<PAGE>
As filed with the Securities and Exchange Commission on May 31, 2000
Securities Act File No. 33-4806
Investment Company Act File No. 811-4636
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/X/
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 48
and /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 49 /X/
The Galaxy Fund /X/
(Exact Name of Registrant as Specified in Charter)
4400 Computer Drive
Westborough, Massachusetts 01581-5108
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(877) 289-4252
W. Bruce McConnel, III
DRINKER BIDDLE & REATH LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103
(Name and Address of Agent for Service)
Copy to:
Jylanne Dunne, Vice President
PFPC Inc.
4400 Computer Drive
Westborough, Massachusetts 01581-5108
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on [date] pursuant to paragraph (b)
[ X ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on July 1, 2000 pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on [date] pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest.
<PAGE>
[Front cover page]
The Galaxy Fund Subject to Completion
Preliminary Prospectus Dated May 31, 2000
[Sidenote:]
A Post-Effective Amendment relating to these Prime A Shares and Prime B
Shares of the Galaxy Pan Asia Fund has been filed with the Securities and
Exchange Commission but has not yet become effective. Information contained
herein is subject to completion or amendment. These Prime A Shares and Prime
B Shares may not be sold nor may offers to buy such shares be accepted prior
to the time the Post-Effective Amendment to the Registration Statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of the offer to buy nor shall there be any sale of these
Prime A Shares and Prime B Shares in any State in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such State.
Prospectus
__________, 2000
Galaxy Pan Asia Fund
Prime A Shares and Prime B Shares
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved any shares of this Fund or determined if this prospectus
is accurate or complete. Anyone who tells you otherwise is committing a crime.
<PAGE>
Contents
Risk/return summary............................................................1
Introduction...................................................................1
Galaxy Pan Asia Fund...........................................................3
Additional information about risk..............................................8
Fund management................................................................9
How to invest in the Fund.....................................................10
How sales charges work........................................................10
Buying, selling and exchanging shares.........................................13
How to buy shares....................................................13
How to sell shares...................................................14
How to exchange shares...............................................15
Other shareholder services...........................................15
Other transaction policies...........................................15
Dividends, distributions and taxes............................................17
<PAGE>
RISK/RETURN SUMMARY
INTRODUCTION
This prospectus describes the Galaxy Pan Asia Fund. The Fund invests primarily
in the common stocks of companies located in or that have their principal
activities in Asia or the Pacific Basin.
On the following pages, you'll find important information about the Fund,
including:
- the Fund's investment objective (sometimes called the Fund's goal) and the
main investment strategies used by the Fund's investment adviser in trying
to achieve that objective
- the main risks associated with an investment in the Fund
- the fees and expenses that you will pay as an investor in the Fund.
IS THE FUND RIGHT FOR YOU?
Not all mutual funds are for everyone. Your investment goals and tolerance for
risk will determine which fund is right for you.
Equity funds are generally best suited to investors seeking growth of their
investment over time and who are prepared to accept the risks associated with
equity securities. Equity funds have the potential for higher returns than other
funds, such as bond funds or money market funds, but also carry more risk.
Different equity funds have different levels of risk. They have varying
objectives and investment styles, and some are considered more aggressive than
others. On a risk spectrum ranking funds from conservative to aggressive, the
Galaxy Pan Asia Fund is considered to have an aggressive level of risk. This
ranking is based on the assessment by the Fund's investment adviser of the
potential risk of the Fund relative to the other equity funds offered by Galaxy,
but this can change over time. It should not be used to compare the Fund with
other mutual funds or other types of investments. Consult your financial
professional to help you decide if the Fund is right for you.
THE FUND'S INVESTMENT ADVISER
Fleet Investment Advisors Inc., which is referred to in this prospectus as
the Adviser, is the investment adviser for the Fund. The Adviser, an indirect
wholly-owned subsidiary of FleetBoston Financial Corporation, was established
in 1984 and has its main office at 75 State Street, Boston, Massachusetts
02109. The Adviser also provides investment management and advisory services
to individual and institutional clients and manages the other Galaxy
investment portfolios. As of December 31, 1999, the Adviser managed over $68
billion in assets.
1
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AN INVESTMENT IN THE FUND ISN'T A FLEET BANK DEPOSIT AND IT ISN'T INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN THE FUND.
2
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Galaxy Pan Asia Fund
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks capital appreciation.
THE FUND'S MAIN INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in the common stocks
of companies located in or whose principal activities are in Asia and the
Pacific Basin. These countries may include Hong Kong, India, Indonesia, Japan,
Malaysia, the People's Republic of China, the Philippines, Republic of Korea,
Singapore, Taiwan and Thailand. In determining where a company's principal
activities are located, the Adviser will consider its country of organization,
the principal trading market for its stocks, the source of its revenues and the
location of its assets. The Fund emphasizes investments in the developed
countries of the region (i.e., Hong Kong, Japan, and Singapore), however, it may
also invest in companies located in emerging markets. The Fund will invest
mainly in large and medium-sized companies, although it may invest in companies
of any size.
[Sidenote:]
SUB-ADVISER
The Adviser has appointed UOB Global Capital LLC as Sub-Adviser to assist it in
the day-to-day management of the Fund's investment portfolio.
The Sub-Adviser determines how much to invest in each country by looking at
factors such as prospects for economic growth, expected inflation levels,
government policies and the range of available investment opportunities. The
Sub-Adviser uses a rigorous bottom-up approach, emphasizing intensive research
and stockpicking as the means to identify undervalued stocks in the Asian
markets. The investment process is based on a disciplined and systematic
approach to identifying under-priced securities. Fundamental parameters that are
value and/or growth oriented are used to screen the stock universe to identify
companies that are likely to outperform. Regular company visits are an intrinsic
part of the process. Top-down macro analysis and market valuation are used to
support asset allocation decisions. Quantitative tools are used to help identify
and manage exposure to different risk factors.
The Fund will sell a security if, as a result of changes in the economy of a
particular country or the Asian and Pacific Basin region in general, the
Sub-Adviser believes that holding the security is no longer consistent with the
Fund's investment objective. A security may also be sold as a result of a
deterioration in the performance of the security or in the financial condition
of the company that issued the security.
3
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THE MAIN RISKS OF INVESTING IN THE FUND
Changes in the U.S. or foreign economies can cause the value of stocks and other
investments held by the Fund to fall. Stock prices may decline over short or
extended periods. U.S. and foreign stock markets tend to move in cycles, with
periods of rising prices and periods of falling prices.
The value of your investment in the Fund will go up and down with the value of
the investments which the Fund holds. The Fund's investments may not perform as
well as other investments, even in times of rising markets.
In addition, the Fund carries the following main risks:
- FOREIGN INVESTMENTS - Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- EMERGING MARKETS - The risks associated with foreign investments are
heightened when investing in emerging markets. The governments and
economies of emerging market countries feature greater instability than
those of more developed countries. Such investments tend to fluctuate in
price more widely and to be less liquid than other foreign investments.
- REGIONAL RISK - Because the Fund invests primarily in the stocks of
companies located in Asia and the Pacific Basin, the Fund is particularly
susceptible to events in that region. Events in any one country may impact
the other countries or the region as a whole. As a result, events in the
region will generally have a greater effect on the Fund than if the Fund
were more geographically diversified.
- COUNTRY RISK - The Fund may invest 25% or more of its assets in the
securities of companies located in one country. When the Fund invests a
high percentage of its assets in a particular country, the Fund will be
especially susceptible to factors affecting that country.
- CURRENCY EXCHANGE - Although the Fund usually makes investments that are
sold in foreign currencies, it values its holdings in U.S. dollars. If the
U.S. dollar rises compared to a foreign currency, the Fund loses on the
currency exchange.
- SMALL COMPANIES RISK - Small companies tend to have limited resources,
product lines and market share. As a result, their share prices tend to
fluctuate more than those of larger companies. Their shares may also trade
less frequently and in limited volume, making them potentially less liquid.
The price of small company stocks might fall regardless of trends in the
broader market.
- HEDGING - The Fund may invest in derivatives, such as options, futures and
foreign currencies, to hedge against market risk or the currency risk of
its foreign investments. There's no guarantee hedging will always work. It
can also prevent the Fund from making a gain if markets move in the
opposite direction to the hedge.
- SELECTION OF INVESTMENTS: The Adviser evaluates the risks and rewards
presented by all securities purchased by the Fund and how they advance the
Fund's investment objective. It's possible, however, that these evaluations
will prove to be inaccurate.
4
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[Sidenote:]
DERIVATIVES
A derivative is an investment whose value is based on or DERIVED from the
performance of other securities or interest or currency exchange rates or
indices. Derivatives are considered to carry a higher degree of risk than other
types of securities.
HOW THE FUND HAS PERFORMED
The Fund had not commenced operations as of the date of this prospectus and,
accordingly, does not have a long-term performance record.
FEES AND EXPENSES OF THE FUND
The following table shows the fees and expenses you may pay when you buy and
hold shares of the Fund.
Shareholder fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
--------------------------- ----------------------------------- -----------------------------------------
Maximum sales charge (load) on Maximum deferred sales charge (load)
purchases shown as a % of the shown as a % of the offering price or
offering price sale price, whichever is less
--------------------------- ----------------------------------- -----------------------------------------
<S> <C> <C>
Prime A Shares 5.50%(1) None(2)
--------------------------- ----------------------------------- -----------------------------------------
Prime B Shares None 5.00%(3)
--------------------------- ----------------------------------- -----------------------------------------
</TABLE>
Annual Fund operating expenses (expenses deducted from the Fund's assets)
<TABLE>
<CAPTION>
--------------------------- -------------------- ---------------------- ---------------- ------------------------------
Management fees Distribution and Other expenses Total Fund operating expenses
service (12b-1) fees
--------------------------- -------------------- ---------------------- ---------------- ------------------------------
<S> <C> <C> <C> <C>
Prime A Shares 1.20% 0.25% 0.77%(4,5) 2.22%(5)
--------------------------- -------------------- ---------------------- ---------------- ------------------------------
Prime B Shares 1.20% 1.00% 0.74%(4,5) 2.94%(5)
--------------------------- -------------------- ---------------------- ---------------- ------------------------------
</TABLE>
(1) Reduced sales charges may be available. See "How to invest in the Fund -
How sales charges work."
(2) Except for investments of $1,000,000 or more. See "How to invest in the
Fund - How sales charges work."
(3) This amount applies if you sell your shares in the first year after
purchase and gradually declines to 0% in the seventh year after purchase.
After eight years, your Prime B Shares will automatically convert to Prime
A Shares. See "How to invest in the Fund - How sales charges work."
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(4) Other expenses are based on estimated amounts for the current fiscal year.
(5) The Adviser has agreed to reimburse Other expenses so that Total Fund
operating expenses do not exceed 1.95% and 2.67% for Prime A Shares and
Prime B Shares, respectively. These reimbursements may be revised or
discontinued at any time.
EXAMPLE
This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:
- you invest $10,000 for the periods shown
- you reinvest all dividends and distributions in the Fund
- you sell all your shares at the end of the periods shown
- your investment has a 5% return each year
- your Prime B Shares convert to Prime A Shares after eight years
- the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:
<TABLE>
<CAPTION>
----------------------- --------------------- --------------------
1 year 3 years
----------------------- --------------------- --------------------
<S> <C> <C>
Prime A Shares $ 763 $ 1,206
----------------------- --------------------- --------------------
Prime Shares $ 797 $ 1,210
------------------------------------------------------------------
If you hold Prime B Shares, you would pay the following expenses if
you didn't sell your shares:
------------------------------------------------------------------
Prime B Shares $ 297 $ 910
----------------------- --------------------- --------------------
</TABLE>
6
<PAGE>
[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is Janet Liem, who joined UOB Overseas Bank Group
(UOB) in 1993 and who has been a portfolio manager with the Sub-Adviser since
April 2000. Under the supervision of Daniel Chan, a member of the Sub-Adviser's
Investment Committee, she is primarily responsible for the day-to-day management
of the Fund's investment portfolio.
Ms. Liem, who also serves as Director and Head of Research of UOB Asset
Management Ltd. (UOBAM), has over 15 years of investment experience. Prior to
joining UOB, she held various research positions with global financial
institutions. She holds a BBA from the National University of Singapore and an
MBA from the University of New South Wales.
Mr. Chan has over 20 years investment experience. He currently serves as Chief
Investment Officer and Managing Director of UOBAM. He has been with UOB since
1982 and the Sub-Adviser since its inception in 1998. He is responsible for all
aspects of the investment process. He is also the current Chairperson of the
Investment Management Association of Singapore. Prior to joining UOB, he was a
Vice President at Sun Hung Kai Securities in Singapore. He holds a BBA from the
National University of Singapore.
7
<PAGE>
ADDITIONAL INFORMATION ABOUT RISK
The main risks associated with an investment in the Galaxy Pan Asia Fund have
been described above. The following supplements that discussion.
TEMPORARY DEFENSIVE POSITIONS
The Fund may temporarily hold up to 100% of its total assets in investments that
are not part of its principal investment strategy to try to avoid losses during
unfavorable market conditions. These investments may include cash (which will
not earn any income), U.S. and foreign money market instruments, debt securities
issued or guaranteed by the U.S. Government or its agencies and foreign national
governments or their agencies, securities of foreign issuers located outside the
Asian and Pacific Basin region, and the securities of U.S. issuers. This
strategy could prevent the Fund from achieving its investment objective and
could reduce the Fund's return and affect its performance during a market
upswing.
OTHER TYPES OF INVESTMENTS
This prospectus describes the Fund's main investment strategies and the
particular types of securities in which the Fund mainly invests. The Fund may,
from time to time, pursue other investment strategies and make other types of
investments in support of its overall investment goal. These supplemental
investment strategies, which are not considered to be main investment strategies
of the Fund - and the risks involved - are described in detail in the Statement
of Additional Information (SAI) which is referred to on the back cover of this
prospectus.
YEAR 2000 RISKS
Over the past several years, the Adviser and Galaxy's other major service
providers expended considerable time and money in addressing the computer and
technology problems associated with the transition to the Year 2000. As a result
of those efforts, Galaxy did not experience any material disruptions in its
operations as a result of the transition to the 21st century. The Adviser and
Galaxy's other major service providers are continuing to monitor the Year 2000
or Y2K problems, however, and there can be no assurances that there will be no
adverse impact to Galaxy or the Fund as a result of future computer-related Y2K
difficulties.
8
<PAGE>
FUND MANAGEMENT
ADVISER
The Adviser, subject to the general supervision of Galaxy's Board of Trustees,
manages the Fund in accordance with its investment objective and policies, makes
decisions with respect to and places orders for all purchases and sales of its
portfolio securities, and maintains related records. For these services, the
Adviser is entitled to receive management fees from the Fund at the annual rate
of 1.20% of the Fund's average daily net assets.
SUB-ADVISER
The Adviser has delegated some of its advisory responsibilities with respect
to the Pan Asia Fund to UOB Global Capital LLC as Sub-Adviser. The
Sub-Adviser determines which securities will be purchased, retained or sold
for the Fund, places orders for the Fund and provides the Adviser with
information on Asian investment and economic developments. The Adviser
assists and consults with the Sub-Adviser as to the Fund's investment
program, reviews sector and country allocations as determined by the
Sub-Adviser for investment and manages the Fund's daily cash position. The
Sub-Adviser's fees are paid by the Adviser.
The Sub-Adviser is located at 592 Fifth Avenue, Suite 602, New York, New York
10036. The Sub-Adviser has entered into an arrangement with its affiliate, UOB
Asset Management Ltd. (UOBAM), pursuant to which UOBAM has agreed to provide
appropriate resources, including investment, operations and compliance
personnel, to the Sub-Adviser. UOBAM is located at UOB Plaza 2, 80 Raffles
Place, #03-00, Singapore 048624. At December 31, 1999, together with its
affiliates, the Sub-Adviser had discretionary management authority over
approximately $2.17 billion in assets.
ALLOCATION OF ORDERS FOR PORTFOLIO SECURITIES
The Adviser and Sub-Adviser may allocate orders for the purchase and sale of
portfolio securities to certain financial institutions, including those that are
affiliated with the Adviser or Sub-Adviser or that have sold shares of the Fund,
to the extent permitted by law or by order of the Securities and Exchange
Commission. The Adviser and Sub-Adviser will allocate orders to such
institutions only if they believe that the quality of the transaction and the
commission are comparable to what they would be with other qualified brokerage
firms.
9
<PAGE>
HOW TO INVEST IN THE FUND
HOW SALES CHARGES WORK
You will normally pay a sales charge to invest in the Fund. If you buy Prime A
Shares, you'll usually pay a sales charge (sometimes called a front-end load) at
the time you buy your shares. If you buy Prime B Shares, you may have to pay a
contingent deferred sales charge (sometimes called a back-end load or CDSC) when
you sell your shares. This section explains these two options.
[Sidenote:]
NET ASSET VALUE
The price you pay for your shares is based on the net asset value per share
(NAV). It's the value of the Fund's assets attributable to Prime A Shares or
Prime B Shares, minus the value of the Fund's liabilities attributable to Prime
A Shares or Prime B Shares, divided by the number of Prime A Shares or Prime B
Shares held by investors.
PRIME A SHARES
The table below shows the sales charge you'll pay if you buy Prime A Shares of
the Fund. The offering price is the NAV of the shares purchased, plus any
applicable sales charge.
<TABLE>
<CAPTION>
------------------------------------- ------------------------------ -----------------------------
Total sales charge
------------------------------------- ------------------------------ -----------------------------
As a % of the offering price As a % of your investment
Amount of your investment per share
------------------------------------- ------------------------------ -----------------------------
<S> <C> <C>
Less than $50,000 5.50% 5.82%
------------------------------------- ------------------------------ -----------------------------
$50,000 but less than $100,000 4.50% 4.71%
------------------------------------- ------------------------------ -----------------------------
$100,000 but less than $250,000 3.50% 3.63%
------------------------------------- ------------------------------ -----------------------------
$250,000 but less than $500,000 2.50% 2.56%
------------------------------------- ------------------------------ -----------------------------
$500,000 but less than $1,000,000 2.00% 2.04%
------------------------------------- ------------------------------ -----------------------------
$1,000,000 and over 0.00%(1) 0.00%(1)
------------------------------------- ------------------------------ -----------------------------
</TABLE>
(1) There is no front-end sales charge on investments in Prime A Shares of
$1,000,000 or more. However, if you sell the shares within one year after
buying them, you'll pay a CDSC of 1% of the offering price or 1% of the net
asset value of your shares, whichever is less, unless the shares were sold
because of the death or disability of the shareholder.
10
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Galaxy's distributor may, from time to time, implement programs under which a
broker-dealer's sales force may be eligible to win nominal awards for certain
sales efforts. If any such program is made available to any broker-dealer, it
will be made available to all broker-dealers on the same terms. Payments made
under such programs are made by Galaxy's distributor out of its own assets and
not out of the assets of the Fund. These programs will not change the price of
Prime A Shares or the amount that the Fund will receive from such sales.
There's no sales charge when you buy Prime A Shares if:
- You buy shares by reinvesting your dividends and distributions.
- You buy shares with money from Prime A Shares of another Galaxy Fund on
which you've already paid a sales charge (as long as you buy the new shares
within 90 days after selling your other shares).
- You're an investment professional who places trades for your clients and
charges them a fee.
- You were a Galaxy shareholder before December 1, 1995.
[Sidenote:]
SALES CHARGE WAIVERS
Ask your broker-dealer, or consult the SAI, for other instances in which the
sales load on Prime A Shares is waived. When you buy your shares, you must tell
your broker-dealer that you qualify for a sales load waiver.
PRIME B SHARES
If you buy Prime B Shares of the Fund, you won't pay a CDSC unless you sell your
shares within six years of buying them. The following table shows the schedule
of CDSC charges:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
If you sell your shares You'll pay a CDSC of
--------------------------------------------------------------------------------
<S> <C>
During the first year 5.00%
--------------------------------------------------------------------------------
During the second year 4.00%
--------------------------------------------------------------------------------
During the third year 3.00%
--------------------------------------------------------------------------------
During the fourth year 3.00%
--------------------------------------------------------------------------------
During the fifth year 2.00%
--------------------------------------------------------------------------------
During the sixth year 1.00%
--------------------------------------------------------------------------------
After the sixth year None
--------------------------------------------------------------------------------
</TABLE>
For purposes of calculating the CDSC, all purchases made during a calendar month
are considered to be made on the first day of that month. The CDSC is based on
the value of the Prime B Shares on the date that they are sold or the original
cost of the shares, whichever is lower. To keep your CDSC as low as possible
each time you sell shares, Galaxy will first sell any shares in your account
that are not subject to a CDSC. If there are not enough of these,
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<PAGE>
Galaxy will sell those shares that have the lowest CDSC. There is no CDSC on
Prime B Shares that you acquire by reinvesting your dividends and distributions.
In addition, there's no CDSC when Prime B Shares are sold because of the death
or disability of a shareholder and in certain other circumstances such as
exchanges. Ask your broker-dealer, or consult the SAI, for other instances in
which the CDSC is waived.
DISTRIBUTION AND SHAREHOLDER SERVICE FEES
Prime A Shares of the Fund can pay distribution (12b-1) fees at an annual rate
of up to 0.30% of the Fund's Prime A Share assets. The Fund does not intend to
pay more than 0.25% in distribution fees with respect to Prime A Shares during
the current fiscal year.
Prime B Shares of the Fund can pay distribution and shareholder service (12b-1)
fees at an annual rate of up to 1.25% of the Fund's Prime B Share assets. The
Fund does not intend to pay more than 1.00% in distribution and shareholder
service (12b-1) fees during the current fiscal year.
Galaxy has adopted separate plans under Rule 12b-1 that allow the Fund to pay
fees from its Prime A Share assets for selling and distributing Prime A Shares
and from its Prime B Share assets for selling and distributing Prime B Shares
and for services provided to shareholders. Because 12b-1 fees are paid on an
ongoing basis, over time they increase the cost of your investment and may cost
more than paying other sales charges.
CONVERTING PRIME B SHARES TO PRIME A SHARES
Eight years after you buy Prime B Shares of the Fund, they will automatically
convert to Prime A Shares of the Fund. This allows you to benefit from the lower
annual expenses of Prime A Shares.
CHOOSING BETWEEN PRIME A SHARES AND PRIME B SHARES
Prime B Shares are subject to higher fees than Prime A Shares. For this reason,
Prime A Shares can be expected to pay higher dividends than Prime B Shares.
However, because Prime A Shares are subject to an initial sales charge which is
deducted at the time you purchase Prime A Shares (unless you qualify for a sales
load waiver), you will have less of your purchase price invested in the Fund if
you purchase Prime A Shares than if you purchase Prime B Shares of the Fund.
In deciding whether to buy Prime A Shares or Prime B Shares, you should consider
how long you plan to hold the shares. Over time, the higher fees on Prime B
Shares may equal or exceed the initial sales charge and fees for Prime A Shares.
Prime A Shares may be a better choice if you
12
<PAGE>
qualify to have the sales charge reduced or eliminated or if you plan to sell
your shares within one or two years. Consult your financial professional for
help in choosing the appropriate share class.
BUYING, SELLING AND EXCHANGING SHARES
You can buy and sell Prime A Shares and Prime B Shares of the Fund on any day
that the Fund is open for business, which is any day that the New York Stock
Exchange is open. The New York Stock Exchange is generally open for trading
every Monday through Friday, except for national holidays.
Prime A Shares and Prime B Shares have different prices. The price at which you
buy shares is the NAV next determined after your order is accepted, plus any
applicable sales charge. The price at which you sell shares is the NAV next
determined, after receipt of your order in proper form as described below, less
any applicable CDSC. NAV is determined on each day the New York Stock Exchange
is open for trading at the close of regular trading that day (usually 4:00 p.m.
Eastern time). If market prices are readily available for securities owned by
the Fund, they're valued at those prices. If market prices are not readily
available for some securities, they are valued at fair value under the
supervision of Galaxy's Board of Trustees.
Sometimes, the price of a security trading on a foreign stock exchange may be
affected by events that happen after that exchange closes. If this happens, the
fair value of the security may be determined using other factors and may not
reflect the security's last quoted price. In addition, foreign securities may
trade on days when shares of the Fund are not priced. As a result, the NAV per
share of the Fund may change on days when you won't be able to buy or sell Fund
shares.
[Sidenote:]
MINIMUM INVESTMENT AMOUNTS
The minimum initial investment amount to open a Fund account is $2,500. You
generally can make additional investments for as little as $100.
Usually, you must keep at least $250 in your account. If your account falls
below $250 because you sell or exchange shares, Galaxy may redeem your shares
and close your account. Galaxy will give you 60 days' notice in writing
before closing your account.
HOW TO BUY SHARES
You can buy shares through your broker-dealer. Your broker-dealer is responsible
for sending your order to Galaxy's distributor and wiring the money to Galaxy's
custodian. Your broker-
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<PAGE>
dealer will usually hold your shares of record in its name and receive all
confirmations of purchases and sales. Your ownership of the shares will be
recorded by your broker-dealer and reflected in your account statements provided
to you. For details, please contact your broker-dealer. A broker-dealer who
places orders on your behalf may charge you a separate fee for its services.
DISCOUNT PLANS
You may have the sales charges on purchases of Prime A Shares reduced or waived
completely through the discount plans described below:
- RIGHTS OF ACCUMULATION - You can add the value of the Prime A Shares that
you already own in any Galaxy Fund that charges a sales load to your next
investment in Prime A Shares for purposes of calculating the sales charge.
- LETTER OF INTENT - You can purchase Prime A Shares of any Galaxy Fund that
charges a sales load over a 13-month period and receive the same sales
charge as if all of the shares had been purchased at the same time. To
participate, complete the Letter of Intent section on the account
application. Galaxy's administrator will hold in escrow Prime A Shares
equal to 5% of the amount you indicate in the Letter of Intent for payment
of a higher sales charge if you don't purchase the full amount indicated in
the Letter of Intent. See the SAI for more information on this escrow
feature.
- REINVESTMENT PRIVILEGE - You can reinvest some or all of the money that you
receive when you sell Prime A Shares of the Fund in Prime A Shares of any
Galaxy Fund within 90 days without paying a sales charge.
[Sidenote:]
DISCOUNT PLANS
You must tell your broker-dealer when you buy your shares that you want to take
advantage of any of these discount plans. See the SAI for additional
requirements that may apply.
HOW TO SELL SHARES
You can sell your shares through your broker-dealer. The broker-dealer is
responsible for sending your order to Galaxy's distributor and for crediting
your account with the proceeds. Galaxy doesn't charge a fee for wiring sale
proceeds to your broker-dealer, but your broker-dealer may charge you a fee.
Please contact your broker-dealer for information on how to sell your shares.
14
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HOW TO EXCHANGE SHARES
You may exchange Prime A Shares of the Fund having a value of at least $100 for
Prime A Shares of any other Galaxy Fund that offers Prime A Shares. You won't
pay a sales charge for exchanging your Prime A Shares.
You may exchange Prime B Shares of the Fund for Prime B Shares of any other
Galaxy Fund that offers Prime B Shares. You won't pay a CDSC when you exchange
your Prime B Shares. However, when you sell the Prime B Shares you acquired in
the exchange, you'll pay a contingent deferred sales charge based on the date
you bought the Prime B Shares which you exchanged.
Galaxy doesn't charge any fee for making exchanges but your broker-dealer might
do so. You are generally limited to three exchanges per year. Galaxy may change
or cancel the exchange privilege with 60 days' advance notice to shareholders.
To exchange shares, contact your broker-dealer.
OTHER SHAREHOLDER SERVICES
Your broker-dealer may offer other shareholder services to its customers. For
example, broker-dealers may offer participation in an automatic investment
program that allows investors to systematically purchase shares of the Funds on
a periodic basis from a designated account. Broker-dealers may also offer a
systematic withdrawal plan which permits investors to sell shares on a regular
basis. Please contact you broker-dealer for details on these and any other
shareholder services that may be available.
OTHER TRANSACTION POLICIES
If Galaxy doesn't receive full payment for your order to buy shares within three
business days of the order date, Galaxy won't accept your order. Galaxy will
advise you if this happens and return any payment it may eventually receive. You
can only invest in shares of the Fund if it is legally available in your state.
Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares, but it does keep a record of shares issued to investors.
Galaxy normally pays you cash when you sell your shares, but it has the right to
deliver securities owned by the Fund instead of cash. When you sell these
securities, you'll pay brokerage charges.
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<PAGE>
Sales proceeds are normally sent to your broker-dealer within three business
days but Galaxy reserves the right to send sales proceeds within seven days if
sending proceeds earlier could adversely affect the Fund.
Galaxy reserves the right to vary or waive any minimum investment requirement.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund pays any dividends from net investment income annually. The Fund pays
any net capital gains at least once a year. It is expected that the Fund's
annual distributions will normally -- but not always -- consist primarily of
capital gains rather than ordinary income. Dividends and distributions are paid
in cash unless you indicate in the account application or in a letter to Galaxy
that you want to have dividends and distributions reinvested in additional
shares.
FEDERAL TAXES
The Fund contemplates declaring as dividends each year all or substantially all
of its taxable income, including its net capital gain (the excess of long-term
capital gain over short-term capital loss). Distributions attributable to the
net capital gain of the Fund will be taxable to you as long-term capital gain,
regardless of how long you have held your shares. Other Fund distributions
(including distributions attributable to short-term capital gains of the Fund)
will generally be taxable to you as ordinary income. You will be subject to
federal income tax on these distributions regardless of whether they are paid in
cash or reinvested in additional shares. You will be notified annually of the
tax status of distributions to you.
You should note that if you purchase shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution, but you
will be taxed on the entire amount of the distribution received, even though, as
an economic matter, the distribution simply constitutes a return of capital.
This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held shares.) Generally,
this gain or loss will be long-term or short-term depending on whether your
holding period for the shares exceeds 12 months, except that any loss realized
on shares held for six months or less will be treated as a long-term capital
loss to the extent of any capital gain dividends that were received on the
shares.
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<PAGE>
The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
Dividends paid by the Fund to its corporate shareholders and that are
attributable to qualifying dividends the Fund receives from U.S. corporations
may be eligible, in the hands of the corporate shareholders, for the corporate
dividends-received deduction, subject to certain holding period requirements and
debt financing limitations.
It is expected that the Fund will be subject to foreign withholding taxes with
respect to dividends or interest received from sources in foreign countries. The
Fund may make an election to treat a proportionate amount of these taxes as
constituting a distribution to each shareholder, which would allow each
shareholder either (1) to credit this proportionate amount of taxes against U.S.
federal income tax liability or (2) to take this amount as an itemized
deduction.
STATE AND LOCAL TAXES
Shareholders may also be subject to state and local taxes on distributions,
redemptions and exchanges. State income taxes may not apply, however, to the
portions of the Fund's distributions, if any, that are attributable to interest
on U.S. Government securities.
MISCELLANEOUS
The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. You should consult your tax
adviser for further information regarding federal, state, local and/or foreign
tax consequences relevant to your specific situation.
17
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[Back Cover Page]
Where to find more information
You'll find more information about the Fund in the following documents:
ANNUAL AND SEMI-ANNUAL REPORTS
Galaxy's annual and semi-annual reports will contain more information about the
Fund and a discussion about the market conditions and investment strategies that
had a significant effect on the Fund's performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains detailed information about the Fund and its policies. By law,
it is incorporated by reference into (considered to be part of) this prospectus.
You can get a free copy of these documents, request other information about the
Fund and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or by writing to:
The Galaxy Fund
P.O. Box 6520
Providence, RI 02940-6520
If you buy your shares through a financial institution, you may contact your
institution for more information.
You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Fund, including the SAI.
They'll charge you a fee for this service. You can also visit the SEC Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.
Public Reference Section of the SEC
Washington, DC 20549-0102
1-202-942-8090.
Reports and other information about the Fund are also available on the EDGAR
Database on the SEC's Web site at http://www.sec.gov. Copies of this information
may also be obtained, after paying a duplicating fee, by electronic request to
the SEC's e-mail address at [email protected].
Galaxy's Investment Company Act File No. is 811-4636.
[Fleet assigned code]
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITTIONAL INFORMATION
MAY 31, 2000
Information contained herein is subject to completion or amendment. A
Post-Effective Amendment relating to the Prime A Shares and Prime B Shares of
the Galaxy Pan Asia Fund has been filed with the Securities and Exchange
Commission. These Prime A Shares and Prime B Shares may not be sold nor may
any offers to buy be accepted prior to the time the Post-Effective Amendment
becomes effective. This Statement of Additional Information does not
constitute a Prospectus.
THE GALAXY FUND
STATEMENT OF ADDITIONAL INFORMATION
______________, 2000
GALAXY PAN ASIA FUND
PRIME A SHARES AND PRIME B SHARES
This Statement of Additional Information is not a prospectus. It relates to
the prospectus for the Prime A Shares and Prime B Shares of the Galaxy Pan Asia
Fund (the "Fund"), as it may be supplemented or revised from time to time (the
"Prospectus"). The Prospectus may be obtained, without charge, by writing:
The Galaxy Fund
P.O. Box 6520
Providence, RI 02940-6520
or by calling 1-877-BUY-GALAXY (1-877-289-4252)
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION............................................................1
DESCRIPTION OF GALAXY AND ITS SHARES...........................................1
INVESTMENT STRATEGIES, POLICIES AND RISKS......................................4
Special Risk Considerations................................................5
Foreign Securities.........................................................5
Other Investment Policies and Risk Considerations..........................5
Ratings....................................................................5
U.S. Government Obligations and Money Market Instruments...................6
Variable and Floating Rate Obligations.....................................8
Repurchase and Reverse Repurchase Agreements...............................8
Securities Lending.........................................................9
Investment Company Securities..............................................9
Derivative Securities.....................................................10
American, European and Global Depository Receipts.........................15
Convertible Securities....................................................16
When-Issued Transactions..................................................16
Restricted and Illiquid Securities........................................17
Portfolio Turnover........................................................18
INVESTMENT LIMITATIONS........................................................18
VALUATION OF PORTFOLIO SECURITIES.............................................21
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................21
Purchases of Prime A Shares and Prime B Shares............................21
General...................................................................21
Applicable Sales Charge - Prime A Shares..................................22
Computation of Offering Price - Prime A Shares............................23
Quantity Discounts........................................................24
Applicable Sales Charge - Prime B Shares..................................26
Characteristics of Prime A Shares and Prime B Shares......................27
Factors to Consider When Selecting Prime A Shares or Prime B Shares.......28
Redemption of Prime A Shares and Prime B Shares...........................29
EXCHANGE PRIVILEGE............................................................29
TAXES.........................................................................30
Taxation of Certain Financial Instruments and Investments.................31
TRUSTEES AND OFFICERS.........................................................31
Shareholder and Trustee Liability.........................................35
INVESTMENT ADVISER AND SUB-ADVISER............................................36
Administrator.................................................................37
CUSTODIAN AND TRANSFER AGENT..................................................38
EXPENSES......................................................................39
PORTFOLIO TRANSACTIONS........................................................39
DISTRIBUTION PLANS............................................................40
PRIME A SHARES PLAN...........................................................40
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PRIME B SHARES PLAN...........................................................41
BOTH DISTRIBUTION PLANS.......................................................41
DISTRIBUTOR...................................................................42
AUDITORS......................................................................43
COUNSEL.......................................................................43
CODES OF ETHICS...............................................................43
PERFORMANCE AND YIELD INFORMATION.............................................43
Performance Reporting.....................................................45
MISCELLANEOUS.................................................................47
APPENDIX A...................................................................A-1
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GENERAL INFORMATION
This Statement of Additional Information should be read in conjunction
with a current Prospectus. This Statement of Additional Information relates to
the Prospectus for Prime A Shares and Prime B Shares of the Galaxy Pan Asia Fund
(the "Fund"). The Fund also offers Trust Shares, Retail A Shares and Retail B
Shares, which are described in a separate statement of additional information
and related prospectuses. This Statement of Additional Information is
incorporated by reference in its entirety into the Prospectus. No investment in
shares of the Fund should be made without reading the Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, FLEETBOSTON FINANCIAL CORPORATION OR ANY OF ITS AFFILIATES, FLEET
INVESTMENT ADVISORS INC., OR ANY FLEET BANK. SHARES OF THE FUND ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS OR OTHER FACTORS SO THAT SHARES
OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.
DESCRIPTION OF GALAXY AND ITS SHARES
The Galaxy Fund ("Galaxy") is an open-end management investment company
currently offering shares of beneficial interest in thirty-seven investment
portfolios: Money Market Fund, Government Fund, U.S. Treasury Fund, Tax-Exempt
Fund, Connecticut Municipal Money Market Fund, Massachusetts Municipal Money
Market Fund, Institutional Money Market Fund, Institutional Government Money
Market Fund, Institutional Treasury Money Market Fund, Prime Reserves,
Government Reserves, Tax-Exempt Reserves, Equity Value Fund, Equity Growth Fund,
Growth Fund II, Equity Income Fund, International Equity Fund, Pan Asia Fund,
Small Company Equity Fund, Asset Allocation Fund, Small Cap Value Fund, Growth
and Income Fund, Strategic Equity Fund, Short-Term Bond Fund, Intermediate
Government Income Fund, High Quality Bond Fund, Corporate Bond Fund, Tax-Exempt
Bond Fund, Intermediate Tax-Exempt Bond Fund, New Jersey Municipal Bond Fund,
New York Municipal Bond Fund, Connecticut Municipal Bond Fund, Connecticut
Intermediate Municipal Bond Fund, Massachusetts Municipal Bond Fund,
Massachusetts Intermediate Municipal Bond Fund, Rhode Island Municipal Bond Fund
and Florida Municipal Bond Fund. Galaxy is also authorized to issue shares of
beneficial interest in two additional investment portfolios, the MidCap Equity
Fund and the New York Municipal Money Market Fund. As of the date of this
Statement of Additional Information, however, the MidCap Equity Fund and the New
York Municipal Money Market Fund had not commenced investment operations.
Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares
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into one or more classes or series of shares by setting or changing in any one
or more respects their respective preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption. Pursuant to such authority, the Board of
Trustees has authorized the issuance of an unlimited number of shares in each of
the series in the Fund as follows: Class NN - Series 1 shares (Trust Shares),
Class NN - Series 2 shares (Retail A Shares), Class NN - Series 3 shares (Retail
B Shares), Class NN - Series 4 shares (Prime A Shares) and Class NN - Series 5
shares (Prime B Shares), each series representing interests in the Pan Asia
Fund. The Fund is classified as a diversified company under the Investment
Company Act of 1940, as amended (the "1940 Act").
Each share of Galaxy (irrespective of series designation) has a par value
of $.001 per share, represents an equal proportionate interest in the related
investment portfolio with other shares of the same class (irrespective of series
designation), and is entitled to such dividends and distributions out of the
income earned on the assets belonging to such investment portfolio as are
declared in the discretion of Galaxy's Board of Trustees.
Shares have no preemptive rights and only such conversion or exchange
rights as the Board of Trustees may grant in its discretion. When issued for
payment as described in the Prospectuses, shares will be fully paid and
non-assessable. Each series of shares in the Fund (i.e., Retail A Shares, Retail
B Shares, Prime A Shares, Prime B Shares and Trust Shares) bear pro rata the
same expenses and are entitled equally to the Fund's dividends and distributions
except as follows. Each series will bear the expenses of any distribution and/or
shareholder servicing plans applicable to such series. For example, as described
below, holders of Prime A Shares will bear the expenses of the Distribution Plan
for Prime A Shares and holders of Prime B Shares will bear the expenses of the
Distribution and Services Plan for Prime B Shares. In addition, each series may
incur differing transfer agency fees and may have differing sales charges.
Standardized yield and total return quotations are computed separately for each
series of shares. The differences in expenses paid by the respective series will
affect their performance. See "Distribution Plan" and "Distribution and Services
Plan" below.
In the event of a liquidation or dissolution of Galaxy or the Fund,
shareholders of the Fund would be entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based upon
the relative asset values of the Fund and Galaxy's other portfolios, of any
general assets of Galaxy not belonging to any particular portfolio, which are
available for distribution. Shareholders of the Fund are entitled to participate
in the net distributable assets of the Fund based on the number of shares of the
Fund that are held by each shareholder, except that each series of the Fund
would be solely responsible for the Fund's payments under any distribution
and/or shareholder servicing plan applicable to such series.
Holders of all outstanding shares of the Fund will vote together in the
aggregate and not by series on all matters, except that only shares of a
particular series of the Fund will be entitled to vote on matters submitted to a
vote of shareholders pertaining to any distribution and/or shareholder servicing
plan for such series (e.g., only Prime A Shares of the Fund will be entitled to
vote on matters
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<PAGE>
submitted to a vote of shareholders pertaining to Galaxy's Distribution Plan for
Prime A Shares and only Prime B Shares of the Fund will be entitled to vote on
matters submitted to a vote of shareholders pertaining to Galaxy's Distribution
and Services Plan for Prime B Shares). Further, shareholders of the Fund, as
well as those of any other investment portfolio now or hereafter offered by
Galaxy, will vote together in the aggregate and not separately on a
portfolio-by-portfolio basis, except as otherwise required by law or when
permitted by the Board of Trustees. Rule 18f-2 under the 1940 Act provides that
any matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as Galaxy shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding shares of the portfolio affected by the matter. The Fund is deemed
to be affected by a matter unless it is clear that the interests of each
portfolio in the matter are substantially identical or that the matter does not
affect any interest of the Fund. Under the Rule, the approval of an investment
advisory agreement or any change in an investment objective or a fundamental
investment policy would be effectively acted upon with respect to the Fund only
if approved by a majority of the outstanding shares of the Fund (irrespective of
series designation). However, the Rule also provides that the ratification of
the appointment of independent public accountants, the approval of principal
underwriting contracts, and the election of trustees may be effectively acted
upon by shareholders of Galaxy voting without regard to class or series.
Shareholders are entitled to one vote for each full share held, and a
proportionate fractional vote for each fractional share held, and will vote in
the aggregate and not by class or series, except as otherwise expressly required
by law or when the Board of Trustees determines that the matter to be voted on
affects only the interests of shareholders of a particular class or series.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
in the aggregate of Galaxy's outstanding shares may elect all of the trustees,
irrespective of the votes of other shareholders.
Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees. Galaxy's Declaration of Trust provides that a
meeting of shareholders shall be called by the Board of Trustees upon a written
request of shareholders owning at least 10% of the outstanding shares of Galaxy
entitled to vote.
Galaxy's Declaration of Trust authorizes the Board of Trustees, without
shareholder approval (unless otherwise required by applicable law), to (a) sell
and convey the assets of the Fund to another management investment company for
consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding shares of the Fund to be redeemed
at a price which is equal to their net asset value and which may be paid in cash
or by distribution of the securities or other consideration received from the
sale and conveyance; (b) sell and convert the Fund's assets into money and, in
connection therewith, to cause all outstanding shares of the Fund to be redeemed
at their net asset value; or (c) combine the assets belonging to the Fund with
the assets belonging to another portfolio of Galaxy and, in connection
therewith, to cause all outstanding shares of the Fund to be redeemed at their
net asset value or converted into shares of another class of Galaxy's shares at
the net asset value. In the event that shares are redeemed in cash at their net
asset value, a shareholder may receive in payment for such shares, due to
changes in the market prices of the Fund's portfolio securities, an
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<PAGE>
amount that is more or less than the original investment. The exercise of such
authority by the Board of Trustees will be subject to the provisions of the 1940
Act, and the Board of Trustees will not take any action described in this
paragraph unless the proposed action has been disclosed in writing to the Fund's
shareholders at least 30 days prior thereto.
INVESTMENT STRATEGIES, POLICIES AND RISKS
Fleet Investment Advisors Inc. ("Fleet"), the Fund's investment adviser,
and UOB Global Capital LLC ("UOBGC"), the Fund's sub-adviser, will use their
best efforts to achieve the Fund's investment objective, although such
achievement cannot be assured. The investment objective of the Fund as described
in its Prospectus may not be changed without the approval of the holders of a
majority of its outstanding shares (as defined under "Miscellaneous"). Except as
noted below under "Investment Limitations," the Fund's investment policies may
be changed without shareholder approval. An investor should not consider an
investment in the Fund to be a complete investment program. The following
investment strategies, policies and risks supplement those set forth in the
Fund's Prospectus.
The Fund invests in common stock and may invest in other securities with
equity characteristics, consisting of trust or limited partnership interests,
preferred stock, rights and warrants. The Fund may also invest in convertible
securities, consisting of debt securities or preferred stock that may be
converted into common stock or that carry the right to purchase common stock.
See "Other Investment Policies and Risk Considerations -- Convertible
Securities" below. The Fund invests in securities listed on foreign or domestic
securities exchanges and securities traded in foreign or domestic
over-the-counter markets, and may invest in unlisted securities.
Securities issued in certain countries are currently accessible to the
Fund only through investment in other investment companies that are specifically
authorized to invest in such securities. The limitations on the Fund's
investment in other investment companies are described below under "Other
Investment Policies and Risk Considerations -- Investment Company Securities."
Subject to applicable securities regulations, the Fund may, for the
purpose of hedging its portfolio, purchase and write covered call options on
specific portfolio securities and may purchase and write put and call options on
foreign stock indexes listed on foreign and domestic stock exchanges. The Fund
may also enter into foreign currency exchange contracts to hedge against
currency risk. In addition, the Fund may invest up to 100% of its total assets
in securities of foreign issuers in the form of ADRs, EDRs or GDRs as described
under "Other Investment Policies and Risk Considerations -- American, European
and Global Depository Receipts." Furthermore, the Fund may purchase and sell
securities on a when-issued basis.
See "Other Investment Policies and Risk Considerations" below regarding
additional investment policies of the Fund.
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<PAGE>
SPECIAL RISK CONSIDERATIONS
FOREIGN SECURITIES
Investments in foreign securities may involve higher costs than
investments in U.S. securities, including higher transaction costs, as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with currency exchange
rates, less complete financial information about the issuers, less market
liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions, might adversely affect the payment of dividends or principal and
interest on foreign obligations.
Although the Fund may invest in securities denominated in foreign
currencies, the Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of the Fund's shares may fluctuate with U.S.
dollar exchange rates as well as with price changes of the Fund's securities in
the various local markets and currencies. Thus, an increase in the value of the
U.S. dollar compared to the currencies in which the Fund makes its investments
could reduce the effect of increases and magnify the effect of decreases in the
price of the Fund's securities in their local markets. Conversely, a decrease in
the value of the U.S. dollar will have the opposite effect of magnifying the
effect of increases and reducing the effect of decreases in the prices of the
Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on convertibility
of currency.
Certain of the risks associated with investments in foreign securities are
heightened with respect to investments in countries with emerging economies or
emerging securities markets. The risks of expropriation, nationalization and
social, political and economic instability are greater in those countries than
in more developed capital markets.
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
Investment methods described in the Prospectus and this Statement of
Additional Information are among those which the Fund has the power to utilize.
Some may be employed on a regular basis; others may not be used at all.
Accordingly, reference to any particular method or technique carries no
implication that it will be utilized or, if it is, that it will be successful.
RATINGS
The Fund may only purchase debt securities rated "A" or higher by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P")
or, if unrated, determined by Fleet or UOBGC to be of comparable quality.
Issuers of commercial paper, bank obligations or repurchase agreements in which
the Fund invests must have, at the time of investment,
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<PAGE>
outstanding debt rated A or higher by Moody's or S&P, or, if they are not rated,
the instrument purchased must be determined to be of comparable quality.
Subsequent to its purchase by the Fund, an issue of securities may cease
to be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Board of Trustees or Fleet or UOBGC, as the case may
be, may determine that it is appropriate for the Fund to continue to hold the
obligation if retention is in accordance with the interests of the Fund and
applicable regulations of the Securities and Exchange Commission ("SEC").
However, the Fund will sell promptly any security that is not rated investment
grade by either S&P or Moody's if such securities exceed 5% of the Fund's net
assets.
U.S. GOVERNMENT OBLIGATIONS AND MONEY MARKET INSTRUMENTS
The Fund may, in accordance with its investment policies, invest from time
to time in obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and in other money market instruments, including but not
limited to bank obligations, commercial paper and corporate bonds with remaining
maturities of 397 days or less.
Examples of the types of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (hereinafter, "U.S. Government
obligations") that may be held by the Fund include, without limitation, direct
obligations of the U.S. Treasury, and securities issued or guaranteed by the
Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, Government National Mortgage
Association, Federal National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Resolution Trust Corporation and
Maritime Administration.
U.S. Treasury securities differ only in their interest rates, maturities
and time of issuance: Treasury Bills have initial maturities of one year or
less; Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of more than ten years. Obligations of
certain agencies and instrumentalities of the U.S. Government, such as those of
the Government National Mortgage Association, are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, are supported by the right of the issuer to borrow from the Treasury;
others, such as those of the Federal National Mortgage Association, are
supported by the discretionary authority of the U.S. Government to purchase the
agency's obligations; still others, such as those of the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the instrumentality.
No assurance can be given that the U.S. Government would provide financial
support to U.S. Government-sponsored instrumentalities if it is not obligated to
do so by law. Some of these instruments may be variable or floating rate
instruments.
Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits issued for a definite period of time
and earning a specified return by a U.S. bank which is a member of the Federal
Reserve System or is insured by the Federal Deposit
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<PAGE>
Insurance Corporation ("FDIC"), or by a savings and loan association or savings
bank which is insured by the FDIC. Bank obligations also include U.S.
dollar-denominated obligations of foreign branches of U.S. banks or of U.S.
branches of foreign banks, all of the same type as domestic bank obligations.
Investments in bank obligations are limited to the obligations of financial
institutions having more than $1 billion in total assets at the time of
purchase. Time deposits with a maturity longer than seven days or that do not
provide for payment within seven days after notice will be limited to 10% of the
Fund's net assets. Investments by the Fund in non-negotiable time deposits are
limited to no more than 5% of the Fund's total assets at the time of purchase.
Domestic and foreign banks are subject to extensive but different
government regulation which may limit the amount and types of their loans and
the interest rates that may be charged. In addition, the profitability of the
banking industry is largely dependent upon the availability and cost of funds to
finance lending operations and the quality of underlying bank assets.
Investments in obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks may subject the Fund to additional risks, including
future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of foreign governmental restrictions which might adversely affect the
payment of principal and interest on such obligations. In addition, foreign
branches of U.S. banks and U.S. branches of foreign banks may be subject to less
stringent reserve requirements and to different accounting, auditing, reporting
and recordkeeping standards than those applicable to domestic branches of U.S.
banks. Such investments may also subject the Fund to investment risks similar to
those accompanying direct investments in foreign securities. See "Special Risk
Considerations -- Foreign Securities." The Fund will invest in the obligations
of U.S. branches of foreign banks or foreign branches of U.S. banks only when
Fleet and/or UOBGC believe that the credit risk with respect to the instrument
is minimal.
Commercial paper may include variable and floating rate instruments which
are unsecured instruments that permit the indebtedness thereunder to vary.
Variable rate instruments provide for periodic adjustments in the interest rate.
Floating rate instruments provide for automatic adjustment of the interest rate
whenever some other specified interest rate changes. Some variable and floating
rate obligations are direct lending arrangements between the purchaser and the
issuer and there may be no active secondary market. However, in the case of
variable and floating rate obligations with a demand feature, the Fund may
demand payment of principal and accrued interest at a time specified in the
instrument or may resell the instrument to a third party. In the event that an
issuer of a variable or floating rate obligation defaulted on its payment
obligation, the Fund might be unable to dispose of the note because of the
absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default. The Fund may also purchase Rule 144A
securities. See "Investment Limitations" below.
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VARIABLE AND FLOATING RATE OBLIGATIONS
The Fund may purchase variable and floating rate instruments in accordance
with its investment objectives and policies as described in the Prospectus and
this Statement of Additional Information. If such an instrument is not rated,
Fleet or UOBGC must determine that such instrument is comparable to rated
instruments eligible for purchase by the Fund and will consider the earning
power, cash flows and other liquidity ratios of the issuers and guarantors of
such instruments and will continuously monitor their financial status in order
to meet payment on demand.
In determining average weighted portfolio maturity, an instrument will
usually be deemed to have a maturity equal to the longer of the period remaining
until the next regularly scheduled interest rate adjustment or the time the Fund
can receive payment of principal as specified in the instrument. Instruments
which are U.S. Government obligations and certain variable rate instruments
having a nominal maturity of 397 days or less when purchased by the Fund,
however, will be deemed to have a maturity equal to the period remaining until
the next interest rate adjustment.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
The Fund may purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually specified date and price ("repurchase
agreements"). Repurchase agreements will be entered into only with financial
institutions such as banks and broker/dealers which are deemed to be
creditworthy by Fleet and/or UOBGC. The Fund will not enter into repurchase
agreements with Fleet or UOBGC or any of their affiliates. Unless a repurchase
agreement has a remaining maturity of seven days or less or may be terminated on
demand upon notice of seven days or less, the repurchase agreement will be
considered an illiquid security and will be subject to the 15% limit described
below in Investment Limitation No. 3 under "Investment Limitations."
The seller under a repurchase agreement will be required to maintain the
value of the securities which are subject to the agreement and held by the Fund
at not less than the agreed upon repurchase price. If the seller defaulted on
its repurchase obligation, the Fund would suffer a loss to the extent that the
proceeds from a sale of the underlying securities (including accrued interest)
were less than the repurchase price (including accrued interest) under the
agreement. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action.
The repurchase price under a repurchase agreement generally equals the
price paid by the Fund plus interest negotiated on the basis of current
short-term rates (which may be more or less than the rate on the securities
underlying the repurchase agreement). Securities subject to a repurchase
agreement will be held by the Fund's custodian or sub-custodian in a segregated
account or in the Federal Reserve/Treasury book-entry system. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act.
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The Fund may also borrow funds for temporary purposes by selling portfolio
securities to financial institutions such as banks and broker/dealers and
agreeing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). Reverse repurchase agreements involve the risk that the
market value of the securities sold by the Fund may decline below the repurchase
price. The Fund would pay interest on amounts obtained pursuant to a reverse
repurchase agreement. Whenever the Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account liquid assets such as
cash or liquid portfolio securities equal to the repurchase price (including
accrued interest). The Fund will monitor the account to ensure such equivalent
value is maintained. Reverse repurchase agreements are considered to be
borrowings by the Fund under the 1940 Act.
SECURITIES LENDING
The Fund may lend its portfolio securities to financial institutions such
as banks and broker/dealers in accordance with the investment limitations
described below. Such loans would involve risks of delay in receiving additional
collateral or in recovering the securities loaned or even loss of rights in the
collateral, should the borrower of the securities fail financially. Any
portfolio securities purchased with cash collateral would also be subject to
possible depreciation. The Fund would continue to accrue interest on the
securities loaned and would also earn income on the loans. Any cash collateral
received by the Fund would be invested in high quality, short-term "money
market" instruments. Loans will generally be short-term, will be made only to
borrowers deemed by Fleet and/or UOBGC to be of good standing and only when, in
Fleet's and/or UOBGC's judgment, the income to be earned from the loan justifies
the attendant risks. The Fund currently intends to limit the lending of its
portfolio securities so that, at any given time, securities loaned by the Fund
represent not more than one-third of the value of its total assets.
INVESTMENT COMPANY SECURITIES
The Fund may invest in securities issued by other investment companies
which invest in high quality, short-term debt securities and which determine
their net asset value per share based on the amortized cost or penny-rounding
method. The Fund may also purchase shares of investment companies investing
primarily in foreign securities, including so-called "country funds." Country
funds have portfolios consisting primarily of securities of issuers located in
one foreign country. Investments in other investment companies will cause the
Fund (and, indirectly, the Fund's shareholders) to bear proportionately the
costs incurred in connection with the investment companies' operations.
Securities of other investment companies will be acquired by the Fund within the
limits prescribed by the 1940 Act. The Fund currently intends to limit its
investments so that, as determined immediately after a securities purchase is
made: (a) not more than 5% of the value of its total assets will be invested in
the securities of any one investment company; (b) not more than 10% of the value
of its total assets will be invested in the aggregate in securities of other
investment companies as a group; (c) not more than 3% of the outstanding voting
stock of any one investment company will be owned by the Fund; and (d) not more
than 10% of the outstanding voting stock of any one closed-end investment
company will be owned in
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the aggregate by the Fund, other investment portfolios of Galaxy, or any other
investment companies advised by Fleet or UOBGC.
DERIVATIVE SECURITIES
The Fund may from time to time, in accordance with its investment
policies, purchase certain "derivative" securities. Derivative securities are
instruments that derive their value from the performance of underlying assets,
interest or currency exchange rates, or indices, and include, but are not
limited to, put and call options, stock index futures and options, indexed
securities and swap agreements, foreign currency exchange contracts and certain
asset-backed and mortgage-backed securities.
Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest or exchange rates or indices will
decline; credit risk that the dealer or other counterparty to the transaction
will fail to pay its obligations; volatility and leveraging risk that, if
interest or exchange rates change adversely, the value of the derivative
security will decline more than the assets, rates or indices on which it is
based; liquidity risk that the Fund will be unable to sell a derivative security
when it wants to because of lack of market depth or market disruption; pricing
risk that the value of a derivative security will not correlate exactly to the
value of the underlying assets, rates or indices on which it is based; and
operations risk that loss will occur as a result of inadequate systems and
controls, human error or otherwise. Some derivative securities are more complex
than others, and for those instruments that have been developed recently, data
are lacking regarding their actual performance over complete market cycles.
Fleet and/or UOBGC will evaluate the risks presented by the derivative
securities purchased by the Fund, and will determine, in connection with their
day-to-day management of the Fund, how such securities will be used in
furtherance of the Fund's investment objectives. It is possible, however, that
Fleet's and/or UOBGC's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Fund will, because
of the risks discussed above, incur loss as a result of their investments in
derivative securities.
WRITING COVERED OPTIONS. The Fund may write (sell) covered call and put
options on any securities in which it may invest. A call option written by the
Fund obligates it to sell specified securities to the holder of the option at a
specified price if the option is exercised at any time before the expiration
date. All call options written by the Fund are covered, which means that the
Fund will own the securities subject to the option as long as the option is
outstanding or the Fund will use the other methods described below. The Fund's
purpose in writing covered call options is to realize greater income than would
be realized on portfolio securities transactions alone. However, the Fund may
forego the opportunity to profit from an increase in the market price of the
underlying security.
A put option written by the Fund would obligate the Fund to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. All put options written by
the Fund would be covered, which means that the
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Fund will segregate cash or liquid assets with a value at least equal to the
exercise price of the put option or will use the other methods described below.
The purpose of writing such options is to generate additional income for the
Fund. However, in return for the option premium, the Fund accepts the risk that
it may be required to purchase the underlying securities at a price in excess of
the securities' market value at the time of purchase.
Call and put options written by the Fund will also be considered to be
covered to the extent that the Fund's liabilities under such options are wholly
or partially offset by its rights under call and put options purchased by the
Fund or by an offsetting forward contract which, by virtue of its exercise price
or otherwise, reduces a Fund's net exposure on its written option position.
The Fund may also write (sell) covered call and put options on any
securities index consisting of securities in which it may invest. Options on
securities indices are similar to options on securities, except that the
exercise of securities index options requires cash payments and does not involve
the actual purchase or sale of securities. In addition, securities index options
are designed to reflect price fluctuations in a group of securities or segment
of the securities market rather than price fluctuations in a single security.
The Fund may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying index,
or by having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional cash consideration which has
been segregated by the Fund) upon conversion or exchange of other securities in
its portfolio. The Fund may cover call and put options on a securities index by
segregating cash or liquid assets with a value equal to the exercise price.
The Fund may terminate its obligations under an exchange traded call or
put option by purchasing an option identical to the one it has written.
Obligations under over-the-counter options may be terminated only by entering
into an offsetting transaction with the counterparty to such option. Such
purchases are referred to as "closing purchase transactions."
PURCHASING OPTIONS. The Fund may purchase put and call options on any
securities in which it may invest or options on any securities index composed of
securities in which it may invest. The Fund would also be able to enter into
closing sale transactions in order to realize gains or minimize losses on
options it had purchased.
The Fund may purchase call options in anticipation of an increase in the
market value of securities of the type in which it may invest. The purchase of a
call option would entitle the Fund, in return for the premium paid, to purchase
specified securities at a specified price during the option period. The Fund
would ordinarily realize a gain if, during the option period, the value of such
securities exceeded the sum of the exercise price, the premium paid and
transaction costs; otherwise the Fund would realize either no gain or a loss on
the purchase of the call option.
The Fund may purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or in securities
in which it may invest. The purchase of
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a put option would entitle the Fund, in exchange for the premium paid, to sell
specified securities at a specified price during the option period. The purchase
of protective puts is designed to offset or hedge against a decline in the
market value of the Fund's securities. Put options may also be purchased by the
Fund for the purpose of affirmatively benefiting from a decline in the price of
securities which it does not own. The Fund would ordinarily realize a gain if,
during the option period, the value of the underlying securities decreased below
the exercise price sufficiently to more than cover the premium and transaction
costs; otherwise the Fund would realize either no gain or a loss on the purchase
of the put option. Gains and losses on the purchase of protective put options
would tend to be offset by countervailing changes in the value of the underlying
portfolio securities.
The Fund would purchase put and call options on securities indices for the
same purposes as it would purchase options on individual securities. For a
description of options on securities indices, see "Writing Covered Options"
above.
RISKS ASSOCIATED WITH OPTIONS TRANSACTIONS. There is no assurance that a
liquid secondary market on an options exchange will exist for any particular
exchange-traded option or at any particular time. If the Fund is unable to
effect a closing purchase transaction with respect to covered options it has
written, the Fund will not be able to sell the underlying securities or dispose
of segregated assets until the options expire or are exercised. Similarly, if
the Fund is unable to effect a closing sale transaction with respect to options
it has purchased, it will have to exercise the options in order to realize any
profit and will incur transaction costs upon the purchase or sale of underlying
securities.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options; (iv) unusual
or unforeseen circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or the Options Clearing Corporation may not at all
times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or in
that class or series of options) would cease to exist, although outstanding
options on that exchange that had been issued by the Options Clearing
Corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
The Fund may purchase and sell both options that are traded on U.S. and
foreign exchanges and options traded over-the-counter with broker-dealers who
make markets in these options. The ability to terminate over-the-counter options
is more limited than with exchange-traded options and may involve the risk that
broker-dealers participating in such transactions will not fulfill their
obligations.
Transactions by the Fund in options on securities and indices will be
subject to limitations established by each of the exchanges, boards of trade or
other trading facilities governing the
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maximum number of options in each class which may be written or purchased by a
single investor or group of investors acting in concert. Thus, the number of
options which the Fund may write or purchase may be affected by options written
or purchased by other investment advisory clients of Fleet and/or UOBGC. An
exchange, board of trade or other trading facility may order the liquidation of
positions found to be in excess of these limits, and it may impose certain other
sanctions.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The use of options to seek to
increase total return involves the risk of loss if Fleet and/or UOBGC is
incorrect in its expectation of fluctuations in securities prices or interest
rates. The successful use of options for hedging purposes also depends in part
on the ability of Fleet and/or UOBGC to manage future price fluctuations and the
degree of correlation between the options and securities markets. If Fleet
and/or UOBGC is incorrect in its expectation of changes in securities prices or
determination of the correlation between the securities indices on which options
are written and purchased and the securities in the Fund's investment portfolio,
the investment performance of the Fund will be less favorable than it would have
been in the absence of such options transactions. The writing of options could
increase the Fund's portfolio turnover rate and, therefore, associated brokerage
commissions or spreads.
OPTIONS ON FOREIGN STOCK INDEXES. The Fund may, for the purpose of hedging
its portfolio, subject to applicable securities regulations, purchase and write
put and call options on foreign stock indexes listed on foreign and domestic
stock exchanges. A stock index fluctuates with changes in the market values of
the stocks included in the index. Examples of foreign stock indexes are SIMEX
and Topix.
Options on stock indexes are generally similar to options on stock except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of stock at a specified price, an option on a stock index
gives the holder the right to receive a cash "exercise settlement amount" equal
to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being greater
than, in the case of a call, or less than, in the case of a put, the exercise
price of the option. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or the option may expire unexercised.
The effectiveness of purchasing or writing stock index options as a
hedging technique will depend upon the extent to which price movements in the
portion of the securities portfolio of the Fund correlate with price movements
of the stock index selected. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular stock,
whether the Fund realizes a gain or loss from the purchase or writing of options
on an index is dependent upon movements in the level of stock prices in the
stock market
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generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by the Fund of options on stock indexes will be subject to
Fleet's and/or UOBGC's ability to predict correctly movements in the direction
of the stock market generally or of a particular industry. This requires
different skills and techniques than predicting changes in the price of
individual stocks. There can be no assurance that such judgment will be accurate
or that the use of these portfolio strategies will be successful. The Fund will
engage in stock index options transactions that are determined to be consistent
with its efforts to control risk.
When the Fund writes an option on a stock index, the Fund will establish a
segregated account with its custodian or with a foreign sub-custodian in which
the Fund will deposit cash or other liquid assets in an amount equal to the
market value of the option, and will maintain the account while the option is
open.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the Fund may buy and sell
securities denominated in currencies other than the U.S. dollar, and may receive
interest, dividends and sale proceeds in currencies other than the U.S. dollar,
the Fund from time to time may enter into foreign currency exchange transactions
to convert the U.S. dollar to foreign currencies, to convert foreign currencies
to the U.S. dollar and to convert foreign currencies to other foreign
currencies. The Fund either enters into these transactions on a spot (I.E.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or uses forward contracts to purchase or sell foreign currencies. Forward
foreign currency exchange contracts are agreements to exchange one currency for
another -- for example, to exchange a certain amount of U.S. dollars for a
certain amount of Japanese yen -- at a future date, which may be any fixed
number of days from the date of the contract, and at a specified price.
Typically, the other party to a currency exchange contract will be a commercial
bank or other financial institution.
Forward foreign currency exchange contracts also allow the Fund to hedge
the currency risk of portfolio securities denominated in a foreign currency.
This technique permits the assessment of the merits of a security to be
considered separately from the currency risk. By separating the asset and the
currency decision, it is possible to focus on the opportunities presented by the
security apart from the currency risk. Although forward foreign currency
exchange contracts are of short duration, generally between one and twelve
months, such contracts are rolled over in a manner consistent with a more
long-term currency decision. Because there is a risk of loss to the Fund if the
other party does not complete the transaction, forward foreign currency exchange
contracts will be entered into only with parties approved by Galaxy's Board of
Trustees.
The Fund may maintain "short" positions in forward foreign currency
exchange transactions, which would involve the Fund's agreeing to exchange
currency that it currently does not own for another currency -- for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars -- at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund will establish with its
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custodian a segregated account consisting of cash or other liquid assets equal
in value to the fluctuating market value of the currency as to which the short
position is being maintained. The value of the securities in the segregated
account will be adjusted at least daily to reflect changes in the market value
of the short position.
Forward foreign currency exchange contracts establish an exchange rate at
a future date. These contracts are transferable in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward foreign currency exchange contract generally has no
deposit requirement and is traded at a net price without commission. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Fund's portfolio securities or in foreign
exchange rates, or prevent loss if the prices of these securities should
decline.
The Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated portfolio position. Since consideration of the prospect for
currency parities will be incorporated into the Fund's long-term investment
decisions, the Fund will not routinely enter into foreign currency hedging
transactions with respect to portfolio security transactions; however, it is
important to have the flexibility to enter into foreign currency hedging
transactions when it is determined that the transactions would be in the Fund's
best interest. Although these transactions tend to minimize the risk of loss due
to a decline in the value of the hedged currency, at the same time they tend to
limit any potential gain that might be realized should the value of the hedged
currency increase. The precise matching of the forward contract amounts and the
value of the securities involved will not generally be possible because the
future value of these securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
AMERICAN, EUROPEAN AND GLOBAL DEPOSITORY RECEIPTS
The Fund may invest in ADRs, EDRs and GDRs. ADRs are receipts issued in
registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. GDRs are
receipts structured similarly to EDRs and are marketed globally. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. GDRs are designed for trading in non-U.S. securities
markets. ADRs, EDRs and GDRs traded in the over-the-counter market which do not
have an active or substantial secondary market will be considered illiquid and
therefore will be subject to the Fund's limitations with respect to such
securities. If the Fund invests in an unsponsored ADR, EDR or GDR, there may be
less information available to the Fund concerning the issuer of the securities
underlying the unsponsored ADR, EDR or GDR than is available for an issuer of
securities underlying a
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sponsored ADR, EDR or GDR. ADR prices are denominated in U.S. dollars although
the underlying securities are denominated in a foreign currency. Investments in
ADRs, EDRs and GDRs involve risks similar to those accompanying direct
investments in foreign securities. Certain of these risks are described above
under "Special Risk Considerations -- Foreign Securities."
CONVERTIBLE SECURITIES
The Fund may from time to time, in accordance with its investment
policies, invest in convertible securities. Convertible securities are fixed
income securities which may be exchanged or converted into a predetermined
number of shares of the issuer's underlying common stock at the option of the
holder during a specified time period. Convertible securities may take the form
of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities.
Convertible bonds and convertible preferred stocks generally retain the
investment characteristics of fixed income securities until they have been
converted but also react to movements in the underlying equity securities. The
holder is entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to exercise the
conversion privilege. Usable bonds are corporate bonds that can be used in whole
or in part, customarily at full face value, in lieu of cash to purchase the
issuer's common stock. When owned as part of a unit along with warrants, which
are options to buy the common stock, they function as convertible bonds, except
that the warrants generally will expire before the bond's maturity. Convertible
securities are senior to equity securities and therefore have a claim to the
assets of the issuer prior to the holders of common stock in the case of
liquidation. However, convertible securities are generally subordinated to
similar non-convertible securities of the same issuer. The interest income and
dividends from convertible bonds and preferred stocks provide a stable stream of
income with generally higher yields than common stocks, but lower than
non-convertible securities of similar quality. The Fund will exchange or convert
the convertible securities held in its portfolio into shares of the underlying
common stock in instances in which, in Fleet's and/or UOBGC's opinion, the
investment characteristics of the underlying common shares will assist the Fund
in achieving its investment objective. Otherwise, the Fund will hold or trade
the convertible securities. In selecting convertible securities for the Fund,
Fleet and/or UOBGC evaluates the investment characteristics of the convertible
security as a fixed income instrument, and the investment potential of the
underlying equity security for capital appreciation. In evaluating these matters
with respect to a particular convertible security, Fleet and/or UOBGC considers
numerous factors, including the economic and political outlook, the value of the
security relative to other investment alternatives, trends in the determinants
of the issuer's profits, and the issuer's management capability and practices.
WHEN-ISSUED TRANSACTIONS
The Fund may purchase eligible securities on a "when-issued" basis.
When-issued transactions, which involve a commitment by the Fund to purchase or
sell particular securities
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with payment and delivery taking place at a future date (perhaps one or two
months later), permit the Fund to lock in a price or yield on a security it owns
or intends to purchase, regardless of future changes in interest rates.
When-issued transactions involve the risk, however, that the yield or price
obtained in a transaction may be less favorable than the yield or price
available in the market when the securities delivery takes place.
The Fund may dispose of a commitment prior to settlement if Fleet or
UOBGC, as the case may be, deems it appropriate to do so. In addition, the Fund
may enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
When the Fund agrees to purchase securities on a when-issued basis, the
Fund's custodian will set aside cash or liquid portfolio securities equal to the
amount of the commitment in a separate account. In the event of a decline in the
value of the securities that the custodian has set aside, the Fund may be
required to place additional assets in the separate account in order to ensure
that the value of the account remains equal to the amount of the Fund's
commitment. The Fund's net assets may fluctuate to a greater degree if it sets
aside portfolio securities to cover such purchase commitments than if it sets
aside cash.
When the Fund engages in when-issued transactions, it relies on the seller
to consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing an opportunity to obtain a price considered to be
advantageous for a security. For purposes of determining the average weighted
maturity of the Fund's portfolio, the maturity of when-issued securities is
calculated from the date of settlement of the purchase to the maturity date.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended (the "1933 Act"). Section 4(2) commercial paper is restricted
as to disposition under federal securities law and is generally sold to
institutional investors, such as the Fund, who agree that they are purchasing
the paper for investment purposes and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2)
commercial paper is normally resold to other institutional investors, like the
Fund, through or with the assistance of the issuer or investment dealers who
make a market in Section 4(2) commercial paper, thus providing liquidity. The
Fund believes that Section 4(2) commercial paper and possibly certain other
restricted securities that meet the criteria for liquidity established by
Galaxy's Board of Trustees are quite liquid. The Fund intends, therefore, to
treat the restricted securities that meet the criteria for liquidity established
by the Board of Trustees, including Section 4(2) commercial paper (as determined
by Fleet), as liquid and not subject to the investment limitation applicable to
illiquid securities. In addition, because Section 4(2) commercial paper is
liquid, the Fund does not intend to subject such paper to the limitation
applicable to restricted securities.
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<PAGE>
Rule 144A under the 1933 Act allows for a broader institutional trading
market for securities otherwise subject to restrictions on resale to the general
public. Rule 144A establishes a "safe harbor" from the registration requirements
of the 1933 Act for resales of certain securities to qualified institutional
buyers. The Fund's investment in Rule 144A securities could have the effect of
increasing the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the Fund's 15% limitation on purchases of illiquid instruments
described under "Investment Limitations" below, Rule 144A securities will not be
considered to be illiquid if Fleet and/or UOBGC has determined, in accordance
with guidelines established by the Board of Trustees, that an adequate trading
market exists for such securities.
PORTFOLIO TURNOVER
The Fund may sell a portfolio investment soon after its acquisition if
Fleet and/or UOBGC believes that such a disposition is consistent with the
Fund's investment objective. Portfolio investments may be sold for a variety of
reasons, such as a more favorable investment opportunity or other circumstances
bearing on the desirability of continuing to hold such investments. A portfolio
turnover rate of 100% or more is considered high, although the rate of portfolio
turnover will not be a limiting factor in making portfolio decisions. A high
rate of portfolio turnover involves correspondingly greater brokerage commission
expenses and other transaction costs, which must be ultimately borne by the
Fund's shareholders. High portfolio turnover may result in the realization of
substantial net capital gains.
INVESTMENT LIMITATIONS
In addition to the Fund's investment objective as stated in the
Prospectus, the following investment limitations are matters of fundamental
policy and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares (as defined under "Miscellaneous").
The Fund may not:
1. Make loans, except that (i) the Fund may purchase or hold debt
instruments in accordance with its investment objective and
policies, and may enter into repurchase agreements with
respect to portfolio securities, and (ii) the Fund may lend
portfolio securities against collateral consisting of cash or
securities which are consistent with its permitted
investments, where the value of the collateral is equal at all
times to at least 100% of the value of the securities loaned.
2. Borrow money or issue senior securities, except that the Fund
may borrow from domestic banks for temporary purposes and then
in amounts not in excess of 33% of the value of its total
assets at the time of such borrowing (provided that the Fund
may borrow pursuant to reverse repurchase
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<PAGE>
agreements in accordance with its investment policies and in
amounts not in excess of the value of its total assets at the
time of such borrowing); or mortgage, pledge, or hypothecate
any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts
borrowed or of the value of the Fund's total assets at the
time of such borrowing. The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in
excess of 5% of its total assets are outstanding.
3. Invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days, securities which are
restricted as to transfer in their principal market,
non-negotiable time deposits and other securities which are
not readily marketable.
4. Purchase securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, if immediately after such purchase more
than 5% of the value of the Fund's total assets would be
invested in such issuer, except that up to 25% of the value of
its total assets may be invested without regard to this
limitation.
5. Purchase securities on margin (except such short-term credits
as may be necessary for the clearance of purchases), make
short sales of securities, or maintain a short position.
6. Act as an underwriter within the meaning of the 1933 Act;
except insofar as the Fund might be deemed to be an
underwriter upon disposition of restricted portfolio
securities; and except to the extent that the purchase of
securities directly from the issuer thereof in accordance with
the Fund's investment objective, policies and limitations may
be deemed to be underwriting.
7. Purchase or sell real estate; except that the Fund may
purchase securities that are secured by real estate, and the
Fund may purchase securities of issuers which deal in real
estate or interests therein; however, the Fund will not
purchase or sell interests in real estate limited
partnerships.
8. Purchase or sell commodities or commodity contracts or invest
in oil, gas, or other mineral exploration or development
programs or mineral leases; provided however, that the Fund
may enter into forward currency contracts and foreign currency
futures contracts and related options to the extent permitted
by its investment objectives and policies.
9. Invest in or sell put options, call options, straddles,
spreads, or any combination thereof; provided, however, that
the Fund may write covered
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call and put options with respect to its portfolio securities
that are traded on a national securities exchange, and may
enter into closing purchase transactions with respect to such
options if, at the time of the writing of such options, the
aggregate value of the securities subject to the options
written by the Fund does not exceed 25% of the value of its
total assets; and further provided that the Fund may purchase
put and call options to the extent permitted by its investment
objectives and policies.
10. Invest in companies for the purpose of exercising management
or control.
11. Purchase securities of other investment companies except in
connection with a merger, consolidation, reorganization, or
acquisition of assets; provided, however, that the Fund may
acquire such securities in accordance with the 1940 Act.
In addition, the Fund may not purchase any securities which would cause
25% or more of the value of the Fund's total assets at the time of purchase to
be invested in the securities of one or more issuers conducting their principal
business activities in the same industry; provided, however that (a) there is no
limitation with respect to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, (b) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents, and
(c) utilities will be classified according to their services. (For example, gas,
gas transmission, electric and gas, electric and telephone each will be
considered a separate industry.)
With respect to Investment Limitation No. 2 above, the Fund intends to
limit any borrowings (including reverse repurchase agreements) to not more than
33% of the value of its total assets at the time of such borrowing.
With respect to Investment Limitation No. 4 above, the Fund does not
intend to acquire more than 10% of the outstanding voting securities of any one
issuer.
Except as stated otherwise, if a percentage limitation is satisfied at the
time of investment, a later increase in such percentage resulting from a change
in the value of the Fund's portfolio securities generally will not constitute a
violation of the limitation. If the value of the Fund's holdings of illiquid
securities at any time exceeds the percentage limitation applicable at the time
of acquisition due to subsequent fluctuations in value or other reasons, the
Board of Trustees will consider what actions, if any, are appropriate to
maintain adequate liquidity. With respect to borrowings, if the Fund's asset
coverage at any time falls below that required by the 1940 Act, the Fund will
reduce the amount of its borrowings in the manner required by the 1940 Act to
the extent necessary to satisfy the asset coverage requirement.
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<PAGE>
VALUATION OF PORTFOLIO SECURITIES
In determining market value, the Fund's portfolio securities which are
primarily traded on foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective exchanges,
except when an occurrence subsequent to the time a value was so established is
likely to have changed such value, in which case the fair value of those
securities may be determined through consideration of other factors by or under
the direction of Galaxy's Board of Trustees. Portfolio securities which are
primarily traded on a domestic exchange are valued at the last sale price on
that exchange or, if there is no recent sale, at the last current bid quotation.
A security which is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for such security.
Investments in debt securities having a remaining maturity of 60 days or less
are valued based upon the amortized cost method. All other securities are valued
at the last current bid quotation if market quotations are available, or at fair
value as determined in accordance with policies established in good faith by the
Board of Trustees. For valuation purposes, quotations of foreign securities in
foreign currency are converted to U.S. dollar equivalents at the prevailing
market rate on the day of valuation. An option is generally valued at the last
sale price or, in the absence of a last sale price, the last offer price.
Certain of the securities acquired by the Fund may be traded on foreign
exchanges or over-the-counter markets on days on which the Fund's net asset
value is not calculated. In such cases, the net asset value of the Fund's shares
may be significantly affected on days when investors can neither purchase nor
redeem shares of the Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in the Fund are sold on a continuous basis by Galaxy's distributor,
Provident Distributors, Inc. ("PDI"). PDI is a registered broker/dealer with its
principal offices at 3200 Horizon Drive, King of Prussia, PA 19406. PDI has
agreed to use appropriate efforts to solicit all purchase orders.
This Statement of Additional Information provides additional purchase and
redemption information for Prime A Shares and Prime B Shares of the Fund.
Purchase and redemption information for Retail A Shares, Retail B Shares and
Trust Shares of the Fund are provided in a separate statement of additional
information and related prospectuses.
PURCHASES OF PRIME A SHARES AND PRIME B SHARES
GENERAL
Investments in Prime A Shares of the Fund are subject to a front-end sales
charge. Investments in Prime B Shares of the Fund are subject to a back-end
sales charge. This back-end sales charge declines over time and is known as a
"contingent deferred sales charge."
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<PAGE>
Investors should read "Characteristics of Prime A Shares and Prime B
Shares" and "Factors to Consider When Selecting Prime A Shares or Prime B
Shares" below before deciding between the two.
Purchase orders for Prime A Shares and Prime B Shares are placed by
investors through selected broker/dealers. The broker/dealer is responsible for
transmitting its customers' purchase orders to PDI and wiring required funds in
payment to Galaxy's custodian on a timely basis. PDI is responsible for
transmitting such orders to Galaxy's transfer agent for execution. Shares
purchased by a broker/dealer on behalf of its customers will normally be held of
record by the broker/dealer and reflected in the account statements provided to
its customers. Depending on the terms of the arrangement between a particular
broker/dealer and Galaxy's transfer agent, confirmations of Prime A Share and/or
Prime B Share purchases and redemptions and pertinent account statements will be
sent by Galaxy's transfer agent directly to a shareholder with a copy to the
broker/dealer, or will be furnished directly to the shareholder by the
broker/dealer. Other procedures for the purchase of Prime A Shares and/or Prime
B Shares established by broker/dealers may apply. Purchases of Prime A Shares
and Prime B Shares will be effected only on days on which the New York Stock
Exchange is open for business ("business day"). On a business day when the New
York Stock Exchange closes early due to a partial holiday, or otherwise, Galaxy
will advance the time at which purchase orders must be received in order to be
processed on that business day.
APPLICABLE SALES CHARGE -- PRIME A SHARES
The public offering price for Prime A Shares of the Fund is the sum of the
net asset value of the Prime A Shares purchased plus any applicable front-end
sales charge as described in the applicable Prospectus. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Prime A Shares that are
purchased with no initial sales charge as part of an investment of $1,000,000 or
more. A portion of the front-end sales charge may be reallowed to broker-dealers
as follows:
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<PAGE>
<TABLE>
<CAPTION>
REALLOWANCE TO
DEALERS
AS A % OF
OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE
--------------------- ---------
<S> <C>
Less than $50,000 5.00%
$50,000 but less than $100,000 4.00%
$100,000 but less than $250,000 3.00%
$250,000 but less than $500,000 2.00%
$500,000 but less than $1,000,000 1.75%
$1,000,000 and over 0.00%
</TABLE>
The appropriate reallowance to dealers will be paid by PDI to
broker-dealer organizations which have entered into agreements with PDI. The
reallowance to dealers may be changed from time to time.
In certain situations or for certain individuals, the front-end sales
charge for Prime A Shares of the Fund may be waived either because of the nature
of the investor or the reduced sales effort required to attract such
investments. In order to receive the sales charge waiver, an investor must
explain the status of his or her investment at the time of purchase. In addition
to the sales charge waivers described in the applicable Prospectus, no sales
charge is assessed on purchases of Prime A Shares of the Fund by the following
categories of investors or in the following types of transactions:
- purchases by directors, officers and employees of broker-dealers
having agreements with PDI pertaining to the sale of Prime A Shares
to the extent permitted by such organizations;
- purchases by current and retired members of Galaxy's Board of
Trustees and members of their immediate families;
- purchases by officers, directors, employees and retirees of
FleetBoston Financial Corporation and any of its affiliates and
members of their immediate families;
- purchases by officers, directors, employees and retirees of PFPC
Inc. and members of their immediate families;
COMPUTATION OF OFFERING PRICE - PRIME A SHARES
An illustration of the computation of the offering price per share of
Prime A Shares of the Fund, on the date such Shares are first offered to the
public and the maximum front-end sales charge of 5.50%, is as follows:
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<PAGE>
<TABLE>
<S> <C>
Net Assets........................................... $ 10.00
Outstanding Shares................................... 1
Net Asset Value Per Share............................ $ 10.00
Sales Charge ( % of
the offering price).................................. $ 0.58
Offering Price to Public............................. $ 10.58
</TABLE>
QUANTITY DISCOUNTS
Investors may be entitled to reduced sales charges through Rights of
Accumulation, a Letter of Intent or a combination of investments, as described
below, even if the investor does not wish to make an investment of a size that
would normally qualify for a quantity discount.
In order to obtain quantity discount benefits, an investor's broker-dealer
must notify PDI at the time of purchase that he or she would like to take
advantage of any of the discount plans described below. Upon such notification,
the investor will receive the lowest applicable sales charge. Quantity discounts
may be modified or terminated at any time and are subject to confirmation of an
investor's holdings through a check of appropriate records. For more information
about quantity discounts, please contact your broker-dealer.
RIGHTS OF ACCUMULATION. A reduced sales charge applies to any purchase of
Prime A Shares of any portfolio of Galaxy that is sold with a sales charge
("Eligible Fund") where an investor's then current aggregate investment in Prime
A Shares is $50,000 or more. "Aggregate investment" means the total of: (a) the
dollar amount of the then current purchase of shares of an Eligible Fund; and
(b) the value (based on current net asset value) of previously purchased and
beneficially owned shares of any Eligible Fund on which a sales charge has been
paid. If, for example, an investor beneficially owns shares of one or more
Eligible Funds with an aggregate current value of $49,000 on which a sales
charge has been paid and subsequently purchases shares of an Eligible Fund
having a current value of $1,000, the sales charge applicable to the subsequent
purchase would be reduced to 4.50% of the offering price. Similarly, with
respect to each subsequent investment, all shares of Eligible Funds that are
beneficially owned by the investor at the time of investment may be combined to
determine the applicable sales charge.
LETTER OF INTENT. By completing the Letter of Intent included as part of
the Account Application, an investor becomes eligible for the reduced sales
charge applicable to the total number of Eligible Fund Prime A Shares purchased
in a 13-month period pursuant to the terms and under the conditions set forth
below and in the Letter of Intent. To compute the applicable sales charge, the
offering price of Prime A Shares of an Eligible Fund on which a sales charge has
been paid and that are beneficially owned by an investor on the date of
submission of the
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<PAGE>
Letter of Intent may be used as a credit toward completion of the Letter of
Intent. However, the reduced sales charge will be applied only to new purchases.
PFPC Inc. ("PFPC"), Galaxy's administrator, will hold in escrow Prime A
Shares equal to 5% of the amount indicated in the Letter of Intent for payment
of a higher sales charge if an investor does not purchase the full amount
indicated in the Letter of Intent. The escrow will be released when the investor
fulfills the terms of the Letter of Intent by purchasing the specified amount.
If purchases qualify for a further sales charge reduction, the sales charge will
be adjusted to reflect the investor's total purchases. If total purchases are
less than the amount specified, the investor will be requested to remit an
amount equal to the difference between the sales charge actually paid and the
sales charge applicable to the total purchases. If such remittance is not
received within 20 days, PFPC, as attorney-in-fact pursuant to the terms of the
Letter of Intent and at PDI's direction, will redeem an appropriate number of
Prime A Shares held in escrow to realize the difference. Signing a Letter of
Intent does not bind an investor to purchase the full amount indicated at the
sales charge in effect at the time of signing, but an investor must complete the
intended purchase in accordance with the terms of the Letter of Intent to obtain
the reduced sales charge. To apply, an investor must indicate his or her
intention to do so under a Letter of Intent at the time of purchase.
QUALIFICATION FOR DISCOUNTS. For purposes of applying the Rights of
Accumulation and Letter of Intent privileges described above, the scale of sales
charges applies to the combined purchases made by any individual and/or spouse
purchasing securities for his, her or their own account or for the account of
any minor children, or the aggregate investments of a trustee or custodian of
any qualified pension or profit-sharing plan established (or the aggregate
investment of a trustee or other fiduciary) for the benefit of the persons
listed above.
REINSTATEMENT PRIVILEGE. Investors may reinvest all or any portion of
their redemption proceeds in Prime A Shares of the Fund or in Prime A Shares of
another portfolio of Galaxy that offers Prime A Shares within 90 days of the
redemption trade date without paying a sales load. Prime A Shares so reinvested
will be purchased at a price equal to the net asset value next determined after
Galaxy's transfer agent receives a reinstatement request and payment in proper
form from the investor's broker-dealer on behalf of its client.
Broker-dealers wishing to exercise this Privilege on behalf of their
customers must submit a written reinstatement request to PFPC as transfer agent
stating that the customer is eligible to use the Privilege. The reinstatement
request and payment must be received within 90 days of the trade date of the
redemption. Currently, there are no restrictions on the number of times an
investor may use this Privilege.
Generally, exercising the Reinstatement Privilege will not affect the
character of any gain or loss realized on redemptions for federal income tax
purposes. However, if a redemption results in a loss, the reinstatement may
result in the loss being disallowed under the Code's "wash sale" rules.
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<PAGE>
APPLICABLE SALES CHARGE - PRIME B SHARES
The public offering price for Prime B Shares of the Fund is the net asset
value of the Prime B Shares purchased. Although investors pay no front-end sales
charge on purchases of Prime B Shares, such Shares are subject to a contingent
deferred sales charge at the rates set forth below if they are redeemed within
six years of purchase. Broker-dealers who have entered into agreements with PDI
will receive commissions from PDI in connection with sales of Prime B Shares.
These commissions may be different than the reallowances or placement fees paid
to dealers in connection with sales of Prime A Shares. The contingent deferred
sales charge on Prime B Shares is based on the lesser of the net asset value of
the Shares on the redemption date or the original cost of the Shares being
redeemed. As a result, no sales charge is imposed on any increase in the
principal value of an investor's Prime B Shares. In addition, a contingent
deferred sales charge will not be assessed on Prime B Shares purchased through
reinvestment of dividends or capital gains distributions.
When an investor redeems his or her Prime B Shares, the redemption request
is processed to minimize the amount of the contingent deferred sales charge that
will be charged. Prime B Shares are redeemed first from those shares that are
not subject to a contingent deferred sales charge (i.e., Prime B Shares that
were acquired through reinvestment of dividends or distributions or that qualify
for other deferred sales charge exemptions) and after that from the Prime B
Shares that have been held the longest.
The proceeds from the contingent deferred sales charge that an investor
may pay upon redemption go to PDI, which may use such amounts to defray the
expenses associated with the distribution-related services involved in selling
Prime B Shares.
EXEMPTIONS FROM THE CONTINGENT DEFERRED SALES CHARGE. Certain types of
redemptions may also qualify for an exemption from the contingent deferred
sales charge. To receive exemptions (i), (iv) or (viii) listed below, an
investor's broker-dealer must explain the status of the investor's redemption
at the time Prime B Shares are redeemed. In addition to the sales charge
exemptions described in the Prospectus, the contingent deferred sales charge
with respect to Prime B Shares is not assessed on: (i) exchanges described
under "investor Programs - Exchange Privilege" below; (ii) redemptions in
connection with required (or, in some cases, discretionary) distributions to
participants or beneficiaries of an employee pension, profit-sharing or other
trust or qualified retirement or Keogh plan, individual retirement account or
custodial account maintained pursuant to Section 403(b)(7) of the Code; (iii)
redemptions in connection with required (or, in some cases, discretionary)
distributions to participants in qualified retirement or Keogh plans,
individual retirement accounts or custodial accounts maintained pursuant to
Section 403(b)(7) of the Code due to death, disability or the attainment of a
specified age; (iv) redemptions effected pursuant to the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of Prime B
Shares held in the account is less than the minimum account size; (v)
redemptions in connection with the combination of the Fund with any other
investment company registered under the 1940 Act by merger, acquisition of
assets, or by any other transaction; (vi) redemptions resulting from a
tax-free return of an excess contribution pursuant to Section 408(d)(4) or
(5) of the Code; or (vii) any redemption of Prime B Shares held
-26-
<PAGE>
by an investor, provided the investor was the beneficial owner of shares of the
Fund (or any of the other portfolios offered by Galaxy or otherwise advised by
Fleet or its affiliates) before December 1, 1995.
CHARACTERISTICS OF PRIME A SHARES AND PRIME B SHARES
The primary difference between Prime A Shares and Prime B Shares lies in
their sales charge structures and shareholder servicing/distribution expenses.
An investor should understand that the purpose and function of the sales charge
structures and shareholder servicing/distribution arrangements for both Prime A
Shares and Prime B Shares are the same.
Prime A Shares of the Fund are sold at their net asset value plus a
front-end sales charge of up to 5.50%. This front-end sales charge may be
reduced or waived in some cases. See the applicable Prospectus and "Applicable
Sales Charges -- Prime A Shares" and "Quantity Discounts" above. Prime A Shares
of the Fund are currently subject to ongoing distribution fees at an annual rate
of up to .25% of the Fund's average daily net assets attributable to its Prime A
Shares.
Prime B Shares of the Fund are sold at net asset value without an initial
sales charge. Normally, however, a deferred sales charge is paid if the Shares
are redeemed within six years of investment. See the applicable Prospectus and
"Applicable Sales Charges - Prime B Shares" above. Prime B Shares of the Fund
are currently subject to ongoing shareholder servicing and distribution fees at
an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to its Prime B Shares. These ongoing fees, which are higher than
those charged on Prime A Shares, will cause Prime B Shares to have a higher
expense ratio and pay lower dividends than Prime A Shares.
Eight years after purchase, Prime B Shares of the Fund will convert
automatically to Prime A Shares of the Fund. The purpose of the conversion is to
relieve a holder of Prime B Shares of the higher ongoing expenses charged to
those shares, after enough time has passed to allow PDI to recover approximately
the amount it would have received if a front-end sales charge had been charged.
The conversion from Prime B Shares to Prime A Shares takes place at net asset
value, as a result of which an investor receives dollar-for-dollar the same
value of Prime A Shares as he or she had of Prime B Shares. The conversion
occurs eight years after the beginning of the calendar month in which the Shares
are purchased. Upon conversion, the converted shares will be relieved of the
distribution and shareholder servicing fees borne by Prime B Shares, although
they will be subject to the distribution fees borne by Prime A Shares.
Prime B Shares acquired through a reinvestment of dividends or
distributions (as discussed under "Applicable Sales Charge - Prime B Shares")
are also converted at the earlier of two dates - eight years after the beginning
of the calendar month in which the reinvestment occurred or the date of
conversion of the most recently purchased Prime B Shares that were not acquired
through reinvestment of dividends or distributions. For example, if an investor
makes a one-time purchase of Prime B Shares of the Fund, and subsequently
acquires additional Prime B Shares of the Fund only through reinvestment of
dividends and/or distributions, all of such
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<PAGE>
investor's Prime B Shares in the Fund, including those acquired through
reinvestment, will convert to Prime A Shares of the Fund on the same date.
FACTORS TO CONSIDER WHEN SELECTING PRIME A SHARES OR PRIME B SHARES
Before purchasing Prime A Shares or Prime B Shares of the Fund, investors
should consider whether, during the anticipated periods of their investments in
the Fund, the accumulated distribution and shareholder servicing fees and
potential contingent deferred sales charge on Prime B Shares prior to conversion
would be less than the initial sales charge and accumulated distribution fees on
Prime A Shares purchased at the same time, and to what extent such differential
would be offset by the higher yield of Prime A Shares. In this regard, to the
extent that the sales charge for Prime A Shares is waived or reduced by one of
the methods described above, investments in Prime A Shares become more
desirable. An investment of $250,000 or more in Prime B Shares would not be in
most shareholders' best interest. Shareholders should consult their financial
advisers and/or brokers with respect to the advisability of purchasing Prime B
Shares in amounts exceeding $250,000.
Although Prime A Shares are subject to a distribution fee, they are not
subject to the higher distribution and shareholder servicing fee applicable to
Prime B Shares. For this reason, Prime A Shares can be expected to pay
correspondingly higher dividends per Share. However, because initial sales
charges are deducted at the time of purchase, purchasers of Prime A Shares (that
do not qualify for exemptions from or reductions in the initial sales charge)
would have less of their purchase price initially invested in the Funds than
purchasers of Prime B Shares in the Fund.
As described above, purchasers of Prime B Shares will have more of their
initial purchase price invested. Any positive investment return on this
additional invested amount would partially or wholly offset the expected higher
annual expenses borne by Prime B Shares. Because the Fund's future returns
cannot be predicted, there can be no assurance that this will be the case.
Holders of Prime B Shares would, however, own shares that are subject to a
contingent deferred sales charge of up to 5.00% upon redemption, depending upon
the year of redemption. Investors expecting to redeem during this eight-year
period should compare the cost of the contingent deferred sales charge plus the
aggregate distribution and shareholder servicing fees on Prime B Shares to the
cost of the initial sales charge and distribution fees on the Prime A Shares.
Over time, the expense of the annual distribution and shareholder servicing fees
on the Prime B Shares may equal or exceed the initial sales charge and annual
distribution fees applicable to Prime A Shares. For example, if net asset value
remains constant, the aggregate distribution and shareholder servicing fees with
respect to Prime B Shares of the Fund would equal or exceed the initial sales
charge and aggregate distribution fees of Prime A Shares approximately eight
years after the purchase. In order to reduce such fees for investors that hold
Prime B Shares for more than eight years, Prime B Shares will be automatically
converted to Prime A Shares as described above at the end of such eight-year
period.
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<PAGE>
REDEMPTION OF PRIME A SHARES AND PRIME B SHARES
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by PDI. On a business day when the New
York Stock Exchange closes early due to a partial holiday or otherwise, Galaxy
will advance the time at which redemption orders must be received in order to be
processed on that business day. Galaxy reserves the right to transmit redemption
proceeds within seven days after receiving the redemption order if, in its
judgment, an earlier payment could adversely affect the Fund.
Galaxy may suspend the right of redemption or postpone the date of payment
for shares for more than seven days during any period when (a) trading in the
markets the Fund normally utilizes is restricted, or an emergency, as defined by
the rules and regulations of the SEC exists making disposal of the Fund's
investments or determination of its net asset value not reasonably practicable;
(b) the Exchange is closed (other than customary weekend and holiday closings);
or (c) the SEC by order has permitted such suspension.
If the Board of Trustees determines that conditions exist which make
payment of redemption proceeds wholly in cash unwise or undesirable, Galaxy may
make payment wholly or partly in securities or other property. Such redemptions
will only be made in "readily marketable" securities. In such an event, a
shareholder would incur transaction costs in selling the securities or other
property. However, Galaxy has filed an election with the SEC to pay in cash all
redemptions requested by a shareholder of record limited in amount during any
90-day period to the lesser of $250,000 or 1% of the net assets of the Fund at
the beginning of such period. Such commitment cannot be revoked without the
prior approval of the SEC.
EXCHANGE PRIVILEGE
A shareholder may, after appropriate prior authorization, exchange through
his or her broker-dealer Prime A Shares of a Fund having a value of at least
$100 for Prime A Shares of any of the other Funds, provided that such other
Prime A Shares may be sold legally in the state of the shareholder's residence.
A shareholder may exchange through his or her broker-dealer Prime B Shares of a
Fund for Prime B Shares of any of the other Funds, provided that such other
Prime B Shares may be sold legally in the state of the shareholder's residence.
No additional sales charges will be incurred when exchanging Prime A
Shares of a Fund for Prime A Shares of another Fund. Prime B Shares may be
exchanged without the payment of any contingent deferred sales charge at the
time the exchange is made. In determining the holding period for calculating the
contingent deferred sales charge payable on redemptions of Prime B Shares, the
holding period of Prime B Shares originally held will be added to the holding
period of the Prime B Shares acquired through exchange. Galaxy does not charge
an exchange fee. The minimum initial investment to establish an account in
another Fund or portfolio by exchange is $2,500.
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<PAGE>
An exchange involves a redemption of all or a portion of the Prime A
Shares or Prime B Shares of the Fund and the investment of the redemption
proceeds in Prime A Shares or Prime B Shares of another portfolio offered by
Galaxy. The redemption will be made at the per share net asset value next
determined after the exchange request is received. The Prime A Shares or Prime B
Shares of the portfolio to be acquired will be purchased at the per share net
asset value next determined after acceptance of the exchange request, plus any
applicable sales charge.
Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in the Fund. For
further information regarding Galaxy's exchange privilege, investors should
contact their broker-dealers.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, Galaxy reserves the right to terminate the exchange privilege of
any shareholder who requests more than three exchanges a year. Galaxy will
determine whether to do so based on a consideration of both the number of
exchanges that any particular shareholder or group of shareholders has requested
and the time period over which their exchange requests have been made, together
with the level of expense to Galaxy which will result from effecting additional
exchange requests. The exchange privilege may be modified or terminated at any
time. At least 60 days' notice of any material modification or termination will
be given to shareholders except where notice is not required under the
regulations of the SEC.
For federal income tax purposes, an exchange of shares is a taxable event
and, accordingly, a capital gain or loss may be realized by an investor. Before
making an exchange request, an investor should consult a tax or other financial
adviser to determine the tax consequences.
TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, and to distribute out its income to shareholders each
year, so that the Fund itself generally will be relieved of federal income and
excise taxes. If the Fund were to fail to so qualify: (1) the Fund would be
taxed at regular corporate rates without any deduction for distributions to
shareholders; and (2) shareholders would be taxed as if they received ordinary
dividends, although corporate shareholders could be eligible for the dividends
received deduction.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of each calendar year to avoid liability for this excise
tax.
The Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or gross sale proceeds paid to
any shareholder who (i) has
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<PAGE>
failed to provide a correct tax identification number, (ii) is subject to backup
withholding due to prior failure to properly include on his or her return
payments of taxable interest or dividends, or (iii) has failed to certify to the
Fund that he or she is not subject to back-up withholding when required to do so
or that he or she is an "exempt recipient."
Dividends declared in October, November or December of any year that are
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by the Fund on December 31
of such year if such dividends are actually paid during January of the following
year.
TAXATION OF CERTAIN FINANCIAL INSTRUMENTS AND INVESTMENTS
The tax principles applicable to transactions in financial instruments and
futures contracts and options that may be engaged in by the Fund, and
investments in passive foreign investment companies ("PFICs"), are complex and,
in some cases, uncertain. Such transactions and investments may cause the Fund
to recognize taxable income prior to the receipt of cash, thereby requiring the
Fund to liquidate other positions, or to borrow money, so as to make sufficient
distributions to shareholders to avoid corporate-level tax. Moreover, some or
all of the taxable income recognized may be ordinary income or short-term
capital gain, so that the distributions may be taxable to shareholders as
ordinary income.
In addition, in the case of any shares of a PFIC in which the Fund
invests, the Fund may be liable for corporate-level tax on any ultimate gain or
distributions on the shares if the Fund fails to make an election to recognize
income annually during the period of its ownership of the shares.
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of
Galaxy's Board of Trustees in accordance with the laws of the Commonwealth of
Massachusetts and the Trust's Declaration of Trust. The trustees and executive
officers of Galaxy, their addresses, principal occupations during the past five
years, and other affiliations are as follows:
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<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
---------------- ----------- ----------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & President & Director, Vicks
Vicks Lithograph & Trustee Lithograph & Printing Corporation
Printing Corporation (book manufacturing and
Commercial Drive commercial printing); Director, Utica
P.O. Box 270 First Insurance Company; Trustee,
Yorkville, NY 13495 Savings Bank of Utica; Director,
Age 66 Monitor Life Insurance Company;
Director, Commercial Travelers
Mutual Insurance Company; Trustee,
The Galaxy VIP Fund; Trustee,
Galaxy Fund II.
John T. O'Neill(1) President, Private Investor; Executive Vice
28 Narragansett Bay Avenue Treasurer & President and CFO, Hasbro, Inc. (toy
Warwick, RI 02889 Trustee and game manufacturer) until
Age 55 December 1999; Trustee, The
Galaxy VIP Fund; Trustee, Galaxy
Fund II.
Louis DeThomasis Trustee President, Saint Mary's College of
Saint Mary's College Minnesota; Director, Bright Day
of Minnesota Travel, Inc.; Trustee, Religious
Winona, MN 55987 Communities Trust; Trustee, The
Age 59 Galaxy VIP Fund; Trustee, Galaxy
Fund II.
Donald B. Miller Trustee Chairman, Horizon Media, Inc.
10725 Quail Covey Road (broadcast services);
Boynton Beach, FL 33436 Director/Trustee, Lexington Funds;
Age 74 Chairman, Executive Committee,
Compton International, Inc.
(advertising agency); Trustee, Keuka
College; Trustee, The Galaxy VIP
Fund; Trustee, Galaxy Fund II.
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<PAGE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
---------------- ----------- ----------------------
<S> <C> <C>
James M. Seed Trustee Chairman and President, The Astra
The Astra Ventures, Inc. Projects, Incorporated (land
One Citizens Plaza development); President, The Astra
Providence, RI 02903 Ventures, Incorporated (previously,
Age 58 Buffinton Box Company -
manufacturer of cardboard boxes);
Commissioner, Rhode Island
Investment Commission; Trustee,
The Galaxy VIP Fund; Trustee,
Galaxy Fund II.
Bradford S. Wellman(1) Trustee Private Investor; Vice President and
2468 Ohio Street Director, Acadia Management
Bangor, ME 04401 Company (investment services);
Age 68 Director, Essex County Gas
Company, until January 1994;
Director, Maine Mutual Fire
Insurance Co.; Member, Maine
Finance Authority; Trustee, The
Galaxy VIP Fund; Trustee, Galaxy
Fund II.
W. Bruce McConnel, III Secretary Partner of the law firm Drinker
One Logan Square Biddle & Reath LLP, Philadelphia,
18th and Cherry Streets Pennsylvania.
Philadelphia, PA 19103
Age 57
Jylanne Dunne Vice President Vice President, PFPC Inc., 1990 to
PFPC Inc. and Assistant present.
4400 Computer Drive Treasurer
Westborough, MA 01581-5108
Age 40
William Greilich Vice President Vice President, PFPC Inc., 1991-96;
PFPC Inc. Vice President and Division
4400 Computer Drive Manager, PFPC Inc., 1996 to
Westborough, MA 01581-5108 present.
Age 46
</TABLE>
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<PAGE>
-------------------------
1. May be deemed to be an "interested person" within the definition set forth
in Section 2(a)(19) of the 1940 Act.
Effective May 28, 1999, each trustee receives an annual aggregate fee of
$45,000 for his services as a trustee of Galaxy, The Galaxy VIP Fund ("Galaxy
VIP") and Galaxy Fund II ("Galaxy II") (collectively, the "Trusts"), plus an
additional $3,500 for each in-person Galaxy Board meeting attended and $1,500
for each in-person Galaxy VIP or Galaxy II Board meeting attended not held
concurrently with an in-person Galaxy meeting, and is reimbursed for expenses
incurred in attending all meetings. Each trustee also receives $750 for each
telephone Board meeting in which the trustee participates, $1,000 for each
in-person Board committee meeting attended and $500 for each telephone Board
committee meeting in which the trustee participates. The Chairman of the Boards
of the Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets. Prior to May 28,
1999, each Trustee was entitled to receive an annual aggregate fee of $40,000
for his services as a Trustee of the Trusts plus an additional $2,500 for each
in-person Galaxy Board meeting attended, with all other fees being the same as
those currently in effect.
Effective March 1, 1996, each trustee became entitled to participate in
The Galaxy Fund, The Galaxy VIP Fund and Galaxy Fund II Deferred Compensation
Plans (the "Original Plans"). Effective January 1, 1997, the Original Plans were
merged into The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II Deferred
Compensation Plan (together with the Original Plans, the "Plan"). Under the
Plan, a trustee may elect to have his deferred fees treated as if they had been
invested by the Trusts in the shares of one or more portfolios in the Trusts, or
other types of investment options, and the amount paid to the trustees under the
Plan will be determined based upon the performance of such investments. Deferral
of trustees' fees will have no effect on a portfolio's assets, liabilities, and
net income per share, and will not obligate the Trusts to retain the services of
any trustee or obligate a portfolio to any level of compensation to the trustee.
The Trusts may invest in underlying securities without shareholder approval.
No employee of PFPC receives any compensation from Galaxy for acting as an
officer. No person who is an officer, director or employee of Fleet or UOBGC, or
any of their affiliates, serves as a trustee, officer or employee of Galaxy. The
trustees and officers of Galaxy own less than 1% of its outstanding shares.
The following chart provides certain information about the fees received
by Galaxy's trustees in the most recently completed fiscal year.
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<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Pension or
Retirement Total Compensation
Benefits Accrued from Galaxy and Fund
Aggregate Compensation as Part of Fund Complex *Paid to
Name of Person/Position from Galaxy Expenses Trustees
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bradford S. Wellman $39,395 None $55,750
Trustee
------------------------------------------------------------------------------------------------------------
Dwight E. Vicks, Jr. $42,875 None $60,500
Chairman and Trustee
------------------------------------------------------------------------------------------------------------
Donald B. Miller** $40,042 None $56,500
Trustee
------------------------------------------------------------------------------------------------------------
Rev. Louis DeThomasis $37,643 None $53,250
Trustee
------------------------------------------------------------------------------------------------------------
John T. O'Neill $41,813 None $59,000
President, Treasurer
and Trustee
------------------------------------------------------------------------------------------------------------
James M. Seed** $39,355 None $55,750
Trustee
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
</TABLE>
-------------
* The "Fund Complex" consists of Galaxy, The Galaxy VIP Fund and Galaxy
Fund II which comprised a total of 43 separate portfolios as of
October 31, 1999.
** Deferred compensation (including interest) in the amounts of $43,939 and
$65,944 accrued during Galaxy's fiscal year ended October 31, 1999 for
Messrs. Miller and Seed, respectively.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. However, Galaxy's Declaration of Trust provides that shareholders
shall not be subject to any personal liability for the acts or obligations of
Galaxy, and that every note, bond, contract, order or other undertaking made by
Galaxy shall contain a provision to the effect that the shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the trust property of any shareholder held personally
liable solely by reason of his or her being or having been a shareholder and not
because of his or her acts or omissions outside such capacity or some other
reason. The Declaration of Trust also provides that Galaxy shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of Galaxy, and shall satisfy any judgment thereon. Thus, the risk of
shareholder liability is limited to circumstances in which Galaxy itself would
be unable to meet its obligations.
The Declaration of Trust states further that no trustee, officer or agent
of Galaxy shall be personally liable for or on account of any contract, debt,
claim, damage, judgment or decree arising out of or connected with the
administration or preservation of the trust estate or the
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<PAGE>
conduct of any business of Galaxy; nor shall any trustee be personally liable to
any person for any action or failure to act except by reason of his own bad
faith, willful misfeasance, gross negligence or reckless disregard of his duties
as trustee. The Declaration of Trust also provides that all persons having any
claim against the trustees or Galaxy shall look solely to the trust property for
payment.
With the exceptions stated, the Declaration of Trust provides that a
trustee is entitled to be indemnified against all liabilities and expenses
reasonably incurred by him in connection with the defense or disposition of any
proceeding in which he may be involved or with which he may be threatened by
reason of his being or having been a trustee, and that the Board of Trustees
shall indemnify representatives and employees of Galaxy to the same extent to
which they themselves are entitled to indemnification.
INVESTMENT ADVISER AND SUB-ADVISER
Fleet serves as investment adviser to the Fund. In its Advisory Agreement,
Fleet has agreed to provide investment advisory services to the Fund as
described in the Prospectus. Fleet has also agreed to pay all expenses incurred
by it in connection with its activities under the advisory agreement other than
the cost of securities (including brokerage commissions) purchased for the Fund.
See "Expenses" below.
For the services provided and expenses assumed with respect to the Fund,
Fleet is entitled to receive advisory fees, computed daily and paid monthly, at
the annual rate of 1.20% of the average daily net assets of the Fund.
The Advisory Agreement provides that Fleet shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of its duties under the Advisory 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 Fleet in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder. Unless sooner terminated, the Advisory Agreement will
continue in effect from year to year as long as such continuance is approved at
least annually (i) by the vote of a majority of trustees who are not parties to
such Advisory Agreement or interested persons (as 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 Galaxy's Board of Trustees, or by a vote of a
majority of the outstanding shares of the Fund. The term "majority of the
outstanding shares of the Fund" means, with respect to approval of an Advisory
Agreement, the vote of the lesser of (i) 67% or more of the shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund. The Advisory Agreement may be terminated by
Galaxy or by Fleet on sixty days' written notice, and will terminate immediately
in the event of its assignment.
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<PAGE>
The Advisory Agreement provides that Fleet will provide a continuous
investment program for the Fund, including research and management with respect
to all securities and investments and cash equivalents in the Fund. In addition,
the Advisory Agreement authorizes Fleet to engage a sub-adviser to assist it in
the performance of its services. Pursuant to such authorization, Fleet has
appointed UOBGC, which is an indirect majority-owned subsidiary of United
Overseas Bank Group and which has its principal offices at 592 Fifth Avenue,
Suite 602, New York, New York 10036, as the sub-adviser to the Fund. As of
December 31, 1999, UOBGC, together with its affiliates, had discretionary
management authority over approximately $2.17 billion in assets.
Under its Sub-Advisory Agreement with Fleet, UOBGC determines which
securities and other investments will be purchased, retained or sold for the
Fund; places orders for the Fund; manages the Fund's overall cash position; and
provides Fleet with foreign broker research and a quarterly review of
international economic and investment developments. Fleet, among other things,
assists and consults with UOBGC in connection with the Fund's continuous
investment program; approves lists of foreign countries recommended by UOBGC for
investment; reviews the investment policies and restrictions of the Fund and
recommends appropriate changes to the Board of Trustees; and provides the Board
of Trustees and UOBGC with information concerning relevant economic and
political developments. UOBGC will provide services under the Sub-Advisory
Agreement in accordance with the Fund's investment objectives, policies and
restrictions. Unless sooner terminated by Fleet or the Board of Trustees upon
sixty days' written notice or by UOBGC upon ninety days' written notice, the
Sub-Advisory Agreement will continue in effect from year to year as long as such
continuance is approved at least annually as described above.
For the services provided and the expenses assumed pursuant to the
Sub-Advisory Agreement, Fleet pays a fee to UOBGC, computed daily and paid
quarterly, at the annual rate of 0.72% of the average daily net assets of the
Fund.
ADMINISTRATOR
PFPC Inc. ("PFPC") (formerly known as First Data Investor Services Group,
Inc.), located at 4400 Computer Drive, Westborough, Massachusetts 01581-5108,
serves as the Fund's administrator. PFPC is an indirect majority-owned
subsidiary of PNC Financial Services Group.
PFPC generally assists the Fund in its administration and operation. PFPC
also serves as administrator to the other portfolios of Galaxy. For the services
provided to the Fund, PFPC is entitled to receive administration fees based on
the combined average daily net assets of the Fund and the other portfolios
offered by Galaxy, computed daily and paid monthly, at the following annual
rates:
<TABLE>
<CAPTION>
COMBINED AVERAGE DAILY NET ASSETS ANNUAL RATE
--------------------------------- -----------
<S> <C>
Up to $2.5 billion........................ 0.090%
From $2.5 to $5 billion................... 0.085%
From $5 to $12 billion.................... 0.075%
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<PAGE>
<CAPTION>
COMBINED AVERAGE DAILY NET ASSETS ANNUAL RATE
--------------------------------- -----------
<S> <C>
From $12 to $15 billion................... 0.0065%
From $15 to $18 billion................... 0.0060%
From $18 to $21 billion................... 0.0575%
Over $21 billion.......................... 0.0525%
</TABLE>
PFPC also receives a separate annual fee from each Galaxy portfolio for certain
fund accounting services.
From time to time, PFPC may waive voluntarily all or a portion of the
administration fees payable to it by the Fund.
Under the Administration Agreement between Galaxy and PFPC (the
"Administration Agreement"), PFPC has agreed to maintain office facilities for
Galaxy, furnish Galaxy with statistical and research data, clerical, accounting,
and bookkeeping services, provide certain other services such as internal
auditing services required by Galaxy, and compute the net asset value and net
income of the Fund. PFPC prepares the Fund's annual and semi-annual reports to
the SEC, federal and state tax returns, and filings with state securities
commissions, arranges for and bears the cost of processing share purchase and
redemption orders, maintains the Fund's financial accounts and records, and
generally assists in all aspects of Galaxy's operations. Unless otherwise
terminated, the Administration Agreement will remain in effect until May 31,
2001 and thereafter will continue from year to year upon annual approval of
Galaxy's Board of Trustees.
CUSTODIAN AND TRANSFER AGENT
The Chase Manhattan Bank ("Chase Manhattan"), located at One Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as the custodian of the Fund's assets
pursuant to a Global Custody Agreement. Chase Manhattan may employ
sub-custodians for the Fund for the purpose of providing custodial services for
the Fund's foreign assets held outside the United States.
Under the Global Custody Agreement, Chase Manhattan has agreed to: (i)
maintain a separate account or accounts in the name of the Fund; (ii) hold and
disburse portfolio securities on account of the Fund; (iii) collect and make
disbursements of money on behalf of the Fund; (iv) collect and receive all
income and other payments and distributions on account of the Fund's portfolio
securities; (v) respond to correspondence from security brokers and others
relating to its duties; and (vi) make periodic reports to the Board of Trustees
concerning the Fund's operations. Chase Manhattan is authorized to select one or
more banks or trust companies to serve as sub-custodian for the Fund, provided
that Chase Manhattan shall remain responsible for the performance of all of its
duties under the custodian agreement and shall be liable to the Fund for any
loss which shall occur as a result of the failure of a sub-custodian to exercise
reasonable care with respect to the safekeeping of the Fund's assets. In
addition, Chase Manhattan also serves as Galaxy's "foreign custody manager" (as
that term is defined in Rule 17f-5 under the 1940 Act) and in such capacity
employs sub-custodians for the Fund for the purpose of providing custodial
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<PAGE>
services for the foreign assets of the Fund held outside the U.S. The assets of
the Fund are held under bank custodianship in compliance with the 1940 Act.
PFPC serves as the Fund's transfer and dividend disbursing agent pursuant
to a Transfer Agency and Services Agreement (the "Transfer Agency Agreement").
Communications to PFPC should be directed to PFPC at P.O. Box 5108, 4400
Computer Drive, Westborough, Massachusetts 01581. Under the Transfer Agency
Agreement, PFPC has agreed to: (i) issue and redeem shares of the Fund; (ii)
transmit all communications by the Fund to its shareholders of record, including
reports to shareholders, dividend and distribution notices and proxy materials
for meetings of shareholders; (iii) respond to correspondence by security
brokers and others relating to its duties; (iv) maintain shareholder accounts;
and (v) make periodic reports to the Board of Trustees concerning Galaxy's
operations.
EXPENSES
Fleet and PFPC bear all expenses in connection with the performance of
their services for the Fund, except that Galaxy bears the expenses incurred in
the Fund's operations including: taxes; interest; fees (including fees paid to
its trustees and officers who are not affiliated with PFPC); SEC fees; state
securities fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; advisory,
administration, shareholder servicing, Rule 12b-1 distribution (if applicable),
fund accounting and custody fees; charges of the transfer agent and dividend
disbursing agent; certain insurance premiums; outside auditing and legal
expenses; costs of independent pricing services; costs of shareholder reports
and meetings; and any extraordinary expenses. The Fund also pays for brokerage
fees and commissions in connection with the purchase of portfolio securities.
PORTFOLIO TRANSACTIONS
Fleet or UOBGC will select specific portfolio investments and effect
transactions for the Fund. Fleet and UOBGC seek to obtain the best net price and
the most favorable execution of orders. Fleet or UOBGC may, in its discretion,
effect transactions in portfolio securities with dealers who provide research
advice or other services to the Fund, Fleet or UOBGC. Fleet or UOBGC is
authorized 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 Fleet or UOBGC 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 either that particular transaction or Fleet or UOBGC's overall
responsibilities to the Fund and to Galaxy. Such brokerage and research services
might consist of reports and statistics relating to specific companies or
industries, general summaries of groups of stocks or bonds and their comparative
earnings and yields, or broad overviews of the stock, bond and government
securities markets and the economy. The fees under the Investment Advisory
Agreement between Galaxy and Fleet and the Sub-Advisory Agreement between Fleet
and UOBGC are not
-39-
<PAGE>
reduced by reason of receiving such brokerage and research services. The Board
of Trustees will periodically review the commissions paid by the Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits inuring to the Fund.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. There is generally no
stated commission in the case of securities traded in U.S. over-the-counter
markets, but the prices of those securities include undisclosed commissions or
mark-ups. The cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down. U.S.
Government securities are generally purchased from underwriters or dealers,
although certain newly issued U.S. Government securities may be purchased
directly from the U.S. Treasury or from the issuing agency or instrumentality.
No brokerage commissions are typically paid on purchases and sales of U.S.
Government securities.
The Fund may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year. Except as permitted by the SEC or applicable law, the
Fund will not acquire portfolio securities from, make savings deposits in, enter
into repurchase or reverse repurchase agreements with, or sell securities to,
Fleet, UOBGC, PFPC, or their affiliates, and will not give preference to
affiliates and correspondent banks of Fleet with respect to such transactions.
Investment decisions for the Fund are made independently from those for
the other portfolios of Galaxy and for any other investment companies and
accounts advised or managed by Fleet or UOBGC. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund,
another portfolio of Galaxy, 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 Fleet or UOBGC believes to be equitable to the Fund
and such other portfolio, 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, Fleet or UOBGC may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for Galaxy's other
portfolios, or other investment companies or accounts in order to obtain best
execution.
DISTRIBUTION PLANS
PRIME A SHARES PLAN
Galaxy has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (the "Rule") with respect to Prime A Shares of the Fund (the "Prime A
Shares Plan"). Under the Prime A Shares Plan, Galaxy may pay PDI or another
person for expenses and activities intended to result in the sale of Prime A
Shares, including the payment of commissions to broker-dealers
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<PAGE>
and other industry professionals who sell Prime A Shares and the direct or
indirect cost of financing such payments.
Under the Prime A Shares Plan, payments by Galaxy for distribution
expenses may not exceed the annualized rate of 0.30% of the average daily net
assets attributable to the Fund's outstanding Prime A Shares. As of the date of
this Statement of Additional Information, Galaxy intends to limit the Fund's
payments for distribution expenses to not more than 0.25% (on an annualized
basis) of the average daily net asset value of the Fund's outstanding Prime A
Shares.
PRIME B SHARES PLAN
Galaxy has adopted a Distribution and Services Plan pursuant to the Rule
with respect to Prime B Shares of the Fund (the "Prime B Shares Plan"). Under
the Prime B Shares Plan, Galaxy may pay (a) PDI or another person for expenses
and activities intended to result in the sale of Prime B Shares, including the
payment of commissions to broker-dealers and other industry professionals who
sell Prime B Shares and the direct or indirect cost of financing such payments,
(b) institutions for shareholder liaison services, which means personal services
for holders of Prime B Shares and/or the maintenance of shareholder accounts,
such as responding to customer inquiries and providing information on accounts,
and (c) institutions for administrative support services, which include but are
not limited to (i) transfer agent and sub-transfer agent services for beneficial
owners of Prime B Shares; (ii) aggregating and processing purchase and
redemption orders; (iii) providing beneficial owners with statements showing
their positions in Prime B Shares; (iv) processing dividend payments; (v)
providing sub-accounting services for Prime B Shares held beneficially; (vi)
forwarding shareholder communications, such as proxies, shareholder reports,
dividend and tax notices, and updating prospectuses to beneficial owners; and
(vii) receiving, translating and transmitting proxies executed by beneficial
owners.
Under the Prime B Shares Plan, payments by Galaxy (i) for distribution
expenses may not exceed the annualized rate of 0.75% of the average daily net
assets attributable to the Fund's outstanding Prime B Shares, and (ii) to a
broker-dealer for shareholder liaison services and/or administrative support
services may not exceed the annual rates of 0.25% and 0.25%, respectively, of
the average daily net assets attributable to the Fund's outstanding Prime B
Shares which are owned of record or beneficially by that broker-dealer's
customers for whom the broker-dealer is the dealer of record or shareholder of
record or with whom it has a servicing relationship. As of the date of this
Statement of Additional Information, Galaxy intends to limit the Fund's payments
for shareholder liaison and administrative support services under the Prime B
Shares Plan to an aggregate fee of not more than 0.25% (on an annualized basis)
of the average daily net asset value of Prime B Shares owned of record or
beneficially by customers of institutions.
BOTH DISTRIBUTION PLANS
Payments for distribution expenses under the Prime A Shares Plan and
Prime B Shares Plan (the "12b-1 Plans") are subject to the Rule. The Rule
defines distribution expenses to include the cost of "any activity which is
primarily intended to result in the sale of shares issued
-41-
<PAGE>
by" Galaxy. The Rule provides, among other things, that an investment company
may bear such expenses only pursuant to a plan adopted in accordance with the
Rule. In accordance with the Rule, the 12b-1 Plans provide that a report of the
amounts expended under the 12b-1 Plans, and the purposes for which such
expenditures were incurred, will be made to the Board of Trustees for its review
at least quarterly. The 12b-1 Plans provide that they may not be amended to
increase materially the costs which Prime A Shares or Prime B Shares of the Fund
may bear for distribution pursuant to the 12b-1 Plans without shareholder
approval, and that any other type of material amendment must be approved by a
majority of the Board of Trustees, and by a majority of the trustees who are
neither "interested persons" (as defined in the 1940 Act) of Galaxy nor have any
direct or indirect financial interest in the operation of the 12b-1 Plans or in
any related agreements (the "12b-1 Trustees"), by vote cast in person at a
meeting called for the purpose of considering such amendments.
Galaxy's Board of Trustees has concluded that there is a reasonable
likelihood that the 12b-1 Plans will benefit the Fund and holders of Prime A
Shares and Prime B Shares. The 12b-1 Plans are subject to annual reapproval by a
majority of the 12b-1 Trustees and are terminable at any time with respect to
the Fund by a vote of a majority of the 12b-1 Trustees or by vote of the holders
of a majority of the Prime A Shares or Prime B Shares of the Fund, as
applicable. Any agreement entered into pursuant to the 12b-1 Plans with a
broker-dealer is terminable with respect to the Fund without penalty, at any
time, by vote of a majority of the 12b-1 Trustees, by vote of the holders of a
majority of the Prime A Shares or Prime B Shares of the Fund, as applicable, by
PDI or by the broker-dealer. An agreement will also terminate automatically in
the event of its assignment.
As long as the 12b-1 Plans are in effect, the nomination of the trustees
who are not interested persons of Galaxy (as defined in the 1940 Act) must be
committed to the discretion of the 12b-1 Trustees.
DISTRIBUTOR
PDI serves as Galaxy's distributor. PDI is a registered broker-dealer with
principal offices located at 3200 Horizon Drive, King of Prussia, Pennsylvania
19406. Jane Haegele is the sole shareholder of PDI.
Unless otherwise terminated, the Distribution Agreement between Galaxy and
PDI remains in effect until November 30, 2000, and thereafter will continue from
year to year upon annual approval by Galaxy's Board of Trustees, or by the vote
of a majority of the outstanding shares of Galaxy and by the vote of a majority
of the Board of Trustees of Galaxy who are not parties to the Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. The Agreement will terminate in the event of
its assignment, as defined in the 1940 Act.
PDI is entitled to the payment of a front-end sales charge on the sale of
Prime A Shares of the Fund as described in the Prospectus and this Statement of
Additional Information. PDI is
-42-
<PAGE>
also entitled to the payment of contingent deferred sales charges upon the
redemption of Prime B Shares of the Fund.
AUDITORS
Ernst & Young LLP, independent auditors, with offices at 200 Clarendon
Street, Boston, Massachusetts 02110, serve as auditors for Galaxy.
COUNSEL
Drinker Biddle & Reath LLP (of which W. Bruce McConnel, III, Secretary of
Galaxy, is a partner), One Logan Square, 18th and Cherry Streets, Philadelphia,
Pennsylvania 19103, are counsel to Galaxy and will pass upon certain legal
matters on its behalf.
CODES OF ETHICS
Galaxy, Fleet and UOBGC have adopted codes of ethics pursuant to
Rule 17j-1 under the 1940 Act that permit investment personnel subject to their
particular codes of ethics to invest in securities, including securities that
may be purchased or held by the Fund, for their own accounts. The codes of
ethics are on public file with, and available from, the Securities and Exchange
Commission's Public Reference Room in Washington, D.C.
PERFORMANCE AND YIELD INFORMATION
Investment returns and principal values will vary with market conditions
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Past performance is no guarantee of future results. Unless
otherwise indicated, total return figures include changes in share price,
deduction of any applicable sales charge, and reinvestment of dividends and
capital gains distributions, if any.
-43-
<PAGE>
The Fund's 30-day (or one month) standard yields are calculated separately
for each series of shares in the Fund in accordance with the method prescribed
by the SEC for mutual funds:
6
YIELD = 2[(a-b)/cd +1 ) - 1]
Where: a = dividends and interest earned by the Fund during the period;
b = expenses accrued for the period (net of reimbursements);
c = average daily number of shares outstanding during the period
entitled to receive dividends; and
d = maximum offering price per share on the last day of the
period.
For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by the
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on debt obligations held by the Fund is calculated by computing the yield
to maturity of each obligation based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest) and dividing the result
by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by the Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market value of such debt obligations. Expenses accrued
for the period (variable "b" in the formula) include all recurring fees charged
by the Fund to all shareholder accounts in proportion to the length of the base
period and the Fund's mean (or median) account size. Undeclared earned income
will be subtracted from the offering price per share (variable "d" in the
formula).
With respect to mortgage or other receivables-backed obligations that are
expected to be subject to monthly payments of principal and interest
("pay-downs"), (i) gain or loss attributable to actual monthly pay-downs are
accounted for as an increase or decrease to interest income during the period,
and (ii) the Fund may elect either (a) to amortize the discount and premium on
the remaining security, based on the cost of the security, to the weighted
average maturity date, if such information is available, or to the remaining
term of the security, if any, if the weighted
-44-
<PAGE>
average date is not available or (b) not to amortize discount or premium on the
remaining security.
If the Fund advertises its "average annual total return," it computes such
return separately for each series of shares by determining the average annual
compounded rate of return during specified periods that equates the initial
amount invested to the ending redeemable value of such investment according to
the following formula:
1/n
T = [(ERV/P) - 1]
Where: T = average annual total return;
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year (or other)
periods at the end of the applicable period (or a
fractional portion thereof);
P = hypothetical initial payment of $1,000; and
n = period covered by the computation, expressed in years.
The Fund that advertises its "aggregate total return" computes such
returns separately for each series of shares by determining the aggregate
compounded rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:
Aggregate Total Return = [(ERV/P) - 1]
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period. In addition, the Fund's Retail Shares average annual total
return and aggregate total return quotations will reflect the deduction of the
maximum sales load charged in connection with purchases of Prime A Shares or
redemptions of Prime B Shares, as the case may be.
PERFORMANCE REPORTING
From time to time, in advertisements or in reports to shareholders, the
performance of the Fund may be quoted and compared to that of other mutual funds
with similar investment objectives and to stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For
-45-
<PAGE>
example, the performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors the performance of mutual funds, the S&P 500 Index, an unmanaged index
of groups of common stocks, the Consumer Price Index, or the Dow Jones
Industrial Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the New York Stock Exchange. In addition, the
performance of the Fund may be compared to the Morgan Stanley Capital
International Index or the FT World Actuaries Index.
Performance data as reported in national financial publications including,
but not limited to, MONEY MAGAZINE, FORBES, BARRON'S, THE WALL STREET JOURNAL
and THE NEW YORK TIMES, or publications of a local or regional nature may also
be used in comparing the performance of the Fund. Performance data will be
calculated separately for Prime A Shares and Prime B Shares of the Fund.
The standard yield is computed as described above. The Fund may also
advertise its "effective yield" which is calculated similarly but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested.
The Fund may also advertise its performance using "average annual total
return" figures over various periods of time. Such total return figures reflect
the average percentage change in the value of an investment in the Fund from the
beginning date of the measuring period to the end of the measuring period and
are calculated as described above. Average total return figures will be given
for the most recent one-, five- and ten-year periods (if applicable), and may be
given for other periods as well, such as from the commencement of the Fund's
operations, or on a year-by-year basis. The Fund may also use "aggregate total
return" figures for various periods, representing the cumulative change in the
value of an investment in the Fund for the specified period. Both methods of
calculating total return reflect the maximum front-end sales load for Prime A
Shares of the Fund and the applicable contingent deferred sales charge for
Prime B Shares of the Fund and assume that dividends and capital gain
distributions made by the Fund during the period are reinvested in Fund shares.
The Fund may also advertise total return data without reflecting the sales
charges imposed on the purchase of Prime A Shares or the redemption of Prime B
Shares in accordance with the rules of the SEC. Quotations that do not reflect
the sales charges will be higher than quotations that do reflect the sales
charges.
The performance of the Fund will fluctuate and any quotation of
performance should not be considered as representative of the future performance
of the Fund. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in the Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance data are generally functions of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged by institutions with respect to
accounts of customers that have invested in shares of the Fund will not be
included in performance calculations.
-46-
<PAGE>
The portfolio manager of the Fund and other investment professionals may
from time to time discuss in advertising, sales literature or other material,
including periodic publications, various topics of interest to shareholders and
prospective investors. The topics may include but are not limited to the
advantages and disadvantages of investing in tax-deferred and taxable
investments; Fund performance and how such performance may compare to various
market indices; shareholder profiles and hypothetical investor scenarios; the
economy; the financial and capital markets; investment strategies and
techniques; investment products; and tax, retirement and investment planning.
MISCELLANEOUS
As used in this Statement of Additional Information, "assets belonging to"
the Fund or series of the Fund means the consideration received by Galaxy upon
the issuance of shares in the Fund or series of the Fund, together with all
income, earnings, profits, and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds and a portion of any general
assets of Galaxy not belonging to a particular series or portfolio. In
determining the net asset value of a particular series of the Fund, assets
belonging to the particular series of the Fund are charged with the direct
liabilities in respect of that series and with a share of the general
liabilities of Galaxy, which are allocated in proportion to the relative asset
values of the respective series and Galaxy portfolios at the time of allocation.
Subject to the provisions of Galaxy's Declaration of Trust, determinations by
the Board of Trustees as to the direct and allocable liabilities, and the
allocable portion of any general assets with respect to a particular series or
portfolio, are conclusive.
Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent certified public accountants.
A "vote of the holders of a majority of the outstanding shares" of the
Fund or a particular series of shares in the Fund means, with respect to the
approval of an investment advisory agreement, a distribution plan or a change in
an investment objective or fundamental investment policy, the affirmative vote
of the holders of the lesser of (a) more than 50% of the outstanding shares of
the Fund or such series of shares, or (b) 67% or more of the shares of the Fund
or such series of shares present at a meeting if more than 50% of the
outstanding shares of the Fund or such series of shares are represented at the
meeting in person or by proxy.
As of May 22, 2000, the name, address and percentage ownership of the
entities or persons that held of record or beneficially more than 5% of the
outstanding shares of each class of shares of Galaxy's investment portfolios
were as follows:
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<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
MONEY MARKET FUND
TRUST
Fleet New York 99.53%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
RETAIL B
Wylle O'Brian 5.11%
69 Edgewood Ave.
Haverhill, MA 01832-2909
TAX-EXEMPT MONEY MARKET
TRUST
Fleet New York 96.34%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
RETAIL A
Brenda May Earl 12.41%
279 Central Park West
PH-19A
New York, NY 10024-3080
Joseph Dimenna 11.54%
1049 Fifth Ave. Apt. P3
New York, NY 10028-0115
GOVERNMENT MONEY MARKET
TRUST
Fleet New York 98.09%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
U.S. TREASURY MONEY MARKET
TRUST
Fleet New York 94.58%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
RETAIL A
US Clearing A Division of 9.33%
Fleet Securities Inc.
26 Broadway
New York, NY 10004-1703
Taqua Systems Inc. 5.15%
75 Attucks Lane
Hyannis, MA 02601-1867
INSTITUTIONAL TREASURY MONEY MARKET
TRUST
Fleet New York 89.73%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
-48-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Luitpold Pharmaceuticals Inc. 6.33%
Kirk Sobecki, CFO
Attn: Harold Noviello
One Luitpold Dr.
Shirley, NY 11967
MASSACHUSETTS MUNICIPAL MONEY MARKET
RETAIL A
Fleet New York 55.55%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
CONNECTICUT MUNICIPAL MONEY MARKET
RETAIL A
Fleet New York 45.07%
Fleet Investment Services
159 East Main St.
NY/RO/T03C
Rochester, NY 14638-0001
EQUITY VALUE
TRUST
Gales & Co. 76.08%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 14.84%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 7.24%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
EQUITY GROWTH
TRUST
Gales & Co. 68.04%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 17.32%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
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<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Gales & Co. 13.87%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
PRIME A
US Clearing A Division of
Fleet Securities Inc. 49.88%
FBO# 104-32732-16
Hilda Brandt
Roland Park Place
830 W. 40th Street, Apt. 359
Baltimore, MD 21211-2176
US Clearing A Division of 26.03%
Fleet Securities Inc.
FBO# 114-97238-17
Sara Mallow
936 Broadway
New York, NY 10010-6013
US Clearing A Division of 8.66%
Fleet Securities Inc.
FBO# 120-97689-18
Yook Y Doo
46-34 Robinson St.
Flushing, NY 11355-3445
US Clearing A Division of 6.86%
Fleet Securities Inc.
FBO# 021-90471-15
Mabel L Bowman
35634 Meyers Ct.
Fremont, CA 94536-2540
US Clearing A Division of 5.33%
Fleet Securities Inc.
FBO# 143-27206-11
Mary V Mastroianni &
Pasqual Mastroianni JT
Ten
1811 Randolph Road
Schenectady, NY
12308-2021
PRIME B
US Clearing A Division of 19.66%
Fleet Securities Inc.
FBO# 111-98315-17
Thomas J Bernfeld
185 West End Avenue, Apt. 21D
New York, NY 10023-5548
US Clearing A Division of 12.70%
Fleet Securities Inc.
FBO# 166-31108-13
Frank Catanho, Trustee
of the Frank Catanho
1996 Trust dated
10/22/96
24297 Mission Blvd.
Hayward, CA 94544-1020
-50-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
US Clearing A Division of 12.33%
Fleet Securities Inc.
FBO# 024-90318-16
Lynn C. Sherrie
P.O. Box 316
Wilson, NY 14172-0316
US Clearing A Division of 10.64%
Fleet Securities Inc.
FBO# 221-00085-18
Walter M. Swiecicki &
Cathleen Swiecicki JT WROS
119 Old Beekman Road
Monmouth Junction, NJ
08852-3114
US Clearing A Division of 5.84%
Fleet Securities Inc.
FBO# 183-97247-11
W P Fleming
66500 E 253rd
Grove, OK 74344-6163
EQUITY INCOME
TRUST
Gales & Co. 52.31%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 33.73%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 12.33%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
INTERNATIONAL EQUITY
TRUST
Gales & Co. 41.62%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 38.06%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
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<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Gales & Co. 13.28%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RETAIL A
Charles Schwab & Co. Inc. 8.15%
Special Custody Acct. for
Exclusive of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
PRIME A
US Clearing A Division of 80.62%
Fleet Securities Inc.
FBO 125-98055-11
Albert F Twanmo
6508 81st St.
Cabin John, MD 20818-1203
US Clearing A Division of 14.83%
Fleet Securities Inc.
FBO 136-99157-13
Jon-Paul Dadaian
178 Clarken Drive
West Orange, NJ 07052-3441
PRIME B
US Clearing A Division of 79.69%
Fleet Securities Inc.
FBO# 102-59241-17
Church & Friary of St.
Francis of Assisi
c/o Fr. Ronald P Stark OFM
135 West 31st St.
New York, NY 10001-3405
GROWTH & INCOME
TRUST
Gales & Co. 77.71%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 18.37%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
PRIME A
US Clearing A Division of 35.96%
Fleet Securities Inc.
FBO# 160-27022-17
Linda Shaw, Trustee
for the Linda J Shaw
Trust
920 Meadows road
Geneva, IL 60134-3052
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<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
US Clearing A Division of 29.10%
Fleet Securities Inc.
FBO# 113-27816-16
Pamela M Fein
68 Oak Ridge Drive
Bethany, CT 06524-3118
US Clearing A Division of 24.31%
Fleet Securities Inc.
FBO# 175-97327-10
Margaret Ann
Gillenwater
2525 E Prince Road #23
Tucson, AZ 85716-1146
US Clearing A Division of 6.32%
Fleet Securities Inc.
FBO# 103-80060-19
Saint Clare School Endowment
Fund
Attn: Fr, O'Shea/Andrew J
Houvouras &/or Bruce Blatman
821 Prosperity Farms Road
No. Palm Beach, FL 33408-4299
PRIME B
US Clearing A Division of 29.49%
Fleet Securities Inc.
FBO# 147-97497-13
Martin Allen Sante
15222 Birch Lakeshore Drive
Vandalia, MI 49095-9741
US Clearing A Division of 19.45%
Fleet Securities Inc.
FBO# 103-31744-16
Irwin Luftig & Elaine Luftig
6119 Bear Creek Ct
Lake Worth, FL 33467-6812
US Clearing A Division of 16.54%
Fleet Securities Inc.
FBO# 148-28677-18
Linda M. Berke & Michael E.
Berke JT TEN
30941 Westwood Road
Farmington Hills, MI
48331-1466
US Clearing A Division of 16.14%
Fleet Securities Inc.
FBO# 147-29019-15
Walter W Quan
2617 Skyline Drive
Lorain, OH 44053-2243
US Clearing A Division of 6.18%
Fleet Securities Inc.
FBO# 013-90166-12
Florence G. St. Onge
34 Cedar Lane
Warren, RI 02885-2236
US Clearing A Division of 5.94%
Fleet Securities Inc.
FBO# 108-00116-10
Michael Kennedy & Carleen
Kennedy JT WROS
12 Walton Avenue
Locust Valley, NY 11560-1227
-53-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
ASSET ALLOCATION
TRUST
Gales & Co. 92.66%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 6.62%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
PRIME A
US Clearing A Division of 22.80%
Fleet Securities Inc.
FBO# 114-97238-17
Sara Mallow
936 Broadway
New York, NY 10010-6013
US Clearing A Division of 22.62%
Fleet Securities Inc.
FBO# 147-97697-11
Ray Wayne Prince
11010 Stephens Road
Berlin Heights, OH 44814-9673
US Clearing A Division of 14.56%
Fleet Securities Inc.
FBO# 175-97327-10
Margaret Ann
Gillenwater
2525 E Prince Road #23
Tucson, AZ 85716-1146
US Clearing A Division of 13.10%
Fleet Securities Inc.
FBO# 166-98586-13
Pamela Ann Radamaker
1001 Tramway Blvd NE
Albuquerque, NM 87112-6280
US Clearing A Division of 7.44%
Fleet Securities Inc.
FBO 170-29789-15
Nicholas G. Roselli &
Nicholas A. Roselli JT WROS
315 Southampton Road
Westfield, MA 01085-1360
US Clearing A Division of 5.26%
Fleet Securities Inc.
FBO 194-97099-17
James Kenneth Winter
28 South Fork Cove
Senatobia, MS 38668-6329
-54-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
PRIME B
US Clearing A Division of 10.05%
Fleet Securities Inc.
FBO# 138-97818-14
Carol Y Foster
524 Marie Avenue
Blountstown, FL 32424-1218
US Clearing A Division of 9.59%
Fleet Securities Inc.
FBO# 102-92974-11
Ann E Herzog
74 Tacoma Street
Staten Island, NY 10304-4222
US Clearing A Division of 6.39%
Fleet Securities Inc.
FBO# 166-98559-16
Ann P Sargent
422 Los Encinos Avenue
San Jose, CA 95134-1336
US Clearing A Division of 6.20%
Fleet Securities Inc.
FBO# 166-97970-19
Alicia E Schober
10139 Ridgeway Drive
Cupertino, CA 95014-2658
US Clearing A Division of 5.69%
Fleet Securities Inc.
FBO# 194-14889-16
Paul R Thornton & Karin Z
Thornton JT TEN
1207 Oak Glen Lane
Sugar Land, TX 77479-6175
US Clearing A Division of 6.05%
Fleet Securities Inc.
FBO# 147-29049-19
Randall Prince
Rt. 1, Box 865
Turtletown, TN 37391-9700
SMALL COMPANY EQUITY
TRUST
Gales & Co. 60.66%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638
Gales & Co. 28.34%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638
-55-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Gales & Co. 7.26%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638
SMALL CAP VALUE
TRUST
Gales & Co. 46.53%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 32.48%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 18.38%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
PRIME A
US Clearing A Division of 30.36%
Fleet Securities Inc.
FBO# 104-32732-16
Hilda Brandt
3900 North Charles Street
Baltimore, MD 21218-1724
US Clearing A Division of 19.13%
Fleet Securities Inc.
FBO# 150-98301-11
N Clifford Nelson Jr
58 Middlebury Road
Orchard Park, NY 14127-3581
US Clearing A Division of 19.00%
Fleet Securities Inc.
FBO# 102-60254-19
Frederick W Geissinger
601 NW 2nd Street
Evansville, IN 47708-1013
US Clearing A Division of 12.77%
Fleet Securities Inc.
FBO# 103-97564-14
Thomas X McKenna
170 Turtle Creek Drive
Tequesta, FL 33469-1547
US Clearing A Division of 9.35%
Fleet Securities Inc.
FBO# 103-31296-18
Edward U Roddy III
109 Angler Avenue
Palm Beach, FL 33480-3101
-56-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
PRIME B
US Clearing A Division of 14.31%
Fleet Securities Inc.
FBO# 111-98315-17
Thomas J Bernfeld
185 West End Avenue, Apt. 21D
New York, NY 10023-5548
US Clearing A Division of 9.70%
Fleet Securities Inc.
FBO# 107-30623-15
Andrejs Zvejnieks
2337 Christopher Walk
Atlanta, GA 30327-1110
US Clearing A Division of 7.55%
Fleet Securities Inc.
FBO# 108-98472-11
Rufus O. Eddins, Jr.
360 Dominion Circle
Knoxville, TN 37922-2750
US Clearing A Division of 7.25%
Fleet Securities Inc.
FBO# 221-97250-13
Micheal A Veschi
106 Exmoor Court
Leesburg, VA 20176-2049
STRATEGIC EQUITY
TRUST
Gales & Co. 97.22%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RETAIL B
Violet K. Saidnehr 5.90%
260 Middle Neck Road
Great Neck, NY 11021-1175
INTERMEDIATE GOVERNMENT INCOME
TRUST
Gales & Co. 37.37%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 33.74%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
-57-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Gales & Co. 25.30%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RETAIL B
Adriana Vita 7.42%
345 Park Ave.
New York, NY 10154
HIGH QUALITY BOND
TRUST
Gales & Co. 57.48%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 26.57%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 13.63%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
PRIME A
US Clearing A Division of 45.67%
Fleet Securities Inc.
FBO# 103-30971-12
Doris G Schack
FBO - Doris G Schack Living
Trust
9161 East Evans
Scottsdale, AZ 85260-7575
US Clearing A Division of 33.77%
Fleet Securities Inc.
FBO# 132-90090-11
Virginia Holmes
303 Bella Vista Drive
Ithaca, NY 14850-5774
US Clearing A Division of 20.23%
Fleet Securities Inc.
FBO# 013-02964-11
Jane L Grayhurst
770 Boylston St., Apt 10G
Boston, MA 02199-7709
-58-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
PRIME B
US Clearing A Division of 30.75%
Fleet Securities Inc.
FBO# 200-70099-19
Neil C Feldman
41 Windham way
Englishtown, NJ 07726-8216
US Clearing A Division of 12.41%
Fleet Securities Inc.
FBO# 119-97697-10
Ira Zornberg
4219 Nautilus Avenue
Brooklyn, NY 11224-1019
US Clearing A Division of 12.22%
Fleet Securities Inc.
FBO# 147-24459-13
Jay Robert Klein
26800 Amhearst Circle #209
Cleveland, OH 44122-7572
US Clearing A Division of 11.68%
Fleet Securities Inc.
FBO# 102-68909-11
Marjorie Dion
301 Raimond Street
Yaphank, NY 11980-9725
US Clearing A Division of 7.91%
Fleet Securities Inc.
FBO# 157-98031-13
Patricia Fusco
112 E. Chapel Avenue
Cherry Hill, NJ 08034-1204
US Clearing A Division of 5.86%
Fleet Securities Inc.
FBO# 238-97175-19
Marie Gottfried
10208 Andover Coach
Circle H-2
Lake Worth, FL 33467-8158
US Clearing A Division of 5.46%
Fleet Securities Inc.
FBO# 013-03576-19
Louise Brown &
Sandra Fontaine JT
TEN
172 High Street
Woonsocket, RI 02895-4311
SHORT-TERM BOND
TRUST
Gales & Co. 43.57%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 31.50%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
-59-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Gales & Co. 21.51%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RETAIL B
Chelsea Police Relief Assoc. 17.41%
John R. Phillips Treas. &
Michael McCona Clerk
180 Crescent Avenue
Chelsea, MA 02150-3017
Josue Colon Cust 9.70%
Hazel Colon UGMA CT
400 Lasalle St
New Britan, CT 06051-1316
Elizabeth Mugar 9.17%
10 Chestnut St.
Apt. 1808
Springfield, MA 01103-1709
TAX-EXEMPT BOND
TRUST
Gales & Co. 38.51%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 24.35%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 32.16%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RETAIL A
Charles Dagraca & Barbara 7.83%
Dagraca JT WROS
20 William Penn Rd.
Warren, NJ 07059
RETAIL B
Sylvia Fendler 11.54%
72 Brinkerhoff Ave.
Stamford, CT 06905
-60-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Frances E. Stady 6.07%
P.O. BOX 433
3176 Main St.
Yorkshire, NY 14173-0433
US Clearing A Division of 5.14%
Fleet Securities Inc.
FBO 978-02869-11
Carol Guy & Ali E. Guy
14 Thomas St.
Scarsdale, NY 10583-1031
CONNECTICUT MUNICIPAL BOND
TRUST
Gales & Co. 68.00%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638
Gales & Co. 23.64%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638
Bob & Co. 8.12%
c/o Bank of Boston
Attn: Mutual Fd Dept
45-02-06
PO Box 1809
Boston, MA 02105-1809
RETAIL A
Maria Luisa Carcangiu 6.39%
& Juan Rosai
JT WROS
36 Beach Ave.
Milford, CT 06460
MASSACHUSETTS MUNICIPAL BOND
TRUST
Gales & Co. 43.63%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 41.97%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Bob & Co. 12.44%
c/o Bank of Boston
Attn: Mutual Fd Dept 45-02-06
PO Box 1809
Boston, MA 02105-1809
-61-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
CORPORATE BOND
TRUST
Gales & Co. 41.24%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 31.19%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 17.64%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RHODE ISLAND MUNICIPAL BOND
RETAIL A
Gales & Co. 35.16%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Bob & Co. 23.94%
c/o Bank of Boston
Attn: Mutual Fd Dept.
45-02-06
PO Box 1809
Boston, MA 02105-1809
James R. McCulloch 7.65%
c/o Microfibre
PO Box 1208
Pawtucket, RI 02862-1208
NEW YORK MUNICIPAL BOND
TRUST
Gales & Co. 64.12%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Bob & Co. 16.34%
c/o Bank of Boston
ATTN: Mutual Fund
Dept. 45-02-06
P.O. Box 1809
Boston, MA 02105-1809
Gales & Co. 12.08%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
-62-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
Gales & Co. 7.25%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
RETAIL A
Marilyn J Brantley 12.87%
5954 Van Allen Road
Belfast, NY 14711-
8750
NEW JERSEY MUNI BOND
TRUST
Gales & Co. 51.84%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Gales & Co. 31.91%
Fleet Investment Services
Mutual Funds Unit -
NY/RO/TO4A
159 East Main Street
Rochester, NY 14638-0001
Bob & Co. 15.95%
c/o Bank of Boston
ATTN: Mutual Fund Dept.
45-02-06
P.O. Box 1809
Boston, MA 02105-1809
RETAIL A
John W Maki & Kimberly 73.71%
McGrath Maki JT WROS
1 Connet Lane
Mendham, NJ 07945-2938
William Minnaard 10.84%
50 Rock Road
Unit A6
Hawthorne, NJ 07506-1570
PRIME RESERVES
U.S. Clearing 100.00%
26 Broadway
New York, NY 10004-1703
GOVERNMENT RESERVES
U.S. Clearing 100.00%
26 Broadway
New York, NY 10004-1703
TAX-EXEMPT RESERVES
U.S. Clearing 100.00%
26 Broadway
New York, NY 10004-1703
-63-
<PAGE>
As of April 11, 2000, the name, address and percentage ownership of the
entities or persons that held beneficially more than 5% of the outstanding Trust
Shares of each of Galaxy's investment portfolios were as follows:
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
MONEY MARKET
Stable Asset Fund 12.28%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
GOVERNMENT MONEY
Advent Realty Limited Partnership 5.82%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
U.S. TREASURY MONEY
Loring Walcott Client Sweep Acct 24.70%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
EQUITY VALUE
Fleet Savings Plus-Equity Value 26.69%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
EQUITY GROWTH
Fleet Savings Plus-Equity Growth 23.09%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
Nusco Retiree Health VEBA Trust 6.91%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
INTERNATIONAL EQUITY
FFG International Equity Fund 11.17%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
Fleet Savings Plus-Intl Equity 10.03%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
INTERMEDIATE GOVT INC
Nusco Retiree Health VEBA Trust 6.61%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
-64-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
STRATEGIC EQUITY FUND
FFG Retirement & Pension VDG 93.57%
C/O Fleet Financial Group
159 East Main
Rochester, NY 14638
HIGH QUALITY BOND
Fleet Savings Plus Plan-HQ Bond 17.58%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
SHORT TERM BOND FUND
Willcox & Gibbs Retirement Plan 5.47%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
ASSET ALLOCATION
Fleet Savings Plus-Asset Allocation 27.27%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
SMALL COMPANY EQUITY
Fleet Savings Plus-Small Company 31.47%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
TAX EXEMPT BOND
Nusco Retiree Health VEBA Trust 37.33%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
CONNECTICUT MUNI BOND
Winnifred M Purdy 7.64%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
CORPORATE BOND
Cole Hersee Pension Plan 7.87%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
GROWTH INCOME
Fleet Savings Plus-Grth Income 44.75%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
Crompton & Knowles IARP 9.82%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
SMALL CAP VALUE
FFG Emp Ret Misc Assets SNC 25.60%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
-65-
<PAGE>
PERCENT
REGISTRATION NAME OWNERSHIP
-----------------------------------------------------------
CVS Inc 401K P/S Pln 3 5.68%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
INSTITUTIONAL GOVT
Duncanson & Holt Inc 5.66%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
NEW JERSEY MUNI BOND
Perillo Tours 22.11%
C/O Norstar Trust Co/Gales & Co
159 East Main
Rochester, NY 14638
Royal Chambord IMA 11.05%
C/O Norstar Trust Co/Gales & Co
159 East Main
Rochester, NY 14638
McKee Wendell A. Marital Trust 10.98%
C/O Norstar Trust Co/Gales & Co
159 East Main
Rochester, NY 14638
Varco Inc IMA 5.53%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
Terry, Julia Lee Inv Adv 5.20%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
Tiernan Diana IA 5.02%
C/O Norstar Trust Co
Gales & Co
159 East Main
Rochester, NY 14638
-66-
<PAGE>
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current opinion of
credit worthiness of an obligor with respect to financial obligations having an
original maturity of no more than 365 days. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that
the obligor's capacity to meet its financial commitment on the obligation is
strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
"D" - Obligations are in payment default. The "D" rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The "D" rating will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the rating categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be
A-1
<PAGE>
evidenced by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses the highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
"D-3" - Debt possesses satisfactory liquidity and other protection
factors qualify issues as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is expected.
A-2
<PAGE>
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
Fitch IBCA short-term ratings apply to debt obligations that have
time horizons of less than 12 months for most obligations, or up to three years
for U.S. public finance securities. The following summarizes the rating
categories used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This
designation indicates the strongest capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong credit
feature.
"F2" - Securities possess good credit quality. This designation
indicates a satisfactory capacity for timely payment of financial commitments,
but the margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation
indicates that the capacity for timely payment of financial commitments is
adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.
"B" - Securities possess speculative credit quality. This designation
indicates minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.
"C" - Securities possess high default risk. This designation
indicates that default is a real possibility and that the capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
"D" - Securities are in actual or imminent payment default.
Thomson BankWatch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's
highest category and indicates a very high likelihood that principal and
interest will be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of
A-3
<PAGE>
principal and interest is strong, the relative degree of safety is not as high
as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
"TBW-4" - This designation represents Thomson BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as
having significant speculative characteristics. "BB" indicates the least degree
of speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to the obligor's inadequate capacity to meet its financial commitment on the
obligation.
A-4
<PAGE>
"B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
"CCC" - An obligation rated "CCC" is currently vulnerable to
nonpayment, and is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the obligation.
In the event of adverse business, financial, or economic conditions, the obligor
is not likely to have the capacity to meet its financial commitment on the
obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.
"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
"D" - An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk - such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high-grade bonds. They are rated lower
A-5
<PAGE>
than the best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risk
appear somewhat larger than the "Aaa" securities.
"A" - Bonds possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds are considered as medium-grade obligations, (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates speculative elements; "B" indicates a general lack of characteristics
of desirable investment; "Caa" indicates poor standing; "Ca" represents
obligations which are speculative in a high degree; and "C" represents the
lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. (---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa." The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking
in the lower end of its generic rating category.
The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable in periods of greater economic
stress.
A-6
<PAGE>
"BBB" - Debt possesses below-average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt rated
"B" possesses the risk that obligations will not be met when due. Debt rated
"CCC" is well below investment grade and has considerable uncertainty as to
timely payment of principal, interest or preferred dividends. Debt rated "DD" is
a defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.
To provide more detailed indications of credit quality, the "AA,"
"A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within these major categories.
The following summarizes the ratings used by Fitch IBCA for corporate
and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. These ratings denote the lowest expectation of credit risk and
are assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high
credit quality. These ratings denote a very low expectation of credit risk and
indicate very strong capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit
quality. These ratings denote a low expectation of credit risk and indicate
strong capacity for timely payment of financial commitments. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit
quality. These ratings denote that there is currently a low expectation of
credit risk. The capacity for timely payment of financial commitments is
considered adequate, but adverse changes in circumstances and in economic
conditions are more likely to impair this capacity.
"BB" - Bonds considered to be speculative. These ratings indicate
that there is a possibility of credit risk developing, particularly as the
result of adverse economic changes over time; however, business or financial
alternatives may be available to allow financial commitments to be met.
Securities rated in this category are not investment grade.
A-7
<PAGE>
"B" - Bonds are considered highly speculative. These ratings indicate
that significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
"CCC," "CC", and "C" - Bonds have high default risk. Default is a
real possibility, and capacity for meeting financial commitments is solely
reliant upon sustained, favorable business or economic developments. "CC"
ratings indicate that default of some kind appears probable, and "C" ratings
signal imminent default.
"DDD," "DD" and "D" - Bonds are in default. The ratings of
obligations in this category are based on their prospects for achieving partial
or full recovery in a reorganization or liquidation of the obligor. While
expected recovery values are highly speculative and cannot be estimated with any
precision, the following serve as general guidelines. "DDD" obligations have the
highest potential for recovery, around 90%-100% of outstanding amounts and
accrued interest. "DD" indicates potential recoveries in the range of 50%-90%,
and "D" the lowest recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of
their obligations. Entities rated "DDD" have the highest prospect for resumption
of performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
To provide more detailed indications of credit quality, the Fitch
IBCA ratings from and including "AA" to "CCC" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within these major rating
categories.
Thomson Financial BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation indicates that the ability to repay
principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis, with limited incremental risk compared
to issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
A-8
<PAGE>
"BBB" - This designation represents the lowest investment-grade
category and indicates an acceptable capacity to repay principal and interest.
Issues rated "BBB" are more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.
"BB," "B," "CCC," and "CC" - These designations are assigned by
Thomson Financial BankWatch to non-investment grade long-term debt. Such issues
are regarded as having speculative characteristics regarding the likelihood of
timely repayment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's note rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess a
very strong capacity to pay debt service are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest, with some vulnerability to adverse
financial and economic changes over the term of the notes.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
A-9
<PAGE>
"MIG-1"/"VMIG-1" - This designation denotes best quality. There is
present strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes favorable quality, with
all security elements accounted for but lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - This designation denotes adequate quality.
Protection commonly regarded as required of an investment security is present
and although not distinctly or predominantly speculative, there is specific
risk.
"SG" - This designation denotes speculative quality. Debt instruments
in this category lack of margins of protection.
Fitch IBCA and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
A-10
<PAGE>
THE GALAXY FUND
FORM N-1A
PART C. OTHER INFORMATION
Item 23. Exhibits
(a)
(1) Declaration of Trust dated March 31, 1986.(4)
(2) Amendment No. 1 to the Declaration of Trust dated as of
April 26, 1988.(4)
(3) Certificate pertaining to Classification of Shares
pertaining to Class A and Class B shares.(4)
(4) Certificate of Classification of Shares pertaining to
Class C, Class D and Class E shares.(4)
(5) Certificate of Classification of Shares pertaining to
Class C - Special Series 1 and Class D - Special Series
1 shares.(4)
(6) Certificate of Classification of Shares pertaining to
Class F shares; Class G - Series 1 shares; Class G -
Series 2 shares; Class H - Series 1 shares; Class H -
Series 2 shares; Class I - Series 1 shares; Class I -
Series 2 shares; Class J - Series 1 shares; and Class J
- Series 2 shares.(4)
(7) Certificate of Classification of Shares pertaining to
Class K - Series 1 shares; Class K - Series 2 shares;
Class L - Series 1 shares; Class L - Series 2 shares;
Class M - Series 1 shares; Class M - Series 2 shares;
Class N - Series 1 shares; Class N - Series 2 shares;
Class O - Series 1 shares; and Class O - Series 2
shares.(4)
(8) Certificate of Classification of Shares pertaining to
Class P - Series 1 shares; Class P - Series 2 shares;
Class Q - Series 1 shares; Class Q - Series 2 shares;
Class R - Series 1 shares; Class R - Series 2 shares;
and Class S shares.(4)
(9) Certificate of Classification of Shares pertaining to
Class T - Series 1 shares and Class T - Series 2
shares.(4)
(10) Certificate of Classification of Shares pertaining to
Class U - Series 1 shares and Class U - Series 2
shares; Class V shares; Class
<PAGE>
W shares; and Class X - Series 1 shares and Class X -
Series 2 shares.(8)
(11) Certificate of Classification of Shares pertaining to
Class C - Special Series 2 shares; Class H - Series 3
shares; Class J - Series 3 shares; Class K - Series 3
shares; Class L - Series 3 shares; Class M - Series 3
shares; Class N - Series 3 shares; and Class U - Series
3 shares.(8)
(l2) Certificate of Classification of Shares pertaining to
Class A - Special Series 2 shares.(8)
(13) Certificate of Classification of Shares pertaining to
Class Y - Series 1 shares and Class Y - Series 2
shares; Class Z - Series 1 shares, Class Z - Series 2
shares and Class Z - Series 3 shares; and Class AA -
Series 1 shares, Class AA - Series 2 shares and Class
AA - Series 3 shares.(8)
(14) Certificate of Classification of Shares pertaining to
Class BB, Class CC and Class DD shares.(8)
(15) Certificate of Classification of Shares pertaining to
Class D - Special Series 2 shares; Class G - Series 3
shares; Class I - Series 3 shares; and Class X - Series
3 shares.(8)
(16) Certificate of Classification of Shares pertaining to
Class C - Special Series 3 shares; Class C - Special
Series 4 shares; Class D - Special Series 3 shares;
Class D - Special Series 4 shares; Class G - Series 4
shares; Class G Series 5 shares; Class H - Series 4
shares; Class H Series 5 shares; Class I - Series 4
shares; Class I - Series 5 shares; Class J - Series 4
shares; Class J - Series 5 shares; Class K - Series 4
shares; Class K - Series 5 shares; Class L - Series 4
shares; Class L Series 5 shares; Class M - Series 4
shares; Class M - Series 5 shares; Class N - Series 4
shares; Class N - Series 5 shares; Class U - Series 4
shares; Class U - Series 5 shares; Class X - Series 4
shares; Class X Series 5 shares; Class AA - Series 4
shares; and Class AA - Series 5 shares.(8)
(17) Certificate of Classification of Shares pertaining to
Class EE - Series shares and Class EE - Series 2
shares; Class V - Special Series 1 shares; and Class W
- Special Series 1 shares.(11)
(18) Certificate of Classification of Shares pertaining to
Class A - Special Series 3 shares; Class F - Special
Series 2 shares; Class E - Special Series 2 shares;
Class L - Series 6 shares; Class D - Special Series 5
shares; Class J - Series 6 shares; Class R - Series
3shares;
- 2 -
<PAGE>
Class N - Series 6 shares; Class U - Series 6 shares;
Class H - Series 6 shares; and Class G - Series 6
shares. (12)
(19) Certificate of Classification of Shares pertaining to
Class FF shares; Class GG shares; Class HH - Series 1
shares and Class HH - Series 2 shares; Class II shares;
Class JJ - Series 1 shares, Class JJ - Series 2 shares
and Class JJ - Series 3 shares; Class KK - Series 1
shares, Class KK - Series 2 shares and Class KK -
Series 3 shares; Class LL - Series 1 shares, Class LL -
Series 2 shares and Class LL - Series 3 shares; and
Class MM - Series 1 shares, Class MM - Series 2 shares
and Class MM - Series 3 shares.(14)
(20) Certificate of Classification of Shares pertaining to
Class MM - Series 4 shares.(16)
(21) Certificate of Classification of Shares pertaining to
Class NN-Series 1 shares; Class NN-Series 2 shares; and
Class NN-Series 3 shares.(16)
(22) Certificate of Classification of Shares pertaining to
Class NN-Series 4 Shares and Class NN- Series 5
shares.(17)
(b) Code of Regulations.(4)
(c) Article V, Section 5.1, and Article VIII, Section 8.1, of
Registrant's Declaration of Trust incorporated herein by
reference as Exhibit (a)(1), and Amendment No. 1 to
Registrant's Declaration of Trust incorporated herein by
reference as Exhibit (a)(2).
(d) (1) Advisory Agreement between the Registrant and Fleet
Investment Advisors Inc. with respect to the Money
Market, Government, U.S. Treasury, Tax-Exempt,
Institutional Government Money Market (formerly
Institutional Treasury Money Market), Short-Term Bond,
Intermediate Government Income (formerly Intermediate
Bond), Corporate Bond, High Quality Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal
Bond, Massachusetts Municipal Bond, Rhode Island
Municipal Bond, Equity Value, Equity Growth, Equity
Income, International Equity, Small Company Equity and
Asset Allocation Funds dated as of May 19, 1994.(2)
(2) Addendum No. 1 to Advisory Agreement between the
Registrant and Fleet Investment Advisors Inc. with
respect to the Connecticut Municipal Money Market,
Massachusetts Municipal Money Market, Growth and Income
and Small Cap Value Funds dated as of December 1,
1995.(1)
- 3 -
<PAGE>
(3) Addendum No. 2 to Advisory Agreement between the
Registrant and Fleet Investment Advisors Inc. with
respect to the New Jersey Municipal Bond Fund, MidCap
Equity Fund and Strategic Equity Fund dated as of March
3, 1998.(5)
(4) Addendum No. 3 to Advisory Agreement dated September
18, 1998 between the Registrant and Fleet Investment
Advisors Inc. with respect to the Prime Reserves,
Government Reserves and Tax-Exempt Reserves.(8)
(5) Form of Addendum No. 4 to Advisory Agreement between
the Registrant and Fleet Investment Advisors Inc. with
respect to the New York Municipal Money Market
Fund.(11)
(6) Form of Addendum No. 5 to Advisory Agreement between
the Registrant and Fleet Investment Advisors Inc. with
respect to the Institutional Money Market Fund,
Institutional Treasury Money Market Fund, Florida
Municipal Bond Fund, Intermediate Tax-Exempt Bond Fund,
Connecticut Intermediate Municipal Bond Fund,
Massachusetts Intermediate Municipal Bond Fund and
Growth Fund II.(14)
(7) Form of Addendum No. 6 to Advisory Agreement between
the Registrant and Fleet Investment Advisors Inc. with
respect to the Pan Asia Fund.(17)
(8) Sub-Advisory Agreement between Fleet Investment
Advisors Inc. and Oechsle International Advisors, LLC
with respect to the International Equity Fund dated as
of October 8, 1998.(8)
(9) Form of Sub-Advisory Agreement between Fleet Investment
Advisors Inc. and UOB Global Capital LLC with respect
to the Pan Asia Fund.(17)
(e) (1) Distribution Agreement between the Registrant and
Provident Distributors, Inc. dated as of December 1,
1999. (12)
(2) Form of Amendment No. 1 to Distribution Agreement
between the Registrant and Provident Distributors, Inc.
with respect to the New York Municipal Money Market
Fund.(11)
(3) Form of Amendment No. 2 to Distribution Agreement
between the Registrant and Provident Distributors, Inc.
with respect to the Institutional Money Market Fund,
Institutional Treasury Money Market Fund, Florida
Municipal Bond Fund, Intermediate Tax-
- 4 -
<PAGE>
Exempt Bond Fund, Connecticut Intermediate Municipal
Bond Fund, Massachusetts Intermediate Municipal Bond
Fund and Growth Fund II.(14)
(4) Form of Amendment No. 3 to Distribution Agreement
between the Registrant and Provident Distributors, Inc.
with respect to the Pan Asia Fund.(16)
(f) The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II
Deferred Compensation Plan and Related Agreement
effective as of January 1, 1997.(2)
(g) (1) Global Custody Agreement between the Registrant and
The Chase Manhattan Bank dated as of November 1,
1991.(4)
(2) Amendment dated December 2, 1998 to Global Custody
Agreement between the Registrant and The Chase
Manhattan Bank.(9)
(3) Form of Amendment to Global Custody Agreement between
the Registrant and The Chase Manhattan Bank with
respect to the New Jersey Municipal Bond, MidCap Equity
and Strategic Equity Funds.(3)
(4) Form of Amendment to Global Custody Agreement between
the Registrant and The Chase Manhattan Bank with
respect to the Prime Reserves, Government Reserves and
Tax-Exempt Reserves.(5)
(5) Form of Amendment to Global Custody Agreement between
the Registrant and The Chase Manhattan Bank with
respect to the New York Municipal Money Market
Fund.(11)
(6) Form of Amendment to Global Custody Agreement between
the Registrant and The Chase Manhattan Bank with
respect to the Institutional Money Market Fund,
Institutional Treasury Money Market Fund, Florida
Municipal Bond Fund, Intermediate Tax-Exempt Bond Fund,
Connecticut Intermediate Municipal Bond Fund,
Massachusetts Intermediate Municipal Bond Fund and
Growth Fund II.(14)
(7) Form of Amendment to Global Custody Agreement between
the Registrant and The Chase Manhattan Bank with
respect to the Pan Asia Fund.(16)
(8) Consent to Assignment of Global Custody Agreement
between the Registrant, The Chase Manhattan Bank, N.A.
and 440 Financial
- 5 -
<PAGE>
Group of Worcester, Inc. to The Shareholder Services
Group, Inc. d/b/a 440 Financial dated March 31,
1995.(11)
(h) (1) Administration Agreement between the Registrant and
PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.) dated as of June 1, 1997.(3)
(2) Amendment No. 1 dated March 3, 1998 to Administration
Agreement between the Registrant and PFPC Inc.
(formerly known as First Data Investor Services Group,
Inc.) with respect to the New Jersey Municipal Bond
Fund, MidCap Equity Fund and Strategic Equity Fund.(5)
(3) Amendment No. 2 dated as of March 5, 1998 to
Administration Agreement between the Registrant and
PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.).(6)
(4) Amendment No. 3 dated as of September 18, 1998 to
Administration Agreement between the Registrant and
PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.) with respect to the Prime
Reserves, Government Reserves and Tax-Exempt Reserves
Fund.(8)
(5) Amendment No. 4 dated as of September 10, 1998 to
Administration Agreement between the Registrant and
PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.).(9)
(6) Amendment No. 5 dated as of December 1, 1999 to
Administration Agreement between Registrant and PFPC
Inc. (formerly known as First Data Investor Services
Group, Inc.).(12)
(7) Form of Amendment No. 6 to Administration Agreement
between Registrant and PFPC Inc. (formerly known as
First Data Investor Services Group, Inc.) with respect
to the New York Municipal Money Market Fund.(11)
(8) Form of Amendment No. 7 to Administration Agreement
between Registrant and PFPC Inc. (formerly known as
First Data Investor Services Group, Inc.) with respect
to the Institutional Money Market Fund, Institutional
Treasury Money Market Fund, Florida Municipal Bond
Fund, Intermediate Tax-Exempt Bond Fund, Connecticut
Intermediate Municipal Bond Fund, Massachusetts
Intermediate Municipal Bond Fund and Growth
Fund II.(14)
- 6 -
<PAGE>
(9) Form of Amendment No. 8 to Administration Agreement
between Registrant and PFPC Inc. (formerly known as
First Data Investor Services Group, Inc.).(17)
(10) Form of Amendment No. 9 to Administration Agreement
between Registrant and PFPC Inc. (formerly known as
First Data Investor Services Group, Inc.) with respect
to the Pan Asia Fund.(17)
(11) Transfer Agency and Services Agreement between the
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) dated as of June 1,
1997.(3)
(12) Amendment No. 1 dated March 3, 1998 to Transfer Agency
and Services Agreement between the Registrant and PFPC
Inc. (formerly known as First Data Investor Services
Group, Inc.) with respect to the New Jersey Municipal
Bond Fund, MidCap Equity Fund and Strategic Equity
Fund.(5)
(13) Amendment No. 2 dated as of March 5, 1998 to Transfer
Agency and Services Agreement between the Registrant
and PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.).(6)
(14) Amendment No. 3 dated as of September 18, 1998 to
Transfer Agency and Services Agreement between the
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) with respect to the
Prime Reserves, Government Reserves and Tax-Exempt
Reserves Fund.(8)
(15) Amendment No. 4 dated as of September 10, 1998 to
Transfer Agency and Services Agreement between
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.).(9)
(16) Amendment No. 5 dated as of September 9, 1999 to
Transfer Agency and Services Agreement between
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.).(12)
(17) Amendment No. 6 dated as of December 2, 1999 to
Transfer Agency and Services Agreement between
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.).(12)
(18) Form of Amendment No. 7 to Transfer Agency and Services
Agreement between Registrant and PFPC Inc. (formerly
known as First Data Investor Services Group, Inc.) with
respect to the New York Municipal Money Market
Fund.(11)
- 7 -
<PAGE>
(19) Form of Amendment No. 8 to Transfer Agency and Services
Agreement between Registrant and PFPC Inc. (formerly
known as First Data Investor Services Group, Inc). with
respect to the Institutional Money Market Fund,
Institutional Treasury Money Market Fund, Florida
Municipal Bond Fund, Intermediate Tax-Exempt Bond Fund,
Connecticut Intermediate Municipal Bond Fund,
Massachusetts Intermediate Municipal Bond Fund and
Growth Fund II.(14)
(20) Form of Amendment No. 9 to Transfer Agency and Services
Agreement between Registrant and PFPC Inc. (formerly
known as First Data Investor Services Group, Inc.).(17)
(21) Form of Amendment No. 10 to Transfer Agency and
Services Agreement between Registrant and PFPC Inc.
(formerly known as First Data Investor Services Group,
Inc.) with respect to the Pan Asia Fund.(17)
(22) Shareholder Services Plan for Trust Shares and Retail A
Shares and Related Forms of Servicing Agreements.(14)
(23) Shareholder Services Plan for BKB Shares and Related
Forms of Servicing Agreements.(14)
(24) Credit Agreement dated as of December 29, 1999 among
the Registrant, The Galaxy VIP Fund, Galaxy Fund II,
Various Banks, Deutsche Bank Securities Inc. and
Deutsche Bank AG, New York Branch.(14)
(25) Agreement and Plan of Reorganization between The Galaxy
Fund and Boston 1784 Funds.(17)
(i) (1) Opinion and consent of counsel dated September 28,
1999.(10)
(2) Opinion and consent of counsel dated December 3,
1999.(11)
(3) Opinion and consent of counsel dated February 28,
2000.(15)
(4) Opinion and consent of counsel dated May 30, 2000.(17)
(j) (1) Consent of Drinker Biddle & Reath LLP.(17)
(k) None.
(l) (1) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. dated July 24, 1986.(4)
- 8 -
<PAGE>
(2) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. dated October 11, 1990 with
respect to the Treasury, Equity Growth, Equity Income,
International Equity and High Quality Bond Funds.(4)
(3) Purchase Agreement between the Registrant and SMA
Equities, Inc. dated December 30, 1991 with respect to
the Small Company Equity Fund, Short-Term Bond Fund,
Tax-Exempt Bond Fund, Asset Allocation Fund, and New
York Municipal Bond Fund.(4)
(4) Purchase Agreement between the Registrant and Allmerica
Investments, Inc. dated February 22, 1993 with respect
to the Connecticut Municipal Bond, Massachusetts
Municipal Bond, Rhode Island Municipal Bond and
Institutional Government Money Market (formerly
Institutional Treasury Money Market) Funds.(4)
(5) Purchase Agreement between the Registrant and 440
Financial Distributors, Inc. dated May 19, 1994 with
respect to the Corporate Bond Fund.(4)
(6) Purchase Agreement between the Registrant and First
Data Distributors, Inc. dated February 28, 1996 with
respect to the Connecticut Municipal Money Market,
Massachusetts Municipal Money Market Money, Growth and
Income and Small Cap Value Funds.(4)
(7) Purchase Agreement between the Registrant and First
Data Distributors, Inc. with respect to the New Jersey
Municipal Bond Fund.(5)
(8) Form of Purchase Agreement between the Registrant and
First Data Distributors, Inc. with respect to the
MidCap Equity Fund.(3)
(9) Purchase Agreement between the Registrant and First
Data Distributors, Inc. with respect to the Strategic
Equity Fund.(5)
(10) Purchase Agreement between the Registrant and First
Data Distributors, Inc. dated September 18, 1998 with
respect to the Prime Reserves, Government Reserves and
Tax-Exempt Reserves.(9)
- 9 -
<PAGE>
(11) Form of Purchase Agreement between the Registrant and
Provident Distributors, Inc. with respect to the New
York Municipal Money Market Fund.(14)
(12) Form of Purchase Agreement between the Registrant and
Provident Distributors, Inc. with respect to the
Institutional Money Market Fund, Institutional Treasury
Money Market Fund, Florida Municipal Bond Fund,
Intermediate Tax-Exempt Bond Fund, Connecticut
Intermediate Municipal Bond Fund, Massachusetts
Intermediate Municipal Bond Fund and Growth Fund
II.(14)
(13) Form of Purchase Agreement between the Registrant and
Provident Distributors, Inc. with respect to the Pan
Asia Fund.(17)
(m) (1) Distribution and Services Plan for Retail B Shares and
Related Form of Servicing Agreement.(16)
(2) Distribution and Services Plan and Related Form of
Servicing Agreement with respect to the Prime Reserves,
Government Reserves and Tax-Exempt Reserves.(5)
(3) Distribution Plan for A Prime Shares.(6)
(4) Distribution and Services Plan for B Prime Shares and
Related Form of Servicing Agreement.(6)
(5) Distribution and Services Plan and Related Form of
Servicing Agreement with respect to Prime Shares of the
New York Municipal Money Market Fund, Connecticut
Municipal Money Market Fund and Massachusetts Municipal
Money Market Fund.(11)
(6) Distribution Plan with respect to Retail A Shares of
the Pan Asia Fund.(16)
(7) Distribution Plan with respect to Prime A Shares of the
Pan Asia Fund.(17)
(8) Distribution and Services Plan and Related Form of
Servicing Agreement for Prime B Shares of the Pan Asia
Fund.(17)
(n) None.
(o) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System.(17)
(p) (1) Code of Ethics - Registrant.(17)
- 10 -
<PAGE>
(2) Code of Ethics - Fleet Investment Advisors, Inc.(16)
(3) Code of Ethics - Oechsle International Advisors,
LLC.(17)
(4) Code of Ethics - UOB Global Capital LLC.(17)
---------------------
(1) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 27 to the Registrant's Registration
Statement on Form N-1A (File Nos. 33-4806 and 811-4636) as filed with the
Commission on March 4, 1996.
(2) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 29 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on December 30, 1996.
(3) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on December 15, 1997.
(4) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 32 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on February 27, 1998.
(5) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 33 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on June 30, 1998.
(6) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 34 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on September 11,
1998.
(7) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 35 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on October 6, 1998.
(8) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 36 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on December 30, 1998.
(9) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 37 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on February 26, 1999.
- 11 -
<PAGE>
(10) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 38 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on September 28,
1999.
(11) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 40 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on December 3, 1999.
(12) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 41 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on December 29, 1999.
(13) Filed electronically as Appendix II to the Combined Prospectus/Proxy
Statement and incorporated herein by reference to the Registrant's
Registration Statement on Form N-14 as filed with the Commission on
February 7, 2000.
(14) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 43 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on February 23, 2000.
(15) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 44 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on February 28, 2000.
(16) Filed electronically as an Exhibit and incorporated herein by reference
to Post-Effective Amendment No. 46 to the Registrant's Registration
Statement on Form N-1A as filed with the Commission on April 17, 2000.
(17) Filed herewith.
Item 24. Persons Controlled By or Under Common Control with
Registrant
Registrant is controlled by its Board of Trustees.
Item 25. Indemnification
Indemnification of the Registrant's principal underwriter, custodian and
transfer agent against certain losses is provided for, respectively, in Section
1.19 of the Distribution Agreement incorporated herein by reference as Exhibit
(e)(1), in Section 12 of the Global Custody Agreement incorporated herein by
reference as Exhibit (g)(1) and in Article 10 of the Transfer Agency and
Services Agreement incorporated herein by reference as Exhibit (h)(9). The
Registrant has obtained from a major insurance carrier a directors' and
officers' liability policy covering certain types of errors and omissions. In
addition, Section 9.3 of the Registrant's Declaration of Trust dated March 31,
1986, incorporated herein by reference as Exhibit (a)(1), provides as follows:
- 12 -
<PAGE>
9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND EMPLOYEES. The Trust shall
indemnify each of its Trustees against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he may be involved or with
which he may be threatened, while as a Trustee or thereafter, by reason of
his being or having been such a Trustee EXCEPT with respect to any matter
as to which he shall have been adjudicated to have acted in bad faith,
willful misfeasance, gross negligence or reckless disregard of his duties,
PROVIDED that as to any matter disposed of by a compromise payment by such
person, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided unless
the Trust shall have received a written opinion from independent legal
counsel approved by the Trustees to the effect that if either the matter of
willful misfeasance, gross negligence or reckless disregard of duty, or the
matter of bad faith had been adjudicated, it would in the opinion of such
counsel have been adjudicated in favor of such person. The rights accruing
to any person under these provisions shall not exclude any other right to
which he may be lawfully entitled, PROVIDED that no person may satisfy any
right of indemnity or reimbursement hereunder except out of the property of
the Trust. The Trustees may make advance payments in connection with the
indemnification under this Section 9.3, PROVIDED that the indemnified
person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that he is not entitled to such
indemnification.
The Trustees shall indemnify representatives and employees of the Trust to
the same extent that Trustees are entitled to indemnification pursuant to
this Section 9.3.
Insofar as indemnification for liability arising under the Securities Act
of 1933, as amended, may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
- 13 -
<PAGE>
Item 26. (a) Business and Other Connections of Investment Adviser
Fleet Investment Advisors Inc. ("Fleet") is an investment
adviser registered under the Investment Advisers Act of 1940
(the "Advisers Act").
The list required by this Item 26 of officers and directors of
Fleet, together with information as to any business
profession, vocation or employment of a substantial nature
engaged in by such officers and directors during the past two
years, is incorporated herein by reference to Schedules A and
D of Form ADV filed by Fleet pursuant to the Advisers Act (SEC
File No. 801-20312).
(b) Business and Other Connections of Sub-Adviser
Oechsle International Advisors, LLC ("Oechsle") is an
investment adviser registered under the Investment Advisers
Act of 1940 (the "Advisers Act").
The list required by this Item 26 of the officers of Oechsle,
together with information as to any business profession,
vocation or employment of a substantial nature engaged in by
such officers during the past two years, is incorporated
herein by reference to Schedules A and D of Form ADV filed by
Oechsle pursuant to the Advisers Act (SEC File No. 801-28111).
(c) Business and Other Connections of Sub-Adviser
UOB Global Capital LLC ("UOB") is an investment adviser
registered under the Advisers Act.
The list required by this Item 26 of the officers of UOB,
together with information as to any business profession,
vocation or employment of a substantial nature engaged in by
such officers during the past two years, is incorporated
herein by reference to Schedules A and D of Form ADV filed by
UOB pursuant to the Advisers Act (SEC File No. 801-56090).
Item 27. Principal Underwriter
(a) In addition to The Galaxy Fund, Provident Distributors, Inc.
(the "Distributor") currently acts as distributor for The
Galaxy VIP Fund, Galaxy Fund II, International Dollar Reserve
Fund I, Ltd., Provident Institutional Funds Trust, Columbia
Common Stock Fund, Inc., Columbia Growth Fund, Inc., Columbia
International Stock Fund, Inc., Columbia Special Fund, Inc.,
Columbia Small Cap Fund, Inc., Columbia Real Estate Equity
Fund, Inc., Columbia Balanced Fund, Inc., Columbia Daily
Income Company, Columbia U.S. Government Securities Fund,
Inc., Columbia Fixed Income Securities Fund, Inc., Columbia
Municipal Bond Fund, Inc., Columbia High Yield Fund, Inc.,
Columbia National Municipal Bond Fund, Inc., GAMNA Series
Funds, Inc., WT Investment Trust, Kalmar Pooled Investment
Trust, The RBB Fund, Inc., Robertson Stephens Investment
- 14 -
<PAGE>
Trust, HT Insight Funds, Inc., Harris Insight Funds Trust,
Hilliard-Lyons Government Fund, Inc., Hilliard-Lyons Growth
Fund, Inc., Hilliard-Lyons Research Trust, Senbanc Fund,
Warburg Pincus Trust, ABN AMRO Funds, Alleghany Funds, BT
Insurance Funds Trust, First Choice Funds Trust, Forward
Funds, Inc., IAA Trust Asset Allocation Fund, Inc., IAA Trust
Growth Fund, Inc., IAA Trust Tax Exempt Bond Fund, Inc., IAA
Trust Taxable Fixed Income Series Fund, Inc., IBJ Funds Trust,
Light Index Funds, Inc., LKCM Funds, Matthews International
Funds, McM Funds, Metropolitan West Funds, New Covenant Funds,
Inc., Panorama Trust, Smith Breeden Series Funds, Smith
Breeden Trust, Stratton Growth Fund, Inc., Stratton Monthly
Dividend REIT Shares, Inc., The Stratton Funds, Inc., The
Govett Funds, Inc., Trainer, Wortham First Mutual Funds,
Undiscovered Managers Funds, Wilshire Target Funds, Inc.,
Weiss, Peck & Greer Funds Trust, Weiss, Peck & Greer
International Fund, WPG Growth and Income Fund, WPG Growth
Fund, WPG Tudor Fund, RWB/WPG U.S. Large Stock Fund, Tomorrow
Funds Retirement Trust, The BlackRock Funds, Inc. (distributed
by BlackRock Distributors, Inc., a wholly-owned subsidiary of
Provident Distributors, Inc.), Northern Funds Trust and
Northern Institutional Funds Trust (distributed by Northern
Funds Distributors, LLC, a wholly-owned subsidiary of
Provident Distributors, Inc.), The Offit Investment Fund, Inc.
(distributed by Offit Funds Distributor, Inc., a wholly-owned
subsidiary of Provident Distributors, Inc.), The Offit
Variable Insurance Fund, Inc. (distributed by Offit Funds
Distributor, Inc., a wholly-owned subsidiary of Provident
Distributors, Inc.).
(b) The information required by this Item 27 (b) with respect to
each director, officer, or partner of the Distributor is
incorporated by reference to Schedule A of Form BD filed by
the Distributor with the Securities and Exchange Commission
pursuant to the Securities Act of 1934, as amended (File No.
8-46564).
(c) The Distributor receives no compensation from the Registrant
for distribution of its shares other than payments for
distribution assistance pursuant to Registrant's Distribution
Plan for Retail A Shares (Pan Asia Fund), Distribution and
Services Plan for Retail B Shares, Distribution and Services
Plan for the Prime Reserves, Government Reserves and
Tax-Exempt Reserves, Distribution Plan for Prime A Shares and
Distribution and Services Plan for Prime B Shares.
Item 28. Location of Accounts and Records
(1) Fleet Investment Advisors Inc., 75 State Street,
Boston, Massachusetts 02109 (records relating to its
functions as investment adviser to all of the
Registrant's Funds).
(2) Oechsle International Advisors, LLC, One
International Place, Boston, Massachusetts 02210
(records relating to its functions as sub-investment
adviser to the International Equity Fund).
- 15 -
<PAGE>
(3) UOB Global Capital LLC, 592 Fifth Avenue, Suite
602, New York, NY 10036 and UOB Plaza 2, 80 Raffles
Place, #03-00, Singapore 048624 (records relating
to its functions as sub-investment adviser to the
Pan Asia Fund).
(4) Provident Distributors Inc., 3200 Horizon Drive, King
of Prussia, Pennsylvania 19406 (records relating to
its functions as distributor).
(5) PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.), 53 State Street, Mail Stop BOS
425, Boston, MA 02109 (records relating to its
functions as administrator).
(6) PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.), 4400 Computer Drive,
Westborough, MA 01581-5108 (records relating to its
functions as transfer agent).
(7) Drinker Biddle & Reath LLP, One Logan Square, 18th
and Cherry Streets, Philadelphia, Pennsylvania 19103
(Registrant's Declaration of Trust, Code of
Regulations and Minute Books).
(8) The Chase Manhattan Bank, 1211 Avenue of the
Americas, New York, New York 10036 (records relating
to its functions as custodian).
Item 29. Management Services
Inapplicable.
Item 30. Undertakings
None.
- 16 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant has duly caused this
Post-Effective Amendment No. 48 to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in Warwick, Rhode
Island, on the 31st day of May, 2000.
THE GALAXY FUND
Registrant
/s/ JOHN T. O'NEILL
---------------------------
John T. O'Neill
President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 48 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
/s/ John T. O'Neill Trustee, President May 31, 2000
--------------------------- and Treasurer
John T. O'Neill
*/s/ Dwight E. Vicks, Jr. Chairman of the Board May 31, 2000
--------------------------- of Trustees
Dwight E. Vicks, Jr.
*/s/ Donald B. Miller Trustee May 31, 2000
---------------------------
Donald B. Miller
*/s/ Louis Dethomasis Trustee May 31, 2000
---------------------------
Louis DeThomasis
*/s/ Bradford S. Wellman Trustee May 31, 2000
---------------------------
Bradford S. Wellman
*/s/ James M. Seed Trustee May 31, 2000
---------------------------
James M. Seed
*By: /s/ John T. O'Neill
---------------------------
John T. O'Neill
Attorney-In-Fact
<PAGE>
THE GALAXY FUND
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints John T. O'Neill and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, of The Galaxy Fund (the "Trust"), to execute any
and all amendments to the Trust's Registration Statement on Form N-1A pursuant
to the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended (the "Acts"), and all instruments necessary or incidental in
connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys, or either of them, may lawfully do or cause to be done by virtue
hereof.
Dated: December 4, 1996 /s/Dwight E. Vicks, Jr.
--------------------------
Dwight E. Vicks, Jr.
<PAGE>
THE GALAXY FUND
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints John T. O'Neill and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, of The Galaxy Fund (the "Trust"), to execute any
and all amendments to the Trust's Registration Statement on Form N-1A pursuant
to the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended (the "Acts"), and all instruments necessary or incidental in
connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys, or either of them, may lawfully do or cause to be done by virtue
hereof.
Dated: December 5, 1996 /s/Donald B. Miller
---------------------
Donald B. Miller
<PAGE>
THE GALAXY FUND
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints John T. O'Neill and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, of The Galaxy Fund (the "Trust"), to execute any
and all amendments to the Trust's Registration Statement on Form N-1A pursuant
to the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended (the "Acts"), and all instruments necessary or incidental in
connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys, or either of them, may lawfully do or cause to be done by virtue
hereof.
Dated: December 5, 1996 /s/Brother Louis DeThomasis
---------------------------
Brother Louis DeThomasis
<PAGE>
THE GALAXY FUND
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints John T. O'Neill and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, of The Galaxy Fund (the "Trust"), to execute any
and all amendments to the Trust's Registration Statement on Form N-1A pursuant
to the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended (the "Acts"), and all instruments necessary or incidental in
connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys, or either of them, may lawfully do or cause to be done by virtue
hereof.
Dated: December 5, 1996 /s/Bradford S. Wellman
----------------------
Bradford S. Wellman
<PAGE>
THE GALAXY FUND
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints John T. O'Neill and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, of The Galaxy Fund (the "Trust"), to execute any
and all amendments to the Trust's Registration Statement on Form N-1A pursuant
to the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended (the "Acts"), and all instruments necessary or incidental in
connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys, or either of them, may lawfully do or cause to be done by virtue
hereof.
Dated: December 5, 1996 /s/James M. Seed
--------------------
James M. Seed
<PAGE>
EXHIBIT INDEX
Exhibit No. Description:
----------- ------------
(a)(22) Certificate of Classification of Shares pertaining to Class NN -
Series 4 Shares and Class NN - Series 5 Shares.
(d)(7) Form of Addendum No. 6 to Advisory Agreement between the
Registrant and Fleet Investment Advisors Inc. with respect
to the Pan Asia Fund.
(d)(9) Form of Sub-Advisory Agreement between Fleet Investment
Advisors Inc. and UOB Global Capital LLC with respect to the
Pan Asia Fund.
(h)(9) Form of Amendment No. 8 to Administration Agreement between
Registrant and PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.).
(h)(10) Form of Amendment No. 9 to Administration Agreement between
Registrant and PFPC Inc. (formerly known as First Data Investor
Services Group, Inc.) with respect to the Pan Asia Fund.
(h)(20) Form of Amendment No. 9 to Transfer Agency and Services Agreement
between Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.).
(h)(21) Form of Amendment No. 10 to Transfer Agency and Services Agreement
between Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) with respect to the Pan Asia Fund.
(h)(25) Agreement and Plan of Reorganization between The Galaxy Fund and
Boston 1784 Funds.
(i)(5) Opinion and consent of counsel dated May 30, 2000.
(j) Consent of Drinker Biddle & Reath LLP.
(l)(14) Form of Purchase Agreement between the Registrant and Provident
Distributors, Inc. with respect to the Pan Asia Fund.
(m)(7) Distribution Plan with respect to Prime A Shares.
(m)(8) Distribution and Services Plan and Related Form of Servicing
Agreement for Prime B Shares.
(p)(1) Code of Ethics - The Galaxy Fund.
(p)(3) Code of Ethics - Oechsle International Advisors, LLC.
(p)(4) Code of Ethics - UOB Global Capital LLC.
(o) Amended and Restated Plan Pursuant to Rule 18f-3 for Operation of
a Multi-Class System.
