLE>
-10-
<PAGE> 14
<TABLE>
<CAPTION>
Name of Approximate Annual
Investment Company Net Fee
------------------ Assets Rate
-------------- -------
<S> <C> <C>
International Fund, a portfolio of Frank $157,956,428 .50% of the first
Russell Investment Company $20,000,000; .42% of the next
$30,000,000; 40% of the next
$50,000,000; and .35% of
assets in excess of
$100,000,000
</TABLE>
- ----------------------
(1) Oechsle is entitled to a fee at the annual rate of .15% of the Fund's
average daily net assets. Because Oechsle manages only a portion of the
Fund's assets, however, the effective annual fee rate is approximately
.41% of the average daily net assets of the Fund actively managed by
Oechsle.
(2) Oechsle is entitled to a fee at the annual rate of .15% of the Fund's
average daily net assets. Because Oechsle manages only a portion of the
Fund's assets, however, the effective annual fee rate is approximately
.42% of the average daily net assets of the Fund actively managed by
Oechsle.
Oechsle waived sub-advisory fees with respect to the Jamestown
International Equity Fund until the fund had $12,000,000 in assets. After the
fund reached $12,000,000 in assets, Oechsle split its fee with the fund's
investment adviser, net of any expenses, until assets reached $21,500,000.
Prior to May 31, 1996, total expenses and advisory and sub-advisory fees of the
fund were capped at 1.6% of average daily net assets, in the aggregate. As of
May 31, 1996, Oechsle is receiving its full fee for the Jamestown International
Equity Fund.
PAYMENTS TO AFFILIATES. Affiliates of Fleet are entitled
to receive fees under the Trust's Shareholder Services Plan (the "Plan") with
respect to the Fund's Retail A Shares at the maximum annual rate of .50% of the
average daily net asset value of Retail A Shares of the Fund beneficially owned
by customers of certain institutions, including affiliates of Fleet. These
fees are for shareholder liaison and/or shareholder administrative support
services provided by such institutions to the beneficial owners of Retail A
Shares of the Fund. The Trust is currently limiting payments under the Plan,
however, to an aggregate annual fee of not more than .30% of the average daily
net asset value of Retail A Shares beneficially owned by customers of such
institutions. For the fiscal year ended October 31, 1995, affiliates of Fleet
received $93,434 in fees under the Plan with respect to Retail A Shares of the
Fund. It is expected that affiliates of Fleet will continue to provide services
under the Plan after the Meeting.
In addition, Fleet Trust Company, an affiliate of Fleet, is
entitled to receive an annual per account fee of $21 for performing certain
sub-accounting and administrative functions with respect to Trust Shares of the
Fund held by defined contribution plans. Fleet Trust Company is compensated by
First Data Investor Service Group, Inc. ("FDISG"), the Trust's administrator
and transfer agent, for such services and in
-11-
<PAGE> 15
connection therewith, the transfer agency fees payable by Trust Shares of the
Fund have been increased by an amount equal to these fees. For the fiscal year
ended October 31, 1995, Fleet Trust Company received $80,262 from FDISG for
services performed on behalf of defined contribution plans holding Trust Shares
of the Fund. It is expected that Fleet Trust Company will continue to provide
such services after the Meeting.
CURRENT AGREEMENT. The Current Agreement was approved by the
Fund's public shareholders on February 23, 1993 in accordance with SEC
policies then in effect and was last approved by the Trust's Board of Trustees
on May 23, 1996.
ADMINISTRATOR AND DISTRIBUTOR. FDISG serves as the Fund's
administrator. 440 Financial Distributors, Inc. (the "Distributor") serves as
the exclusive distributor of the shares of the Trust. The Distributor is a
wholly-owned subsidiary of FDISG. The principal offices of FDISG and the
Distributor are located at 4400 Computer Drive, Westboro, Massachusetts
01581-5108.
OTHER MATTERS
The Trust does not intend to hold Annual Meetings of
Shareholders except to the extent that such meetings may be required under the
1940 Act or state law. Shareholders who wish to submit proposals for inclusion
in the Proxy Statement for a subsequent shareholder meeting should send their
written proposals to the Trust at its principal office within a reasonable time
before such meeting.
No business other than the matter described above is expected
to come before the Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment of the Meeting,
the persons named in the enclosed Proxy will vote thereon according to their
best judgment in the interests of the Fund.
Dated: July 19, 1996
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO COMPLETE THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
THE TRUST WILL FURNISH, WITHOUT CHARGE, COPIES OF THE TRUST'S
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS DATED OCTOBER 31, 1995 AND APRIL
30, 1996, RESPECTIVELY, TO ANY SHAREHOLDER UPON REQUEST. THE TRUST'S ANNUAL AND
SEMI-ANNUAL REPORTS TO SHAREHOLDERS MAY BE OBTAINED FROM THE TRUST BY WRITING
TO THE TRUST AT 4400 COMPUTER DRIVE, WESTBORO, MASSACHUSETTS 01581-5108 OR BY
CALLING 1-800-628-0414.
-12-
<PAGE> 16
EXHIBIT A
THE GALAXY FUND
SUB-ADVISORY AGREEMENT
INTERNATIONAL EQUITY FUND
AGREEMENT made as of _____________, 1996 between FLEET
INVESTMENT ADVISORS INC., a New York corporation (the "Adviser"), and OECHSLE
INTERNATIONAL ADVISORS, L.P., a Delaware limited partnership ("Oechsle").
WHEREAS, The Galaxy Fund ("Galaxy") is registered as an
open-end, diversified management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to
Galaxy's International Equity Fund (the "Fund");
WHEREAS, the Adviser desires to retain Oechsle to assist it in
the provision of a continuous investment program for the Fund and Oechsle is
willing to do so;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the part
1. Appointment. The Adviser hereby appoints Oechsle to
act as sub-adviser to the Fund as permitted by the Adviser's Advisory Agreement
with Galaxy pertaining to the Fund. Intending to be legally bound, Oechsle
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of
Galaxy's Board of Trustees, Oechsle will assist the Adviser in providing a
continuous investment program for the Fund, including research and management
with respect to all securities and investments and cash equivalents in the
Fund. Oechsle will provide services under this Agreement in accordance with
the Fund's investment objective, policies and restrictions as stated in the
Fund's prospectuses and statement of additional information and resolutions of
Galaxy's Board of Trustees applicable to the Fund.
Without limiting the generality of the foregoing, Oechsle
further agrees that it will:
(a) prepare, subject to the Adviser's approval,
lists of foreign countries for investment by the Fund and determine
from time to time what securities and other
A-1
<PAGE> 17
investments will be purchased, retained or sold for the Fund,
including, with the assistance of the Adviser, the Fund's investments
in futures and forward currency contracts;
(b) manage in consultation with the Adviser the
Fund's temporary investments in securities;
(c) place orders for the Fund either directly with
the issuer or with any broker or dealer;
(d) manage the Fund's overall cash position, and
determine from time to time what portion of the Fund's assets will be
held in different currencies;
(e) provide the Adviser with foreign broker
research, a quarterly review of international economic and investment
developments, and occasional "White Papers" on international
investment issues;
(f) attend regular business and investment-related
meetings with Galaxy's Board of Trustees and the Adviser if requested
to do so by Galaxy and/or the Adviser; and
(g) maintain books and records with respect to the
securities transactions for the Fund, furnish to the Adviser and
Galaxy's Board of Trustees such periodic and special reports as they
may request with respect to the Fund, and provide in advance to the
Adviser all reports to the Board of Trustees for examination and
review within a reasonable time prior to Galaxy Board meetings.
3. Covenants by Sub-Adviser. Oechsle agrees with
respect to the services provided to the Fund that it:
(a) will conform with all Rules and Regulations of
the Securities and Exchange Commission ("SEC") applicable to it;
(b) will use the same skill and care in providing
such services as it uses in providing services to other investment companies;
(c) will telecopy trade information to the Adviser
on the first business day following the day of the trade and cause broker
confirmations to be sent directly to the Adviser. In executing portfolio
transactions and selecting brokers or dealers, Oechsle will use its best
efforts to seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, Oechsle shall
consider all factors it deems relevant, including
A-2
<PAGE> 18
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. In evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, Oechsle may
also consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund
and/or other accounts over which Oechsle or any affiliate of Oechsle exercises
investment discretion. Oechsle is authorized, subject to the prior approval of
Galaxy's Board of Trustees, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if, but only
if, Oechsle determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer--viewed in terms of that particular transaction or in terms of
the overall responsibilities of Oechsle to the Fund and to Galaxy.
Except to the extent permitted by the SEC or by applicable
law, portfolio securities will not be purchased from or sold to the Adviser,
Oechsle, the Fund's distributor (the "Distributor"), or any affiliated person
of either Galaxy, the Adviser, Oechsle, or the Distributor.
(d) will treat confidentially and as proprietary
information of Galaxy all records and other information relative to the Fund
and prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder (except after prior notification to and approval in writing by
Galaxy, which approval shall not be unreasonably withheld and may not be
withheld and will be deemed granted where Oechsle may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by
Galaxy).
(e) will notify Galaxy of any change in its
membership within a reasonable time after such change.
4. Services Not Exclusive. (a) The services furnished
by Oechsle hereunder are deemed not to be exclusive, and nothing in this
Agreement shall (i) prevent Oechsle or any affiliated person (as defined in the
1940 Act) of Oechsle from acting as investment adviser or manager for any other
person or persons, including other management investment companies with
investment objectives and policies the same as or similar to those of the Fund
or (ii) limit or restrict Oechsle or any such affiliated person from buying,
selling or trading any securities
A-3
<PAGE> 19
or other investments (including any securities or other investments which the
Fund is eligible to buy) for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that Oechsle
agrees that it will not undertake any activities which, in its judgment, will
adversely affect the performance of its obligations to the Fund under this
Agreement.
(b) Nothing contained herein, however, shall
prohibit Oechsle from advertising or soliciting the public generally with
respect to other products or services, regardless of whether such advertisement
or solicitation may include prior, present or potential shareholders of Galaxy.
5. Portfolio Transactions. Investment decisions for the
Fund shall be made by Oechsle independently from those for any other investment
companies and accounts advised or managed by Oechsle. The Fund and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Fund and/or another investment company or account, the
transaction will be averaged as to price, and available investments allocated
as to amount, in a manner which Oechsle believes to be equitable to the Fund
and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold by the Fund. To the extent
permitted by law, Oechsle may aggregate the securities to be sold or purchased
for the Fund with those to be sold or purchased for other investment companies
or accounts in order to obtain best execution.
6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Oechsle hereby agrees that all
records which it maintains for Galaxy are the property of Galaxy and further
agrees to surrender promptly to Galaxy any of such records upon Galaxy's
request. Oechsle further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
7. Expenses. During the term of this Agreement, Oechsle
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction charges, if
any) purchased for the Fund.
8. Compensation. For the services provided and the
expenses assumed with respect to the Fund pursuant to this Agreement, the
Adviser will pay Oechsle and Oechsle will accept as full compensation therefor
fees, computed daily and paid
A-4
<PAGE> 20
quarterly, at the annual rate of .40% of the first $50 million of the Fund's
average daily net assets, plus .35% of average daily net assets in excess of
$50 million.
9. Limitation of Liability of Oechsle. Oechsle shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by Galaxy or the Adviser, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Oechsle in the performance of its duties or from reckless disregard of
its obligations and duties under this Agreement.
10. Reference to Oechsle. Neither the Adviser nor any
affiliate or agent of it shall make reference to or use the name of Oechsle or
any of its affiliates, or any of their clients, except references concerning
the identity of and services provided by Oechsle to the Fund, which references
shall not differ in substance from those included in the current registration
statement pertaining to the Fund, this Agreement and the Advisory Agreement
between the Adviser and Galaxy with respect to the Fund, in any advertising or
promotional materials without the prior approval of Oechsle, which approval
shall not be unreasonably withheld or delayed. The Adviser hereby agrees to
make all reasonable efforts to cause Galaxy and any affiliate thereof to
satisfy the foregoing obligation.
11. Duration and Termination. This Agreement shall
become effective as of the date hereof and, unless sooner terminated, shall
continue in effect until August 10, 1997. Thereafter if not terminated, this
Agreement shall continue in effect for successive twelve-month periods ending
on August 10, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of Galaxy's Board of
Trustees who are not parties to this Agreement, or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by Galaxy's Board of Trustees or by the vote of a
majority of the outstanding voting securities of the Fund. Notwithstanding the
foregoing, this Agreement may be terminated at any time, without the payment of
any penalty, by the Adviser or by Galaxy (by Galaxy's Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund) on 60
days' written notice to Oechsle (which notice may be waived by the party
entitled to receive the same) and will automatically terminate upon the
termination of the Advisory Agreement between the Adviser and Galaxy with
respect to the Fund. This Agreement may be terminated by Oechsle at any time,
without payment of any penalty, on 90 days' written notice to Galaxy and the
Adviser (which notice may be waived by the party entitled to receive the same).
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority
A-5
<PAGE> 21
of the outstanding voting securities," "interested persons" and "assignment"
shall have the same meanings as such terms in the 1940 Act.)
12. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective with respect to the Fund until approved by the
vote of a majority of the outstanding voting securities of the Fund.
13. Notice. Any notice, advice or report to be given
pursuant to this Agreement shall be delivered or mailed:
To Oechsle at:
One International Place
Boston, MA 02110
Attention: Stephen J. Butters
With a copy to:
Christopher P. Harvey, Esq.
Hale and Dorr
60 State Street
Boston, MA 02109
To the Adviser at:
75 State Street
Boston, MA 02109
Attention: Thomas O'Neill
To Galaxy at:
4400 Computer Drive
Westboro, MA 01581
With a copy to:
W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
1100 Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107
14. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their
A-6
<PAGE> 22
construction or effect. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by New York law.
15. Names. The names "The Galaxy Fund" and "Trustees of
The Galaxy Fund" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated March 31, 1986 which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "The Galaxy Fund" entered into in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually,
but in such capacities, and are not binding upon any of the Trustees,
shareholders, or representatives of Galaxy personally, but bind only the
property of Galaxy, and all persons dealing with any class of shares of Galaxy
must look solely to the property of Galaxy belonging to such class for the
enforcement of any claims against Galaxy.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
Attest: FLEET INVESTMENT ADVISORS
INC.
By:
- ------------------------- --------------------------
Attest: OECHSLE INTERNATIONAL
ADVISORS, L.P.
By:
- ------------------------- --------------------------
A-7
<PAGE> 23
PROXY
THE GALAXY FUND
INTERNATIONAL EQUITY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of The Galaxy
Fund (the "Trust") for use at a Special Meeting of Shareholders of the
International Equity Fund to be held at the offices of First Data Investor
Services Group, Inc., 4400 Computer Drive, Westboro, Massachusetts 01581-5108
on August 9, 1996 at 10:00 a.m., Eastern Time.
The undersigned hereby appoints Neil Forrest and Kevin
Morrissey, and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-stated Special Meeting, and at all
adjournments or postponements thereof, all Class G shares of beneficial
interest (evidencing interests in the International Equity Fund) held of record
by the undersigned on June 28, 1996, the record date for the meeting, upon the
matter described on the reverse side AND UPON ANY OTHER MATTER WHICH MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
1. Proposal to approve a new Sub-Advisory Agreement
between Fleet Investment Advisors Inc. and Oechsle
International Advisors, L.P. with respect to the
International Equity Fund.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting.
Every properly signed proxy will be voted in the manner
specified hereon and, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS
GRANTING AUTHORITY TO VOTE FOR PROPOSAL 1.
PLEASE SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When
signing as attorney or as executor,
administrator, trustee or
<PAGE> 24
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized person.
Dated:
------------------------------
X
--------------------------------------
Signature
X
--------------------------------------
Signature, if held jointly
-2-
