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THE GALAXY FUND
DISTRIBUTION PLAN
FOR PRIME A SHARES
This Distribution Plan (the "Plan") has been adopted by the
Board of Trustees of The Galaxy Fund (the "Trust") in connection with the Prime
A series of shares (the "Prime A Shares") in each of the following investment
portfolios of the Trust: Small Company Equity Fund, Small Cap Value Fund, Equity
Growth Fund, Equity Income Fund, International Equity Fund, Pan Asia Fund, Asset
Allocation Fund, Equity Value Fund, Growth and Income Fund, Strategic Equity
Fund, Short-Term Bond Fund, Intermediate Government Income Fund, High Quality
Bond Fund and Tax-Exempt Bond Fund (collectively, the "Funds"). The Plan has
been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act").
Section 1. DISTRIBUTION PAYMENTS. (a) The Trust may pay the
distributor of the Trust (the "Distributor") (or any other person) a fee (a
"Distribution Fee") of up to 0.30% annually of the average daily net assets
attributable to the outstanding Prime A Shares of each of the Funds. The
Distribution Fee shall be calculated and accrued daily, paid monthly and shall
be in consideration for distribution services and the assumption of related
expenses (including the payment of commissions and transaction fees) in
conjunction with the offering and sale of Prime A Shares of the Funds. In
determining the amounts payable on behalf of a Fund under the Plan, the net
asset value of the Prime A Shares shall be computed in the manner specified in
the Trust's then current Prospectuses and Statements of Additional Information
describing such Prime A Shares.
(b) Payments to the Distributor under subsection (a) above
shall be used by the Distributor to cover expenses and activities primarily
intended to result in the sale of Prime A Shares. Such expenses and activities
may include but are not limited to: (i) direct out-of-pocket promotional
expenses incurred by the Distributor in advertising and marketing Prime A
Shares; (ii) expenses incurred in connection with preparing, printing, mailing,
and distributing or publishing advertisements and sales literature; (iii)
expenses incurred in connection with printing and mailing Prospectuses and
Statements of Additional Information to other than current shareholders; (iv)
periodic payments or commissions to one or more securities dealers, brokers,
financial institutions or other industry professionals, such as investment
advisors, accountants, and estate planning firms (each a "Distribution
Organization") with respect to a Fund's Prime A Shares beneficially owned by
customers for whom the Distribution Organization is the Distribution
Organization of record or shareholder of record; (v) the direct or indirect cost
of financing the payments or expenses included in (i) and (iv) above; or (vi)
such other services as may be construed by any court or governmental agency or
commission, including the Securities and Exchange Commission (the "Commission"),
to constitute distribution services under the 1940 Act or rules and regulations
thereunder.
Section 2. EXPENSES ALLOCATED; COMPLIANCE. Amounts paid by a
Fund under the Plan must be for distribution services rendered for or on behalf
of the holders of such Fund's
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Prime A Shares. However, joint distribution financing or other services rendered
with respect to such Prime A Shares (which may involve other investment funds or
companies that are affiliated persons of the Trust or affiliated persons of the
Distributor) is authorized to the extent permitted by law.
Section 3. REPORTS TO TRUST. So long as this Plan is in
effect, the Distributor shall provide the Trust's Board of Trustees, and the
Trustees shall review, at least quarterly, a written report of the amounts
expended pursuant to the Plan and the purposes for which such expenditures were
made.
Section 4. APPROVAL OF PLAN. This Plan will become effective
with respect to a particular Fund's Prime A Shares on the date the public
offering of Prime A Shares commences upon the approval by a majority of the
Board of Trustees, including a majority of those trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan (the "Disinterested
Trustees"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on the approval of the Plan.
Section 5. CONTINUANCE OF PLAN. Unless sooner terminated in
accordance with the terms hereof, this Plan shall continue until May 28, 2001
and thereafter for so long as its continuance is specifically approved at least
annually by the Trust's Board of Trustees in the manner described in Section 4
hereof.
Section 6. AMENDMENTS. This Plan may be amended at any time by
the Board of Trustees provided that (a) any amendment to increase materially the
costs which the Prime A Shares of a Fund may bear pursuant to the Plan shall be
effective only upon approval by a vote of a majority of the outstanding Prime A
Shares affected by such matter, and (b) any material amendments of the terms of
the Plan shall become effective only upon approval in the manner described in
Section 4 hereof.
Section 7. TERMINATION. This Plan, as to any Fund, is
terminable without penalty at any time by (a) a vote of a majority of the
Disinterested Trustees, or (b) a vote of a majority of the outstanding Prime A
Shares of such Fund.
Section 8. SELECTION/NOMINATION OF TRUSTEES. While this Plan
is in effect, the selection and nomination of those Disinterested Trustees shall
be committed to the discretion of such Disinterested Trustees.
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Section 9. 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.
Adopted: May 28, 1998
Revised: May 25, 2000
Reapproved: May 27, 1999 and May 25, 2000
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