<PAGE>
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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
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 Rule 14a-11(c) or Rule 14a-12
THE GALAXY FUND
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[PRELIMINARY COPY]
THE GALAXY FUND
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE INTERNATIONAL EQUITY FUND
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August __, 1998
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 September 25, 1998, 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 purpose
of considering and voting upon:
(1) A proposal to approve a new sub-advisory agreement between
Fleet Investment Advisors Inc. ("Fleet") and Oechsle International
Advisors, LLC with respect to the Fund, the terms of which are
substantially identical to the terms of the current sub-advisory
agreement between Fleet and Oechsle International Advisors, L.P.; 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 July 31, 1998 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
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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 SEPTEMBER 25, 1998 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.
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[PRELIMINARY COPY]
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 September 25, 1998 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 $__________ plus out-of-pocket expenses. The Trust's officers
and service contractors may also solicit proxies by telephone, facsimile or
personal interview.
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 August __, 1998.
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>
INTRODUCTION
Oechsle International Advisors, L.P. ("Oechsle LP") currently acts as sub-
adviser to the Fund pursuant to a sub-advisory agreement dated August 12, 1996
(the "Current Agreement") between Fleet Investment Advisors Inc. ("Fleet") and
Oechsle LP. It is proposed that a new sub-advisory agreement (the "New
Agreement") be entered into effective at the time of the reorganization and
recapitalization of Oechsle LP that is described below (the "Transaction"). The
New Agreement will be substantially identical to the Current Agreement, except
that (1) the New Agreement will be dated as of the date of the Transaction and
(2) Oechsle International Advisors, LLC ("Oechsle LLC"), rather than Oechsle LP,
will be a party to the New Agreement. Effective at the time of the Transaction,
Oechsle LP is being reorganized into Oechsle LLC, and thereafter Oechsle LLC
will conduct the business that Oechsle LP conducted prior to that time. Oechsle
LP and Oechsle LLC are sometimes collectively referred to below as "Oechsle."
The New Agreement is being proposed because, under the Investment Company
Act of 1940 (the "1940 Act"), the Transaction could be regarded as involving an
"assignment" of the Current Agreement. The 1940 Act generally provides that an
investment advisory or sub-advisory agreement relating to a mutual fund
automatically terminates upon its "assignment." The New Agreement is being
proposed in order to ensure that Oechsle LLC can act as the Fund's sub-adviser
beginning at the time of the Transaction.
THE NEW AGREEMENT AND THE TRANSACTION WILL NOT RESULT IN ANY CHANGES IN THE
SCOPE OF THE SERVICES RECEIVED BY THE FUND, THE PORTFOLIO MANAGEMENT STAFF AT
OECHSLE THAT IS INVOLVED IN MANAGING THE FUND'S PORTFOLIO, THE FUND'S ADVISORY
OR SUB-ADVISORY FEE RATES OR ANY OTHER EXPENSES PAID BY THE FUND. All costs
associated with this Proxy Statement and the solicitation of shareholder votes
are being paid by Oechsle.
CURRENT STRUCTURE OF OECHSLE. Oechsle LP is a Delaware limited
partnership. Its sole general partner is Oechsle Group, L.P., a Delaware
limited partnership ("Group LP"). Walter Oechsle, as Managing General Partner
of Group LP, is the chief executive officer of Oechsle LP and Group LP. In
addition to Mr. Oechsle, the following persons are general partners of Group LP:
S. Dewey Keesler, Jr., L. Sean Roche, Stephen P. Langer, Steven H. Schaefer,
Warren Walker and Andrew S. Parlin. The principal occupation of all of the
general partners of Group LP is a partner of Group LP and officer of Oechsle LP.
The address of Oechsle LP, Group LP and each general partner of Group LP is One
International Place, Boston, Massachusetts 02110.
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Dresdner Asset Management (U.S.A.) Corporation ("DAMCO") currently owns a
majority limited partnership interest in Oechsle LP. DAMCO is a wholly-owned
subsidiary of Dresdner Bank AG. DAMCO's address is 75 Wall Street, New York,
New York 10005. The address of Dresdner Bank AG is Jurgen-Ponto-Platz 1 60301,
Frankfurt am Main, Germany.
CERTAIN OWNERSHIP CHANGES EFFECTED BY THE TRANSACTION. As part of the
Transaction, Oechsle LP will be reorganized into Oechsle LLC, which will
thereafter conduct the business that Oechsle LP conducted prior to that time.
Also as part of the Transaction, (1) the seven general partners of Group LP
will approximately double their current collective ownership interest in
Oechsle, (2) Dresdner Bank AG will sell the stock of DAMCO to Fleet Financial
Group, Inc., which will thereafter hold approximately a 35% (on a fully
diluted basis) interest in Oechsle, which will not constitute voting
securities, and Dresdner will no longer hold any interest in Oechsle.
STRUCTURE FOLLOWING THE TRANSACTION. Oechsle LLC is a Delaware limited
liability company. Its Member Manager will be Oechsle Group, LLC, a Delaware
limited liability company ("Group LLC") which will own approximately a 44%
(on a fully diluted basis) interest in Oechsle LLC. The seven current general
partners of Group LP will collectively own approximately an 89% interest in
Group LLC. The management, policies and control of Oechsle LLC will, subject
to certain limitations, be vested exclusively in Group LLC. Day-to-day
management of Oechsle LLC will be exercised by the Management Committee of
Group LLC, which will consist of Messrs. Keesler, Roche, Langer, Walker and
Parlin.
The address of Oechsle LLC and Group LLC is One International Place,
Boston, Massachusetts 02110. The address of Fleet Financial Group, Inc. is One
Federal Street, Boston, Massachusetts 02110.
OTHER. Consummation of the Transaction is subject to the satisfaction of a
number of conditions. It is currently expected that the Transaction will be
effected on or about October 1, 1998.
A copy of the New Agreement is attached to this Proxy Statement as Exhibit
A. 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, (1) Fleet,
which is an indirect wholly-owned subsidiary of Fleet Financial Group, Inc. and
has principal offices located at 75 State Street, Boston, Massachusetts 02109,
will continue to serve as the Fund's investment adviser under its existing
advisory agreement dated as of May 19, 1994, and (2) Oechsle LLC will replace
Oechsle LP as the Fund's sub-adviser upon consummation of the Transaction.
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DESCRIPTION OF THE NEW AGREEMENT
TERMS AND FEES. As previously noted, the terms and conditions of the New
Agreement with Oechsle LLC are substantially identical to those in the Current
Agreement, except that (1) the New Agreement will be dated as of the date of the
Transaction and (2) Oechsle LLC, rather than Oechsle LP, will be a party to the
New 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 LLC 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
LLC 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.
THERE WILL BE NO CHANGE IN THE ADVISORY FEES PAYABLE BY THE FUND TO FLEET
NOR IN THE SUB-ADVISORY FEES PAYABLE BY FLEET TO THE FUND'S SUB-ADVISER AS A
RESULT OF APPROVAL OF THE NEW AGREEMENT. The annual advisory fee rate payable
by the Fund to
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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 both the
Current Agreement and the New Agreement, the annual sub-advisory fee rate
payable by Fleet to the Fund's sub-adviser 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. The sub-advisory fees
payable by Fleet to the Fund's sub-adviser under both the Current Agreement and
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, 1997 were $1,844,037 and $979,810, 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, 1997 were 0.68% and 0.36%, respectively, of the
Fund's average daily net assets.
The New Agreement provides that Oechsle LLC 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 New Agreement, in executing portfolio transactions and selecting
brokers or dealers, Oechsle LLC is obligated to 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 LLC 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 LLC 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 LLC
or any affiliate of Oechsle LLC exercises investment discretion. Oechsle LLC is
authorized, subject to the prior approval of Galaxy's Board of Trustees, to pay
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 LLC 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
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<PAGE>
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 LLC independently
from those for any other investment companies and accounts advised or managed by
Oechsle LLC. 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 LLC believes to be equitable to the Fund and such other investment
company or account. While in some cases this practice may adversely affect 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 LLC 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 LLC, the Fund's
distributor, or any "affiliated person" of either the Trust, Fleet, Oechsle LLC
or the Fund's distributor.
The New Agreement provides that Oechsle LLC 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 LLC 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 in accordance with the requirements
of the 1940 Act, it is expected that the New Agreement will become effective on
the date of the consummation of the Transaction, and will thereafter continue in
effect until August 10, 1999. Thereafter, if not terminated, the New Agreement
would continue in effect for successive twelve-month 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 parties" (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.
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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 LLC. Similarly, the New Agreement provides
that Oechsle LLC 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 May 28, 1998. In considering whether to approve the New
Agreement and to submit the New Agreement to shareholders of the Fund for their
approval, the Board of Trustees considered the following factors: (a) Oechsle
LLC's representations that it would provide investment advisory and other
services to the Fund of a scope and quality at least equivalent, in the Board's
judgment, to the scope and quality of services currently provided to the Fund;
(b) the performance of the Fund since Oechsle LP was appointed sub-adviser; (c)
the terms and conditions contained in the New Agreement, that are substantially
identical to those in the Current Agreement; (d) Oechsle LLC's willingness to
share economies of scale with the Fund's shareholders as evidenced by the
breakpoints in its fee schedule; (e) the fees and expense ratios of comparable
mutual funds; (f) Oechsle LLC's representation that the persons responsible for
the investment policies of Oechsle LLC will be the same persons who currently
direct Oechsle LP's investment policies; and (g) the benefits which Oechsle LLC
may derive from the New Agreement, including receipt of investment research and
information in return for allocating portfolio brokerage. Based on the
foregoing factors, each of which was considered material and of equal importance
by the Trust's Board of Trustees, the Trustees concluded that approval of the
New Agreement was 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
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the outstanding shares" of the Fund (as defined by the 1940 Act), which means
the lesser of (i) 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 (ii) 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 consummation of the Transaction and Oechsle LLC will serve as the
Fund's sub-adviser under 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
July 31, 1998 will be entitled to vote at the Meeting. On that date, there were
____________ Class G-Special Series 1 shares (Trust Shares) and ____________
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 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 proposed 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 names
as proxies will
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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,
affiliates of Fleet held of record approximately ____% of the outstanding shares
of the Fund as trustee, agent or custodian for their respective customers. The
agreements with these affiliates of Fleet governing the accounts of beneficial
owners of shares of the Fund generally provide the affiliates with discretion to
vote all shares held by them of record. The affiliates of Fleet intend to
exercise this discretion and to vote shares of the Fund held by them "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 5% or more of the outstanding shares of the
Fund's share classes were as follows:
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Name & Address Class of Shares Percentage of Percentage of Fund
Owned Class Owned Shares Owned
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As of the record date, the trustees and officers of the Trust as a group,
owned less than 1% of the outstanding shares of the Fund.
ADDITIONAL INFORMATION
OECHSLE. Oechsle also serves as sub-adviser to the following registered
investment companies, which have investment objectives similar to the Fund.
These investment companies, their approximate net assets (at March 31, 1998),
and the annual sub-advisory fees payable by these investment companies to
Oechsle are as follows:
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Name of Approximate Annual
Investment Company Net Fee
------------------ Assets Rate
------ ----
The AAL Variable Product $ 11,000,000 .54% of the first
International Stock Portfolio, a $20,000,000; .45% of
portfolio Fund of The AAL Variable the next $30,000,000;
Product Series and .36% of assets in
excess of $50,000,000
The Jamestown International Equity $ 42,000,000 .50% of average daily
Fund, a series of the Williamsburg net assets
Investment Trust
The MMA Praxis International Fund, $ 22,000,000 .50% of average daily
a series portfolio of the MMA net assets
Praxis Mutual Fund
International Fund, a portfolio of $ 209,000,000 .40% of the first
Frank Russell Investment Company $50,000,000; .35% of
EFFECTIVE JULY 1, 1998 the next $600,000,000;
and .30% of assets in
excess of $650,000,000
International Securities Fund, a $ 178,000,000 .40% of the first
portfolio of Frank Russell $50,000,000; .35%
Investment Company of next
EFFECTIVE JULY 1, 1998 $600,000,000; and .30%
of assets in excess of
$650,000,000
International Equity $ 626,000,000 .40% of average daily
Investments, a portfolio of net assets
Consulting Group Capital
Markets Funds, Ltd. (a Smith
Barney managed fund)
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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, 1997, affiliates of Fleet received $102,465 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 Bank, 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 Bank is compensated by First Data Investor
Services Group, Inc. ("Investor Services Group"), the Trust's administrator and
transfer agent, for such services and in 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, 1997, Fleet Bank
received $197,191 from Investor Services Group for services performed on
behalf of defined contribution plans holding Trust Shares of the Fund. It is
expected that Fleet Bank will continue to provide such services after the
Meeting.
CURRENT AGREEMENT. The Current Agreement was approved by the Fund's public
shareholders on August 9, 1996 in connection with the appointment of Oechsle LP
as the Fund's sub-adviser and was last approved by the Trust's Board of Trustees
on May 28, 1998.
ADMINISTRATOR AND DISTRIBUTOR. Investor Services Group serves as the
Fund's administrator. First Data Distributors, Inc. (the "Distributor") serves
as the exclusive distributor of the shares of the Trust. The Distributor is a
wholly-owned subsidiary of Investor Services Group. The principal offices of
Investor Services Group and the Distributor are located at 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.
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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: August __, 1998
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, 1997 AND APRIL 30, 1998,
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.
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<PAGE>
EXHIBIT A
THE GALAXY FUND
SUB-ADVISORY AGREEMENT
INTERNATIONAL EQUITY FUND
AGREEMENT made as of _________, 1998 between FLEET INVESTMENT ADVISORS
INC., a New York corporation (the "Adviser"), and OECHSLE INTERNATIONAL
ADVISORS, LLC, a Delaware limited liability company ("Oechsle").
WHEREAS, The Galaxy Fund ("Galaxy") is registered as an open-end,
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 previously has retained Oechsle International
Advisors, L.P. ("Oechsle L.P.") to assist it in the provision of a continuous
investment program for the Fund and Oechsle L.P. currently is providing such
assistance pursuant to a Sub-Advisory Agreement dated as of August 12, 1996;
WHEREAS, Oechsle L.P. is this day recapitalizing and reorganizing into
Oechsle (the "Transaction"); and
WHEREAS, the Adviser desires to retain Oechsle to assist it in the
provision of a continuous investment program for the Fund following the
Transaction, and Oechsle is willing to do so;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
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
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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 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;
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(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 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) Oechsle will notify Galaxy of any change in its membership
within a reasonable time after such change.
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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 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
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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 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 identify
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
on the date of the consummation of the Transaction, provided that the
shareholders of the Fund have previously approved the Agreement in accordance
with the requirements of the 1940 Act. Unless sooner terminated as provided
herein, this Agreement, shall continue in effect until August 10, 1999.
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
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<PAGE>
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 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.
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<PAGE>
Drinker Biddle & Reath LLP
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 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.
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<PAGE>
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.
FLEET INVESTMENT ADVISORS INC.
By:
---------------------------
OECHSLE INTERNATIONAL
ADVISORS, LLC
By: Oechsle Group, LLC,
Managing Member
By:
---------------------------
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[PRELIMINARY COPY]
THE GALAXY 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 TRUST'S
INTERNATIONAL EQUITY FUND (THE "FUND") TO BE HELD ON SEPTEMBER 25, 1998, AT
10:00 A.M. EASTERN TIME, AT THE OFFICES OF FIRST DATA INVESTOR SERVICES GROUP,
INC., 4400 COMPUTER DRIVE, WESTBORO, MASSACHUSETTS 01581-5108.
THE UNDERSIGNED HEREBY APPOINTS JYLANNE DUNNE, WILLIAM GREILICH AND
CHRISTINE P. RITCH, 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 SHARES OF BENEFICIAL INTEREST
REPRESENTING INTERESTS IN THE FUND HELD OF RECORD BY THE UNDERSIGNED ON JULY 31,
1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTER AND UPON ANY
OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Proposal to approve a new sub-advisory agreement between Fleet Investment
Advisors Inc. ("Fleet") and Oechsle International Advisors, LLC with
respect to the Fund, the terms of which are substantially identical to
terms of the current sub-advisory agreement between Fleet and Oechsle
International Advisors, L.P.
/ /FOR / /AGAINST / /ABSTAIN
(2) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. 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" THE PROPOSAL.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR 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.
_____________________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
