<PAGE>
THE GALAXY FUND
CODE OF ETHICS
I. LEGAL REQUIREMENT.
Rule 17j-1(b) under the Investment Company Act of 1940, as amended (the
"1940 Act"), makes it unlawful for any trustee or officer of The Galaxy Fund
(the "Trust"), in connection with the purchase or sale by such person of a
security "held or to be acquired" by the Trust:
1. To employ any device, scheme or artifice to defraud
the Trust;
2. To make to the Trust any untrue statement of a
material fact or omit to state to the Trust a
material fact necessary in order to make the
statements made, in light of the circumstances under
which they are made, not misleading;
3. To engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit
upon the Trust; or
4. To engage in any manipulative practice with respect
to the Trust's investment portfolios.
II. PURPOSE OF THE CODE OF ETHICS.
The Trust expects that its trustees and officers will conduct their
personal investment activities in accordance with (1) the duty at all times to
place the interests of the Trust's shareholders first, (2) the requirement that
all personal securities transactions be conducted consistent with this Code of
Ethics and in such a manner as to avoid any actual or potential conflict of
interest or any abuse of an individual's position of trust and responsibility,
and (3) the fundamental standard that investment company personnel should not
take inappropriate advantage of their positions.
In view of the foregoing, the provisions of Section 17(j) of the 1940
Act, the Securities and Exchange Commission's 1940 Act Release No. 23958
"Personal Investment Activities of Investment Company Personnel" (August 24,
1999), the "Report of the Advisory Group on Personal Investing" issued by the
Investment Company Institute on May 9, 1994 and the Securities and Exchange
Commission's September 1994 Report on "Personal Investment Activities of
Investment Company Personnel," the Trust has determined to adopt this Code of
Ethics on behalf of the Trust to specify a code of conduct for certain types of
personal securities transactions which might involve conflicts of interest or an
appearance of impropriety, and to establish reporting requirements and
enforcement procedures.
<PAGE>
III. DEFINITIONS.
A. An "Access Person" means: (1) each trustee or officer of the
Trust; (2) each employee (if any) of the Trust (or of any
company in a control relationship to the Trust) who in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase
or sale of a security by the Trust or whose functions relate
to the making of any recommendations with respect to such
purchases or sales; and (3) any natural person in a control
relationship to the Trust who obtains information concerning
recommendations made to the Trust with regard to the purchase
or sale of a security.
For purposes of this Code of Ethics, an "Access Person" does
not include any person who is subject to the securities
transaction pre-clearance requirements and securities
transaction reporting requirements of the Code of Ethics
adopted by the Trust's investment adviser or principal
underwriter in compliance with Rule 17j-1 of the 1940 Act and
Rule 204-2(a)(12) of the Investment Advisers Act of 1940 or
Section 15(f) of the Securities Exchange Act of 1934, as
applicable.
B. "Restricted Trustee" or "Restricted Officer" means each
trustee or officer of the Trust who is not also a director,
officer, partner, employee or controlling person of the
Trust's investment adviser, administrator, custodian, transfer
agent, or distributor.
C. An Access Person's "immediate family" includes a spouse, minor
children and adults living in the same household as the Access
Person.
D. A security is "held or to be acquired" if within the most
recent 15 days it (1) is or has been held by the Trust, or (2)
is being or has been considered by the Trust or its investment
adviser for purchase by the Trust. A purchase or sale includes
the writing of an option to purchase or sell and any security
that is exchangeable for or convertible into, any security
that is held or to be acquired by a fund.
E. An "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933, the issuer of
which, immediately before the registration, was not subject to
the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934.
F. "Investment Personnel" of the Trust means:
(i) Any employee of the Trust (or of any company in a
control relationship to the Trust) who, in connection with his
or her regular
-2-
<PAGE>
functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities
by the Trust.
(ii) Any natural person who controls the Trust and
who obtains information concerning recommendations made to the
Trust regarding the purchase or sale of securities by the
Trust.
G. A "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to
Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505
or Rule 506 under the Securities Act of 1933.
H. "Non-Reportable Security" means:
1. Direct obligations of the Government of the United
States; banker's acceptances; bank certificates of
deposit; commercial paper; high quality short-term
debt instruments (any instrument having a maturity at
issuance of less than 366 days and that is rated in
one of the two highest rating categories by a
nationally recognized statistical rating
organization), including repurchase agreements; and
shares of registered open-end investment companies.
2. Securities purchased or sold in any account over
which the Access Person has no direct or indirect
influence or control.
I. "Exempt Security" means:
1. Securities purchased or sold in a transaction which
is non-volitional on the part of either the Access
Person or the Trust.
2. Securities acquired as a part of an automatic
dividend reinvestment plan.
3. Securities acquired upon the exercise of rights
issued by an issuer PRO RATA to all holders of a
class of its securities, to the extent such rights
were acquired from such issuer, and sales of such
rights so acquired.
4. Securities which the Trust's investment portfolios
are not permitted to purchase under the investment
objectives and policies set forth in the Trust's then
current prospectus(es) under the Securities Act of
1933 or the Trust's registration statement on Form
N-1A.
-3-
<PAGE>
IV. POLICIES OF THE TRUST REGARDING PERSONAL SECURITIES TRANSACTIONS.
A. GENERAL POLICY.
No Access Person of the Trust shall engage in any act,
practice or course of business that would violate the
provisions of Rule 17j-1(b) set forth above, or in connection
with any personal investment activity, engage in conduct
inconsistent with this Code of Ethics.
B. SPECIFIC POLICIES.
1. RESTRICTIONS ON PERSONAL SECURITIES TRANSACTIONS BY
ACCESS PERSONS OTHER THAN RESTRICTED TRUSTEES AND
RESTRICTED OFFICERS.
a. No Access Person who is not a Restricted
Trustee or Restricted Officer may buy or
sell securities other than Non-Reportable
Securities and Exempt Securities for his or
her personal portfolio or the portfolio of a
member of his or her immediate family
without obtaining oral authorization from
the Compliance Officer of the Trust's
administrator PRIOR to effecting such
security transaction.
A written authorization for such security
transaction will be provided by the
administrator's Compliance Officer to the
person receiving the authorization (if
granted) and to the Trust's administrator to
memorialize the oral authorization that was
granted.
NOTE: If an Access Person has
questions as to whether purchasing
or selling a security for his or her
personal portfolio or the portfolio
of a member of his or her immediate
family requires prior oral
authorization, the Access Person
should consult the administrator's
Compliance Officer for clearance or
denial of clearance to trade PRIOR
to effecting any securities
transactions.
b. Pre-clearance approval under paragraph (a)
will expire at the close of business on the
trading day after the date on which oral
authorization is received, and the Access
Person is required to renew clearance for
the transaction if the trade is not
completed before the authority expires.
-4-
<PAGE>
c. No clearance will be given to an Access
Person other than a Restricted Trustee or
Restricted Officer to purchase or sell any
security (1) on a day when any portfolio of
the Trust has a pending "buy" or "sell"
order in that same security until that order
is executed or withdrawn or (2) when the
Compliance Officer has been advised by the
investment adviser that the same security is
being considered for purchase or sale for
any portfolio of the Trust.
d. The pre-clearance requirement contained in
paragraph IV.B.1.a, above, shall apply to
ALL purchases of a beneficial interest in
any security through an Initial Public
Offering or a Limited Offering by any Access
Person who is also classified as Investment
Personnel. A record of any decision and the
reason supporting such decision to approve
the acquisition by Investment Personnel of
Initial Public Offerings or Limited
Offerings shall be made by the Compliance
Officer.
2. RESTRICTIONS ON PERSONAL SECURITIES TRANSACTIONS BY
RESTRICTED TRUSTEES AND RESTRICTED OFFICERS.
The Trust recognizes that a Restricted Trustee and a
Restricted Officer do not have on-going, day-to-day
involvement with the operations of the Trust. In
addition, it has been the practice of the Trust to
give information about securities purchased or sold
by the Trust or considered for purchase or sale by
the Trust to Restricted Trustees and Restricted
Officers in materials circulated more than 15 days
after such securities are purchased or sold by the
Trust or are considered for purchase or sale by the
Trust. Accordingly, the Trust believes that less
stringent controls are appropriate for Restricted
Trustees and Restricted Officers, as follows:
a. The securities pre-clearance requirement
contained in paragraph IV.B.1.a. above shall
apply to a Restricted Trustee or Restricted
Officer only if he or she knew or, in the
ordinary course of fulfilling his or her
official duties as a trustee or officer,
should have known, that during the fifteen
day period before the transaction in a
security (other than a Non-Reportable
Security or an Exempt Security) or at the
time of the transaction that the security
purchased or sold by him or her (other than
a Non-Reportable Security or an Exempt
Security) was also purchased or sold by the
Trust or considered for purchase or sale by
the Trust.
b. If the pre-clearance provisions of the
preceding paragraph apply, no clearance will
be given to a Restricted Trustee or
-5-
<PAGE>
Restricted Officer to purchase or sell any
security (1) on a day when any portfolio of
the Trust has a pending "buy" or "sell"
order in that same security until that order
is executed or withdrawn or (2) when the
Compliance Officer has been advised by the
investment adviser that the same security is
being considered for purchase or sale for
any portfolio of the Trust.
V. PROCEDURES.
A. In order to provide the Trust with information to enable it to
determine with reasonable assurance whether the provisions of
this Code are being observed by its Access Persons:
1. Each Access Person of the Trust other than a trustee
who is not an "interested person" of the Trust (as
defined in the 1940 Act) will submit to the Trust's
administrator an Initial Holdings Report in the form
attached hereto as Exhibit A that lists ALL
securities other than Non-Reportable Securities
beneficially owned(1) by the Access Person. This
report must be submitted within ten days of becoming
an Access Person (or for persons already designated
as Access Persons, by January 30, 2001), and must
include the title of each security, the number of
shares held, and the principal amount of the
security. The Report must also include a list of any
securities accounts maintained with any broker,
dealer or bank.
2. Each Access Person of the Trust other than a trustee
who is not an "interested person" of the Trust (as
defined in the 1940 Act) will also submit to the
Trust's administrator an Annual Holdings Report
attached hereto as Exhibit A no later than thirty
days after the end of the calendar year. The Annual
Holdings Report must list ALL securities other
than Non-Reportable Securities beneficially owned
--------------------
(1). You will be treated as the "beneficial owner" of a security under this
policy only if you have a direct or indirect pecuniary interest in the security.
(a) A direct pecuniary interest is the opportunity, directly or
indirectly, to profit, or to share the profit, from the
transaction.
(b) An indirect pecuniary interest is any nondirect financial
interest, but is specifically defined in the rules to include
securities held by members of your immediate family sharing
the same household; securities held by a partnership of which
you are a general partner; securities held by a trust of which
you are the settlor if you can revoke the trust without the
consent of another person, or a beneficiary if you have or
share investment control with the trustee; and equity
securities which may be acquired upon exercise of an option or
other right, or through conversion.
For interpretive guidance on this test, you should consult
counsel.
-6-
<PAGE>
by the Access Person, the title of each security, the
number of shares held, and the principal amount of
the security, as well as a list of any securities
accounts maintained with any broker, dealer or bank.
3. Each Access Person of the Trust other than a
Restricted Trustee or Restricted Officer shall direct
his or her broker to supply to the Compliance Officer
of the Trust's administrator, on a timely basis,
duplicate copies of confirmations of all securities
transactions in which the person has, or by reason of
such transaction acquires any direct or indirect
beneficial ownership and copies of periodic
statements for all securities accounts.
4. Each Access Person of the Trust, other than a trustee
who is not an "interested person" (as defined in the
1940 Act), shall submit reports in the form attached
hereto as Exhibit B to the Trust's administrator,
showing all transactions in securities other than
Non-Reportable Securities in which the person has, or
by reason of such transaction acquires, any direct or
indirect beneficial ownership, as well as all
accounts established with brokers, dealers or banks
during the quarter in which any securities were held
for the direct or indirect beneficial interest of the
Access Person.(2) Such reports shall be filed no
later than 10 days after the end of each calendar
quarter. An Access Person of the Trust need not make
a quarterly transaction report under this paragraph
if all of the information required by this paragraph
4 is contained in the brokerage confirmations or
account statements required to be submitted under
paragraph 3.
5. Each trustee who is not an "interested person" of the
Trust need not make an initial or annual holdings
report but shall submit the same quarterly report as
required under paragraph 4 to the Trust's
administrator, but only for a transaction in a
security other than a Non-Reportable Security where
he or she knew at the time of the transaction or, in
the ordinary course of fulfilling his or her official
duties as a trustee, should have known that during
the 15-day period immediately preceding or after the
date of the transaction, such security is or was
purchased or sold, or considered for purchase or
sale, by the Trust.
6. The administrator of the Trust shall notify each
Access Person of the Trust who may be subject to the
pre-clearance requirement or required to make reports
pursuant to this Code that such person is
-------------------------
(2). See footnote above.
-7-
<PAGE>
subject to the pre-clearance or reporting
requirements and shall deliver a copy of this Code to
each such person.
7. The administrator of the Trust shall review the
initial holdings reports, annual holdings reports,
and quarterly transaction reports received and, as
appropriate, compare the reports with the
pre-clearance authorization received, and report to
the Trust's Board of Trustees:
a. with respect to any transaction that appears
to evidence a possible violation of this
Code; and
b. apparent violations of the reporting
requirement stated herein.
8. The Board shall consider reports made to it hereunder
and shall determine whether the policies established
in Sections IV and V of this Code of Ethics have been
violated, and what sanctions, if any, should be
imposed on the violator, including but not limited to
a letter of censure, suspension or termination of the
employment of the violator, or the unwinding of the
transaction and the disgorgement of any profits to
the Trust. The Board shall review the operation of
this Code of Ethics at least once a year.
9. The Trust's investment adviser(s) shall adopt,
maintain and enforce separate codes of ethics with
respect to their personnel in compliance with Rule
17j-1 and Rule 204-2(a)(12) of the Investment
Advisers Act of 1940 or Section 15(f) of the
Securities Exchange Act of 1934, as applicable, and
shall forward to the Trust's administrator and the
Trust's counsel copies of such codes and all future
amendments and modifications thereto. The Board shall
review and approve such codes at least once a year.
Furthermore, any material changes to an investment
adviser's code will be approved by the Board at the
next scheduled quarterly board meeting and in no case
more than six months after such change.
10. At each quarterly Board of Trustees' meeting, the
administrator and investment adviser(s) of the Trust
shall provide a written report to the Trust's Board
of Trustees stating:
a. any reported securities transaction that
occurred during the prior quarter that may
have been inconsistent with the provisions
of the code(s) of ethics adopted by the
Trust's investment adviser(s); and
-8-
<PAGE>
b. all disciplinary actions(3) taken in
response to such violations.
11. At least once a year, the Trust's investment
adviser(s) shall provide to the Board a written
report which contains: (a) a summary of existing
procedures concerning personal investing by advisory
persons and any changes in the procedures during the
past year; (b) an evaluation of current compliance
procedures and a report on any recommended changes in
existing restrictions or procedures based upon the
Trust's experience under this Code of Ethics,
industry practices, or developments in applicable
laws and regulations; (c) describes any issues
arising under the code of ethics or procedures since
the last report, including but not limited to,
information about material violations of the code or
procedures and sanctions imposed in response to
material violations; and (d) a certification that the
procedures which have been adopted are those
reasonably necessary to prevent Access Persons from
violating the respective Codes of Ethics.
12. This Code, the Codes of the investment adviser(s), a
copy of each report by an Access Person, any record
of any violation of this Code and any action taken as
a result thereof, any written report hereunder by the
Trust's administrator, investment adviser(s), records
of approvals relating to Initial Public Offerings and
Limited Offerings, lists of all persons required to
make reports and a list of all persons responsible
for reviewing such reports shall be preserved with
the Trust's records for the period required by Rule
17j-1.
VI. CERTIFICATION.
Each Access Person will be required to certify annually that he or she
has read and understood this Code of Ethics, and will abide by it. Each Access
Person will further certify that he or she has disclosed or reported all
personal securities transactions required to be disclosed or reported under the
Code of Ethics. A form of such certification is attached hereto as Exhibit C.
The Board of Trustees of The Galaxy Fund
---------------------------
(3). Disciplinary action includes but is not limited to any action that has
a material financial effect upon the employee, such as fining, suspending, or
demoting the employee, imposing a substantial fine or requiring the disgorgement
of profits.
-9-
<PAGE>
Exhibit A
THE GALAXY FUND
(the "Trust")
HOLDINGS REPORT
For the Year/Period Ended
-------------------------
(month/day/year)
[ ] Check Here if this is an Initial Holdings Report
To: PFPC Inc., as Administrator of the Trust
As of the calendar year/period referred to above, I have a direct or
indirect beneficial ownership interest in the securities listed below which are
required to be reported pursuant to the Code of Ethics of the Trust:
<TABLE>
<CAPTION>
Title of Number Principal
Security of Shares Amount
-------- --------- ------
<S> <C> <C>
</TABLE>
The name of any broker, dealer or bank with whom I maintain an account
in which my securities are held for my direct or indirect benefit are as
follows:
THIS REPORT (i) EXCLUDES TRANSACTIONS WITH RESPECT TO WHICH I HAD NO
DIRECT OR INDIRECT INFLUENCE OR CONTROL, (ii) EXCLUDES OTHER TRANSACTIONS NOT
REQUIRED TO BE REPORTED, AND (iii) IS NOT AN ADMISSION THAT I HAVE OR HAD ANY
DIRECT OR INDIRECT BENEFICIAL OWNERSHIP IN THE SECURITIES LISTED ABOVE.
Date: Signature:
----------------------- -------------------------------
Print Name:
------------------------------
<PAGE>
Exhibit B
THE GALAXY FUND
(the "Trust")
QUARTERLY TRANSACTION REPORT
For the Calendar Quarter Ended
------------------------------
(month/day/year)
To: PFPC Inc. as Administrator of the Trust
A. SECURITIES TRANSACTIONS. During the quarter referred to above, the
following transactions were effected in securities of which I had, or by reason
of such transactions acquired, direct or indirect beneficial ownership, and
which are required to be reported pursuant to the Code of Ethics of the Trust:
<TABLE>
<CAPTION>
Broker/Dealer
Number of Nature of Or Bank
Interest Rate Shares or Dollar Transaction Through Which
Title of and Maturity Date Date of Principal Amount of (Purchase, Transaction
Security (If Applicable) Transaction Amount Transaction Sale, Other) Price Effected
-------- ----------------- ----------- --------- ----------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
--------------------
* Transactions that are asterisked indicate transactions in a security where I
knew at the time of the transaction or, in the ordinary course of fulfilling my
official duties as a trustee or officer, should have known that during the
15-day period immediately preceding or after the date of the transaction, such
security was purchased or sold, or such security was being considered for
purchase or sale, by the Trust.
B. NEW BROKERAGE ACCOUNTS. During the quarter referred to above, I
established the following accounts in which securities were held during the
quarter for my direct or indirect benefit:
Name of Broker, Dealer or Bank Date Account Was Established
------------------------------ ----------------------------
C. OTHER MATTERS. This report (i) excludes transactions with respect to
which I had no direct or indirect influence or control, (ii) excludes other
transactions not required to be reported, and (iii) is not an admission that I
have or had any direct or indirect beneficial ownership in the securities listed
above.
Date: Signature:
----------------------- -------------------------------
Print Name:
------------------------------
<PAGE>
Exhibit C
THE GALAXY FUND
(the "Trust")
ANNUAL CERTIFICATE
Pursuant to the requirements of the Code of Ethics of the
Trust, the undersigned hereby certifies as follows:
1. I have read the Trust's Code of Ethics.
2. I understand the Code of Ethics and acknowledge that
I am subject to it.
3. Since the date of the last Annual Certificate (if
any) given pursuant to the Code of Ethics, I have
reported all personal securities transactions and
provided any securities holding reports required to
be reported under the requirements of the Code of
Ethics.
Date:
-----------------------------------
Print Name
-----------------------------------
Signature
