--
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.______)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
The Shawmut Funds
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4)
and 0-11.
1. Title of each class of securities to which
transaction applies:
2. Aggregate number of securities to which
transaction applies:
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-
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calculated and state how it was determined):
4. Proposed maximum aggregate value of
transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
____________________________________________________________
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2) Form, Schedule or Registration Statement No.:
____________________________________________________________
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4) Date Filed:
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PRELIMINARY
THE SHAWMUT FUNDS
19th Floor
1001 Liberty Avenue
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on October 23, 1995
To Shawmut Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the
Shareholders ("Shareholders") of each class of The Shawmut
Funds ("Shawmut") will be held at Federated Investors Tower,
1001 Liberty Avenue, 19th Floor, Pittsburgh, Pennsylvania
15222-3779 on October 23, 1995 at 2:00 p.m. Eastern Time for
the following purposes:
ITEM 1. With respect to each investment
fund (a "Shawmut Fund") of Shawmut:
To consider and act upon a proposal to
approve an Agreement and Plan of Reorganization
(the "Reorganization Agreement") and the
transactions contemplated thereby, including (a)
the transfer of substantially all of the assets
and liabilities of Shawmut's Growth Equity, Prime
Money Market, Limited Term Income, Fixed Income,
Intermediate Government Income, Connecticut
Intermediate Municipal Income and Massachusetts
Intermediate Municipal Income Funds and the
transfer of all the assets and liabilities of
Shawmut's Growth and Income Equity, Small
Capitalization Equity, Connecticut Municipal Money
Market and Massachusetts Municipal Money Market
Funds to corresponding investment funds (the
"Galaxy Funds") of The Galaxy Fund in exchange for
shares of the Galaxy Funds; (b) the distribution
of the Galaxy Funds' shares so received to
shareholders of the Shawmut Funds; and (c) the
termination under state law of Shawmut.
ITEM 2. With respect to each Shawmut Fund:
To transact such other business as may
properly come before the Special Meeting or any
adjournment(s) thereof.
The proposed reorganization and related matters are
described in the attached Combined Proxy
Statement/Prospectus. Appendix I to the Combined Proxy
Statement/Prospectus is a copy of the Reorganization
Agreement.
Shareholders of record as of the close of business on
____________, 1995 are entitled to notice of, and to vote
at, the Special Meeting or any adjournment(s) thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY
CARD WHICH IS BEING SOLICITED BY SHAWMUT'S BOARD OF
TRUSTEES. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE
THEY ARE EXERCISED BY SUBMITTING TO SHAWMUT A WRITTEN NOTICE
OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY
ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
________________________
Secretary
___________________, 1995
COMBINED PROXY STATEMENT/PROSPECTUS
Dated ____________, 1995
THE SHAWMUT FUNDS
Federated Investors Tower
19th Floor
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(800) - SHAWMUT
THE GALAXY FUND
440 Lincoln Street
Worcester, Massachusetts 01605-1959
(800) 628-0414
This Combined Proxy Statement/Prospectus is furnished in
connection with the solicitation of proxies by the Board of
Trustees of The Shawmut Funds ("Shawmut") in connection with a
Special Meeting (the "Meeting") of Shareholders ("Shareholders")
to be held on October 23, 1995 at 2:00 p.m. Eastern Time at
Federated Investors Tower, 1001 Liberty Avenue, 19th Floor,
Pittsburgh, Pennsylvania 15222-3779, at which Shareholders will
be asked to consider and approve a proposed Agreement and Plan of
Reorganization dated ____________, 1995 (the "Reorganization
Agreement"), by and between Shawmut and The Galaxy Fund
("Galaxy").
Shawmut and Galaxy are open-end, series, management
investment companies. Shawmut Bank, N.A. currently provides
investment advisory services to Shawmut. Fleet Investment
Advisors Inc. ("Fleet") provides investment advisory services to
Galaxy. In reviewing the proposed reorganization (the
"Reorganization"), the Shawmut Board considered the pending
merger between Shawmut National Corporation, the parent company
of Shawmut Bank, N.A., and Fleet Financial Group, Inc.; the
effect of such merger on Shawmut; the recommendation of Shawmut
Bank, N.A. and Fleet with respect to the proposed consolidation
of Shawmut and Galaxy; the fact that the reorganization would
constitute a tax-free reorganization; and the fact that the
interests of Shareholders would not be diluted as a result of the
reorganization.
The Reorganization Agreement provides that each of the
following seven investment funds of Shawmut (collectively, the
"Reorganizing Funds") will transfer substantially all its assets
and known liabilities to the existing Galaxy investment fund
(collectively, the "Existing Galaxy Funds") identified below
opposite its name:
Reorganizing Funds Existing Galaxy Funds
Shawmut Growth Equity Fund Equity Growth Fund
Shawmut Prime Money Market Fund Money Market Fund
Shawmut Limited Term Income Fund Short-Term Bond Fund
Shawmut Fixed Income Fund Corporate Bond Fund
Shawmut Intermediate Government Intermediate Government
Income Fund Income Fund
Shawmut Connecticut Intermediate Connecticut Municipal
Municipal Income Fund Bond Fund
Shawmut Massachusetts Intermediate Massachusetts Municipal
Municipal Income Fund Bond Fund
The Reorganization Agreement also provides that each of the
following four investment funds of Shawmut (collectively, the
"Continuing Funds") will transfer all its assets and known
liabilities to the newly-organized Galaxy investment fund
(collectively, the "New Galaxy Funds") identified below opposite
its name:
Continuing Funds New Galaxy Funds
Shawmut Growth and Income Equity Growth and Income Fund
Fund
Shawmut Connecticut Municipal Money Connecticut Municipal
Market Fund Money Market Fund
Shawmut Massachusetts Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
Shawmut Small Capitalization Small Cap Value Fund
Equity Fund
In exchange for the transfer of these assets and
liabilities, Galaxy will simultaneously issue shares in each of
the eleven Galaxy investment funds listed above (collectively,
the "Galaxy Funds") to the corresponding Shawmut investment fund
of the eleven listed above (collectively, the "Shawmut Funds").
Most of the Shawmut Funds have two classes of shares
outstanding, as do most of the Galaxy Funds (referred to as
"series of shares" by the Galaxy Funds). Holders of each class
of shares of a Shawmut Fund will receive the series of shares of
the corresponding Galaxy Fund as set forth in the table on
page__ under "Information Relating to the Proposed
Reorganization-- Description of the Reorganization Agreement."
The Shawmut Funds will then make a liquidating distribution
of the Galaxy Funds' shares to the Shareholders of the Shawmut
Funds, so that a holder of a class of shares in a Shawmut Fund at
the Effective Time of the Reorganization (as hereinafter defined)
will receive a series of Shares (as described herein) of the
corresponding Galaxy Fund with the same aggregate net asset value
as the Shareholder had in the Shawmut Fund immediately before the
Reorganization. Following the Reorganization, Shawmut will be
terminated under state law.
The Existing Galaxy Funds currently are conducting
investment operations as described in this Combined Proxy
Statement/ Prospectus. The New Galaxy Funds have recently been
organized for the purpose of continuing the investment operations
of the Shawmut Growth and Income Equity, Connecticut Municipal
Money Market, Massachusetts Municipal Money Market and Small
Capitalization Equity Funds.
This Combined Proxy Statement/Prospectus sets forth the
information that a Shareholder of Shawmut should know before
voting on the Reorganization Agreement (and related
transactions), and should be retained for future reference. The
Prospectuses relating to the shares of the Existing Galaxy Funds,
which describe the operations of those Funds, accompany this
Combined Proxy Statement/Prospectus. Additional information is
set forth in the Statement of Additional Information relating to
those Funds and this Combined Proxy Statement/Prospectus, which
are dated March 1, 1995 (as revised June 12, 1995) and
__________________, 1995, respectively, and in the Prospectuses
and Combined Statements of Additional Information, dated
December 31, 1994, relating to the Shawmut Funds. Each of these
documents is on file with the Securities and Exchange Commission
(the "SEC"), and is available without charge upon oral or written
request by writing or calling either Shawmut or Galaxy at the
respective addresses or telephone numbers indicated above. The
information contained in the Prospectuses and Combined Statements
of Additional Information, dated December 31, 1994, relating to
the Shawmut Funds is incorporated herein by reference.
This Combined Proxy Statement/Prospectus constitutes the
Proxy Statement of Shawmut for the meeting of its Shareholders,
and Galaxy's Prospectus for the shares of its Existing Galaxy
Funds that have been registered with the SEC and are to be issued
in connection with the Reorganization. Because the operations of
the Continuing Funds will be carried on by the New Galaxy Funds,
this Combined Proxy Statement/Prospectus does not constitute a
prospectus for the shares that will be issued in the
Reorganization with respect to the Continuing Funds.
This Combined Proxy Statement/Prospectus is expected to
first be sent to Shareholders on or about ___________, 1995.
THE SECURITIES OF THE GALAXY FUNDS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS COMBINED PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED
PROXY STATEMENT/PROSPECTUS AND IN THE MATERIALS EXPRESSLY
INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY SHAWMUT OR GALAXY.
SHARES OF THE GALAXY FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, FLEET FINANCIAL GROUP, INC., OR ANY OF
ITS AFFILIATES, FLEET INVESTMENT ADVISORS INC., OR ANY FLEET
BANK. SHARES OF THE GALAXY FUNDS 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 GALAXY
FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE GALAXY FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED. THERE IS NO ASSURANCE THAT GALAXY'S MONEY MARKET FUND,
CONNECTICUT MUNICIPAL MONEY MARKET FUND OR MASSACHUSETTS
MUNICIPAL MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
TABLE OF CONTENTS
Page
Summary 1
Proposed Reorganization 1
Reasons for Reorganization 1
Federal Income Tax Consequences 1
Overview of the Shawmut Funds and Galaxy Funds 2
Voting Information 39
Risk Factors 39
Information Relating to the Proposed Reorganization 42
Description of the Reorganization Agreement 42
Capitalization 47
Federal Income Tax Consequences 48
Comparison of Investment Policies and Risk Factors 49
Investment Policies and Risk Factors -- Shawmut
Growth Equity Fund and Galaxy Equity Growth Fund 50
Investment Policies and Risk Factors -- Shawmut
Prime Money Market Fund and Galaxy Money Market Fund 51
Investment Policies and Risk Factors --
Shawmut Limited Term Income Fund and
Galaxy Short-Term Bond Fund 52
Investment Policies and Risk Factors -- Shawmut
Fixed Income Fund and Galaxy Corporate
Bond Fund 54
Investment Policies and Risk Factors -- Shawmut
Intermediate Government Income Fund and
Galaxy Intermediate Government Income Fund 55
Investment Policies and Risk Factors --
Shawmut Connecticut/Massachusetts Intermediate
Municipal Income Funds and Galaxy
Connecticut/Massachusetts Municipal Bond Funds 57
Investment Policies and Risks -- General 59
Investment Limitations 62
Purchase and Redemption Information, Exchange
Privileges, Distribution, Pricing, Organization 66
Other Information 73
Information Relating to Voting Matters 76
General Information 76
Shareholder and Board Approvals 77
Appraisal Rights 78
Quorum 78
Annual Meetings 78
Additional Information about Galaxy 79
Additional Information about Shawmut 82
Litigation 87
Financial Highlights 87
Financial Statements 107
Other Business 107
Shareholder Inquiries 108
Appendix I--Agreement and Plan of Reorganization A-1
Appendix II - Portfolio Reviews - Galaxy Funds B-1
SUMMARY
The following is a summary of certain information relating
to the proposed Reorganization, the parties thereto and the
related transactions, and is qualified by reference to the more
complete information contained elsewhere in this Combined Proxy
Statement/Prospectus, the prospectuses and statements of
additional information of Shawmut and Galaxy, and the
Reorganization Agreement attached to this Combined Proxy
Statement/Prospectus as Appendix I. Shawmut's Combined Annual
Report to Shareholders and the most recent Combined Semi-Annual
Report to Shareholders may be obtained free of charge by calling
1-800-SHAWMUT or writing Federated Investors, Federated Investors
Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779.
Proposed Reorganization. Based upon their evaluation of the
relevant information presented to them, and in light of their
fiduciary duties under federal and state law, Shawmut's and
Galaxy's Boards, including their members who are not "interested
persons" within the meaning of the Investment Company Act of 1940
(the "1940 Act"), have determined that the proposed
Reorganization is in the best interests of Shawmut's and Galaxy's
Shareholders, respectively, and that the interests of existing
Shareholders of Shawmut and Galaxy, respectively, will not be
diluted as a result of such Reorganization.
The Cover Page and pages _____ hereof summarize the proposed
Reorganization.
Reasons for the Reorganization.
The primary reason for the Reorganization is the pending
merger between Shawmut National Corporation, the parent of
Shawmut Bank, N.A. ("Shawmut Bank"), and Fleet Financial Group,
Inc. If this merger is completed, the currently existing
investment advisory contract between the Shawmut Funds and
Shawmut Bank, would be terminated. Given that fact, Shawmut Bank
and Fleet have recommended that each of the Shawmut Funds be
reorganized as described in this Combined Proxy
Statement/Prospectus contemporaneously with the proposed merger
of the bank holding companies. In consideration of the
possibility that the existing investment advisory contract would
be terminated, and in consideration of the fact that the
Reorganization will be tax-free and will not dilute the interests
of Shawmut Shareholders, the Board of Trustees of Shawmut
authorized the Agreement and Plan of Reorganization and has
suggested approval of the Reorganization to Shareholders.
Federal Income Tax Consequences. Shareholders of the Shawmut
Funds will recognize no gain or loss for federal income tax
purposes on their receipt of shares of the Galaxy Funds.
Shareholders of the Galaxy Funds will have no tax consequence
from the Reorganization. The Shawmut Funds will incur no federal
tax liability as a result of the Reorganization, and the Galaxy
Funds will recognize no gain or loss for federal tax purposes on
their issuance of shares in the Reorganization. See "Information
Relating to the Proposed Reorganization -- Federal Income Tax
Consequences."
Overview of the Shawmut Funds and Galaxy Funds. There are no
material differences between the investment objectives and
policies of the Continuing Funds and the corresponding New Galaxy
Funds. The investment objectives and policies of the
Reorganizing Funds are similar to those of the corresponding
Existing Galaxy Funds.
Shawmut Growth Equity Fund and Galaxy Equity Growth Fund.
The investment objectives of the Shawmut Growth Equity Fund
and the Galaxy Equity Growth Fund are similar but not identical.
The investment objective of the Shawmut Growth Equity Fund is to
seek long-term capital appreciation by investing at least 65% of
its assets in a diversified portfolio of growth-oriented equity
securities, such as common stock and convertible securities,
including securities convertible to common and preferred stock,
convertible bonds or debentures, units of "usable" bonds
(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) and warrants, or a combination of the
features of several of these securities. The Galaxy Equity
Growth Fund invests at least 75% of its total assets in common
stock, preferred stock, common stock warrants and securities
convertible to common stock, in addition to preferred and common
stock warrants.
Shawmut Prime Money Market Fund and Galaxy Money Market Fund.
Both the Shawmut Prime Money Market Fund and the Galaxy
Money Market Fund seek current income consistent with stability
of principal and liquidity. Each Fund pursues its investment
objective by investing in a variety of money market instruments
that mature in (i) thirteen months or less in the case of the
Shawmut Prime Money Market Fund and (ii) not in excess of one
year, except for certain variable and floating rate instruments
and securities subject to repurchase agreements in certain cases,
with respect to the Galaxy Money Market Fund.
Shawmut Limited Term Income Fund and Galaxy Short-Term Bond Fund.
The objective of the Shawmut Limited Term Income Fund is to
seek current income consistent with low principal volatility and
total return while the Galaxy Short-Term Bond Fund's objective is
to seek a high level of current income consistent with
preservation of capital. The Shawmut Limited Term Income Fund
implements its objective by investing at least 65% of its total
assets in U.S. Treasury obligations and obligations of U.S.
Government agencies and instrumentalities, domestic issues of
corporate debt obligations having floating or fixed rates of
interest, prime commercial paper, asset-backed securities,
repurchase agreements and certain derivative instruments. The
Galaxy Short-Term Bond Fund invests substantially all of its
assets in obligations of the U.S. Government, its agencies and
instrumentalities, obligations convertible into common stock,
corporate debt obligations of domestic and foreign corporations,
such as bonds and debentures, money market instruments and asset-
backed and mortgage-backed securities.
Shawmut Fixed Income Fund and Galaxy Corporate Bond Fund.
The investment objective of the Shawmut Fixed Income Fund is
to seek current income consistent with total return, whereas the
Galaxy Corporate Bond Fund seeks current income and subject to
this objective, will consider total return in managing the
portfolio. The Shawmut Fixed Income Fund must invest at least
65% of its assets in securities that include: (i) direct
obligations of the U.S. Treasury; (ii) obligations of the U.S.
Government and its agencies and instrumentalities; (iii) domestic
issues of corporate debt obligations having floating or fixed
rates of interest and rated in one of the five highest categories
by a nationally recognized statistical rating organization
("Rating Organization"); prime commercial paper; asset-backed
securities rated BBB or higher by a Rating Organization; (iv)
repurchase agreements; and (v) certain derivative securities.
The Galaxy Corporate Bond Fund invests 65% of its assets in
either (i) debt obligations of domestic or foreign business
corporations; or (ii) debt obligations of agencies,
instrumentalities or authorities that are organized in
corporation form by one or more U.S. states or political sub-
divisions or by foreign governments.
Shawmut Intermediate Government Income Fund and Galaxy
Intermediate Government Income Fund.
The Shawmut Intermediate Government Income Fund's investment
objective is to seek current income consistent with total return.
The Galaxy Intermediate Government Income Fund's investment
objective is to seek the highest level of current income
consistent with prudent risk of capital, and subject to this
objective it will consider total return in managing the
portfolio. Under normal market and economic conditions, both the
Shawmut Intermediate Government Income Fund and Galaxy
Intermediate Government Income Fund will invest at least 65% of
the value of their respective total assets in U.S. Government
securities. Other permitted investments for the Shawmut
Intermediate Government Income Fund include domestic issues of
floating or fixed rate corporate debt obligations rated in one of
the five highest rating categories by a Rating Organization;
asset-backed securities rated in one of the four highest rating
categories by a Rating Organization; repurchase agreements
collateralized by eligible investments; and certain derivative
securities, including options and futures contracts, indexed
securities and swap agreements. Other permitted investments for
the Galaxy Intermediate Government Income Fund include corporate
debt obligations rated in one of the three highest rating
categories by a Rating Organization; obligations convertible into
common stock; obligations of supra-national banks, municipal
securities; interest rate futures contracts; and money market
instruments such as bank obligations and commercial paper.
Shawmut Connecticut Intermediate Municipal Income Fund and
Shawmut Massachusetts Intermediate Municipal Income Fund
(collectively, the "Shawmut Muni Bond Funds") and Galaxy
Connecticut Municipal Bond Fund and Galaxy Massachusetts
Municipal Bond Fund (collectively, the "Galaxy Muni Bond Funds").
The investment objectives of each of the Shawmut Muni Bond
Funds and the Galaxy Muni Bond Funds are similar. The Shawmut
Muni Bond Funds seek current income that is exempt from federal
regular income tax and either Connecticut or Massachusetts state
income tax, as applicable. The Galaxy Muni Bond Funds seek
current interest income, which is exempt from both federal income
tax and, to the extent possible, either Connecticut or
Massachusetts personal income tax, as applicable, as is
consistent with relative stability of principal. The Shawmut
Muni Bond Funds and the Galaxy Muni Bond Funds have similar
diversification requirements in that each Fund must invest at
least 80% of its total assets in obligations which are exempt
from federal regular income tax, and 65% of each Fund's total
assets must be invested in debt obligations issued by the State
of Connecticut or Commonwealth of Massachusetts, as applicable,
and their political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the
United States, which are exempt from federal income tax and
Connecticut or Massachusetts income tax, as applicable.
See "Comparison of Investment Objectives and Risk Factors"
below and the Shawmut and Galaxy Prospectuses, which are
incorporated by reference herein for a description of the
similarities and differences between the investment objectives
and policies of the Reorganizing Funds and the corresponding
Existing Galaxy Funds.
Certain Arrangements with Service Providers - The Shawmut
Funds. Shawmut Bank, a wholly-owned subsidiary of Shawmut
National Corporation, a bank holding company, serves as
investment adviser for the Shawmut Funds and is entitled to
receive advisory fees from them, computed and paid daily, at the
following annual rates, expressed as a percentage of average
daily net assets:
Actual Advisory
Fee in Year
Maximum Ended October 31,
The Shawmut Funds Advisory Fee 1994 (after waivers)
Growth Equity Fund 1.00% 0.50%
Prime Money Market Fund 0.50% 0.29%
Limited Term Income Fund 0.80% 0.60%
Fixed Income Fund 0.80% 0.60%
Intermediate Government Income Fund 0.80% 0.60%
Connecticut Intermediate
Municipal Income Fund 0.70% 0.00%*
Massachusetts Intermediate
Municipal Income Fund 0.70% 0.00%*
Growth and Income Equity Fund 1.00% 0.80%
Connecticut Municipal
Money Market Fund 0.50% 0.42%
Massachusetts Municipal
Money Market Fund 0.50% 0.42%
Small Capitalization Equity Fund 1.00% 0.75%
* This Fund paid no advisory fee.
_________________________________________________________________
Pursuant to the Shawmut investment advisory contract,
Shawmut Bank provides investment research and supervision to the
Shawmut Funds and conducts a continuous program of investment
evaluation. Shawmut Bank also directs the investments of the
Shawmut Funds and in accordance with the Funds' investment
objectives, policies and limitations, and creates and maintains
all necessary books and records.
Administrative services are provided to Shawmut by Federated
Administrative Services ("Federated"). For its services,
Federated receives a fee, computed daily and paid monthly, at the
annual rate of .15% of the average aggregate daily net assets of
all investment portfolios of the Shawmut Funds up to $250
million, .125% of the next $250 million of such aggregate assets,
..10% of the next $250 million of such aggregate assets, and .075%
of such aggregate assets in excess of $750 million. The minimum
annual administration fee for each Shawmut Fund is $50,000. For
the fiscal year ended October 31, 1994, Federated received
administration fees (after fee waivers) at the effective annual
rates of 0.075%, 0.0907%, 0.1844%, 0.1051%, 0.1043%, 0.1031%,
0.595%, 0.8672%, 0.1998%, 0.1044% and 0.1033% of the average
daily net assets of the Prime Money Market, Connecticut Municipal
Money Market, Massachusetts Municipal Money Market, Limited Term
Income, Fixed Income, Intermediate Government Income, Connecticut
Intermediate Municipal Income, Massachusetts Intermediate
Municipal Income, Growth Equity, Growth and Income Equity and
Small Capitalization Equity Funds, respectively.
Federated Services Company ("Federated Services") serves as
Shawmut's transfer and dividend disbursing agent. Federated
Services also provides certain accounting and recordkeeping
services with respect to the portfolio investments of each
Shawmut Fund.
Custodial services are provided to Shawmut by Shawmut Bank
pursuant to an agreement dated November 25, 1992.
Federated Securities Corp. ("FSC") is the principal
distributor for Shawmut. Under the distribution agreement, FSC
acts as the agent of Shawmut in connection with the offering of
shares of each Shawmut Fund.
Shawmut has adopted a Distribution Plan pursuant to Rule 12b-
1 under the Investment Company Act of 1940 (the "12b-1 Plan").
Under the 12b-1 Plan, the class of shares known as the Investment
Shares of each of the Prime Money Market, Connecticut Municipal
Money Market, Limited Term Income, Fixed Income, Intermediate
Government Income, Growth Equity, Growth and Income Equity and
Small Capitalization Equity Funds bears the expense of
distribution fees payable to FSC at an annual rate of up to .50%
of the average daily net asset value of such Fund's outstanding
Investment Shares to finance activities which are principally
intended to result in the sale of Investment Shares. FSC may
enter into agreements with financial institutions which provide
distribution and/or administrative services as agents for their
customers who beneficially own Investment Shares. Administrative
services provided by such financial institutions may include,
without limitation: providing office space, equipment, telephone
facilities and various clerical, supervisory, computer and other
personnel as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries;
assisting clients in changing dividend options, account
designations and addresses; and such other services as may
reasonably be requested.
The 12b-1 Plan is a "compensation" type plan as opposed to a
"reimbursement" type plan. Accordingly, payments by Investment
Shares under the 12b-1 Plan are based on the expressed fee rather
than on the specific amounts expended by FSC for distribution
purposes. FSC may be able to recover such amounts or may earn a
profit from payments made by Investment Shares of the Shawmut
Funds under the 12b-1 Plan.
For the fiscal year ended October 31, 1994, Shawmut paid, in
the aggregate, fees to FSC pursuant to the Distribution Plan of
$502,842.00, which represent 0.0025% of the Shawmut Funds'
average net assets during that period.
Certain Arrangements with Service Providers - The Galaxy
Funds. Fleet, which is an indirect, wholly-owned subsidiary of
Fleet Financial Group, Inc., a registered bank holding company,
serves as investment adviser to Galaxy and is entitled to receive
advisory fees from Galaxy, computed daily and paid monthly, at
the following annual rates:
Actual Advisory
Advisory Fee Fee in Year
Ended
(% of average October 31,
1994
The Galaxy Fund daily net assets)
(after waivers)
Equity Growth Fund 0.75%
0.75%
Money Market Fund 0.40%+
0.40%
Short-Term Bond Fund 0.75% 0.55%
Corporate Bond Fund 0.75%
0.00%*
Intermediate Government
Income Fund 0.75%
0.55%
Connecticut Municipal
Bond Fund 0.75% 0.00%
Massachusetts Municipal
Bond Fund 0.75% 0.00%
Growth and Income Fund 0.75% 0.00%*
Connecticut Municipal 0.40% of the first $750 0.00%*
Money Market Fund million of net assets
plus 0.35% of net assets
in excess of $750 million
Massachusetts Municipal 0.40% of the first $750 0.00%*
Money Market Fund million of net assets
plus 0.35% of net assets
in excess of $750 million
Small Cap Value Fund 0.75% 0.00%*
+ Fleet has undertaken that its advisory fee will be 0.40% of
assets to $750 million and 0.35% of assets in excess of $750
million for this Fund. There can be no assurance that Fleet
will continue to reduce its advisory fees on assets in
excess of $750 million.
* The Corporate Bond Fund did not commence operations until
December 12, 1994. The Growth and Income, Connecticut
Municipal Money Market, Massachusetts Municipal Money Market
and Small Cap Value Funds have not yet commenced operations.
If the Reorganization is approved by Shareholders, Fleet
will serve as investment adviser to the Galaxy Funds pursuant to
an advisory agreement that (other than providing for lower
contractual advisory fees) is similar in all material respects to
Shawmut's existing investment advisory contract with Shawmut
Bank.
See "Management of the Fund(s)--Investment Adviser" in the
Galaxy Prospectuses accompanying this Combined Proxy
Statement/Prospectus which are incorporated herein by reference,
for additional information on Galaxy's Adviser.
Administrative services are provided to Galaxy by The
Shareholder Services Group, Inc. d/b/a 440 Financial ("440
Financial"). For its services, 440 Financial is entitled to
receive a fee, computed daily and paid monthly, at the annual
rate of .09% of the first $2.5 billion of the combined average
daily net assets of the Galaxy Funds and the other investment
portfolios offered by Galaxy, .085% of the next $2.5 billion of
such combined average daily net assets, and .08% of such combined
average daily net assets in excess of $5 billion. Under the fee
schedule in effect prior to March 1, 1994, 440 Financial Group of
Worcester, Inc. ("440 Group"), the predecessor to 440 Financial,
was entitled to administration fees at the annual rate of .078%
of the first $2.5 billion of the combined average daily net
assets of all investment portfolios of Galaxy, plus .073% of such
combined assets in excess of $2.5 billion. In addition, 440
Financial receives a separate fee from each Galaxy Fund for
certain fund accounting services. The annual fund accounting fee
for each Galaxy Fund is based on the average net assets of each
such Fund as follows: net assets under $50 million -- $25,000;
net assets of $50 million but less than $200 million -- $35,000;
net assets of $200 million but less than $500 million -- $50,000;
net assets of $500 million but less than $1 billion-- $85,000;
and $125,000 for net assets in excess of $1 billion, plus certain
out-of-pocket expenses. The annual fund accounting fee for a
Galaxy Fund possessing more than 25% in foreign assets is 150% of
the annual fund accounting fees described above. 440 Financial
is also entitled to receive an annual fee of $10,000 for
administrative services related to Galaxy's multi-class
distribution system.
For the fiscal year ended October 31, 1994, 440 Group,
received administration fees at the annual rate of .084% of the
average daily net assets of each of the Money Market, Short-Term
Bond, Intermediate Government Income and Equity Growth Funds, and
received no administration fees with respect to the Connecticut
Municipal Bond and Massachusetts Municipal Bond Funds. For the
same year, 440 Group waived administration fees at the annual
rate of .084% of the average daily net assets of each of the
Connecticut Municipal Bond and Massachusetts Municipal Bond
Funds. The Connecticut Municipal Money Market, Massachusetts
Municipal Money Market, Corporate Bond, Growth and Income and
Small Cap Value Funds had not commenced operations during the
fiscal year ended October 31, 1994.
See "Management of the Fund(s)--Administrator" in the Galaxy
Prospectuses accompanying this Combined Proxy/Prospectus, which
are incorporated herein by reference, for additional information
on Galaxy's Administrator.
440 Financial also serves as Galaxy's transfer and dividend
disbursing agent. For these services, 440 Financial receives
fees based on annual per shareholder account charges for account
maintenance and fees for certain shareholder-generated
transactions, plus out-of-pocket expenses. The minimum annual
transfer agency fee for each Galaxy Fund is $5,000. See
"Custodian and Transfer Agent" in the Galaxy Prospectuses
accompanying this Combined Proxy/Prospectus, which are
incorporated herein by reference, for additional information on
Galaxy's Transfer Agent.
Custodial services are provided to Galaxy by The Chase
Manhattan Bank, N.A. ("Chase"). See "Custodian and Transfer
Agent" in Galaxy's Prospectuses accompanying this Combined
Proxy/Prospectus, which are incorporated herein by reference, for
additional information about Galaxy's Custodian.
440 Financial Distributors, Inc., an affiliate of 440
Financial, serves as distributor of the shares of the Galaxy
Funds.
Comparative Fee Tables. Set forth in the tables below is
(i) information regarding the fees and expenses paid by each
class of shares of each Shawmut Fund and of each series of shares
of each Galaxy Fund as of October 31, 1994, restated to reflect
expenses the Shawmut Funds and the Galaxy Funds, respectively,
expect to incur during the current fiscal year and (ii) pro forma
information for each combined Fund assuming the Reorganization
had taken place on April 30, 1995.
Comparative Fee Table For Each Fund
Shawmut Growth Galaxy Equity Pro Forma
Equity Fund Growth Fund Combined Fund
Investment Trust Retail Trust Retail Trust
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 4.00% None None None 3.75% None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None None
Exchange Fee None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees .53%(1) .53%(1) .75% .75%
..75% .75%
(after fee waivers)
Shareholder Servicing Fees None None .30%None .30%None
12b-1 Fees .25%(2)None None None None None
Other Expenses
(after fee waivers and/or
expense reimbursements) .70%(3) .70%(3) .55% .38% .42%
..25%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) 1.48%(4)1.23%(4) 1.60%(5) 1.13%(5)
1.47%(6) 1.00%(6)
(1) The maximum management fee for the Investment Shares and
Trust Shares of the Shawmut Growth Equity Fund is 1.00%.
(2) The 12b-1 fee for the Investment Shares of the Shawmut Growth
Equity Fund has been reduced to reflect the voluntary waiver
of fees by that Fund's distributor. The Shawmut Growth
Equity Fund can pay up to 0.50% of the average daily net
assets of its Investment Shares as a 12b-1 fee to the
distributor.
(3) Other expenses for the Investment Shares and Trust Shares of
the Shawmut Growth Equity Fund have been reduced to reflect
the voluntary waiver of fees by that Fund's custodian and the
reimbursement of expenses by that Fund's investment adviser.
(4) Absent the voluntary waivers and reimbursements explained in
the above footnotes, which can be terminated at any time, the
operating expenses for the Investment Shares and Trust Shares
of the Shawmut Growth Equity Fund would have been 2.69% and
2.19%, respectively.
(5) During the period ended October 31, 1994, the Investment
Adviser reimbursed expenses of the Galaxy Equity Growth Fund
in the amount of $3,877. Absent the voluntary reimbursement,
which can be terminated at any time, the operating expenses
for the Retail Shares and Trust Shares of the Galaxy Equity
Growth Fund would have been 1.60% and 1.13%, respectively.
(6) Absent voluntary waivers, which can be terminated at any
time, the pro forma operating expenses for the Retail Shares
and Trust Shares of the Galaxy Equity Growth Fund would be
1.51% and 1.03%, respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Growth Equity Fund
Investment Shares $54 $85 $118 $210
Trust Shares $13 $39 $ 68 $149
Galaxy Equity Growth Fund
Retail Shares $16 $50 $ 86 $187
Trust Shares $11 $35 $ 61 $135
Pro Forma Combined Fund
Retail Shares $52 $82 $114 $204
Trust Shares $10 $31 $ 54 $120
Shawmut Prime Galaxy Money Pro Forma
Money Market Fund Market Fund Combined Fund
Investment Trust Retail Trust Retail
Trust
Shares Shares Shares Shares Shares
Shares
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .29%(1) .29%(1) .40% .40% .40%
..40%
Shareholder Servicing FeeNone None .10%None .10%None
12b-1 Fees .25%(2)None None None None None
Other Expenses
(after fee waivers and/or
expense reimbursements) .17%(3) .17%(3) .35% .19% .24%
..11%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) .71%(4) .46%(4) .85%(5) .59%(5)
..74%(6) .51%(6)
(1) The maximum management fee for the Investment Shares and Trust
Shares of the Shawmut Prime Money Market Fund is .50%.
(2) The 12b-1 fee for the Investment Shares of the Shawmut Prime
Money Market Fund has been reduced to reflect the voluntary
waiver of fees by that Fund's distributor. The Shawmut Prime
Money Market Fund can pay up to .50% of the average daily net
assets of its Investment Shares as a 12b-1 fee to its
distribution.
(3) Other expenses of the Investment Shares and Trust Shares of the
Shawmut Prime Money Market Fund have been reduced to reflect the
voluntary waiver of fees by that Fund's custodian, the voluntary
waiver of fees of that Fund's administrator and the reimbursement
of expenses by that Fund's adviser.
(4) Absent the voluntary waivers and reimbursements in the above
footnotes, which can be terminated at any time, the operating
expenses for the Investment Shares and Trust Shares of the
Shawmut Prime Money Market Fund would be 1.18% and .68%,
respectively.
(5) Without voluntary expense reimbursements by its investment
adviser, which can be terminated at any time, operating expenses
for the Retail Shares and Trust Shares of the Galaxy Money Market
Fund would be .91% and .60%, respectively.
(6) Absent voluntary waivers, which can be terminated at any time,
the pro forma operating expenses for the Retail Shares and Trust
Shares of the Galaxy Money Market Fund would be 0.77% and 0.57%,
respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Prime Money Market Fund
Investment Shares $7 $23 $40 $88
Trust Shares $5 $15 $26 $58
Galaxy Money Market Fund
Retail Shares $9 $27 $46 $103
Trust Shares $6 $18 $32 $72
Pro Forma Combined
Retail Shares $7 $23 $40 $90
Trust Shares $5 $16 $28 $63
Shawmut Limited TermGalaxy Short-Term Pro Forma
Income Fund Bond Fund Combined Fund
Investment Trust Retail Trust
Retail Trust
Shares Shares Shares Shares Shares
Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 2.00% None None None 3.75% None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None None
Exchange Fee None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fee/Advisory Fees
(after fee waivers) .62%(1) .62%(1) .55%(2) .55%(2) .55%
..55%
Shareholder Servicing FeeNone None .15% None .15%None
12b-1 Fees .25%(3)None None None None None
Other Expenses
(after fee waivers and
expense reimbursements) .54%(4) .54%(4) .40% .24% .40%
..24%
Total Operating Expenses
(after fee waivers and
expense reimbursements) 1.41%(5)1.16%(5) 1.10%(6) .79%(6) 1.10%(7)
..79%(7)
(1) The maximum management fee for the Investment and Trust
Shares of the Shawmut Limited Term Income Fund is 0.80%.
(2) The maximum management fee for the Retail Shares and Trust
Shares of the Galaxy Short-Term Bond Fund is .75% and .75%,
respectively.
(3) The 12b-1 fee for the Investment Shares of the Shawmut
Limited Term Income Fund has been reduced to reflect the
voluntary waiver of fees by that Fund's distributor. The
Shawmut Limited Term Income Fund can pay up to 0.50% of the
daily net assets of its Investment Shares as a 12b-1 fee to
its distributor.
(4) Other expenses for the Investment Shares and Trust Shares of
the Shawmut Limited Term Income Fund have been reduced to
reflect the voluntary waiver of fees by that Fund's
custodian.
(5) Absent the voluntary waivers explained in the above
footnotes, which can be terminated at any time, the
operating expenses of the Investment Shares and Trust Shares
of the Shawmut Limited Term Income Fund are 1.87% and 1.37%,
respectively.
(6) Absent the voluntary fee waivers and/or expense
reimbursements by the investment adviser, which can be
terminated at any time, operating expenses for the Retail
Shares and Trust Shares of the Galaxy Short-Term Bond Fund
would be 1.47% and 1.12%, respectively.
(7) Absent voluntary waivers, which can be terminated at any
time, the pro forma operating expenses of the Retail Shares
and Trust Shares of the Galaxy Short-Term Bond Fund would be
1.35% and 1.06%, respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Limited Term Income Fund
Investment Shares $34 $64 $96 $186
Trust Shares $12 $37 $64 $141
Galaxy Short-Term Bond
Retail Shares $11 $34 $59 $131
Trust Shares $ 8 $25 $43 $ 96
Pro Forma Combined Fund
Retail Shares $49 $71 $95 $165
Trust Shares $ 8 $25 $43 $ 96
Shawmut Fixed Galaxy Corporate Pro Forma
Income Fund Bond Fund Combined Fund
Investment Trust Trust Trust
Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 2.00% None None None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None
Exchange Fee None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .63%(1) .63%(1) .55%(2) .55%
Shareholder Servicing Fee None None None None
12b-1 Fees .25%(3)None None None
Other Expenses
(after fee waivers and/or
expense reimbursements) .35%(4) .35%(4) .55% .23%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) 1.23%(5) .98%(5) 1.10%(6)
..78%(7)
(1) The maximum management fee for the Investment Shares and
Trust Shares of the Shawmut Fixed Income Fund is .80%.
(2) The maximum management fee for Trust Shares of the Galaxy
Corporate Bond Fund is .75%.
(3) The 12b-1 fee for the Investment Shares of the Shawmut
Fixed Income Fund has been reduced to reflect the voluntary
waiver of fees by that Fund's distributor. The Shawmut
Fixed Income Fund can pay up to .50% and the average daily
net assets of the Investment Shares as a 12b-1 fee to its
distributor.
(4) Other expenses of the Investment Shares and Trust Shares of
the Shawmut Fixed Income Fund have been reduced to reflect
the voluntary waiver of fees by that Fund's custodian.
(5) Absent the voluntary waivers explained in the above
footnotes, which can be terminated at any time, the
operating expenses of the Investment Shares and Trust
Shares of the Shawmut Fixed Income Fund would be 1.67% and
1.17%, respectively.
(6) Absent fee waivers and/or expense reimbursements by the
investment adviser and/or administrator, which can be
terminated at any time, the operating expenses for Trust
Shares of the Galaxy Corporate Bond Fund would be 1.22%.
(7) Absent voluntary waivers, which can be terminated at any
time, the pro forma operating expenses of the Trust Shares
of the Galaxy Corporate Bond Fund would be 1.61%.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Fixed Income Fund
Investment Shares $32 $58 $86 $166
Trust Shares $10 $31 $54 $120
Galaxy Corporate Bond Fund
Trust Shares $11 $34 N/A N/A
Pro Forma Combined Fund
Trust Shares $ 8 $24 $42 $95
Galaxy Intermediate
Shawmut Intermediate Government IncomePro Forma
Government Income Fund Fund Co
mbined Fund
Investment Trust Retail Trust Retail
Trust
Shares Shares Shares Shares Shares
Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 2.00%None None None 3.75%None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None None
Exchange Fee None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .65%(1) .65%(1) .55%(2) .55%(2)
..55% .55 %
Shareholder Servicing Fee None None .15%None .15%None
12b-1 Fees .25%(3)NoneNone None None None
Other Expenses
(after fee waivers and/or
expense reimbursements) .46%(4) .46%(4) .40% .24%
..36% .19%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) 1.36%(5)1.11%(5) 1.10%(6) .79%(6)
1.06%(7) .74%(7)
(1) The maximum management fee for the Investment Shares and
Trust Shares of the Shawmut Intermediate Government Income
Fund is .80%.
(2) The maximum management fee for the Retail and Trust Shares
of the Galaxy Intermediate Government Income Fund is .75%,
respectively.
(3) The 12b-1 fee for the Investment Shares of the Shawmut
Intermediate Government Income Fund has been reduced to
reflect the voluntary waiver of fees by that Fund's
distributor. The Shawmut Intermediate Government Income
Fund can pay up to .50% as a 12b-1 fee to the distributor.
(4) Other expenses for the Investment Shares and Trust Shares of
the Shawmut Intermediate Government Income Fund have been
reduced to reflect the voluntary waiver of fees by that
Fund's custodian.
(5) Absent the voluntary waivers explained in the above
footnotes, which can be terminated at any time, the
operating expenses for the Investment Shares and Trust
Shares of the Shawmut Intermediate Government Income Fund
would be 1.79% and 1.29%, respectively.
(6) Absent the voluntary fee waivers and/or expense
reimbursement by the investment adviser, which can be
terminated at any time, operating expenses for the Retail
Shares and Trust Shares of the Galaxy Intermediate
Government Income Fund would be 1.32% and .97%,
respectively.
(7) Absent voluntary waivers, which can be terminated at any
time, the pro forma operating expenses of the Retail Shares
and Trust Shares of the Galaxy Intermediate Government
Income Fund would be 1.26% and 0.94%, respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Intermediate Government
Income Fund
Investment Shares $34 $62 $93 $180
Trust Shares $11 $35 $61 $135
Galaxy Intermediate Government
Income Fund
Retail Shares $11 $34 $59 $131
Trust Shares $ 8 $25 $43 $ 96
Pro Forma Combined Fund
Retail Shares $48 $70 $93 $160
Trust Shares $ 7 $23 $40 $ 90
Shawmut Galaxy
Connecticut Connecticut
Intermediate Municipal Pro Forma
Income Bond
Combined
Bond* Fund Fund
All Retail Trust Retail Trust
Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 2.00% None None 3.75% None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None
Exchange Fee None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .01%(1) .00%(2) .00%(2) .00%
..00%
Shareholder Services Fee None .15% None .15% None
12b-1 Fees .00%(3)None None None None
Other Expenses
(after waivers and/or
expense reimbursements) .50%(4) .80% .70% .45%
..57%(7)
Total Operating Expenses
(after waivers and/or
expense reimbursements) .51%(5) .95%(6) .70%(6)
..60%(7).57%
_____________________
* The Shawmut Connecticut Intermediate Municipal Income Fund
currently sells its shares without class designation.
(1) The maximum management fee for the Shawmut Connecticut
Intermediate Municipal Income Fund is .70%.
(2) The maximum management fee for the Retail Shares and Trust
Shares of the Galaxy Connecticut Municipal Bond Fund is
.75%.
(3) The Shawmut Connecticut Intermediate Municipal Income Fund
does not intend to accrue or pay 12b-1 fees until either a
separate class of shares has been created for certain
fiduciary investors for the Fund or a determination is made
that such investors will be subject to 12b-1 fees. The
Shawmut Connecticut Intermediate Municipal Income Fund can
pay up to .50% of its average daily net assets as a 12b-1
fee to its distributor.
(4) Other expenses for the Shawmut Connecticut Intermediate
Municipal Income Fund have been reduced to reflect the
voluntary waiver by that Fund's custodian and the
reimbursement of expenses by that Fund's adviser.
(5) Absent the voluntary waivers and reimbursements explained in
the above footnotes, which can be terminated at any time,
the operating expenses for the Shawmut Connecticut
Intermediate Municipal Income Fund are 3.30%.
(6) Absent the voluntary fee waivers and expense reimbursements
by its investment adviser and/or administrator, which can be
terminated at any time, operating expenses for the Retail
Shares and Trust Shares of the Galaxy Connecticut Municipal
Bond Fund would be 1.67% and 1.41%, respectively.
(7) Absent voluntary waivers, which can be terminated at any
time, the pro forma operating expenses of the Retail Shares
and Trust Shares of the Connecticut Municipal Bond Fund
would be 1.49% and 1.26%, respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Connecticut Intermediate
Municipal Income Fund $25 $36 $48 $ 83
Investment Shares $ 5 $16 $29 $ 64
Trust Shares
Galaxy Connecticut Municipal
Bond Fund
Retail Shares $10 $30 $52 $114
Trust Shares $ 7 $22 $38 $ 85
Pro Forma Combined Fund
Retail Shares $44 $56 $69 $108
Trust Shares $ 5 $16 $28 $ 63
Shawmut Galaxy
Massachusetts Massachusetts
Intermediate Municipal Pro Forma
Income Bond Combined
Bond* Fund Fund
All Retail Trust Retail Trust
Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 2.00% None None 3.75% None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None
Exchange Fee None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .02%(1) .00%(2) .00%(2) .00%
..00%
Shareholder Services Fee None .15% None .15% None
12b-1 Fees .00%(3)None None None None
Other Expenses
(after waivers and/or
expense reimbursements) .50%(4) .80% .69% .45% .51%
Total Operating Expenses
(after waivers and/or
expense reimbursements) .52%(5) .95%(6) .69%(6)
..60%(7).51%(7)
* The Shawmut Massachusetts Intermediate Municipal Income Fund currently
sells its shares without class designation.
(1) The maximum management fee for the Shawmut Massachusetts Intermediate
Municipal Income Fund is .70%.
(2) The maximum management fee for the Retail Shares and Trust Shares of
the Galaxy Massachusetts Municipal Bond Fund is .75%.
(3) The Shawmut Massachusetts Intermediate Municipal Income Fund does not
intend to accrue or pay 12b-1 fees until either a separate class of
shares has been created for certain fiduciary investors for the fund
or a determination is made that such investors will be subject to 12b-
1 fees. The Shawmut Massachusetts Intermediate Municipal Income Fund
can pay up to .50% of its daily net assets as a 12b-1 fee to its
distributor.
(4) Other expenses for the Shawmut Massachusetts Intermediate Municipal
Income Fund have been reduced to reflect the voluntary waiver of fees
by that Fund's custodian and the reimbursement of expenses by that
Fund's adviser.
(5) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the operating expenses for the Shawmut Massachusetts
Intermediate Municipal Income Fund would be 3.10%.
(6) Absent the voluntary fee waivers and expense reimbursements by its
investment adviser and/or administrator, which can be terminated at
any time, operating expenses for the Retail Shares and Trust Shares of
the Galaxy Massachusetts Municipal Bond Fund would be 1.69% and 1.41%,
respectively.
(7) Absent voluntary waivers, which can be terminated at any time, the pro
forma operating expenses for the Retail Shares and Trust Shares of the
Galaxy Massachusetts Municipal Bond Fund would be 1.64% and 1.39%,
respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Massachusetts Intermediate
Municipal Income Fund
Investment Shares $25 $36 $48 $ 84
Trust Shares $ 5 $17 $29 $ 65
Galaxy Massachusetts Municipal
Bond Fund
Retail Shares $10 $30 $52 $114
Trust Shares $ 7 $22 $38 $ 85
Pro Forma Combined Fund
Retail Shares $44 $56 $69 $108
Trust Shares $ 5 $16 $28 $ 63
Shawmut Growth Galaxy Growth
and Income and Income Pro
Forma
Equity Fund Fund*
Combined
Investment Trust Retail Trust Retail
Trust
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 4.00% None None None 3.75% None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None None
Exchange Fee None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees .82%(1) .82%(1) N/A
N/A .75% .75%
(after fee waivers)
Shareholder Servicing Fee None None N/A N/A .30% None
12b-1 Fees .25%(2) None N/A N/A None
None
Other Expenses
(after fee waivers and/or
expense reimbursements) .26%(3) .26%(3) N/A N/A
..44% .20%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) 1.33%(4) 1.08%(4) N/A N/A
1.49%(5) .95%(5)
* The Galaxy Growth and Income Fund has not yet commenced operations.
The Galaxy Growth and Income Fund will continue the operations of
the Shawmut Growth and Income Fund upon consummation of the
Reorganization relating to that Fund.
(1) The maximum management fee for the Investment Shares and Trust
Shares of the Shawmut Growth and Income Equity Fund is 1.00%.
(2) The 12b-1 fee for the Investment Shares of the Shawmut Growth and
Income Equity Fund has been reduced to reflect the voluntary waiver
of fees by that Fund's distributor. The Shawmut Growth and Income
Equity Fund can pay up to 0.50% of the average daily net assets of
its Investment Shares as a 12b-1 fee to its distributor.
(3) Other expenses for the Investment Shares and Trust Shares of the
Shawmut Growth and Income Equity Fund have been reduced to reflect
the voluntary waiver of fees by that Fund's custodian.
(4) Absent the voluntary waivers explained in the above footnotes,
which can be terminated at any time, the operating expenses of the
Investment Shares and Trust Shares of the Shawmut Growth and Income
Equity Fund would be 1.77% and 1.27%, respectively.
(5) Absent voluntary fee waivers, which can be terminated at any time,
the pro forma operating expenses for the Retail Shares and Trust
Shares of the Galaxy Growth and Income Fund would be 1.60% and
1.01%, respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods.
1 Year 3 Years 5 Years 10
Years
Shawmut Growth and Income
Equity Fund
Investment Shares $ 53 $ 80 $110 $194
Trust Shares $ 11 $ 34 $ 60 $132
Galaxy Growth and Income
Fund
Retail Shares N/A N/A N/A N/A
Trust Shares N/A N/A N/A N/A
Pro Forma Combined
Retail Shares $ 52 $ 83 $115 $207
Trust Shares $ 10 $ 30 $ 52 $114
Shawmut Connecticut Galaxy
Connecticut
Municipal Money Municipal MoneyPro Forma
Market Fund Market Fund* Combined
Investment Trust
Shares Shares Shares Shares
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .34%(1) .34%(1)N/A .40%
Shareholder Servicing Fee None None N/A .10%
12b-1 Fees .25%(2)None N/A None
Other Expenses
(after fee waivers and/or
expense reimbursements) .23%(3) .23%(3)N/A .12%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) .82%(4) .57%(4)N/A .62%(5)
* The Galaxy Connecticut Municipal Money Market Fund has not yet
commenced operations. The Galaxy Connecticut Municipal Money
Market Fund will continue the operations of the Shawmut
Connecticut Municipal Money Market Fund upon consummation of the
Reorganization relating to that Fund.
(1) The maximum management fee for the Investment Shares and Trust
Shares of the Shawmut Connecticut Municipal Money Market Fund is
.50%.
(2) The 12b-1 fee for the Investment Shares of the Shawmut
Connecticut Municipal Money Market Fund has been reduced to
reflect the voluntary waiver of fees by that Fund's distributor.
The Shawmut Connecticut Municipal Money Market Fund can pay up to
.50% of the average daily net assets of its Investment Shares as
a 12b-1 fee to its distributor.
(3) Other expenses of the Investment Shares and Trust Shares of the
Shawmut Connecticut Municipal Money Market Fund have been reduced
to reflect the voluntary waiver of fees by that Fund's custodian,
the voluntary waiver of fees by that Fund's administrator and the
reimbursement of expenses by that Fund's adviser.
(4) Absent the voluntary waivers and reimbursements explained in the
above footnotes, which can be terminated at any time, the
operating expenses of the Investment Shares and Trust Shares of
the Shawmut Connecticut Municipal Money Market Fund would be
1.28% and .78%, respectively.
(5) Absent voluntary waivers, which can be terminated at any time,
the pro forma operating expenses of the Shares of the Connecticut
Municipal Money Market Fund would be .74%.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Connecticut Municipal
Money Market Fund
Investment Shares $8 $26 $46 $101
Trust Shares $6 $18 $32 $ 71
Galaxy Connecticut Municipal
Money Market Fund N/A N/A N/A N/A
Pro Forma Combined
All Shares $6 $19 $34 $76
Shawmut MassachusettsGalaxy Massa
chusetts
Municipal Money Municipal Money
Pro Forma
Market Fund+ Market Fund*
Combined
All Shares Shares
Shares
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees
(after fee waivers) .18%(1) N/A
..40%
Shareholder Servicing Fee None N/A .10%
12b-1 Fees .00%(2) N/A None
Other Expenses
(after fee waivers and/or
expense reimbursements) .39%(3) N/A
..12%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) .57%(4) N/A
..62%(5)
+ The Shawmut Massachusetts Municipal Money Market Fund currently sells
its shares without class designation.
* The Galaxy Massachusetts Municipal Money Market Fund has not yet
commenced operations. The Galaxy Massachusetts Municipal Money Market
Fund will continue the operations of the Shawmut Massachusetts
Municipal Money Market Fund upon consummation of the Reorganization
relating to that Fund.
(1) The maximum management fee for the Shawmut Massachusetts Municipal
Money Market Fund is .50%.
(2) The Shawmut Massachusetts Municipal Money Market Fund does not intend
to accrue or pay 12b-1 fees until either a separate class of shares
has been created for certain fiduciary investors or a determination is
made that such investors will be subject to the 12b-1 fee. The
Shawmut Massachusetts Municipal Money Market Fund can pay up to .50%
of its average net assets as a 12b-1 fee to its distributor.
(3) Other expenses of the Shawmut Massachusetts Municipal Money Market
Fund have been reduced to reflect the voluntary waiver of fees by that
Fund's custodian and the voluntary reimbursement of expenses by that
Fund's adviser.
(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, which can be terminated at any time, the operating expenses
for the Shawmut Massachusetts Municipal Money Market Fund would be
1.06%.
(5) Absent voluntary waivers, which can be terminated at any time, the pro
forma operating expenses of the Shares of the Galaxy Massachusetts
Municipal Money Market Fund would be 0.89%.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10
Years
Shawmut Massachusetts Municipal $6 $18 $32 $71
Money Market Fund
Galaxy Massachusetts Municipal N/A N/A N/A N/A
Money Market Fund
Pro Forma Combined
All Shares $6 $19 $34 $76
Shawmut Small Galaxy Small
Capitalization Cap Pro Forma
Equity Fund Value Fund* Combined
Investment Trust Retail Trust Retail
Trust
Shares Shares Shares Shares Shares
Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 4.00% None None None 3.75% None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price) None None None None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fee (as a percentage
of amount redeemed, if
applicable) None None None None None None
Exchange Fee None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees/Advisory Fees .76%(1) .76%(1) N/A N/A .75%
..75%
(after fee waivers)
Shareholder Servicing Fee None None N/A N/A .30%None
12b-1 Fees .25%(2)None N/A N/A None None
Other Expenses
(after fee waivers and/or
expense reimbursements) .34%(3) .34%(3) N/A N/A .56%
..25%
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) 1.35%(4) 1.10%(4) N/A N/A 1.61%(5)
1.00%(5)
* The Galaxy Small Cap Value Fund has not yet commenced
operations. The Galaxy Small Cap Value Fund will continue
the operations of the Shawmut Small Capitalization Equity
Fund upon consummation of the Reorganization relating to
that Fund.
(1) The maximum management fee for the Investment Shares and
Trust Shares of the Shawmut Small Capitalization Equity Fund
is 1.00%.
(2) The 12b-1 fee for the Investment Shares of the Shawmut Small
Capitalization Equity Fund has been reduced to reflect the
voluntary waiver of fees by that Fund's distributor. The
Shawmut Small Capitalization Equity Fund can pay up to 0.50%
of the average daily net assets of its Investment Shares as
a 12b-1 fee to its distributor.
(3) Other expenses of the Investment Shares and Trust Shares of
the Shawmut Small Capitalization Equity Fund have been
reduced to reflect the voluntary waiver of fees by that
Fund's custodian.
(4) Absent the voluntary waivers explained in the above
footnotes, which can be terminated at any time, the
operating expenses for the Investment Shares and Trust
Shares of the Shawmut Small Capitalization Equity Fund would
be 1.86% and 1.36%, respectively.
(5) Absent voluntary waivers, which can be terminated at any
time, the pro forma operating expenses of the Retail Shares
and the Trust Shares of the Galaxy Small Cap Value Fund
would be 1.69% and 1.07%, respectively.
Example: An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual return, and (2)
redemption at the end of the following periods.
1 Year 3 Years 5 Years 10
Years
Shawmut Small Capitalization
Equity Fund
Investment Shares $53 $81 $111 $196
Trust Shares $11 $35 $ 61 $134
Galaxy Small Cap
Equity Fund
Retail Shares N/A N/A N/A N/A
Trust Shares N/A N/A N/A N/A
Pro Forma Combined
Retail Shares $54 $86 $121 $219
Trust Shares $10 $31 $ 54 $120
Expense Ratios -- Shawmut Funds. The following table sets
forth (i) the ratios of operating expenses to average net assets
of the Shawmut Funds for the one-year period ended October 31,
1994 (a) after fee waivers and expense reimbursements, and (b)
absent fee waivers and expense reimbursements, and (ii) the
annualized ratios of operating expenses to average net assets of
the Shawmut Funds for the six-month period ended April 30, 1995
(a) after fee waivers and expense reimbursements and (b) absent
fee waivers and expense reimbursements:
Fiscal Year Ended October 31,
1994
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Net Assets Absent
Fee Waivers and Fee Waivers and
Expense Expense
Reimbursements Reimbursements
Shawmut Funds
Shawmut Growth Equity Fund
Investment Shares 1.43% 2.61%
Trust Shares 1.18% 2.11%
Shawmut Prime Money Market
Fund
Investment Shares 0.68% 1.22%
Trust Shares 0.43% 0.72%
Shawmut Limited Term Income
Fund
Investment Shares 1.28% 1.76%
Trust Shares 1.03% 1.26%
Shawmut Fixed Income Fund
Investment Shares 1.19% 1.68%
Trust Shares 0.94% 1.18%
Shawmut Intermediate Government
Income Fund
Investment Shares 1.26% 1.74%
Trust Shares 1.01% 1.24%
Shawmut Connecticut Intermediate
Municipal Income Fund
All Shares 0.48% 3.09%
Shawmut Massachusetts Intermediate
Municipal Income Fund
All Shares 0.51% 4.21%
Shawmut Growth and Income
Equity Fund
Investment Shares 1.29% 1.74%
Trust Shares 1.04% 1.24%
Shawmut Connecticut Municipal
Money Market Fund
Investment Shares 0.78% 1.50%
Trust Shares 0.53% 1.00%
Shawmut Massachusetts Municipal
Money Market Fund
All Shares 0.53% 1.21%
Shawmut Small Capitalization
Equity Fund
Investment Shares 1.31% 1.84%
Trust Shares 1.06% 1.34%
Six-Month Period Ended April
30, 1995
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Net Assets Absent
Fee Waivers and Fee Waivers and
Expense Expense
Reimbursements Reimbursements
Shawmut Funds
Shawmut Growth Equity Fund
Investment Shares 1.46% 2.78%
Trust Shares 1.21% 2.28%
Shawmut Prime Money Market
Fund
Investment Shares 0.70% 1.17%
Trust Shares 0.45% 0.67%
Shawmut Limited Term Income
Fund
Investment Shares 1.38% 1.84%
Trust Shares 1.13% 1.34%
Shawmut Fixed Income Fund
Investment Shares 1.25% 1.71%
Trust Shares 1.00% 1.21%
Shawmut Intermediate Government
Income Fund
Investment Shares 1.36% 1.79%
Trust Shares 1.11% 1.29%
Shawmut Connecticut Intermediate
Municipal Income Fund
All Shares 0.50% 2.90%
Shawmut Massachusetts Intermediate
Municipal Income Fund
All Shares 0.50% 2.64%
Shawmut Growth and Income
Equity Fund
Investment Shares 1.31% 1.78%
Trust Shares 1.06% 1.28%
Shawmut Connecticut Municipal
Money Market Fund
Investment Shares 0.81% 1.31%
Trust Shares 0.56% 0.81%
Shawmut Massachusetts Municipal
Money Market Fund
All Shares 0.56% 1.14%
Shawmut Small Capitalization
Equity Fund
Investment Shares 1.40% 1.91%
Trust Shares 1.15% 1.41%
Expense Ratios -- Galaxy Funds. The following tables set
forth (i) the ratios of operating expenses to average net assets
of the Galaxy Funds for the fiscal year ended October 31, 1994
(a) after fee waivers and expense reimbursements, and (b) absent
fee waivers and expense reimbursements, and (ii) the annualized
ratios of operating expenses to average net assets of the Galaxy
Funds for the six-month period ended April 30, 1995 (a) with fee
waivers and expense reimbursements, and (b) absent fee waivers
and expense reimbursements:
Fiscal Year Ended October 31, 1994
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Net Assets Absent
Fee Waivers and Fee Waivers and
Expense Expense
Reimbursements Reimbursements
Galaxy Funds
Equity Growth Fund
Retail Shares .98% .99%
Trust Shares .93% .93%
Money Market Fund
Shares .64% .64%
Short-Term Bond Fund
Retail Shares .93% 1.14%
Trust Shares .91% 1.11%
Corporate Bond Fund --(1) --(1)
Intermediate Government Income Fund
Retail Shares .78% .99%
Trust Shares .75% .95%
Connecticut Municipal
Bond Fund
Retail Shares .25% 1.42%
Trust Shares .23% 1.41%
Massachusetts Municipal
Bond Fund
Retail Shares .33% 1.43%
Trust Shares .33% 1.41%
Growth and Income Fund
Retail Shares --(1) --(1)
Trust Shares --(1) --(1)
Connecticut Municipal Money
Market Fund --(1) --(1)
Massachusetts Municipal Money
Market Fund --(1) --(1)
Small Cap Value Fund
Retail Shares --(1) --(1)
Trust Shares --(1) --(1)
(1)The Galaxy Corporate Bond, Growth and Income, Connecticut Municipal Money Ma
rket, Massachusetts Municipal Money Market and Small Cap Value Funds
had not commenced operations as of October 31, 1994.
Six-Month Period Ended April
30, 1995
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Net Assets Absent
Fee Waivers and Fee Waivers and
Expense Expense
Reimbursements Reimbursements
Galaxy Funds
Equity Growth Fund
Retail Shares 1.42% 1.48%
Trust Shares .98% 1.02%
Money Market Fund
Retail Shares .73% .77%
Trust Shares .56% .56%
Short-Term Bond Fund
Retail Shares .93% 1.30%
Trust Shares .75% 1.07%
Corporate Bond Fund*
Trust Shares 1.02% 1.81%
Intermediate Government Income Fund
Retail Shares 1.01% 1.29%
Trust Shares .73% .96%
Connecticut Municipal
Bond Fund
Retail Shares .67% 1.46%
Trust Shares .44% 1.21%
Massachusetts Municipal
Bond Fund
Retail Shares .68% 1.63%
Trust Shares .56% 1.35%
Growth and Income Fund
Retail Shares --(1) --(1)
Trust Shares --(1) --(1)
Connecticut Municipal Money
Market Fund --(1) --(1)
Massachusetts Municipal Money
Market Fund --(1) --(1)
Small Cap Value Fund
Retail Shares --(1) --(1)
Trust Shares
* For the period December 12, 1994 (commencement of operations) through
April 30, 1995.
(1)The Galaxy Growth and Income, Connecticut Municipal Money Market, Massachuse
tts Municipal Money Market and Small Cap Value Funds were not
operational during the six-month period ended April 30, 1995.
Voting Information. This Combined Proxy Statement/Prospectus is
being furnished in connection with the solicitation of proxies by
Shawmut's Board of Trustees in connection with a Special Meeting
of Shareholders to be held at Federated Investors Tower, 1001
Liberty Avenue, 19th Floor, Pittsburgh, Pennsylvania on Monday,
October 23, 1995 at 2:00 p.m. Eastern Time (such meeting and any
adjournments thereof hereinafter referred to as the "Meeting").
Only Shareholders of record at the close of business on _______,
1995 will be entitled to notice of and to vote at the Meeting.
Each share or fraction thereof is entitled to one vote or
fraction thereof and all shares will vote separately by Fund.
Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no specification
is made, the persons named as proxies will vote in favor of each
proposal set forth in the Notice of Meeting. Proxies may be
revoked at any time before they are exercised by submitting to
Shawmut a written notice of revocation or a subsequently executed
proxy or by attending the Meeting and voting in person. For
additional information, including a description of the
Shareholder vote required for approval of the Reorganization
Agreement and related transactions contemplated thereby, see
"Information Relating to Voting Matters."
Risk Factors. The following discussion highlights the principal
differences between the risk factors associated with an
investment in the Shawmut Reorganizing Funds and the Existing
Galaxy Funds and is qualified in its entirety by the more
extensive discussion of risk factors in "Comparison of Investment
Policies and Risk Factors."
Shawmut Growth Equity Fund and Galaxy Equity Growth Fund.
The Shawmut Growth Equity Fund may invest in derivative
securities such as stock index futures, swap agreements, indexed
securities and other futures, while the Galaxy Equity Growth Fund
is not permitted to invest in such securities. Each of the
foregoing derivative securities can be volatile instruments.
With respect to futures contracts, if the adviser applies a hedge
at an inappropriate time or judges market conditions incorrectly,
futures may lower a fund's return. A fund could also experience
losses if prices of futures were poorly correlated with its other
investments, or it could not close its positions because of an
illiquid secondary market. Swap agreements are subject to a
counterparty's ability to perform and may decline in value
depending on the creditworthiness of the party. In addition, a
fund may also suffer losses if it is unable to terminate a swap
agreement or reduce its exposure through offsetting transactions.
There are also differences in the quality of investments
that the Shawmut Growth Equity Fund and Galaxy Equity Growth Fund
are permitted to make. For example, the Shawmut Growth Equity
Fund may invest in certain securities that are rated "BB" (i.e.,
the fifth highest ratings group) or higher by a Rating
Organization while the Galaxy Equity Growth Fund may only invest
in securities rated in one of the four highest ratings groups.
Securities rated in the fifth highest ratings group either have
speculative characteristics or are predominantly speculative with
respect to the ability to pay interest and repay principal in
accordance with the terms of the obligation.
Shawmut Prime Money Market and Galaxy Money Market Fund.
The principal difference between the Shawmut Prime Money
Market Fund and the Galaxy Money Market Fund is that the Shawmut
Fund may invest up to 5% of its total assets in debt instruments
rated in the second highest ratings category by a Rating
Organization while the Galaxy Money Market Fund may invest in
debt instruments rated only in the highest category.
Shawmut Limited Term Income Fund and Galaxy Short-Term Bond Fund.
The principal differences in the risk factors between the
Shawmut Limited Term Income Fund and the Galaxy Short-Term Bond
Fund is that the Shawmut Fund may invest in corporate debt
obligations rated in the fifth highest ratings group while the
Galaxy Fund may only invest in bonds and debentures rated in the
three highest ratings groups. See "Risk Factors -- Shawmut
Growth Equity Fund and Galaxy Equity Growth Fund" for a
discussion of the risk factors involved in investments in the
fifth highest ratings groups. Unlike the Galaxy Short-Term Bond
Fund, the Shawmut Limited Term Income Fund may invest in certain
derivative securities, such as indexed securities and swap
agreements. See "Risk Factors -- Shawmut Growth Equity Fund and
Galaxy Equity Growth Fund" for a discussion of risk factors with
respect to derivatives.
The Galaxy Short-Term Bond Fund, unlike the Shawmut Limited
Term Income Fund, may invest in debt obligations of foreign
corporations and supranational banks and Canadian Provincial
Governments. Foreign investments usually involve higher costs
than investments in domestic securities and may entail additional
risks associated with currency exchange rates, less complete
financial information about 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 are additional
factors that may adversely impact upon foreign investments.
The Galaxy Short-Term Bond Fund may also invest in
"stripped" obligations of both the U.S. Government and private
issuers. The Shawmut Limited Term Income Fund is not expressly
permitted to invest in such securities. Stripped securities,
particularly stripped mortgage-backed securities, may exhibit
greater price volatility than other types of debt securities.
Shawmut Fixed Income Fund and Galaxy Corporate Bond Fund.
The Shawmut Fixed Income Fund is permitted to invest up to
10% of its total assets in corporate debt obligations in the
fifth highest ratings category. The Galaxy Corporate Bond Fund
must invest at least 95% of its assets in debt obligations rated
in the four highest ratings categories. See "Risk Factors --
Shawmut Growth Equity Fund and Galaxy Equity Growth Fund" for a
discussion of the speculative characteristics of securities rated
in the fifth highest ratings category.
The Shawmut Fixed Income Fund, unlike the Galaxy Corporate
Bond Fund, may invest in certain derivative securities, such as
all types of futures contracts, indexed securities and swap
agreements. See "Risk Factors -- Shawmut Growth Equity Fund and
Galaxy Equity Growth Fund" for a discussion of the risk factors
associated with investments in derivative securities.
The Galaxy Corporate Bond Fund, unlike the Shawmut Fixed
Income Fund, may invest in debt obligations of foreign issuers
and "stripped" securities. See "Risk Factors -- Shawmut Limited
Term Income Fund and Galaxy Short-Term Bond Fund" for a
discussion of the risk factors associated with these investments.
Shawmut Intermediate Government Income Fund and Galaxy
Intermediate Government Income Fund.
The Shawmut Intermediate Government Income Fund may invest
in corporate debt obligations rated in one of the five highest
ratings categories, while the Galaxy Intermediate Government
Income Fund may invest in such obligations rated only in the
three highest categories. The Shawmut Intermediate Government
Income Fund, unlike the Galaxy Intermediate Government Income
Fund, may also invest in certain derivative securities, such as
futures contracts, indexed securities and swap agreements. See
"Risk Factors -- Shawmut Growth Equity Fund and Galaxy Equity
Growth Fund" for a discussion of the risk factors involved with
investments in derivative securities and securities rated in the
fifth highest ratings categories.
The Galaxy Intermediate Government Income Fund unlike the
Shawmut Intermediate Government Income Fund may invest in foreign
issuers. See "Risk Factors -- Shawmut Limited Term Income Fund
and Galaxy Short-Term Bond Fund" for a discussion of risks
associated with foreign investments.
Shawmut Connecticut Intermediate Municipal Income Fund and
Shawmut Municipal Income Fund (collectively, the "Shawmut Muni
Bond Funds") and Galaxy Connecticut Municipal Bond Fund and
Galaxy Massachusetts Municipal Bond Fund (collectively, the
"Galaxy Muni Bond Funds").
One of the principal differences between the Shawmut Muni
Bond Funds and the Galaxy Muni Bond Funds is that the Shawmut
Muni Bond Funds may invest in debt obligations rated in one of
the four highest ratings categories while the Galaxy Muni Bond
Funds may invest in obligations rated only in the three highest
categories. Issuers of debt rated in the fourth highest ratings
category may have a weakened capacity to pay interest and repay
principal by comparison to issuers in the third highest ratings
category.
Another principal difference is that the Shawmut Muni Bond
Funds may invest in certain derivative securities such as swap
agreements, indexed securities and synthetic bond derivatives.
See "Risk Factors -- Shawmut Growth Equity Fund and Galaxy Equity
Growth Fund" for a discussion of the risk factors involved in
investments in derivative securities generally.
The Galaxy Muni Bond Funds may invest more than 25% of their
assets in municipal securities, the interest on which is derived
solely from revenues on similar projects if such investment is
deemed appropriate by the Adviser. To the extent that a Fund's
assets are concentrated in municipal securities payable from
revenues on similar projects, the Fund will be subject to the
particular risks presented by such project to a greater extent
than it would be if its assets were not concentrated.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
Shawmut has entered into an agreement whereby its investment
portfolios are to be acquired by portfolios of Galaxy.
Significant provisions of this Reorganization Agreement are
summarized below; however, this summary is qualified in its
entirety by reference to the Reorganization Agreement, a copy of
which is attached as Appendix I to this Combined Proxy Statement
and Prospectus.
Description of the Reorganization Agreement. There are
twelve separate Shawmut investment portfolios. The assets of
seven of them are being acquired by seven similar investment
portfolios currently offered by Galaxy. Four of the Shawmut
portfolios will be acquired by four new Galaxy portfolios which
have been organized to continue the operations of these Shawmut
portfolios. The assets of a twelfth Shawmut portfolio, the
Quantitative Equity Fund, will be acquired by the Shawmut Growth
and Income Equity Fund prior to the Effective Time of the
Reorganization, in exchange for Trust Shares and Investment
Shares of the Growth and Income Equity Fund to be distributed pro
rata by the Quantitative Equity Fund to its shareholders of Trust
Shares and Investment Shares, respectively, in complete
liquidation and dissolution of the Quantitative Equity Fund.
The Reorganization Agreement provides that at the Effective
Time of the Reorganization substantially all of the assets and
liabilities of the Shawmut Funds will be transferred to the
Galaxy Funds identified in the table below. The holders of each
class of shares of a Shawmut Fund will receive the series of
shares of the corresponding Galaxy Fund identified in the table.
In the table, (a) opposite the name of each Shawmut Fund is the
name of the Galaxy Fund which will issue shares to such Shawmut
Fund, and (b) opposite the name of each class of shares of the
Shawmut Fund is the name of the series of shares of the Galaxy
Fund to be distributed to the holders of such Shawmut class. The
number of each series of shares to be issued by the Galaxy Funds
will have an aggregate net asset value equal to the aggregate net
asset value of the corresponding class or classes of shares of
the particular Shawmut Fund as of the regular close of the New
York Stock Exchange, currently 4:00 p.m. New York time, on the
Valuation Date.
Shawmut Portfolios and Classes Galaxy Portfolios
and Series
Shawmut Growth Equity Fund Equity Growth Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Prime Money Market Fund Money Market Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Limited Term Income Fund Short-Term Bond Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Fixed Income Fund Corporate Bond Fund
Investment Shares Trust Shares
Trust Shares Trust Shares
Shawmut Intermediate Government Income Fund Intermediate Bond
Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Connecticut Intermediate Municipal Connecticut
Municipal Bond Income Fund Fund
All Shares* Retail Shares
Trust Shares
Shawmut Massachusetts Intermediate Municipal Massachusetts
Municipal Bond
Income Fund Fund
All Shares* Retail Shares
Trust Shares
Shawmut Growth and Income Equity Fund Growth and Income
Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
* Shareholders who purchased their shares through the Trust
Department of Shawmut Bank will receive Trust Shares of the
corresponding Galaxy Fund. All other shareholders will
receive Retail Shares of the corresponding Galaxy Fund.
Shawmut Portfolio and Classes Galaxy Portfolios
and Series
Shawmut Connecticut Municipal Money Connecticut
Municipal Money
Market Fund Market Fund
Investment Shares Shares
Trust Shares Shares
Shawmut Massachusetts Municipal Money Massachusetts
Municipal Money
Market Fund Market Fund
All Shares Shares
Shawmut Small Capitalization Equity Fund Small Cap Value
Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Galaxy does not anticipate the need to liquidate any assets
of any of the Shawmut Funds due to any possible conflict with the
investment policies and restrictions of the corresponding Galaxy
Funds and, accordingly, no Shawmut Fund will incur any brokerage
fees in connection with the Reorganization.
The Reorganization Agreement provides that Shawmut will
declare a dividend or dividends prior to the Effective Time of
the Reorganization which, together with all previous dividends,
will have the effect of distributing to the shareholders of each
of the Reorganizing Funds all undistributed net investment income
earned and net capital gains realized up to and including the
Effective Time of the Reorganization.
Following the transfer of assets and liabilities from the
Shawmut Funds to the Galaxy Funds, and the issuance of shares by
the Galaxy Funds to the Shawmut Funds, each of the Shawmut Funds
will distribute the series of shares of the Galaxy Funds pro rata
to the holders of classes of shares of the Shawmut Funds as
described above in liquidation of the Shawmut Funds. Each holder
of a class of shares of a Shawmut Fund at the Effective Time of
the Reorganization will receive an amount of the corresponding
series of shares of the corresponding Galaxy Fund of equal value,
plus the right to receive any dividends or distributions which
were declared before the Effective Time of the Reorganization but
which remained unpaid at that time. Following the
Reorganization, the registration of Shawmut as an investment
company under the 1940 Act will be terminated, and Shawmut will
be terminated under state law.
The stock transfer books of Shawmut will be permanently
closed at the Effective Time of the Reorganization. If any
shares of a Shawmut Fund are represented by a share certificate,
the certificate must be surrendered to Galaxy's transfer agent
for cancellation before the Galaxy Fund shares issued to the
shareholder in the Reorganization can be redeemed. Any lost
share certificates will be subject to verification and
indemnification with respect to the loss.
The Reorganization is subject to a number of conditions,
including approval of the Reorganization Agreement and the
transactions contemplated thereby described in this Combined
Proxy Statement/Prospectus by the shareholders of Shawmut; the
receipt of certain legal opinions described in the Reorganization
Agreement; the receipt of certain certificates from the parties
concerning the continuing accuracy of the representations and
warranties in the Reorganization Agreement and other matters; and
the parties' performance in all material respects of their
agreements and undertakings in the Reorganization Agreement.
Assuming satisfaction of the conditions in the Reorganization
Agreement, the Effective Time of the Reorganization is expected
to occur on _________________, 1995 or such other date as is
agreed to by the parties.
The expenses of Galaxy and of Shawmut incurred in connection
with the Reorganization will be borne by Fleet Financial Group,
Inc. and/or Shawmut National Corporation.
The Reorganization may be abandoned at any time prior to the
Effective Time of the Reorganization by the mutual consent of the
parties to the Reorganization Agreement. The Reorganization
Agreement provides further that at any time prior to or (to the
fullest extent permitted by law) after approval of the
Reorganization Agreement by the shareholders of Shawmut (a) the
parties thereto may, by written agreement approved by their
respective Boards of Trustees or authorized officers and with or
without the approval of their shareholders, amend any of the
provisions of the Reorganization Agreement; and (b) either party
may waive any breach by the other party or the failure to satisfy
any of the conditions to its obligations with or without the
approval of such party's shareholders.
The Reorganization Agreement also provides that the
Reorganization will be contingent upon the consummation of the
merger between Fleet Financial Group, Inc. and Shawmut National
Corporation.
In its consideration and approval of the Reorganization, the
Board of Trustees of Shawmut considered, primarily, the pending
merger between Shawmut National Corporation, the parent company
of Shawmut Bank, and Fleet Financial Group, Inc. If this merger
is completed, the currently existing investment advisory contract
between the Shawmut Funds and Shawmut Bank, would be terminated.
Given that fact, Shawmut Bank and Fleet have recommended that
each of the Shawmut Funds be reorganized as described in this
Combined Proxy Statement/Prospectus contemporaneously with the
proposed merger of the bank holding companies. The Board of
Trustees considered the effect of the proposed merger of the bank
holding companies on Shawmut; the recommendation of Shawmut Bank
and Fleet with respect to the proposed consolidation of Shawmut
and Galaxy; the fact that the reorganization would constitute a
tax-free reorganization; and that the interests of Shareholders
would not be diluted as a result of the reorganization.
Section 15(f) of the 1940 Act provides that when a change in
the control of an investment adviser occurs, the investment
adviser or any of its affiliated persons may receive any amount
or benefit in connection therewith as long as, among other
things, no "unfair burden" is imposed on the investment company
as a result of the transaction relating to the change of control,
or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" as defined in the
1940 Act includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" of
any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company
or its security holders (other than fees for bona fide investment
advisory or other services) or from any person in connection with
the purchase or sale of securities or other property to, from or
on behalf of the investment company (other than fees for bona
fide principal underwriting services).
Fleet has agreed during the three-year period immediately
following consummation of the Reorganization to use its best
efforts to ensure that at least 75% of the Board of Trustees of
Galaxy will not be "interested persons" of Fleet within the
meaning of the 1940 Act. Fleet has advised the Board of Trustees
of Shawmut that the Board of Trustees of Galaxy will meet this
requirement following the Reorganization.
After consideration of all of the foregoing factors,
together with certain other factors and information considered to
be relevant, Shawmut's trustees unanimously approved the
Reorganization Agreement and directed that it be submitted to
shareholders for approval. Shawmut's Board of Trustees
recommends that shareholders vote "FOR" approval of the
Reorganization Agreement.
The Board of Trustees of Shawmut has not determined what
action it will take in the event the shareholders fail to approve
the Reorganization Agreement or for any reason the Reorganization
is not consummated. If the Reorganization is not consummated for
any reason, the Trustees may choose to consider approval of a new
investment advisory agreement with Fleet, alternative
dispositions of Shawmut's assets, including the sales of assets
to, or merger with, another investment company, or the possible
liquidation of any of its Funds.
At a meeting held on June 12, 1995, the Galaxy Board of
Trustees considered the proposed reorganization with respect to
the Galaxy Funds. Based upon their evaluation of the relevant
information provided to them, and in light of their fiduciary
duties under federal and state law, the Board of Trustees
unanimously determined that the proposed reorganization was in
the best interests of the Galaxy Funds and their respective
shareholders and that the interests of existing shareholders of
the Galaxy Funds would not be diluted as a result of effecting
the transaction.
Capitalization. Because the Reorganizing Funds will be
combined in the Reorganization with the Existing Galaxy Funds,
the total capitalization of each of the Existing Galaxy Funds
after the Reorganization is expected to be greater than the
current capitalization of the corresponding Shawmut Reorganizing
Funds. The following table sets forth as of April 30, 1995, (i)
the capitalization of each of the Reorganizing Funds and (ii) the
pro forma capitalization of each of the Existing Galaxy Funds as
adjusted to give effect to the Reorganization. If consummated,
the capitalization of each Fund is likely to be different at the
Effective Time of the Reorganization as a result of daily share
purchase and redemption activity in the Funds.
Shawmut Galaxy Pro Forma
Growth Equity Equity Growth Combined
Total Net Assets $21,234,296 $446,725,819 $467,960,115
Investment/Retail Shares$6,650,075 $77,332,872 $83,982,947
Trust Shares $14,584,221 $369,392,947 $383,977,168
Shares Outstanding 1,938,212 29,507,465 30,910,285
Investment/Retail Shares 607,088 5,110,489 5,550,018
Trust Shares 1,331,124 24,396,976 25,360,267
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $10.95 $15.13 $15.13
Trust Shares $10.96 $15.14 $15.14
Shawmut Galaxy Pro Forma
Prime Money Market Money Market Combined
Total Net Assets $784,948,492$851,074,673$1,636,023,165
Investment/Retail Shares$207,427,726$528,146,786$735,574,512
Trust Shares $577,520,766 $322,927,887 $900,448,653
Shares Outstanding 784,948,492 852,074,6731,637,114,686
Investment/Retail Shares207,427,726 528,783,187 736,210,913
Trust Shares 577,520,766 323,383,007 900,903,773
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $1.00 $1.00 $1.00
Trust Shares $1.00 $1.00 $1.00
Shawmut Galaxy Pro Forma
Limited Term IncomeShort-Term BondCombined
Total Net Assets $47,146,041 $62,589,076 $109,742,477
Investment/Retail Shares $6,665,876 $28,605,640 $35,272,557
Trust Shares $40,480,165 $33,983,436 $74,469,920
Shares Outstanding 4,936,239 6,370,011 11,166,898
Investment/Retail Shares 697,884 2,911,330 3,589,551
Trust Shares 4,238,355 3,458,681 7,577,347
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $9.55 $9.83 $9.83
Trust Shares $9.55 $9.83 $9.83
Shawmut Galaxy Pro Forma
Fixed Income Corporate Bond Combined
Total Net Assets $85,598,188 $34,792,900 $120,424,604
Investment/Retail Shares $8,022,153 na na
Trust Shares $77,576,035 $34,792,900 $120,424,604
Shares Outstanding 8,905,348 3,367,839 11,657,452
Investment/Retail Shares 834,440 na na
Trust Shares 8,070,908 3,367,839 11,657,452
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $9.61 $0.00 na
Trust Shares $9.61 $10.33 $10.33
Galaxy
Shawmut IntermediateIntermediate Pro Forma
Government IncomeGovernment IncomeCombined
Total Net Assets $55,265,206 $274,465,602 $329,726,405
Investment/Retail Shares $10,122,431 $79,435,405 $89,557,029
Trust Shares $45,142,775 $195,030,197 $240,169,376
Shares Outstanding 5,794,768 27,696,441 33,272,708
Investment/Retail Shares 1,061,329 8,015,844 9,037,199
Trust Shares 4,733,439 19,680,597 24,235,509
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $9.54 $9.91 $9.91
Trust Shares $9.54 $9.91 $9.91
Shawmut
Connecticut Galaxy
Intermediate Connecticut Pro Forma
Municipal Income Municipal Bond Combined
Total Net Assets $8,295,627 $20,315,269 $28,616,947
Investment/Retail Shares $8,295,627 $16,484,967 $24,786,645
Trust Shares na $3,830,302 $3,830,302
Shares Outstanding 855,033 2,099,466 2,957,077
Investment/Retail Shares 855,033 1,703,633 2,561,244
Trust Shares na 395,833 395,833
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $9.70 $9.88 $9.68
Trust Shares $0.00 $9.68 $9.68
Shawmut
Massachusetts Galaxy
Intermediate Massachusetts Pro Forma
Municipal Income Municipal Bond Combined
Total Net Assets $8,178,439 $20,858,341 $29,018,995
Investment/Retail Shares $8,178,439 $14,398,709 $22,559,363
Trust Shares na $6,459,632 $6,459,632
Shares Outstanding 840,412 2,182,159 3,035,784
Investment/Retail Shares 840,412 1,506,359 2,359,984
Trust Shares na 675,800 675,800
Net Asset Value Per Share_______________________________________
Investment/Retail Shares $9.73 $9.56 $9.56
Trust Shares $0.00 $9.56 $9.56
Federal Income Tax Consequences. Consummation of the
Reorganization is subject to the condition that Shawmut and
Galaxy receive an opinion from Drinker Biddle & Reath to the
effect that for federal income tax purposes: (i) the transfer of
all of the assets and liabilities of each of the Reorganizing
Funds (except in each case for a cash reserve in an amount
necessary for the discharge of all known and reasonably
anticipated liabilities of each of the Reorganizing Funds) and
each of the Continuing Funds to the corresponding Galaxy Fund in
exchange for shares of the corresponding Galaxy Fund and
liquidating distributions to shareholders of the Shawmut Funds of
the shares of the Galaxy Fund so received, as described in the
Reorganization Agreement, will constitute reorganizations within
the meaning of Section 368(a)(1)(C), Section 368(a)(1)(D) or
Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as
amended, and with respect to the Reorganization, Shawmut and
Galaxy will each be considered "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or
loss will be recognized by the Shawmut Funds as a result of such
transactions; (iii) no gain or loss will be recognized by the
Galaxy Funds as a result of such transactions; (iv) no gain or
loss will be recognized by the shareholders of any Shawmut Fund
on the distribution to them by Shawmut of shares of any class of
the corresponding Galaxy Fund in exchange for their shares of any
class of the Shawmut Fund; (v) the aggregate basis of the Galaxy
Fund shares received by a shareholder of a Shawmut Fund will be
the same as the aggregate basis of the shareholder's Shawmut Fund
shares immediately prior to the Reorganization; (vi) the basis of
each Galaxy Fund in the assets of the corresponding Shawmut Fund
received pursuant to the Reorganization will be the same as the
basis of the assets in the hands of the Shawmut Fund immediately
before the Reorganization; (vii) a shareholder's holding period
for Galaxy Fund shares will be determined by including the period
for which the shareholder held the Shawmut Fund shares exchanged
therefor, provided that the shareholder held such Shawmut Fund
shares as a capital asset; and (viii) each Galaxy Fund's holding
period with respect to the assets received in the Reorganization
will include the period for which such assets were held by the
corresponding Shawmut Fund.
Galaxy and Shawmut have not sought a tax ruling from the
Internal Revenue Service ("IRS"), but are acting in reliance upon
the opinion of counsel discussed in the previous paragraph. That
opinion is not binding on the IRS and does not preclude the IRS
from adopting a contrary position. Shareholders should consult
their own advisers concerning the potential tax consequences to
them, including state and local income taxes.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objectives and policies of the Shawmut
Reorganizing Funds are, in many respects, similar to those of the
corresponding Existing Galaxy Funds. There are, however, certain
differences. The following discussion summarizes some of the
more significant similarities and differences in the investment
policies and risk factors of the Shawmut Reorganizing Funds and
corresponding Existing Galaxy Funds and is qualified in its
entirety by the discussion elsewhere herein, and in the
prospectuses and statements of additional information of the
Shawmut Reorganizing Funds and the Existing Galaxy Funds
incorporated herein by reference.
Shawmut Growth Equity Fund and Galaxy Equity Growth Fund
The Shawmut Growth Equity Fund may invest up to 20% of its
total assets in derivative securities such as stock index
futures, swap agreements, indexed securities and other futures
and options (except that only 5% of its total assets may be
invested in call options), while the Galaxy Equity Growth Fund
may not participate in any of these transactions, except for
covered call options in an amount of up to 25% the value of its
net assets. Options and futures can be volatile investments and
involve certain risks. If the investment adviser applies a hedge
at an inappropriate time or judges market conditions incorrectly,
options and futures may lower a fund's return. A fund could also
experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or
it could not close its positions because of an illiquid secondary
market. By writing a covered call option, a fund forgoes the
opportunity to profit from an increase in the market price of the
underlying security above the exercise price, except insofar as
the premium represents such a profit, and it will not be able to
sell the underlying security until the option expires or is
exercised if the fund effects a closing purchase transaction by
purchasing an option of the same series.
With respect to futures contracts, positions in such
contracts may be closed only on an exchange or board of trade
that furnishes a secondary market for such contracts. There is
no guarantee that a liquid market will exist for futures
contracts at a specified time. Also, because futures contracts
look to projected price levels of valuation, market circumstances
may result in there being a discrepancy between the price of the
stock index future and movement in the corresponding stock index.
The absence of a perfect price correlation between the futures
contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions,
rather than satisfying additional margin requirements. This
could result in a distortion of the relationship between the
index and the futures market. In addition, because the futures
market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by
speculators in the futures market could result in price
fluctuations.
Swap agreements are sophisticated hedging instruments that
typically involve a small investment of cash relative to the
magnitude of risks assumed. As a result, swaps can be highly
volatile and may have a considerable impact on a fund's
performance. Swap agreements are subject to risks related to the
counterparty's ability to perform and may decline in value if the
counterparty's creditworthiness deteriorates. A fund may also
suffer losses if it is unable to terminate outstanding swap
agreements or to reduce its exposure through offsetting
transactions.
There are several differences between the Shawmut Growth
Equity Fund and the Galaxy Equity Growth Fund with respect to the
range and quality of investments expressly permitted under their
respective investment policies. The Shawmut Growth Equity Fund
may also invest in convertible securities, such as 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 that are rated "BB" or
higher by Standard & Poor's Ratings Group, Division of McGraw
Hill ("Standard & Poor's"), or Fitch Investors Service, Inc.
("Fitch") or "Ba" or higher by Moody's Investors Service, Inc.
("Moody's") (i.e., the fifth highest ratings group in each case).
The Galaxy Equity Growth Fund may only invest in securities
convertible to common stock that are rated in one of the four
highest ratings categories of either Standard & Poor's or
Moody's. Securities that are rated "BB" by Standard & Poor's or
Fitch or "Ba" by Moody's (i.e., the fifth highest rating group in
each case), either have speculative characteristics or are
predominately speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. Debt obligations that are not determined to be
investment grade are high-yield, high-risk bonds, typically
subject to greater market fluctuations, and securities in the
lower rating category may be in danger of loss of income and
principal due to an issuer's default. To a greater extent than
investment-grade bonds, the value of lower rated bonds tends to
reflect short-term corporate, economic and market developments,
as well as investor perception of the issuer's credit quality.
In addition, lower rated bonds may be more difficult to dispose
of or to value than higher-rated, lower-yielding bonds.
Shawmut Prime Money Market Fund and Galaxy Money Market Fund
The Shawmut Prime Money Market Fund may invest up to 5%
(with not more than 1% in one issuer) of its total assets in debt
instruments rated in the second highest ratings category by a
Rating Organization, whereas the Galaxy Money Market Fund may
only invest in debt instruments rated in the highest category for
short-term debt securities by at least two Rating Organizations,
(or one Rating Organization if rated by only one, or, if not
rated, of comparable quality to the highest ratings category).
Unlike the Galaxy Money Market Fund, the Shawmut Prime Money
Market Fund may invest in domestic issues of corporate debt
obligations and eurodollar commercial paper. The Galaxy Money
Market Fund may invest in asset-backed securities, guaranteed
investment contracts of U.S. insurance companies, obligations of
foreign banks and savings deposits of both foreign and domestic
banks and may lend its portfolio securities. The Shawmut Prime
Money Market Fund is not explicitly permitted to enter into these
transactions. The Fund's investment in interest-bearing savings
deposits may not exceed 5% of the value of its total assets at
the time of deposit and investments in non-negotiable time
deposits are limited to no more than 5% of the Fund's total
assets at the time of purchase.
The Shawmut Prime Money Market Fund, unlike the Galaxy Money
Market Fund, may enter into when-issued or delayed delivery
transactions. These transactions are arrangements in which a
fund purchases securities with payment and delivery scheduled for
a future time. The seller's failure to complete these
transactions may cause the Shawmut Prime Money Market Fund to
miss a price or yield considered to be advantageous. Settlement
dates may be a month or more after entering into these
transactions, and the market values of the securities purchases
may vary from the purchase prices. Accordingly, the Shawmut
Prime Money Market Fund may pay more or less than the market
value of the securities on the settlement date.
Shawmut Limited Term Income Fund and Galaxy Short-Term Bond Fund.
The Shawmut Limited Term Income may invest in domestic
issues of corporate debt obligations having floating or fixed
rates of interest and rated in one of the five highest categories
by a Rating Organization. By contrast, bonds and debentures in
which the Galaxy Short-Term Bond Fund normally invests must be
rated in one of the three highest categories by a Rating
Organization (or, if unrated, are of comparable quality in the
opinion of the investment adviser). See "Comparison of
Investment Policies and Risks -- Shawmut Growth Equity Fund and
Galaxy Equity Growth Fund" for a discussion of the speculative
characteristics of securities rated in the fifth highest ratings
category.
The Galaxy Short-Term Bond Fund, unlike the Shawmut Limited
Term Income Fund, may invest in debt obligations of foreign
corporations and obligations of supranational banks and Canadian
Provincial Governments. The Fund may also invest in guaranteed
investment contracts issued by Canadian insurance companies. The
Fund must limit investments in foreign securities to no more than
35% of its total assets. Direct investments in foreign
securities generally 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 principal and interest on
foreign obligations. Certain of the risks associated with
investments in foreign securities are heightened with respect to
investments in developing countries and fledgling democracies.
The risks of expropriation, nationalization and social, political
and economic instability are greater in those countries than in
more developed capital markets. In addition, although the Galaxy
Short-Term Bond and Corporate Bond Fund may invest in securities
denominated in foreign currencies, the Fund values its securities
and other assets in U.S. dollars and the Fund is not currently
invested in securities denominated in a foreign currency. The
net asset value of the shares of a Fund which invests in
securities denominated in foreign currencies 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 Galaxy Short-Term Bond makes its
investments could reduce the effect of increases and magnify the
effect of decreases in the prices 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 Funds are subject to the possible imposition of
exchange control regulations or freezes on convertibility of
currency.
The Shawmut Limited Term Income Fund may invest up to 10% of
its total assets in certain derivative securities, such as
options, all types of futures contracts, indexed securities and
swap agreements. The Galaxy Short-Term Bond Fund, however, may
not invest in these securities, except that it is permitted to
invest up to one-third of its assets in interest rate futures
contracts. See "Comparison of Investment Policies and Risk
Factors -- Shawmut Growth Equity Fund and Galaxy Equity Growth
Fund" for a discussion of the risks involved in investments in
derivatives securities and futures contracts.
The Galaxy Short-Term Bond Fund, unlike the Shawmut Limited
Term Income Fund, may purchase "stripped" obligations of both the
U.S. Government and private issuers. Stripped securities,
particularly stripped mortgage-backed securities ("SMBS"), may
exhibit greater price volatility than ordinary debt securities
because of the manner in which their principal and interest are
returned to investors. SMBS are usually structured with two or
more classes that receive different proportions of the interest
and principal distributions from a pool of mortgage-backed
obligations. A common type of SMBS will have one class receiving
all of the interest, while the other class will receive all of
the principal. However, in some instances, one class will
receive some of the interest and most of the principal while the
other class will receive most of the interest and the remainder
of the principal. If the underlying obligations experience
greater than anticipated prepayments of principal, the Fund may
fail to fully recoup its initial investment in these securities.
The market value of the class consisting entirely of principal
payments generally is extremely volatile in response to changes
in interest rates. The yields on a class of SMBS that receives
all or most of the interest are generally higher than prevailing
market yields on other mortgage-backed obligations because their
cash flow patterns are more volatile, and there is a greater risk
that the initial investment will not be fully recouped. SMBS
that are not issued by the U.S. Government (or a U.S. Government
agency or instrumentality) are considered illiquid and are
subject to the Fund's 15% net asset limit on investments in
illiquid securities.
The Galaxy Short-Term Bond Fund may also invest in municipal
securities, which may include variable and floating rate, tax-
exempt instruments. Generally, the market value of municipal
securities can be expected to vary inversely to changes in
prevailing interest rates. There may be no active secondary
market for variable, floating rate municipal securities.
However, the periodic readjustments of their interest rates tend
to assure that their value will approximate par value.
Shawmut Fixed Income Fund and Galaxy Corporate Bond Fund.
With respect to the quality of portfolio investments, there
are certain differences between the Funds. The Shawmut Fixed
Income Fund may not invest in corporate debt obligations rated
lower than the fourth highest category of Standard & Poor's,
Moody's or Fitch, except that the Fund may invest up to 10% of
the value of its total assets in corporate debt obligations rated
in the fifth ratings category ("Ba" or "BB") so long as not more
than 1% of the Fund's total assets is invested in the BA-rated or
BB-rated obligations of a single issuer. By contrast, the Galaxy
Corporate Bond Fund must invest substantially all (95%) of its
assets in debt obligations rated at the time of purchase within
one of the four highest ratings categories of Standard & Poor's
or Moody's. If a security drops below the four highest ratings
categories, the Fund will not be obligated to dispose of the
obligation and may continue to hold it as long as (i) the value
of all of the debt obligations of the Fund which are rated below
the four highest rating categories does not exceed 5% of the
Fund's net assets, and (ii) the investment adviser considers the
investment to be appropriate under the circumstances. See
"Comparison of Investment Policies and Risk Factors -- Shawmut
Growth Equity Fund and Galaxy Equity Growth Fund" for a
discussion of risk factors involved in investment in securities
rated "Ba" or "BB."
One of the principal differences between the Shawmut Fixed
Income Fund and the Galaxy Corporate Bond Fund is that the Galaxy
Fund may invest in debt obligations of foreign issuers, including
foreign corporations and banks, as well as foreign governments
and their political subdivisions. The Galaxy Corporate Bond
Fund, however, is subject to a 20% net asset limit on foreign
investments. See "Comparison of Investment Policies and Risk
Factors -- Shawmut Limited Term Income Fund and Galaxy Short-Term
Bond Fund" for a discussion of the risk factors involved in
investments of foreign issuers.
The Shawmut Fixed Income Fund may invest up to 20% of its
total assets in certain derivative securities such as options and
all types of futures contracts, indexed securities and swap
agreements. The Galaxy Corporate Bond Fund may not invest in
these securities, except that it may invest up to one-third of
its total assets in interest rate future contracts. See
"Comparison of Investment Policies and Risk Factors -- Shawmut
Growth Equity Fund and Galaxy Equity Growth Fund" for a
discussion of risk factors involved in derivatives securities and
futures contracts.
The Galaxy Corporate Bond Fund may invest in zero coupon
bonds and stripped obligations, consisting of U.S. Treasury
receipts and other "stripped" securities that evidence ownership
in either the future interest payments or the future principal
payments on U.S. government and other obligations. Zero coupon
bond prices can be very volatile when interest rates change. The
market value of zero coupon securities is generally more volatile
and likely to react to changes in interest rates then the market
value of interest-bearing securities with similar maturities and
credit qualities. See "Comparison of Investment Policies and
Risk Factors -- Shawmut Limited Term Income Fund and Galaxy Short-
Term Bond Fund" for a discussion of the risks factors involved in
investments in "stripped" securities.
The Galaxy Corporate Bond Fund may also invest in municipal
securities, unlike the Shawmut Fixed Income Fund. See
"Comparison of Investment Policies and Risk Factors -- Shawmut
Limited Term Income Fund and Galaxy Short-Term Bond Fund" for a
discussion of the risks of investment in municipal securities.
Shawmut Intermediate Government Income Fund and Galaxy
Intermediate Government Income Fund.
Under normal market and economic conditions, both the
Shawmut Intermediate Government Income Fund and the Galaxy
Intermediate Government Income Fund must invest at least 65% of
the value of their respective total assets in U.S. Government
securities.
The Galaxy Intermediate Government Income Fund may invest in
securities of foreign issuers, including supranational banks and
Canadian Provincial Governments, and guaranteed investment
contracts issued by Canadian insurance companies. The Fund will
limit investments in foreign issuers, however, to no more than
35% of its total assets. By contrast, the Shawmut Intermediate
Government Income Fund is not expressly permitted to invest in
securities of foreign issuers. See "Comparison of Investment
Policies and Risk Factors -- Shawmut Limited Term Income Fund and
Galaxy Short-Term Bond Fund" for a discussion of the risks of
investments in foreign securities and guaranteed investment
contracts.
The Shawmut Intermediate Government Income Fund may invest
its assets in corporate debt obligations rated in one of the five
highest ratings categories of a Rating Organization. In
contrast, the Galaxy Intermediate Government Income Fund must
invest its assets in such obligations rated in one of the three
highest ratings categories. See "Comparison of Investment
Policies and Risk Factors -- Shawmut Growth Equity Fund and
Galaxy Equity Growth Fund" for a discussion of the speculative
characteristics of investments in securities rated in the fifth
highest ratings category.
The Shawmut Intermediate Government Income Fund may also
invest up to 20% of its total assets in certain derivative
securities, such as options and futures contracts, indexed
securities and swap agreements. By contrast, the Galaxy
Intermediate Government Income Fund may not invest in any of
these securities, except that one-third of its total assets may
be invested in interest rate futures. See "Comparison of
Investment Policies and Risk Factors -- Shawmut Growth Equity
Fund and Galaxy Equity Growth Fund" for a discussion of the risks
involved in investments in derivative securities and futures
contracts.
The Galaxy Intermediate Government Income Fund may also
invest in municipal securities, including variable and floating
rate, tax-exempt instruments and stripped obligations of the U.S.
Government or private issuers. See "Comparison of Investment
Policies and Risk Factors -- Shawmut Fixed Income and Galaxy
Corporate Bond Fund" for a discussion of the risks of investment
in municipal securities and "Comparison of Investment Policies
and Risk Factors -- Shawmut Limited Term Income Fund and Galaxy
Short-Term Bond Fund" for a discussion of the risks involved in
investments in "stripped" obligations.
Shawmut Connecticut Intermediate Municipal Income Fund and
Shawmut Massachusetts Intermediate Municipal Income Fund
(collectively, the "Shawmut Muni Bond Funds") and Galaxy
Connecticut Municipal Bond Fund and Galaxy Massachusetts
Municipal Bond Fund (collectively, the "Galaxy Muni Bond Funds").
The Shawmut Muni Bond Funds and the Galaxy Muni Bond Funds
have similar but not identical investment policies. Since each
of the Funds invest primarily in Connecticut or Massachusetts
municipal securities, as applicable, the Funds are subject to the
risk that the value of their shares may be especially affected by
factors pertaining to the economy of Connecticut or
Massachusetts, as the case may be, and the ability of issuers of
Connecticut/Massachusetts municipal securities to meet their
obligations.
The Shawmut Muni Bond Funds may invest in debt obligations
rated in one of the four highest ratings categories of either
Moody's, Standard & Poor's or Fitch, whereas the Galaxy Muni Bond
Funds may purchase securities only in one of the three highest
categories. Debt rated in the fourth ratings category is
regarded as having adequate capacity to pay interest and
principal, but adverse economic conditions or changing
circumstances may lead to a weakened capacity to pay interest and
repay principal.
The Shawmut Muni Bond Funds, unlike the Galaxy Muni Bond
Funds, may invest up to 20% of their total assets in swap
agreements, indexed securities and options and futures. The
Galaxy Muni Bond Funds may not invest in these securities, except
that they may invest up to one-third of their total assets in
futures contracts. These Funds engage in futures transactions
for hedging purposes only and not for speculation. The Shawmut
Muni Bond Funds may also invest in synthetic bond derivatives.
These securities are formed when an investment banker acquires
all or part of a fixed rate municipal bond and divides it into
two classes of variable rate securities -- one that provides a
source of short-term, tax-exempt income and the other which is
sold as a residual rate security and has a long duration and also
offers a source of tax-exempt income. There is an inverse
relationship between the two classes of securities. This means
that the holder of the short-term security may receive interest
income that is greater than, or less than, the coupon rate of the
underlying fixed rate bond, and that the holder of the residual
security would, for the same period, receive a rate of return
that is less than, or greater than, as the case may be, the
bond's coupon rate. See "Comparison of Investment Policies and
Risk Factors -- Shawmut Growth Equity Fund and Galaxy Equity
Growth Fund" for a discussion of the risks of investments in
derivatives securities and futures.
Unlike the Galaxy Muni Bond Funds, the Shawmut Muni Bond
Funds may also invest in tender option bonds, zero coupon
securities and variable rate demand notes. The bankruptcy,
receivership, or default of any of the parties to the tender
option bond will adversely affect the quality and marketability
of the security. See "Comparison of Investment Policies and Risk
Factors -- Shawmut Fixed Income Fund and Galaxy Corporate Bond
Fund" for a description of the risks involved in investments in
zero coupon securities. Variable rate demand notes are long-term
demand notes that have variable or floating interest rates.
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase
prices. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation or depreciation is less for
variable rate municipal securities than for fixed income
obligations.
The Shawmut Muni Bond Funds, unlike the Galaxy Muni Bond
Funds, may also invest in participation interests, which
represent undivided proportional interests in municipal lease
payments by a governmental or nonprofit entity. Lease
obligations may be limited by municipal charter or the nature of
the appropriation for the lease. In particular, lease
obligations may be subject to periodic appropriation. If the
entity does not appropriate funds for future lease payments, the
entity cannot be compelled to make such payments. Furthermore, a
lease may provide that the participants cannot accelerate lease
obligations upon default. The participants would only be able to
enforce lease payments as they become due. In the event of a
default or failure of appropriation, unless the participation
interests are credit enhanced, it is unlikely that the
participants would be able to obtain an acceptable source of
payment.
The Galaxy Muni Bond Funds, unlike the Shawmut Bond Funds,
may invest in municipal securities of the "moral obligation"
type, rated and unrated, variable and floating rate municipal
securities and private activity bonds. In the case of "moral
obligation" municipal securities, if the issuer is unable to meet
its debt service from current revenues, it may draw on a reserve
fund, the restoration of which is a moral commitment but not a
legal obligation of the state or municipality which created the
issuer. There may be no active secondary market for variable or
floating rate municipal securities. However, the periodic
readjustments of their interest rates tend to assure that their
value will approximate their par value. Private activity bonds
held by the Galaxy Muni Bond Funds are in most cases revenue
securities and are not payable from the unrestricted revenues of
the issuer. Consequently, the credit quality of such private
activity bonds is usually directly related to the credit standing
of the corporate user of the facility involved.
The Galaxy Muni Bond Funds are also permitted to invest more
than 25% of their assets in municipal securities the interest on
which is paid solely from revenues on similar projects if such
investment is deemed necessary or appropriate by the Adviser. To
the extent that a Fund's assets are concentrated in municipal
securities payable from revenues on similar projects, the Fund
will be subject to the particular risks presented by such
projects to a greater extent than it would be if its assets were
not so concentrated.
Investment Policies and Risks -- General.
The investment objectives of the Shawmut Reorganizing Funds
and the Existing Galaxy Funds are fundamental, meaning that they
may not be changed without a vote of the holders of a majority of
a particular Fund's outstanding shares, as defined by the 1940
Act. This section describes certain policies and risks that are
common to a number of Shawmut Reorganizing Funds and Existing
Galaxy Funds.
Each Reorganizing Shawmut Fund and each Existing Galaxy Fund
is permitted to (i) enter into repurchase agreements and reverse
repurchase agreements; and (ii) purchase obligations of the U.S.
Government, its agencies and instrumentalities. Each Shawmut
Reorganization Fund and each Existing Galaxy Fund (except the
Galaxy Money Market Fund) may enter into when-issued and delayed
delivery transactions.
The Galaxy Short-Term Bond, Intermediate Government Income,
Corporate Bond, Connecticut Municipal Bond and Massachusetts
Municipal Bond Funds are permitted to enter into stand-by
commitments with respect to municipal securities. None of the
Shawmut Reorganizing Funds is permitted to participate in these
transactions, except the Shawmut Prime Money Market Fund, which
may invest in stand-by commitments with respect to securities it
may purchase pursuant to its investment objectives.
There are similarities between the Funds with respect to the
types of money market instruments they are permitted to purchase.
Each Shawmut Reorganizing Fund may invest in a broad array of
money market instruments, all rated in one of the top two rating
categories by a Rating Organization and high quality commercial
paper. Each Existing Galaxy Fund may also purchase money market
instruments and commercial paper; the Galaxy Money Market Fund
may only purchase money market instruments and commercial paper
that are rated by a Rating Organization in the highest category
for such instruments, and the Galaxy Connecticut Municipal Bond
and Galaxy Massachusetts Municipal Bond Funds may purchase money
market instruments and commercial paper that are within the two
highest ratings assigned by a Rating Organization.
Each Shawmut Reorganizing Fund and each Existing Galaxy
Fund, with the exception of the Galaxy Connecticut Municipal Bond
and Galaxy Massachusetts Municipal Bond Funds, may purchase
restricted securities. Both the Shawmut Reorganizing Funds and
the Existing Galaxy Funds limit their investments in such
securities pursuant to their respective illiquid securities
limits. Finally, each Shawmut Reorganizing Fund may purchase
illiquid securities in an amount not to exceed 15% of the value
of its net assets, except for the Shawmut Prime Money Market
Fund, which may not invest more than 10% of its net assets in
such securities. Each Existing Galaxy Fund may also invest in
illiquid securities, but must limit such investments to 10% of
the net asset value of each respective Fund, except the Galaxy
Corporate Bond Fund, which may invest up to 15% of the value of
its net assets in such securities.
All of the Existing Galaxy Funds may enter into forward
commitment transactions, except the Galaxy Money Market and
Galaxy Equity Growth Funds, while none of the Shawmut
Reorganizing Funds may enter into such transactions. Forward
commitment transactions involve a commitment to purchase or sell
particular securities with payment and delivery taking place at a
future date. These transactions involve the risk 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. To the extent that an Existing Galaxy Fund
entered into forward commitment transactions exceeding 25% of the
value of its assets, the Fund's liquidity and the ability of the
Adviser to manage the Fund might be adversely affected.
Each Existing Galaxy Fund and each Shawmut Reorganizing Fund
(except the Shawmut Prime Money Market, Connecticut Intermediate
Municipal Income and Massachusetts Municipal Income Funds) may
lend its portfolio securities up to one-third the value of its
total assets. Such loans 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.
Each Existing Galaxy Fund (except the Galaxy Equity Growth
Fund) and each Shawmut Reorganizing Fund (except the Shawmut
Prime Money Market, Shawmut Connecticut Intermediate Municipal
Income and Shawmut Massachusetts Intermediate Municipal Income
Funds) may invest in asset-backed securities. These securities
may be backed by either credit card receivables or motor vehicle
installment purchase obligations. Asset-backed securities entail
certain risks, including the risk that credit card receivables
are generally unsecured, and the debtors are entitled to the
protection of a number of state and federal consumer credit laws,
many of which give such debtors the right to set off certain
amounts owned on the credit cards, thereby reducing the balance
due. Most issuers of asset-backed securities backed by motor
vehicle installment purchase obligations permit the servicer of
such receivable to retain possession of the underlying
obligations. If the servicer sells these obligations to another
party, there is a risk that the purchaser would acquire an
interest superior to that of the holders of the related asset-
backed securities. Further, if a vehicle is registered in one
state and is then reregistered because the owner and obligor move
to another state, such reregistration could defeat the original
security interest in the vehicle in certain cases. In addition,
because of the large number of vehicles involved in a typical
issuance and technical requirements under state laws, the trustee
for the holders of asset-backed securities backed by automobile
receivables may not have a proper security interest in all of the
obligations backing such receivables. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in
some cases, be available to support payments on these securities.
Each Existing Galaxy Fund (except the Galaxy Equity Growth
and Galaxy Money Market Funds) and each Shawmut Reorganizing Fund
(except the Shawmut Prime Money Market, Connecticut Intermediate
Municipal Income and Massachusetts Intermediate Municipal Income
Funds) may invest in mortgage-backed securities. To the extent
that a Fund purchases mortgage-backed securities at a premium,
mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in
some loss of the Fund's principal investment to the extent of the
premium paid. The yield of a Fund that invests in mortgage-
backed securities may be affected by reinvestment of prepayments
at higher or lower rates than the original investment. Mortgage-
backed securities have either fixed or adjustable interest rates.
The rate of return on mortgage-backed securities may be affected
by prepayments on principal on the underlying loans, which
generally increase as interest rates decline. As a result, when
interest rates decline, holders of these securities normally do
not benefit from appreciation in market value to the same extent
as holders of other non-callable debt securities. In addition,
the value of mortgage-backed securities will fluctuate in
response to market interest rates.
The Galaxy Short-Term Bond, Intermediate Government Income,
Connecticut Municipal Bond and Massachusetts Municipal Bond
Funds, unlike their corresponding Shawmut Reorganizing Funds, may
invest in guaranteed investment contracts ("GICs") issued by
Canadian and U.S. insurance companies and bank investment
contracts ("BICs"); the Galaxy Money Market Fund may also invest
in guaranteed investment contracts, and the Galaxy Corporate Bond
Fund may invest in bank investment contracts, unlike the
corresponding Shawmut Reorganizing Funds. GICs and BICs are
considered illiquid securities, which means that the Fund may
experience delays in disposing of the security because of an
absence of a secondary market.
Each Existing Galaxy Fund, unlike its corresponding Shawmut
Reorganizing Fund, is permitted to invest in variable and
floating rate commercial paper. In the event that an issuer of
variable or floating rate commercial paper defaulted on its
payment obligation, a 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.
Investment Limitations
Neither the Shawmut Reorganizing Funds nor the Existing
Galaxy Funds may change their fundamental investment limitations
without the affirmative vote of the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of the particular
Shawmut Reorganizing Fund or Existing Galaxy Fund. However,
investment limitations that are not fundamental policies may be
changed by the Board of Trustees without shareholder approval.
The investment limitations of the Shawmut Reorganizing Funds and
the corresponding Existing Galaxy Funds are similar, but not
identical.
Each of the Shawmut Reorganizing Funds (except the Shawmut
Connecticut Intermediate Municipal Income and Massachusetts
Intermediate Municipal Income Funds) and each of the
corresponding Existing Galaxy Funds (except the Galaxy
Connecticut Municipal Bond and Massachusetts Municipal Bond
Funds) is a "diversified" investment portfolio and, therefore,
has a fundamental policy limiting investments in securities of
any one issuer, other than securities issued by the U.S.
Government, its agencies and instrumentalities and repurchase
agreements collateralized by such securities, to 5% of the value
of a fund's total assets, except that up to 25% of the value of
its total assets may be invested without regard to this 5%
limitation. In addition, none of the Shawmut Funds (except the
Shawmut Connecticut Intermediate Municipal Income and
Massachusetts Intermediate Municipal Income Funds) may acquire
more than 10% of the outstanding voting securities of any one
issuer, except that the Shawmut Fixed Income, Intermediate
Government Income, Limited Term Income and Prime Money Market
Funds may invest up to 25% of their respective assets without
regard to such limitation. The corresponding Existing Galaxy
Funds do not have the same voting securities limitation.
With respect to at least 50% of the total assets of each of
the Shawmut Connecticut Intermediate Municipal Income and
Massachusetts Intermediate Municipal Income Funds, no more than
5% may be invested in securities of a single issuer, and no more
than 25% of each Fund's total assets may be invested in the
securities of a single issuer at the close of each quarter of
each fiscal year. For purposes of this limitation, governmental
subdivisions, including states, territories, possessions of the
United States, or their political subdivisions, agencies,
authorities, instrumentalities, or similar entities, will be
considered a separate issuer if their assets and revenues are
separate from those of the government body creating it and the
security is backed only by its own assets and revenues.
Industrial revenue bonds backed only by the assets and revenues
of a non-governmental issuer are considered to be issued solely
by that user. If, in the case of an industrial development bond
or government-issued security, a governmental or other entity
guarantees the security, such guarantee would be considered a
separate security issued by the guarantor, as well as the other
issuer, subject to limited exclusions allowed by the 1940 Act.
The Galaxy Connecticut Municipal Bond and Massachusetts
Municipal Bond Funds may not 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 either Fund's
total assets would be invested in the securities of such issuer,
except that up to 50% of the value of either Fund's total assets
may be invested without regard to this 5% limitation, provided
that no more than 25% of the value of either Fund's total assets
are invested in the securities of any one issuer.
None of the Shawmut Reorganizing Funds may borrow money
directly or engage in reverse repurchase agreements except that
they may borrow money directly or through reverse repurchase
agreements in amounts up to one-third of their respective total
assets, including the amounts borrowed, for temporary purposes.
None of the Existing Galaxy Funds (except the Galaxy Equity
Growth Fund) may borrow money, except from domestic banks for
temporary purposes, and then in amounts not in excess of 10% of
the value of each Fund's total assets, provided that each such
Fund may borrow pursuant to reverse repurchase agreements in
accordance with its investment policies and in amounts not in
excess of 10% of its total assets. The Galaxy Equity Growth Fund
may borrow money or invest in reverse repurchase agreements in
amounts not in excess of 33% of the value of its total assets.
The Shawmut Reorganizing Funds may only mortgage, pledge or
hypothecate their assets to secure permitted indebtedness, and
then the Funds may only pledge assets having a market value not
exceeding the lesser of the dollar amounts borrowed or 10% of the
value of total assets. The Existing Galaxy Funds also may not
mortgage, pledge or hypothecate their assets except in connection
with permitted borrowings and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of a
Fund's total assets; the Galaxy Equity Growth Fund may not
mortgage, pledge or hypothecate its assets except in connection
with permitted borrowings and in amounts not in excess of the
lesser of the dollar amounts borrowed or 33% of the value of the
Fund's total assets.
Neither the Shawmut Reorganizing Funds nor the Existing
Galaxy Funds may purchase securities while borrowings (including
reverse repurchase agreements) in excess of 5% of each Fund's
total assets are outstanding. The investment limitations
described in the foregoing paragraphs regarding borrowing and
pledging of assets are fundamental with respect to the Shawmut
Reorganizing Funds and the Existing Galaxy Funds.
Neither the Shawmut Reorganizing Funds nor the Existing
Galaxy Funds may make loans, except that: (i) each Shawmut
Reorganizing Fund (except the Shawmut Prime Money Market,
Connecticut Intermediate Municipal Income and Massachusetts
Intermediate Municipal Income Funds) may lend portfolio
securities up to one-third of the value of the Fund's total
assets; and (ii) the Shawmut Prime Money Market Fund may hold
certain money market instruments including repurchase agreements
and variable amount demand master notes; and (iii) the Shawmut
Connecticut Intermediate Municipal Income and Massachusetts
Intermediate Municipal Income Funds may acquire publicly or non-
publicly issued municipal bonds or temporary investments or enter
into repurchase agreements; and (iv) the Shawmut Fixed Income,
Intermediate Government Income, Limited Term Income and Growth
Equity Funds may purchase or hold money market instruments,
repurchase agreements, obligations of the U.S. Government, its
agencies or instrumentalities, and certain debt instruments; and
(v) each Existing Galaxy Fund may purchase or hold debt
instruments and enter into repurchase agreements, and each Fund
may lend portfolio securities against collateral consisting of
cash or securities that are consistent with such Fund's permitted
investments, where the value of the collateral is equal at all
times to at least 100% of the value of the securities loaned.
The foregoing limitations on securities lending are fundamental
limitations for both the Shawmut Reorganizing Funds and the
Existing Galaxy Funds.
The Shawmut Reorganizing Funds will not invest 25% or more
of the value of their respective total assets in any one industry
other than securities issued by the U.S. Government, its agencies
or instrumentalities, provided that (i) for purposes of the
Shawmut Prime Money Market Fund, investing in domestic bank
instruments or repurchase agreements secured by U.S. Government
obligations shall not be considered investments in any one
industry; and (ii) the Shawmut Growth Equity Fund may invest as
temporary investments more than 25% of the value of its assets in
cash or cash items, securities guaranteed by the U.S. Government,
its agencies or instrumentalities, or instruments secured by
these money market instruments, such as repurchase agreements.
None of the Existing Galaxy Funds may purchase securities
that would cause 25% or more of the value of a 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 that there is no
limitation with respect to (i) obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities; and
(ii) obligations issued or guaranteed by domestic banks or U.S.
branches of foreign banks in the case of the Galaxy Money Market
Fund; and (iii) securities issued or guaranteed by any U.S.
state, territory or possession of the U.S. Government, the
District of Columbia, or any of their authorities, agencies,
instrumentalities or political subdivisions in the case of the
Galaxy Connecticut Municipal Bond and Massachusetts Municipal
Bond Funds. The foregoing investment limitations of each of the
Shawmut Reorganizing Funds and the Existing Galaxy Funds with
respect to industry concentration of investments is a fundamental
investment limitation.
Each of the Shawmut Reorganizing Funds must limit its
investments in illiquid securities to 15% of its net assets,
except that the Shawmut Prime Money Market is subject to a 10%
limitation. By contrast, each of the Existing Galaxy Funds must
limit its investments in illiquid securities to 10% of its net
assets, except that the Galaxy Corporate Bond Fund is subject to
a 15% limitation. For purposes of investments in illiquid
securities by the Existing Galaxy Funds (except for the
Connecticut Municipal Bond and Massachusetts Municipal Bond
Funds), Rule 144A securities will not be considered illiquid if
the Funds' investment adviser determines that an adequate trading
market exists with respect to such securities. The foregoing
limitations on investments in illiquid securities are fundamental
as to the Existing Galaxy Funds but are not fundamental as to the
Shawmut Reorganizing Funds.
The Shawmut Reorganizing Funds may not invest more than 10%
of their total assets in securities subject to restrictions on
resale under the Securities Act of 1933, except that (i) the
Shawmut Fixed Income, Intermediate Government Income, Limited
Term Income, Growth Equity and Prime Money Market Funds may
invest in commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted securities
that meet criteria for liquidity as established by the Trustees
apart from this restriction, and (ii) the Shawmut Growth Equity
Fund is subject to a 15% limitation on investment in restricted
securities. This limitation is a non-fundamental limitation of
all of the Shawmut Reorganizing Funds, except for the Shawmut
Connecticut Intermediate Municipal Income and the Massachusetts
Intermediate Municipal Income Funds. The Existing Galaxy Funds
may not invest more than 10% of their net assets in restricted
securities, but this limitation is fundamental as to the Existing
Galaxy Funds.
Other fundamental investment limitations of the Existing
Galaxy Funds including the following: (i) the Galaxy Money
Market Fund may not purchase any securities other than "money-
market" instruments, some of which may be subject to repurchase
agreements, but the Fund may make interest-bearing savings
deposits not in excess of 5% of the value of its total assets at
the time of deposit and may make time deposits.
The Shawmut Connecticut Intermediate Municipal Income and
Massachusetts Intermediate Municipal Income Funds will not invest
more than 5% of the value of their respective total assets in
industrial development bonds where the principal and interest are
the responsibility of companies (or guarantors, where applicable)
with less than three years of continuous operations, including
the operation of any predecessor; and the Galaxy Connecticut
Municipal Bond and Massachusetts Municipal Bond Funds may not
invest any assets in industrial revenue bonds where the payment
of principal and interest are the responsibility of a company
(including its predecessors) with less than three years of
continuous operation. The limitations discussed in this
paragraph are fundamental with respect to both the Shawmut
Reorganizing Funds and the Existing Galaxy Funds.
See "Investment Objectives and Policies" in Galaxy's
Statement of Additional Information which is incorporated by
reference herein for additional investment limitations of the
Existing Galaxy Funds.
Purchase and Redemption Information, Exchange Privileges,
Distribution, Pricing, Organization. Shares of the Shawmut
Funds are sold on a continuous basis by their distributor,
Federated Securities Corp. and may be purchased at the public
offering price through Federated Administrative Services or any
securities dealer having a sales agreement with Federated
Securities Corp. The public offering price is the net asset
value per share next computed after receipt of an order by
Federated Administrative Services plus, in the case of Investment
Shares, a maximum sales charge of 4.00% with respect to the
Shawmut Growth and Income Equity, Growth Equity and Small
Capitalization Equity Funds and 2.00% with respect to the Shawmut
Limited Term Income, Intermediate Government Income, Fixed
Income, Connecticut Intermediate Municipal Income and
Massachusetts Intermediate Municipal Income Funds. Investment
Shares of the Shawmut Prime Money Market, Connecticut Municipal
Money Market and Massachusetts Municipal Money Market Funds are
sold without a sales charge. The amount of the sales charge is
reduced incrementally on purchases of $50,000 or more depending
upon the amount of the purchase. No sales charge is imposed on
purchases by trustees, directors, and employees (and their
spouses and children under age 21) of Shawmut, Shawmut Bank, the
brokers, or Federated Securities Corp., or their affiliates, or
any bank, or investment dealer who has a sales agreement with
Federated Securities Corp. Any applicable sales charge can be
reduced on the purchase of Investment Shares through quantity
discounts and accumulated purchases, letters of intent,
reinvestment privileges or concurrent purchases. No sales charge
is imposed on any of the Trust Shares of the Shawmut Funds.
The minimum initial investment in Investment Shares of the
Shawmut Funds by an investor is $1,000 (except for the Shawmut
Prime Money Market, Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds, which require a
minimum initial investment in Investment Shares of $2,500), or
$500 in the case of retirement plan accounts. Subsequent
investments by participants in the Systematic Investment Program,
or by retirement plan accounts, must be in amounts of at least
$50. Subsequent investments by all other investors must be in
amounts of at least $100. The initial minimum investment for
employees of Shawmut Bank and its affiliates may be waived from
time to time. Purchase orders for shares of the Shawmut Funds
are effected on any "business day," that is, a day on which the
New York Stock Exchange and Federal Reserve Wire System are open
for business.
The minimum initial investment in Trust Shares of the
Shawmut Funds by an investor is $1,000 (except for the Shawmut
Prime Money Market, Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds, which require a
minimum initial investment in Trust Shares of $2,500).
Subsequent investments by all other investors must be in amount
of at least $100.
Investors may purchase Trust Shares of the Shawmut Funds by
Federal Reserve wire, mail or transfer. Shawmut Funds Trust
Shares are sold by the distributor on days on which the New York
Stock Exchange and Federal Reserve Wire System are open for
business. Shawmut Fund Trust Shares may also be purchased
through Shawmut Bank, Shawmut Bank Connecticut, National
Association, Shawmut Bank NH, or their affiliates (collectively,
"Shawmut Bank") on days on which both Shawmut Bank and the New
York Stock Exchange and Federal Reserve Wire System are open for
Business. Texas residents must purchase, exchange and redeem
Trust Shares through Federated Securities Corp. Shawmut Funds
reserve the right to reject any purchase request.
Trust Shares of the Shawmut Funds are redeemed either by
mail or telephone, and are redeemed at their net asset value next
determined after Federated Services Company receives the
redemption request. Redemptions will be made on days on which
the Funds compute their net asset value. Requests for
redemptions can be made by telephone or in writing by contacting
a Shawmut Bank Trust officer. Redemption requests received prior
to 4:00 p.m. (Eastern Time) will be effected on the same business
day.
Investors may purchase Investment Shares of the Shawmut
Funds by Federal Reserve wire, mail or transfer. Shares of the
Shawmut Funds are sold by the distributor on days on which the
New York Stock Exchange and Federal Reserve Wire System are open
for business. Investment Shares of the Shawmut Funds may also be
purchased in branches of Shawmut Bank, from certain brokers which
have offices located in branches of Shawmut Bank under lease
agreements with Shawmut Bank. Offices of the brokers located in
branches of Shawmut Bank are open on days on which each of
Shawmut Bank and the New York Stock Exchange and Federal Reserve
Wire System are open for business. Texas residents must
purchase, exchange and redeem Investment Shares through Federated
Securities, Corp. The Shawmut Funds reserve the right to reject
any purchase request.
Investors may redeem Investment Shares by mail or
telephone. The Shawmut Funds redeem Investment Shares at their
net asset value next determined after Federated Services Company
receives the redemption request. Redemptions will be made on
days on which the Investment Shares of the Shawmut Funds compute
their net asset value. Requests for redemptions can be made by
telephone or in writing by contacting your broker or directly
from the Shawmut Funds. Redemption requests received prior to
4:00 p.m. (Eastern time) (except for the Shawmut Prime Money
Market, Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds, which must receive redemption
requests prior to 2:00 p.m. (Eastern time)) will be effected on
the same business day.
Shares of Galaxy are sold on a continuous basis by its
distributor, 440 Financial Distributors, Inc. Trust Shares are
offered to investors maintaining qualified accounts at bank and
trust institutions, including institutions affiliated with Fleet
Financial Group., Inc., and to participants in employer-sponsored
defined contribution plans. Galaxy also issues Retail Shares,
which are offered primarily to individuals or corporations
purchasing either for their own accounts or for the accounts of
others and to Fleet Brokerage Corporation, Fleet Securities,
Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loans
associations and broker/dealers on behalf of their customers.
Trust Shares and Retail Shares represent equal pro rata interests
in a Galaxy Fund, except they bear different expenses which
reflect the difference in the range of services provided to them.
Galaxy issues only one class of shares in its Connecticut and
Massachusetts Municipal Money Market Funds. The public offering
price is the net asset value per share. No sales charge is
presently imposed on any of the shares of Galaxy, including those
issued in the Reorganization.
Effective ___________, 1995, Galaxy intends to impose a
front-end sales load on purchases of Retail Shares of certain of
the Galaxy Funds. Accordingly, the public offering price of
Galaxy Fund Retail Shares as of _____________, 1995 will be the
net asset value per Retail Share next computed after receipt of
an order by 440 Financial plus a maximum sales charge of 3.75%
with respect to the Galaxy Growth and Income, Equity Growth,
Small Cap Value, Short-Term Bond, Intermediate Government Income,
Corporate Bond, Connecticut Municipal Bond and Massachusetts
Municipal Bond Funds. The Galaxy Money Market, Connecticut
Municipal Money Market and Massachusetts Municipal Money Market
Funds will be sold without a sales charge. The amount of the
sales charge will be reduced incrementally on purchases of
$50,000 or more depending upon the amount of the purchase. The
sales load described above will not be applicable to: (i)
reinvestment of dividends and distributions; (ii) IRA, SEP and
Keogh Plan accounts; (iii) purchases of up to $1,000 per month
through Automatic Investment Program accounts; (iv) any purchase
of Retail Shares, 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
_______, 1995; (v) purchases by directors, officers and employees
of Galaxy's distributor and of broker-dealers having agreements
with Galaxy's distributor pertaining to the sale of Retail Shares
to the extent permitted by such organizations; (vi) investors who
purchase pursuant to a wrap fee program offered by any broker-
dealer or other financial institution or financial planning
organization; (vii) purchases by members of Galaxy's Board of
Trustees; (viii) purchases by officers, directors, employees and
retirees of Fleet Financial Group, Inc. and any of its
affiliates; and (ix) any purchase of Retail Shares pursuant to
Galaxy's Reinstatement Privilege.
Any applicable sales charge may be substantially reduced
through quantity discounts, such as rights of accumulation,
letters of intent or a combination of investments. No sales
charge will be imposed, however, on shares of the Galaxy Funds
issued in the Reorganization.
Trust Shares are sold to investors maintaining qualified
accounts at bank and trust institutions, including subsidiaries
of Fleet Financial Group, Inc. and (except for the Tax-Exempt,
Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal
Bond, Massachusetts Municipal Bond Fund and Rhode Island
Municipal Bond Funds) to participants in employer-sponsored
defined contribution plans. Trust Shares are sold without a
sales charge.
The Distributor has established several procedures to enable
different types of investors to purchase Retail Shares of Galaxy.
Retail Shares may be purchased by individuals or corporations
which submit a purchase application to Galaxy, purchasing
directly either for their own accounts or for the accounts of
others. Retail Shares may also be purchased by Fleet Brokerage
Securities Corporation, Fleet Securities, Inc., Fleet Financial
Group, Inc., its affiliates, their correspondent banks, and other
qualified banks, savings and loan associations and broker/dealers
on behalf of their customers ("Customers").
With respect to the Galaxy Corporate Bond Fund, the
Distributor has established several procedures to enable
different types of investors to purchase Trust Shares of Galaxy.
Trust Shares may be purchased by investors who maintain qualified
accounts at bank and trust institutions, including subsidiaries
of Fleet Financial Group, Inc., who are participants in employer-
sponsored defined contribution plans, or who are customers of
Fleet Brokerage Securities Corporation, Fleet Securities, Inc.,
Fleet Financial Group, Inc., its affiliates, their correspondent
banks, and other qualified banks, savings and loan associations
and broker/dealers. Trust Shares of the Fund may also be
purchased by individuals or corporations which submit a purchase
application to Galaxy, purchasing directly for their own accounts
or for the accounts of others ("Direct Investors").
The minimum initial investment for Galaxy's Direct Investors
and the minimum initial aggregate investment for institutions
purchasing on behalf of Customers is $2,500. The minimum
investment for subsequent purchases is $100. There are no
minimum requirements for investors participating in the Automatic
Investment Program (described below). Institutions may require
Customers to maintain certain minimum investments in Retail
Shares. Purchase orders for shares of Galaxy are effected on any
"Business Day," that is, any day on which the New York Stock
Exchange is open for trading. Galaxy does not impose any minimum
initial or subsequent investment requirements with respect to
Trust Shares.
Direct Investors in Galaxy may redeem shares by mail,
telephone, and subject to certain conditions and minimum amounts,
by wire. Customers of institutions may redeem all or part of
their Retail Shares in accordance with procedures governing their
accounts at institutions. Payments for redemption orders
received by the Distributor on a Business Day will normally be
wired on the fifth business day to the institutions. Galaxy
reserves the right to redeem accounts (other than retirement plan
accounts) involuntarily, upon 60 days' written notice, if the
account's net asset value falls below $250 as a result of
redemptions. In addition, if an investor has agreed with a
particular institution to maintain a minimum balance in his or
her account at the institution with respect to Retail Shares of
the Fund, and the balance in such account falls below that
minimum, the Customer may be obliged by the institution to redeem
all of his or her shares. Redemption orders are effected at the
net asset value per share next determined after receipt and
acceptance of the order by the Distributor. Galaxy reserves the
right to wire redemption proceeds within seven days after
receiving the redemption order if, in its judgement, an earlier
payment could adversely affect the Fund. A shareholder of record
of Galaxy, including former shareholders of Shawmut following the
consummation of the Reorganization, may be required to redeem
shares if due to investor redemptions the balance in such
shareholder's account drops below $250 and a shareholder does not
increase the balance to at least $250 upon 60 days' written
notice.
Galaxy has telephone exchange privileges among the Retail
Shares of its investment portfolios. There are no exchange
privileges for Trust Shares. Shareholders of Galaxy may also
request an exchange in writing. Any exchange must satisfy the
requirements relating to the minimum initial investment in the
particular Galaxy Fund. Shares of Galaxy may be exchanged only
if they are not represented by outstanding share certificates.
Galaxy offers an Automatic Investment Program and Systematic
Withdrawal Plan in connection with the purchase and redemption of
shares. Galaxy also offers a Direct Deposit Program in
connection with the purchase of the Retail Shares. Shares of
Galaxy are also available for purchase in connection with the
following tax-deferred prototype retirement plans: Individual
Retirement Accounts (including "roll overs" from existing
retirement plans), Simplified Employee Pension Plans, Multi-
Employer Pension Plans, and Keogh Plans.
The Shawmut Growth and Income Equity, Growth Equity and
Small Capitalization Equity Funds declare dividends of
substantially all of their net investment income quarterly to all
shareholders invested in each such Equity Fund on the record
date. Capital gains realized by each such Equity Fund, if any,
will be distributed to such Equity Fund's shareholders at least
once every 12 months.
The Shawmut Limited Term Income, Intermediate Government
Income, Fixed Income, Connecticut Intermediate Municipal Income
and Massachusetts Intermediate Municipal Income Funds declare
dividends of substantially all of their net investment income
monthly to all shareholders invested in each such Income Fund on
the record date. Capital gains realized by each such Income
Fund, if any, will be distributed to such Income Fund's
shareholders at least once every 12 months.
The Shawmut Prime Money Market, Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds declare
dividends of substantially all of their net investment income
daily and pay these dividends monthly to all shareholders
invested in each such Money Market Fund on the record date.
Investment Shares purchased by wire before 11:00 a.m. (Eastern
Time) in the case of the Shawmut Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds and before
2:00 p.m. (Eastern Time) in the case of the Shawmut Prime Money
Market Fund begin earning dividends that day. Investment Shares
purchased by check begin earning dividends on the next business
day after the check is converted by a broker into federal funds.
Capital gains realized by each such Money Market Fund, if any,
will be distributed to such Money Market Fund's shareholders at
least once every 12 months.
Galaxy's Money Market, Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds declare dividends
of substantially all of their respective net investment income
daily immediately after the 11:00 a.m. pricing of shares on the
day of declaration. The Funds do not expect to realize net
capital gains. However, if any such gains were realized, they
would be paid out to shareholders no less frequently than
annually.
Dividends from net investment income of Galaxy's Short-Term
Bond, Corporate Bond, Intermediate Government Income, Connecticut
Municipal Bond and Massachusetts Municipal Bond Funds are
declared daily and paid monthly. Net realized capital gains are
declared at least annually.
Dividends from net investment income of Galaxy's Equity
Growth, Growth and Income and Small Cap Value Funds are declared
and paid quarterly. Net realized capital gains are declared at
least annually.
The assets of the Shawmut Prime Money Market, Connecticut
Municipal Money Market and Massachusetts Municipal Money Market
Funds are valued based on amortized cost. Each such Fund
attempts to stabilize the net asset value of its shares at $1.00.
The net asset value per share is determined by dividing the sum
of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding. The Funds
cannot guarantee that the net asset value of their respective
shares will always remain at $1.00 per share. The Shawmut Prime
Money Market, Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds determine net asset
value for purposes of pricing purchase and redemption orders at
12:00 p.m. and 4:00 p.m. (Eastern Time), Monday through Friday,
except on: (i) days on which there are not sufficient changes in
the value of the portfolio securities that its net asset value
might be materially affected; (ii) days during which no shares
are tendered for redemption and no orders to purchase shares are
received; or (iii) on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
The assets of Galaxy's Money Market Fund are valued based
upon the amortized cost method. Pursuant to this method, a
security is valued by reference to the Fund's acquisition cost as
adjusted for amortization of premium or accretion of discount, as
long as it approximates the market value of the security.
Although the Fund seeks to maintain the net asset value per share
at $1.00, there can be no assurance that the net asset value per
share will not vary. Galaxy's Money Market Fund determines its
net asset value for the purpose of pricing purchase and
redemption orders as of 11:00 a.m. (Eastern Time) and the close
of regular trading hours on the New York Stock Exchange,
currently, 4:00 p.m. (Eastern Time), on each day the New York
Stock Exchange is open. Net asset value per share of the Fund
for purposes of pricing sales and redemptions is calculated by
dividing the value of all securities and other assets
attributable to a series of shares of the Fund, less the
liabilities attributable to the shares of that series of the
Fund, by the number of outstanding shares of the Fund.
The Shawmut Funds (other than the Shawmut Prime Money
Market, Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds) determine net asset value for
purposes of pricing purchase and redemption orders at the close
of the New York Stock Exchange, normally 4:00 p.m. (Eastern
Time), Monday through Friday, except on: (i) days on which there
are not sufficient changes in the value of the portfolio
securities that its net asset value might be materially affected;
(ii) days during which no shares are tendered for redemption and
no orders to purchase shares are received; or (iii) on the
following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day.
Galaxy (other than the Galaxy Money Market Fund) determines
the net asset value per share of its Funds as of the close of
regular trading hours on the New York Stock Exchange, currently
4:00 p.m. (Eastern Time). The asset value per share is
determined on each day on which the New York Stock Exchange is
open for trading. Currently, the holidays which Galaxy observes
are New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Net asset value per share of each of the Galaxy Funds for
purposes of pricing sales and redemptions is calculated by
dividing the value of all securities and other assets
attributable to a series of the shares of a Fund, less the
liabilities attributable to the shares of that series of the
Fund, by the number of outstanding shares of the Fund.
Other Information. Galaxy and Shawmut are registered as open-end
management investment companies under the 1940 Act. Currently,
Galaxy offers twenty investment portfolios and Shawmut offers
eleven portfolios.
Galaxy and Shawmut are organized as Massachusetts business
trusts and are subject to the provisions of their respective
Declaration of Trust and Bylaws. Shares of both Galaxy and
Shawmut: (i) are entitled to one vote for each full share held
and a proportionate fractional vote for each fractional share
held; (ii) will vote in the aggregate and not by class or series
except as otherwise expressly required by law or when class
voting is permitted by the respective Board of Trustees; and
(iii) are entitled to participate equally in the dividends and
distributions that are declared with respect to a particular
investment portfolio and in the net distributable assets of such
portfolio on liquidation. Shares of the Galaxy Funds have a par
value of $.001, while the shares of the Shawmut Funds have no par
value. In addition, shares of the Galaxy Funds and Shawmut Funds
have no preemptive rights and only such conversion and exchange
rights as the respective Boards of Trustees may grant in their
discretion. When issued for payment as described in their
prospectuses, Galaxy Fund shares and Shawmut Fund shares are
fully paid and non-assessable by such entities except as required
under Massachusetts law. 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. To the extent required by law, Galaxy
will assist in shareholder communications in such matters.
Galaxy has adopted a Shareholder Services Plan (the "Galaxy
Shareholder Services Plan"), under which Galaxy may enter into
servicing agreements with institutions ("Institutions")
(including Fleet Bank and its affiliates) pursuant to which
Institutions will render certain administrative and support
services to their customers who are beneficial owners of Galaxy
Shares ("Customers"). Although the Galaxy Shareholder Services
Plan has been approved by Galaxy's Board of Trustees with respect
to both Trust Shares and Retail Shares, Galaxy currently intends
to enter into shareholder servicing agreements only with respect
to its Retail Shares.
Shareholder services under the Galaxy Shareholder Services
Plan will be provided to Customers who are beneficial owners of
Galaxy Retail Shares and are intended to supplement the services
provided by Galaxy's Administrator and transfer agent to the
shareholders of record of Galaxy Retail Shares. The Galaxy
Shareholder Services Plan provides that fees payable by a Galaxy
Fund to an Institution may not exceed the annual rate of .50% (on
an annualized basis) of the average daily net asset value of the
Shares of that Galaxy Fund beneficially owned by Customers. In
consideration of up to .15% (on an annualized basis) with respect
to a Galaxy Bond Fund and .25% (on an annualized basis) with
respect to both a Galaxy Money Market Fund and a Galaxy Equity
Fund, of the average daily net asset value of Retail Shares owned
beneficially by their Customers, Institutions may provide one or
more of the following services to such Customers: aggregating
and processing purchase and redemption requests and placing net
purchase and redemption orders with the distributor; processing
dividend payments from a Fund; providing Customers with
information as to their positions in Retail Shares; providing sub-
accounting with respect to Retail Shares or the information
necessary for sub-accounting; and providing periodic mailings to
Customers. In consideration for payment of up to a separate fee
of .15% (on an annualized basis) with respect to a Galaxy Bond
Fund and .25% (on an annualized basis) with respect to a Galaxy
Equity Fund, of the average daily net asset value of Retail
Shares owned beneficially by their Customers, Institutions may
provide one or more of these additional services to such
Customers: providing Customers with information as to their
positions in Retail Shares; responding to Customer inquiries; and
providing a service to invest the assets of Customers in Retail
Shares. These services are described more fully in Galaxy's
Statement of Additional Information, which is incorporated by
reference hereto. Galaxy intends to limit payment under these
servicing agreements for each Fund to not more than .15% (on an
annualized basis) with respect to a Galaxy Bond Fund, .10% (on an
annualized basis) with respect to a Galaxy Money Market Fund and
..30% (on an annualized basis) with respect to a Galaxy Equity
Fund, of the average daily net asset value of the Retail Shares
of the Fund beneficially owned by Customers of Institutions.
Institutions may charge fees to their Customers who are owners of
Retail Shares in connection with their accounts with such
Institutions. Any such fees would be in addition to any amounts
that may be received by an Institution under the Galaxy
Shareholder Services Plan. Under the terms of each servicing
agreement entered into with Galaxy, Institutions are required to
provide their Customers with a schedule of any fees that they may
charge in connection with Customer investments in Retail Shares.
Shawmut has adopted a Distribution Plan pursuant to Rule 12b-
1 under the Investment Company Act of 1940 (the "12b-1 Plan").
Under the 12b-1 Plan, the class of shares known as the Investment
Shares of each of the Prime Money Market, Connecticut Municipal
Money Market, Limited Term Income, Fixed Income, Intermediate
Government Income, Growth Equity, Growth and Income Equity and
Small Capitalization Equity Funds bear the expense of
distribution fees payable to FSC at an annual rate of up to .50%
of the average daily net asset value of such Fund's outstanding
Investment Shares to finance activities which are principally
intended to result in the sale of Investment Shares. FSC may
enter into agreements with financial institutions which provide
distribution and/or administrative services as agents for their
customers who beneficially own Investment Shares. Administrative
services provided by such financial institutions may include,
without limitation: providing office space, equipment, telephone
facilities and various clerical, supervisory, computer and other
personnel as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries;
assisting clients in changing dividend options, account
designations and addresses; and such other services as may
reasonably be requested.
The 12b-1 Plan is a "compensation" type plan as opposed to a
"reimbursement" type plan. Accordingly, payments by the
Investment Shares under the 12b-1 Plan are based on the expressed
fee rather than on the specific amounts expended by FSC for
distribution purposes. FSC may be able to recover such amounts
or may earn a profit from payments made by Investment Shares of
the Shawmut Funds under the
12b-1 Plan.
The foregoing is only a summary. Shareholders may obtain
copies of the Declaration of Trust and Code of Regulations of
Galaxy and Shawmut, and the Massachusetts General Law from Galaxy
upon written request at the address shown on the cover page of
this Combined Proxy Statement/Prospectus.
INFORMATION RELATING TO VOTING MATTERS
General Information. This Combined Proxy Statement/Prospectus is
being furnished in connection with the solicitation of proxies by
Shawmut's Board of Trustees in connection with the Meeting. It
is expected that the solicitation of proxies will be primarily by
mail. Officers and service contractors of Shawmut may also
solicit proxies by telephone, telegraph or personal interview.
Any shareholder giving a proxy may revoke it at any time before
it is exercised by submitting to Shawmut a written notice of
revocation or a subsequently executed proxy or by attending the
Meeting and voting in person.
Only shareholders of record at the close of business on
August 30, 1995 will be entitled to vote at the Meeting. On that
date there were outstanding and entitled to be voted
766,857,839.96 shares of the Shawmut Prime Money Market Fund,
2,096,491.924 shares of the Shawmut Growth Equity Fund,
4,213,848.129 shares of the Shawmut Limited Term Income Fund,
9,021,517.863 shares of the Shawmut Fixed Income Fund,
6,023,203.94 shares of the Shawmut Intermediate Government Income
Fund, 877,063.3390 shares of the Shawmut Connecticut Intermediate
Municipal Income Fund, 1,120,176.0290 shares of the Shawmut
Massachusetts Intermediate Income Fund, 19,327,425.92 shares of
the Shawmut Growth and Income Equity Fund, 108,967,427.92 shares
of the Shawmut Connecticut Municipal Money Market Fund,
33,756,923.45 shares of the Shawmut Massachusetts Municipal Money
Market Fund and 11,559,934.586 shares of the Shawmut Small
Capitalization Equity Fund. Each share or fraction thereof is
entitled to one vote or fraction thereof, and all shares will
vote separately by Fund.
If the accompanying proxy is executed and returned in time
for the Meeting, the shares covered thereby will be voted in
accordance with the proxy on all matters that may properly come
before the Meeting or any adjournment thereof. For information
on adjournment of the meeting, see "Quorum" below.
Shareholder and Board Approvals. The Reorganization Agreement
(and the transactions contemplated thereby) are being submitted
for approval at the Meeting by the holders of a majority of the
outstanding shares of the Shawmut Growth Equity, Prime Money
Market, Limited Term Income, Fixed Income, Intermediate
Government Income, Connecticut Intermediate Municipal Income,
Massachusetts Intermediate Municipal Income, Growth and Equity
Income, Small Capitalization Equity, Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds in
accordance with the provisions of Shawmut's Declaration of Trust
and the requirements of the 1940 Act. The term "majority of the
outstanding shares" of a Shawmut Fund as used herein means the
lesser of (a) 67% of the shares of the particular Shawmut Fund
present at the Meeting if the holders of more than 50% of the
outstanding shares of the Shawmut Fund are present in person or
by proxy, or (b) more than 50% of the outstanding shares of such
Shawmut Fund.
In tallying shareholder votes, abstentions and broker non-
votes (i.e., proxies sent in by brokers and other nominees that
cannot be voted on a proposal because instructions have been
received from the beneficial owners) will be counted for purposes
of determining whether or not a quorum is present for purposes of
convening the meeting. On the Reorganization proposal,
abstentions and broker non-votes will be considered to be a vote
against the Reorganization proposal.
The vote of the shareholders of the corresponding Galaxy
Funds is not being solicited because their approval or consent is
not necessary for the Reorganization to be consummated.
At August 30, 1995, Shawmut Bank, N.A. and its affiliates
held of record 0%,of the Shawmut Prime Money Market, Growth
Equity, Limited Term Income, Fixed Income, Intermediate
Government Income, Connecticut Intermediate Municipal Income,
Massachusetts Intermediate Municipal Income, Growth and Income
Equity, Massachusetts Municipal Money Market and Small
Capitalization Equity Funds, respectively, and 54.73% of the
Shawmut Connecticut Municipal Money Market Fund. At August 30,
1995, the name, address and share ownership of the persons who
beneficially owned 5% or more of the Shawmut Funds are as
follows:
Olsen & Co., Boston, Massachusetts, beneficially owned
505,796,141.6 shares (65.95%) of Shawmut Prime Money Market Fund;
1,397,962.1230 shares (66.68%) of Shawmut Growth Equity Fund;
3,458,703.8260 shares (82%) of Shawmut Limited Term Income Fund;
8,053,865.6870 shares (89.2%) of Shawmut Fixed Income Fund;
4,915,305.7620 shares (81.6%) of Shawmut Intermediate Government
Income Fund; 163,964.4810 shares (18.69%) of Shawmut Connecticut
Intermediate Municipal Income Fund; 198,429.8660 shares (17.71%)
of Shawmut Massachusetts Intermediate Municipal Income Fund;
15,673,771.8220 shares (82.6%) of Shawmut Growth and Income
Equity Fund; 34,334,986.52 shares (31.5%) of Shawmut Connecticut
Municipal Money Market Fund; 9,513,784.0870 shares (82.2%) of
Shawmut Small Capitalization Equity Fund; and 15,576,274.8300
shares (46.14%) of Shawmut Massachusetts Municipal Money Market
Fund.
Wornat Leasing, Hartford, Connecticut, beneficially owned
400,537.7940 shares (9.5%) of Shawmut Limited Term Income Fund;
Eleanor Cecarelli, Shelton, Connecticut, beneficially owned
54,947.3210 shares (6.26%) of Shawmut Connecticut Intermediate
Municipal Income Fund; and Clement McIver, Jr., Sudbury,
Massachusetts, beneficially owned 2,079,562.5400 shares (6.16%)
of Shawmut Massachusetts Municipal Money Market Fund.
Upon consummation of the Reorganization, the following
persons would own beneficially 5% or more of the outstanding
shares of the corresponding Galaxy Funds.
At ____________, 1995, the trustees and officers of Shawmut
Funds, as a group, owned less than 1% of the outstanding shares
of each of the Shawmut Funds. At ___________, 1995, the trustees
and officers of Galaxy owned less than 1% of the outstanding
shares of each of the corresponding Galaxy Funds.
At _____________, 1995, the name, address, and share
ownership of the persons who beneficially owned 5% or more of the
Galaxy Funds' outstanding shares are as follows:
As of _____________, 1995, the name, address and share
ownership of the entities or persons that held of record more
than 5% of the outstanding Trust Shares of the Galaxy Funds'
investment portfolios were as follows:
Appraisal Rights. Shareholders are not entitled to any rights of
share appraisal under Shawmut's Declaration of Trust or under the
laws of the Commonwealth of Massachusetts in connection with the
Reorganization. Shareholders have, however, the right to redeem
from Shawmut their Shawmut Fund shares at net asset value until
the Effective Time of the Reorganization, and thereafter
shareholders may redeem from Galaxy the Galaxy shares acquired by
them in the Reorganization at net asset value.
Quorum. In the event that a quorum is not present at the
Meeting, or in the event that a quorum is present at the Meeting
but sufficient votes to approve the Reorganization Agreement and
the transactions contemplated thereby are not received, the
persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of
those shares affected by the adjournment that are represented at
the Meeting in person or by proxy. If a quorum is present, the
persons named as proxies will vote those proxies which they are
entitled to vote FOR the Reorganization Agreement in favor of
such adjournments, and will vote those proxies required to be
voted AGAINST such proposal against any adjournment. A
shareholder vote may be taken with respect to one or more Shawmut
Funds prior to any such adjournment if sufficient votes have been
received for approval with respect to any such Shawmut Fund. A
quorum is constituted with respect to a Shawmut Fund by the
presence in person or by proxy of the holders of more than 50% of
the outstanding shares of the Fund entitled to vote at the
Meeting. Shawmut proxies properly executed and marked with a
negative vote or an abstention will be considered to be present
at the Meeting for the purposes of determining the existence of a
quorum for the transaction of business.
Annual Meetings. Galaxy does not presently intend to hold annual
meetings of shareholders for the election of trustees and other
business unless and until such time as less than a majority of
the trustees holding office have been elected by the
shareholders, at which time the trustees then in office will call
a shareholders' meeting for the election of trustees.
Shareholders have the right to call a meeting of shareholders to
consider the removal of one or more trustees or for other matters
and such meetings will be called when requested in writing by the
holders of record of 10% or more of Galaxy's outstanding shares
of common stock. To the extent required by law, Galaxy will
assist in shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT GALAXY
Information about the Existing Galaxy Funds is included in
the Prospectuses accompanying this Combined Proxy
Statement/Prospectus, which are incorporated by reference herein.
Additional information about these Funds is included in their
Statement of Additional Information dated March 1, 1995 (as
revised June 12, 1995), which has been filed with the SEC. A
copy of the Statement of Additional Information may be obtained
without charge by writing to Galaxy c/o The Shareholder Services
Group, Inc. d/b/a 440 Financial, 440 Lincoln Street, Worcester,
Massachusetts 01653-1959, or by calling Galaxy at 1-800-628-0414.
Galaxy is subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act, as applicable,
and, in accordance with such requirements, files proxy materials,
reports and other information with the SEC. These materials can
be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the offices of The Shareholder Services Group,
Inc., d/b/a 440 Financial listed above and at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates.
The current trustees and officers of Galaxy will continue as
trustees and officers following the Reorganization. The name of
each such trustee as well as information concerning his principal
occupations during the past five years are set forth below.
Principal Occupation
Positions During Past 5 YearsName
and Address with Galaxy and Other Affiliations
Dwight E. Vicks, Jr. Chairman & President & Director,
Vicks Lithograph & Trustee Vicks Lithograph &
Printing Printing Corporation
Corporation (book manufacturing and
Commercial Drive commercial printing);
P.O. Box 270 Director, Utica Fire
Yorkville, NY 13495 Insurance Company;
Trustee, Savings Bank
of Utica; Director,
Monitor Life Insurance
Company; Director,
Commercial Travelers
Mutual Insurance
Company; Trustee, The
Galaxy VIP Fund;
Trustee, Galaxy Fund
II.
John T. O'Neill1 President, Executive Vice
Hasbro, Inc. Treasurer President and CFO,
200 Narragansett & Trustee Hasbro, Inc. (toy and
Park Drive game manufacturer),
Pawtucket, RI 02862 since 1987; Trustee,
The Galaxy VIP Fund;
Trustee, Galaxy Fund
II; Managing Partner,
KPMG Peat Marwick
(accounting firm),
1986.
Louis DeThomasis Trustee President, Saint Mary's
Saint Mary's College College of Minnesota;
of Minnesota Director, Bright Day
Winona, MN 55987 Travel, Inc.; Trustee,
Religious Communities
Trust; Trustee, The
Galaxy VIP Fund;
Trustee, Galaxy Fund
II.
Donald B. Miller
10725 Quail Covey Trustee Chairman, Horizon
Road Media, Inc. (broadcast
Boynton Beach, FL services);
33436 Director/Trustee,
Lexington Funds;
President and CEO,
Media General Broadcast
Services, Inc. (1986 to
1989); Chairman,
Executive Committee,
Compton International,
Inc. (advertising
agency); Trustee, Keuka
College; Trustee, The
Galaxy VIP Fund;
Trustee, Galaxy Fund
II.
James M. Seed Trustee Chairman and President,
The Astra Ventures, The Astra Projects,
Inc. Incorporated (land
One Citizens Plaza development);
Providence, RI 02903 President, The Astra
Ventures, Incorporated
(previously, Buffinton
Box Company -
manufacturer of
cardboard boxes);
Trustee, The Galaxy VIP
Fund; Trustee, Galaxy
Fund II; Commissioner,
Rhode Island Investment
Commission.
Bradford S. Wellman1 Trustee Private Investor;
2468 Ohio Street President, Ames &
Bangor, ME 04401 Wellman, from 1978 to
1991; President,
Pingree Associates,
Inc., from 1974 until
1990; 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.
Neil Forrest Vice The Shareholder
The Shareholder President Services Group, Inc.
Services Group, d/b/a 440 Financial
Inc., (1992 to present); Vice
d/b/a 440 Financial President, Investment
440 Lincoln Street Marketing and Strategic
Worcester, MA 01605- Planning, Manufacturers
1959 and Traders Trust Co.
(1990-1992).
W. Bruce McConnel, Secretary Partner of the law firm
III Drinker Biddle & Reath,
Philadelphia Philadelphia,
National Pennsylvania
Bank Building
Broad and Chestnut
Sts.
Philadelphia, PA
19107
Louis Russo Assistant Vice President, The
The Shareholder Treasurer Shareholder Services
Services Group, Inc., Group, Inc., d/b/a 440
d/b/a/ 440 Financial Financial since 1990;
440 Lincoln Street Director, Funds
Worcester, MA 01605 Accounting, Fidelity
1959 Investments from
1988 to 1990.
_________________________
1. An interested person within the definition set forth in
Section 2(a)(19) of the 1940 Act.
ADDITIONAL INFORMATION ABOUT SHAWMUT
Information about Shawmut is incorporated herein by
reference from its Prospectuses and Combined Statements of
Additional Information, each dated December 31, 1994, copies of
which may be obtained without charge by writing or calling
Shawmut at the address and telephone number shown on the cover
page of this Combined Proxy Statement/Prospectus. Reports and
other information filed by Shawmut can be inspected and copied at
the Public Reference Facilities maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of such
material can be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20549, at prescribed rates.
The name and address of each trustee and officer of Shawmut
as well as information concerning his or her principal
occupations during the past five years are as follows:
Position with
Name and Address The Shawmut Funds Principal Occupations
John F. Donahue* Chairman and Chairman and Trustee,
Federated Investors Tower Trustee Federated
Investors,
Pittsburgh, Pennsylvania Federated
Advisers, Federated
Management, and
Federated Research;
Chairman and Director,
Federated Research
Corp.; Chairman,
Passport Research,
Ltd.; Director, Aetna
Life and Casualty
Company; Chief
Executive Officer and
Director, Trustee or
Managing General
Partner of the Funds.
Mr. Donahue is the
father of J.
Christopher Donahue,
Vice President of the
Trust.
Thomas G. Bigley Trustee Director, Oberg
28th Floor Manufacturing Co.;
One Oxford Centre Chairman of the Board,
Pittsburgh, Pennsylvania Children's
Hospital of
Pittsburgh; Director,
Trustee or Managing
General Partner of the
Funds; formerly,
Senior Partner, Ernst
& Young LLP.
John T. Conroy, Jr. Trustee President, Investment
Wood/IPC Commercial Dept. Properties
Corporation;
John R. Wood and Associates, Senior Vice
President,
Inc., Realtors John R. Wood and
3255 Tamiami Trail North Associates, Inc.,
Naples, Florida Realtors;
President, Northgate
Village Development
Corporation; Partner
or Trustee in private
real estate ventures
in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President,
Naples Property
Management, Inc.
William J. Copeland Trustee Director and Member of
the
One PNC Plaza - 23rd Floor Executive Committee,
Pittsburgh, Pennsylvania Michael Baker,
Inc.; Director,
Trustee or Managing
General Partner of the
Funds; formerly, Vice
Chairman and Director,
PNC Bank, N.A., and
PNC Bank Corp. and
Director, Ryan Homes,
Inc.
James E. Dowd Trustee Attorney-at-law;
Director,
571 Hayward Mill Road The Emerging Germany
Fund,
Concord, Massachusetts Inc.; Director,
Trustee, or Managing
General Partner of the
Funds; formerly,
Director, Blue Cross
of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Trustee Hematologist,
Oncologist,
3471 Fifth Avenue, and Internist,
Suite 1111 Presbyterian and
Pittsburgh, Pennsylvania Montefiore
Hospitals; Professor
of Medicine and
Trustee, University of
Pittsburgh; Director
of Corporate Health,
University of
Pittsburgh Medical
Center; Director,
Trustee, or Managing
General Partner of the
Funds.
Edward L. Flaherty, Jr.@ Trustee Attorney-at-law; Share-
Two Gateway Center holder, Henny,
Kochuba,
Suite 674 Meyer and Flaherty;
Pittsburgh, Pennsylvania Director, Eat'N
Park Restaurants,
Inc., and Statewide
Settlement Agency,
Inc.; Director,
Trustee, or Managing
General Partner of the
Funds; formerly,
Counsel, Horizon
Financial, F.A.,
Western Region.
Edward C. Gonzales* President, Vice President,
Treasurer
Federated Investors Tower Treasurer and and
Trustee, Federated
Pittsburgh, Pennsylvania Trustee Investors;
Vice President and
Treasurer, Federated
Advisers, Federated
Management, Federated
Research, Federated
Research Corp., and
Passport Research,
Ltd.; Executive Vice
President, Treasurer,
and Director,
Federated Securities
Corp.; Trustee,
Federated Services
Company and Federated
Shareholder Services;
Chairman, Treasurer,
and Trustee, Federated
Administrative
Services; Trustee or
Director of some of
the Funds; Vice
President and
Treasurer of the
Funds.
Peter E. Madden Trustee Consultant; State
225 Franklin Street Representative, Common-
Boston, Massachusetts wealth of
Massachusetts;
Director, Trustee, or
Managing General
Partner of the Funds;
formerly, President,
State Street Bank and
Trust Company and
State Street Boston
Corporation and
Trustee, Lahey Clinic
Foundation, Inc.
Gregor F. Meyer Trustee Attorney-at-law; Share-
Two Gateway Center holder, Henny,
Kochuba,
Suite 674 Meyer and Flaherty;
Pittsburgh, Pennsylvania Chairman,
Meritcare, Inc.;
Director, Eat'N Park
Restaurants, Inc.;
Director, Trustee, or
Managing General
Partner of the Funds;
formerly, Vice
Chairman, Horizon
Financial, F.A.
Wesley W. Posvar Trustee Professor, Foreign
Policy
1202 Cathedral of Learning and Management
Consultant;
University of Pittsburgh Trustee, Carnegie
Pittsburgh, Pennsylvania Endowment for
International Peace,
RAND Corporation,
Online Computer
Library Center, Inc.,
and U.S. Space
Foundation; Chairman,
Czecho Slovak
Management Center;
Director, Trustee, or
Managing General
Partner of the Funds;
President Emeritus,
University of
Pittsburgh; formerly,
Chairman, National
Advisory Council for
Environmental Policy
and Technology.
Marjorie P. Smuts Trustee Public
relations/marketing
4905 Bayard Street consultant; Director,
Pittsburgh, Pennsylvania Trustee, or
Managing General
Partner of the Funds.
J. Christopher Donahue Vice President President and Trustee,
Federated Investors Tower Federated Investors,
Pittsburgh, Pennsylvania Federated
Advisers, Federated
Management, and
Federated Research;
President and
Director, Federated
Research Corp.;
President, Passport
Research, Ltd.;
Trustee, Federated
Administrative
Services, Federated
Services Company, and
Federated Shareholder
Services; President or
Vice President of the
Funds; Director,
Trustee, or Managing
General Partner of
some of the Funds.
Mr. Donahue is the son
of John F. Donahue,
Chairman and Trustee
of the Trust.
Richard B. Fisher Vice President Executive Vice
President
Federated Investors Tower and Trustee,
Federated
Pittsburgh, Pennsylvania Investors;
Director, Federated
Research Corp.;
Chairman and Director,
Federated Securities
Corp.; President or
Vice President of some
of the Funds; Director
or Trustee of some of
the Funds.
John W. McGonigle Vice President Vice President,
Secretary,
Federated Investors Tower and Secretary
General Counsel, and
Pittsburgh, Pennsylvania Trustee,
Federated Investors;
Vice President,
Secretary, and
Trustee, Federated
Advisers, Federated
Management, and
Federated Research;
Vice President and
Secretary, Federated
Research Corp. and
Passport Research,
Ltd.; Trustee,
Federated Services
Company; Executive
Vice President,
Secretary, and
Trustee, Federated
Administrative
Services; Secretary
and Trustee, Federated
Shareholder Services;
Executive Vice
President and
Director, Federated
Securities Corp.; Vice
President and
Secretary of the
Funds.
Jeffrey W. Sterling Vice President Vice President,
Federated
Federated Investors Tower and Assistant
Administrative Services;
Pittsburgh, Pennsylvania Treasurer Vice President and
Assistant Treasurer of
some of the Funds.
____________________________
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board
of Trustees between meetings of the Board.
Other Information.
Subject to the control and direction of the Trustees, Shawmut
Bank has the authority and discretion to select brokers and dealers to
execute portfolio transactions for the Shawmut Continuing Funds, and
to select the markets on or in which the transactions will be
executed. Shawmut Bank also may, to the extent permitted by
applicable laws and regulations, aggregate securities to be sold or
purchased for a Shawmut Fund and for other clients in order to obtain
the most favorable price and efficient execution. Although the Galaxy
Advisory Agreement does not expressly authorize such aggregation by
Fleet, Galaxy and Fleet believe that such aggregation by Fleet is
nevertheless permitted.
The Shawmut advisory contract obligates Shawmut Bank to obtain
the best net results in terms of price and execution. The Galaxy
Advisory Agreement is identical in this respect. In addition, Shawmut
Bank may, in its discretion, purchase and sell portfolio securities to
and from brokers and dealers who provide research, analysis, advice
and similar services, and in return for this research and analysis,
Shawmut Bank may pay those brokers and dealers a higher commission or
spread than may be charged by other brokers and dealers.
LITIGATION
Neither Shawmut nor Galaxy is involved in any litigation that
would have any material adverse financial effect upon either the
Shawmut Funds or the Galaxy Funds.
FINANCIAL HIGHLIGHTS
Shawmut Financial Highlights. The tables set forth below
present financial information for the Investment Shares and Trust
Shares of the Shawmut Growth Equity, Prime Money Market, Limited Term
Income, Fixed Income, Intermediate Government Income, Connecticut
Intermediate Municipal Income, Massachusetts Intermediate Municipal
Income, Growth and Income Equity, Massachusetts Municipal Money
Market, Connecticut Municipal Money Market and Small Capitalization
Equity Funds. This information is derived from the Shawmut Funds'
unaudited financial statements for the six-month period ended April
30, 1995. The data should be read in conjunction with the unaudited
financial statements and related notes which are included in the
Statement of Additional Information related to this Combined Proxy
Statement/Prospectus. The financial highlights for the Shawmut Funds
for prior periods are contained in Shawmut's Prospectuses dated
December 31, 1994 and the financial statements for the Shawmut Funds
for prior periods are contained in Shawmut's Annual Report to
Shareholders and are incorporated by reference into Shawmut's Combined
Statements of Additional Information dated December 31, 1994, which
Prospectuses and Combined Statements of Additional Information are
incorporated herein by reference.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Growth Equity Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $10.69 $10.69
Net Investment Income 0.06 0.08
Net Realized and Unrealized
Gain/(Loss) on Investments 0.45 0.46
Total From Investment Operations 0.51 0.54
Dividends to Shareholders from
Net Investment Income (0.05) (0.07)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions (0.20) (0.20)
Total Distributions (0.25) (0.27)
Net Asset Value, end of period 10.95 10.96
Total Return 5.00% 5.24%
Expenses 1.21%(b)
1.46%(b)
Net Investment Income 1.39%(b)
1.14%(b)
Expense Waiver/Reimbursement (a) 1.07%(b)
1.32%(b)
Net Assets, end of period
(000 omitted) 6,650 14,584
Portfolio turnover rate 130% 130%
_______________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Prime Money Market Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $ 1.00 $1.00
Net Investment Income 0.03 0.03
Net Realized and Unrealized
Gain/(Loss) on Investments -- --
Total From Investment Operations 0.03 0.03
Dividends to Shareholders from
Net Investment Income (0.03) (0.03)
Distributions to Shareholders
from Net Realized Gain on -- --
Investment Transactions
Total Distributions (0.03) (0.03)
Net Asset Value, end of period 1.00 1.00
Total Return 2.58% 2.70%
Expenses 0.45%(b)
0.70%(b)
Net Investment Income 5.41%(b)
5.18%(b)
Expense Waiver/Reimbursement (a) 0.22%(b)
0.47%(b)
Net Assets, end of period
(000 omitted) 207,428 577,521
Portfolio turnover rate -- --
___________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Limited Term Income Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $9.45 $9.45
Net Investment Income 0.26 0.28
Net Realized and Unrealized
Gain/(Loss) on Investments 0.10 0.09
Total From Investment Operations 0.36 0.37
Dividends to Shareholders from
Net Investment Income (0.26) (0.27)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions -- --
Total Distributions (0.26) (0.27)
Net Asset Value, end of period 9.55 9.55
Total Return 3.88% 4.01%
Expenses 1.38%(b) 1.13%(b)
Net Investment Income 5.56%(b) 5.79%(b)
Expense Waiver/Reimbursement (a) 0.46%(b) 0.21%(b)
Net Assets, end of period
(000 omitted) 6,666 40,480
Portfolio turnover rate 81% 81%
__________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Fixed Income Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $9.32 $9.32
Net Investment Income 0.30 0.32
Net Realized and Unrealized
Gain/(Loss) on Investments 0.28 0.27
Total From Investment Operations 0.58 0.59
Dividends to Shareholders from
Net Investment Income (0.29) (0.30)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions -- --
Total Distributions (0.29) (0.30)
Net Asset Value, end of period 9.61 9.61
Total Return 6.29% 6.43%
Expenses 1.25%(b) 1.00%(b)
Net Investment Income 6.23%(b) 6.48%(b)
Expense Waiver/Reimbursement (a) 0.46%(b) 0.21%(b)
Net Assets, end of period
(000 omitted) 8,022 77,576
Portfolio turnover rate 56% 56%
___________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Intermediate Government
Income Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $9.37 $9.37
Net Investment Income 0.27 0.28
Net Realized and Unrealized
Gain/(Loss) on Investments 0.17 0.17
Total From Investment Operations 0.44 0.45
Dividends to Shareholders from
Net Investment Income (0.27) (9.28)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions -- --
Total Distributions (0.27) (0.28)
Net Asset Value, end of period 9.54 9.54
Total Return 4.79% 4.92%
Expenses 1.36%(b) 1.11%(b)
Net Investment Income 5.73%(b) 5.98%(b)
Expense Waiver/Reimbursement (a) 0.43%(b) 0.18%(b)
Net Assets, end of period
(000 omitted) 10,122 45,143
Portfolio turnover rate 64% 64%
__________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Connecticut Intermediate
Municipal Income Fund
Period Ended
April 30, 1995
All
Shares
Net Asset Value, beginning
of period $9.32
Net Investment Income 0.22
Net Realized and Unrealized
Gain/(Loss) on Investments 0.38
Total From Investment Operations 0.60
Dividends to Shareholders from
Net Investment Income (0.22)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions --
Total Distributions (0.22)
Net Asset Value, end of period 9.70
Total Return 6.47%
Expenses 0.50%(b)
Net Investment Income 4.57%(b)
Expense Waiver/Reimbursement (a) 2.40%(b)
Net Assets, end of period
(000 omitted) 8,296
Portfolio turnover rate 3%
________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
Connecticut Intermediate Municipal Income Fund
sells its shares without class designation.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Massachusetts Intermediate
Municipal Income Fund
Period Ended
April 30, 1995
All
Shares
Net Asset Value, beginning
of period $9.31
Net Investment Income 0.22
Net Realized and Unrealized
Gain/(Loss) on Investments 0.42
Total From Investment Operations 0.64
Dividends to Shareholders from
Net Investment Income (0.22)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions --
Total Distributions (0.22)
Net Asset Value, end of period 9.73
Total Return 6.99%
Expenses 0.50%(b)
Net Investment Income 4.69%(b)
Expense Waiver/Reimbursement (a) 2.14%(b)
Net Assets, end of period
(000 omitted) 8,178
Portfolio turnover rate 7%
________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
Massachusetts Intermediate Municipal Income Fund
sells its shares without class designation.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Growth & Income Equity Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $11.15 $11.15
Net Investment Income 0.12 0.13
Net Realized and Unrealized
Gain/(Loss) on Investments 0.71 0.71
Total From Investment Operations 0.83 0.84
Dividends to Shareholders from
Net Investment Income (0.13) (0.14)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions (0.49) (0.49)
Total Distributions (0.62) (0.63)
Net Asset Value, end of period 11.36 11.36
Total Return 7.94% 8.09%
Expenses 1.31%(b) 1.06%(b)
Net Investment Income 2.18%(b) 2.43%(b)
Expense Waiver/Reimbursement (a) 0.47%(b) 0.22%(b)
Net Assets, end of period
(000 omitted) 31,811 171,927
Portfolio turnover rate 20% 20%
________________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Connecticut Municipal
Money Market Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $1.00 $1.00
Net Investment Income 0.01 0.02
Net Realized and Unrealized
Gain/(Loss) on Investments -- --
Total From Investment Operations 0.01 0.02
Dividends to Shareholders from
Net Investment Income (0.01) (0.02)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions -- --
Total Distributions (0.01) (0.02)
Net Asset Value, end of period 1.00 1.00
Total Return 1.43% 1.55%
Expenses 0.81%(a) 0.56%(a)
Net Investment Income 2.83%(a) 3.08%(a)
Expense Waiver/Reimbursement (b) 0.50%(a) 0.25%(a)
Net Assets, end of period
(000 omitted) 70,018 32,060
Portfolio turnover rate -- --
________________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Massachusetts Municipal
Money Market Fund
Period Ended
April 30, 1995
All
Shares
Net Asset Value, beginning
of period $1.00
Net Investment Income 0.02
Net Realized and Unrealized
Gain/(Loss) on Investments --
Total From Investment Operations 0.02
Dividends to Shareholders from
Net Investment Income (0.02)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions --
Total Distributions (0.02)
Net Asset Value, end of period 1.00
Total Return 1.58%
Expenses 0.56%(b)
Net Investment Income 3.17%(b)
Expense Waiver/Reimbursement (a) 0.58%(b)
Net Assets, end of period
(000 omitted) 34,248
Portfolio turnover rate --
________________________________________
Based on net asset value which does not reflect
the sales load or contingent deferred sales charge, if
applicable.
Massachusetts Municipal Money Market Fund sells
its shares without class designation.
(a) This voluntary expense decrease is reflected in
both the expense and net investment income ratios shown
above.
(b) Computed on an annualized basis.
Selected data for a Shawmut Share of capital stock
outstanding throughout the period indicated:
Small Capitalization
Equity Fund
Period Ended
April 30, 1995
Investment Trust
Shares Shares
Net Asset Value, beginning
of period $10.06 $10.06
Net Investment Income 0.08 0.09
Net Realized and Unrealized
Gain/(Loss) on Investments 0.49 0.50
Total From Investment
Operations 0.57 0.59
Dividends to Shareholders from
Net Investment Income (0.09) (0.10)
Distributions to Shareholders
from Net Realized Gain on
Investment Transactions -- --
Total Distributions (0.09) (0.10)
Net Asset Value, end of period 10.54 10.55
Total Return 5.71% 5.96%
Expenses 1.75%(b) 1.50%(b)
Net Investment Income 1.69%(b) 1.94%(b)
Expense Waiver/Reimbursement (a) 3.46%(b) 3.21%(b)
Net Assets, end of period
(000 omitted) 875 3,345
Portfolio turnover rate 8% 8%
________________________________________
Based on net asset value which does not reflect the sales
load or contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the
expense and net investment income ratios shown above.
(b) Computed on an annualized basis.
Galaxy Financial Highlights. The tables set forth
below present financial information for the Retail Shares and
Trust Shares of the Galaxy Equity Growth, Money Market, Short-
Term Bond, Connecticut Municipal Bond, Massachusetts Municipal
Bond and Intermediate Government Income Funds and the Trust
Shares of the Corporate Bond Fund. This information is derived
from the Galaxy Funds' unaudited financial statements for the
period ended April 30, 1995. The data should be read in
conjunction with the unaudited financial statements and related
notes which are included in the Statement of Additional
Information related to this Combined Proxy Statement/Prospectus.
Financial information for the Galaxy Funds for prior periods (i)
is contained in Galaxy's Prospectuses dated March 1, 1995 as
supplemented March 21, 1995 and, with respect to the Corporate
Bond Fund, June 12, 1995, which accompany this Combined Proxy
Statement/Prospectus and are incorporated herein by reference,
and (ii) is incorporated by reference from Galaxy's Annual
Reports to Shareholders into the Statement of Additional
Information dated March 1, 1995 (as revised June 12, 1995), which
is incorporated herein by reference.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Equity Growth Fund
Period Ended
April 30, 1995
Retail Trust
Shares Shares
Net Asset Value, beginning
of period $14.18 $14.19
Income from Investment Operations:
Net Investment Income (A) 0.07 0.10
Net realized and unrealized
gain/(loss) on investments 1.13 1.13
Total From Investment
Operations: 1.20 1.23
Less Distributions:
Dividends from net investment
income (0.08) (0.11)
Distributions from net realized
capital gains (0.17) (0.17)
Total Distributions: (0.25) (0.28)
Net increase (decrease) in net
asset value 0.95 0.95
Net Asset Value, End of Period $15.13 $15.14
Total Return 8.59% 8.82%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $77,333 $369,393
Ratios to average net assets:*
Net Investment Income 0.92% 1.37%
Operating expenses (A) 1.42% 0.98%
Portfolio turnover rate 14% 14%
__________________________________
* Annualized.
(A) Net investment income per share and the annualized operating
expense ratio for Retail Shares and Trust Shares before
reimbursement of fees by the Investment Adviser for the six
months ended April 30, 1995 were $0.07 and 1.48% and $0.10
and 1.02%, respectively.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Money Market Fund
Period Ended
April 30, 1995
Retail Trust
Shares Shares
Net Asset Value, beginning
of period $1.00 $1.00
Income from Investment Operations:
Net Investment Income (A) 0.03 0.03
Net Realized and Unrealized
Gain/(Loss) on Investments -- --
Total From Investment
Operations 0.03 0.03
Less Distributions:
Dividends from net investment
income (0.03) (0.03)
Distributions to Capital from
Net Realized Capital Gains -- --
Total Distributions (0.03) (0.03)
Net increase (decrease) in net
asset value -- --
Net Asset Value, end of period $1.00 $1.00
Total Return 2.55% 2.64%
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) $528,147 $322,928
Ratios to average net assets:*
Net Investment Income 5.12% 5.24%
Operating Expenses 0.73% 0.56%
_____________________________________
* Annualized.
(A) Net investment income per share and the annualized operating
expense ratio for the six months ended April 30, 1995 were
$0.03 and 0.77% for the Retail Shares and $0.03 and 0.56%
for the Trust Shares.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Short-Term Bond Fund
Period Ended
April 30, 1995
Retail Trust
Shares Shares
Net Asset Value, Beginning
of period $9.73 $9.73
Income from Investment Operations:
Net Investment Income (A) 0.27 0.28
Net realized and unrealized
gain/(loss) on investments 0.10 0.10
Total From Investment
Operations: 0.37 0.38
Less Distributions:
Distributions from net investment
income (0.27) (0.28)
Distributions from net realized
capital gains -- --
Distributions in excess of net
realized capital gains -- --
Total Distributions: (0.27) (0.28)
Net increase (decrease) in net
asset value 0.10 0.10
Net Asset Value, End of
Period (000's) $9.83 $9.83
Total Return 3.83% 3.93%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $28,606 $33,983
Ratios to average net assets:*
Net investment income 5.51% 5.70%
Operating Expenses (A) 0.93% 0.75%
Portfolio turnover rate 144% 144%
* Annualized.
(A) Net investment income per share and the annualized operating
expense ratios for Retail Shares and Trust Shares before waiver
and/or reimbursement of fees by the Investment Adviser for the six
months ended April 30, 1995 were $0.26 and 1.30% and $0.27 and
1.07%, respectively.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Corporate Bond Fund(1)
Period Ended
April 30, 1995
Trust Shares
Net Asset Value, beginning
of period $10.00
Income from Investment Operations:
Net Investment Income (A) 0.27
Net Realized and Unrealized
Gain (Loss) on Investments 0.33
Total From Investment 0.60
Operations
Less Distributions:
Distributions from Net
Investment Income (0.27)
Distributions from net realized
capital gains --
Total Distributions (0.27)
Net increase (decrease) in
net asset value 0.33
Net Asset Value, end of
period $10.33
Total Return 6.07%
Ratios/Supplemental Data:
Net Assets, End of period (000's) $34,793
Ratios to average net assets:*
Net investment income 6.97%
Operating expenses (A) 1.02%
Portfolio Turnover Rate 14%
(1) The Fund commenced operations on December 12,
1994.
* Annualized.
(A) Net investment income per share and the annualized
operating expense ratio before waiver and/or
reimbursement of fees by the Investment Adviser
and/or Administration for the period ended April
30, 1995 were $0.24 and 1.81%, respectively.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Intermediate Government Income Fund(1)
Period Ended
April 30, 1995
Retail Trust
Shares Shares
Net Asset Value, Beginning
of period $9.68 $9.68
Income from Investment Operations:
Net investment income (A) 0.30 0.31
Net realized and unrealized
gain/(loss) on investments 0.23 0.23
Total From Investment
Operations: 0.53 0.54
Less Distributions:
Distributions from net investment
income (0.30) (0.31)
Distributions in excess of
net investment income -- --
Distributions from net realized
capital gains -- --
Distributions in excess of net
realized capital gains -- --
Total Distributions: (0.30) (0.31)
Net increase (decrease) in
net asset value 0.23 0.23
Net Asset Value, End of Period $9.91 $9.91
Total Return 5.53% 5.68%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $79,435 $195,030
Ratios to average net assets:*
Net investment income 6.14% 6.42%
Operating expense (A) 1.01% 0.73%
Portfolio turnover rate 56% 56%
_____________________________________
(1) The Fund was formerly known as the Intermediate Bond Fund.
* Annualized.
(A) Net investment income per share and the annualized operating
expense ratios for Retail Shares and Trust Shares before
waiver and/or reimbursement of fees by the Investment
Adviser for the six months ended April 30, 1995 were $0.29
and 1.29% and $0.33 and 0.96%, respectively.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Connecticut Municipal
Bond Fund
Period Ended
April 30, 1995
Retail Trust
Shares Shares
Net Asset Value, Beginning
of period $9.22 $9.22
Income from Investment Operations:
Net Investment Income (A) 0.22 0.23
Net realized and unrealized
gain (loss) on investments 0.46 0.46
Total From Investment
Operations: 0.68 0.69
Less Distributions:
Distributions from net
investment income (0.22) (0.23)
Distributions from net realized
capital gains -- --
Total Distributions: (0.22) (0.23)
Net increase (decrease) in
net asset value 0.46 0.46
Net Asset Value, End of
period $9.68 $9.68
Total Return 7.47% 7.60%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $16,485 $3,830
Ratios to average net assets:*
Net investment income 4.74% 4.97%
Operating expenses (A) 0.67% 0.44%
Portfolio Turnover Rate 0% 0%
_____________________________________
* Annualized.
(A) Net investment income per share and the annualized operating
expense ratios for Retail Shares and Trust Shares before
reimbursement and waiver of fees by the Investment Adviser
and/or Administrator for the six months ended April 30, 1995
were $0.18 and 1.46% and $0.19 and 1.21%, respectively.
Selected data for a Galaxy share of capital stock
outstanding throughout the period indicated:
Massachusetts Municipal
Bond Fund
Period Ended
April 30, 1995
Retail Trust
Shares Shares
Net Asset Value, Beginning
of period $9.12 $9.12
Income from Investment Operations:
Net Investment Income (A) 0.22 0.22
Net Realized and Unrealized
gain (loss) on investments 0.44 0.44
Total From Investment Operations: 0.66 0.66
Less Distributions:
Dividends from net investment income (0.22) (0.22)
Distributions from net realized
capital gains -- --
Total Distributions: (0.22) (0.22)
Net increase (decrease) in
net asset value 0.44 0.44
Net Asset Value, End of
Period $9.56 $9.56
Total Return 7.33% 7.38%
Ratios/Supplemental Data:
Net Assets, End of period (000's) $14,399 $6,459
Ratios to average net assets:*
Net investment income 4.77% 4.89%
Operating expenses (A) 0.68% 0.56%
Portfolio Turnover Rate 7% 7%
_____________________________________
* Annualized.
(A) Net investment income per share and the annualized operating
expense ratios for Retail Shares and Trust Shares before
reimbursement and waiver of fees by the Investment Adviser
and/or Administrator for the six months ended April 30, 1995
were $0.17 and 1.63% and $0.19 and 1.35%, respectively.
FINANCIAL STATEMENTS
The financial statements and financial highlights for shares
of the Existing Galaxy Funds for the fiscal period ended
October 31, 1994 are in Galaxy's Prospectuses dated March 1,
1995, as supplemented March 31, 1995 and, with respect to the
Corporate Bond Fund, June 12, 1995, and incorporated by reference
in Galaxy's Statement of Additional Information dated March 1,
1995 (as revised June 12, 1995), which Prospectuses and Statement
of Additional Information are incorporated by reference in this
Combined Proxy Statement/Prospectus. The financial highlights
for shares of the Shawmut Funds for the fiscal period ended
October 31, 1994 are included in Shawmut's Prospectuses dated
December 31, 1994 and the financial statements for shares of the
Shawmut Funds for the fiscal period ended October 31, 1994 are
contained in Shawmut's Annual Report to Shareholders and
incorporated by reference in Shawmut's Combined Statements of
Additional Information dated December 31, 1994, which
Prospectuses and Combined Statements of Additional Information
are incorporated by reference in this Combined Proxy
Statement/Prospectus.
The statements of assets and liabilities of the Existing
Galaxy Funds, including the portfolios of investments as of
October 31, 1994, and the related statements of operations,
statements of changes in net assets and financial highlights for
the periods indicated in the financial statements are included in
Galaxy's Prospectuses and incorporated by reference in Galaxy's
Statement of Information, and incorporated by reference in this
Combined Proxy/Prospectus, have been incorporated by reference
herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The financial highlights for the Shawmut Funds included in
Shawmut's Prospectuses dated December 31, 1994 and the statements
of assets and liabilities of the Shawmut Funds, including the
investments as of October 31, 1994, and the related statements of
operations, statements of changes in net assets and financial
highlights for the periods indicated in the financial statements
contained in Shawmut's Annual Report and incorporated by
reference in Shawmut's Combined Statements of Additional
Information, and incorporated by reference in this Combined
Proxy/Prospectus, have been incorporated herein in reliance on
the reports of Price Waterhouse LLP, given on the authority of
that firm as experts in accounting and auditing.
OTHER BUSINESS
Shawmut's Board knows of no other business to be brought
before the Meeting. However, if any other matters come before
the Meeting, it is the intention that proxies which do not
contain specific restrictions to the contrary will be voted on
such matters in accordance with the judgment of the persons named
in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Shawmut in writing
at the address on the cover page of this Combined Proxy
Statement/Prospectus or by telephoning 1-800-SHAWMUT.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made as of ___________,
1995 between The Galaxy Fund, a Massachusetts business trust
("Galaxy"), and The Shawmut Funds, a Massachusetts business trust
("Shawmut").
WHEREAS, the parties desire that substantially all of the
known assets and liabilities of Shawmut's portfolios be
transferred to, and be acquired and assumed by, certain Galaxy
portfolios in exchange for Retail Shares and/or Trust Shares of
the Galaxy portfolios which shall thereafter be distributed by
Shawmut to the holders of shares, including Investment Shares
and/or Trust Shares, of its portfolios, all as described in this
Agreement (the "Reorganization");
WHEREAS, the parties intend that four of the Galaxy
portfolios, the Growth and Income Fund, the Connecticut Municipal
Money Market Fund, the Massachusetts Municipal Money Market Fund
and the Small Cap Value Fund, will have nominal assets and
liabilities before the Reorganization and will continue
investment operations of the Shawmut Growth and Income Equity
Fund, the Shawmut Connecticut Municipal Money Market Fund, the
Shawmut Massachusetts Municipal Money Market Fund and the Shawmut
Small Capitalization Equity Fund, respectively, after the
Reorganization; and
WHEREAS, the parties intend that in connection with the
Reorganization, each of the Shawmut portfolios shall be
terminated and the Shawmut Funds shall be deregistered as
described in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and subject to the terms and
conditions hereof, and intending to be legally bound hereby,
Galaxy and Shawmut agree as follows:
I. Transfer of Assets of Shawmut Portfolios.
1.01 (a) At the Effective Time of the Reorganization (as defined
in Article VIII), all property of every description,
and all interests, rights, privileges and powers of
each of the Shawmut portfolios (each, an "Acquired
Fund") other than cash in an amount necessary to pay
any unpaid dividends and distributions as provided in
Article IV(h) (such assets, the "Acquired Fund Assets")
shall be transferred and conveyed by such Acquired Fund
to Galaxy on behalf of one of its portfolios as set
forth in Section 1.02 (each, an "Acquiring Fund"), and
shall be accepted by Galaxy on behalf of such Acquiring
Fund, and Galaxy, on behalf of such Acquiring Fund,
shall assume all known liabilities whether accrued,
absolute, contingent or otherwise, of such Acquired
Fund reflected in the calculation of such Acquired
Fund's net asset value (the "Acquired Fund
Liabilities"), so that at and after the Effective Time
of the Reorganization: (i) all assets of each Acquired
Fund shall become and be the assets of its Acquiring
Fund; and (ii) all known liabilities of each Acquired
Fund reflected as such in the calculation of an
Acquired Fund's net asset value shall attach to its
Acquiring fund as aforesaid and may thenceforth be
enforced against such Acquiring Fund to the extent as
if the same had been incurred by it. Without limiting
the generality of the foregoing, the Acquired Fund
Assets shall include all property and assets of any
nature whatsoever, including, without limitation, all
cash, cash equivalents, securities, claims and
receivables (including dividend and interest
receivables) owned by an Acquired Fund, and (subject to
Section 1.01(b)) any deferred or prepaid expenses shown
as an asset on an Acquired Fund's books, at the
Effective Time of the Reorganization, and all good
will, all other intangible property and all books and
records belonging to an Acquired Fund. Recourse by any
person for the Acquired Fund Liabilities assumed by an
Acquiring Fund shall, at and after the Effective Time
of the Reorganization, be limited to such Acquiring
Fund.
(b) Notwithstanding Section 1.01(a), unamortized
organizational expenses of the first seven Acquired
Funds listed in Section 1.02 shall not be transferred
or assumed hereunder. The parties have been advised
that such expenses will be paid to such Acquired Funds
by one or more third parties and will be eliminated
from the balance sheets of such Acquired Funds prior to
the Effective Time of the Reorganization.
1.02 The assets of each Acquired Fund shall be acquired by
the Acquiring Fund identified below opposite its name, and the
holders of each class of shares of such Acquired Fund shall
receive the class of shares of the Acquiring Fund identified
below opposite the name of such class:
Shawmut Portfolios and Classes Galaxy Portfolios and
Classes
Shawmut Growth Equity Fund Equity Growth Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Prime Money Market Fund Money Market Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Limited Term Income Fund Short-Term Bond Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Fixed-Income Fund Corporate Bond Fund
Investment Shares Trust Shares
Trust Shares Trust Shares
Shawmut Intermediate Government Intermediate Government
Income Fund Income Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Connecticut Intermediate Connecticut Municipal
Bond
Municipal Income Fund Fund
Shares (purchased other than through Retail Shares
Shawmut Bank, N.A. Trust Department)
Shares (purchased through Shawmut Bank, Trust Shares
N.A. Trust Department)
Shawmut Massachusetts Intermediate Massachusetts Municipal
Bond
Municipal Income Fund Fund
Shares (purchased other than Retail Shares
through Shawmut Bank, N.A.
Trust Department)
Shares (purchased through Shawmut Trust Shares
Bank, N.A. Trust Department)
Shawmut Growth and Income Equity Fund Growth and Income Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
Shawmut Connecticut Municipal Money Connecticut
Municipal Money
Market Fund Market Fund
Investment Shares Shares
Trust Shares Shares
Shawmut Massachusetts Municipal Money Massachusetts Municipal
Money
Market Fund Market Fund
All Shares Shares
Shawmut Small Capitalization Equity Fund Small Cap Value Fund
Investment Shares Retail Shares
Trust Shares Trust Shares
1.03 In exchange for the transfer of the Acquired Fund
Assets and the assumption of the Acquired Fund Liabilities,
Galaxy shall simultaneously issue at the Effective Time of the
Reorganization to each Acquired Fund a number of full and
fractional shares of the Acquiring Fund specified in Section 1.02
(to the third decimal place), of the class or classes identified
in Section 1.02, all determined and adjusted as provided in this
Agreement. The number of each class of shares of the Acquiring
Funds so issued will have an aggregate net asset value equal to
the value of the Acquired Fund Assets that are represented by the
class of shares of the Acquired Fund, the holders of which shall
receive such class of shares of the Acquiring Fund, as specified
in Section 1.02, all determined and adjusted as provided in this
Agreement.
1.04 The net asset value of each class of shares of the
Acquiring Funds and the net asset value of each class of shares
of the Acquired Funds shall be determined as of the Valuation
Time specified in Article III.
1.05 The net asset value of each class of shares of each
Acquiring Fund shall be computed in the manner set forth in such
Acquiring Fund's then current prospectuses under the Securities
Act of 1933, as amended (the "1933 Act"). In determining the
value of the securities transferred by each Acquired Fund to an
Acquiring Fund, each security shall be priced in accordance with
the policies and procedures of Galaxy as described in its then
current prospectuses for such Acquiring Fund.1 The net asset
values of each class of shares of the Acquired Funds and each
class of shares of the Acquiring Funds, including money market
funds valued in accordance with amortized cost procedures in
accordance with Rule 2a-7 under the Investment Company Act of
1940, as amended (the "1940 Act"), will be computed as of the
Valuation Time by pricing each security at its market value as of
the Valuation Time. For such purposes, price quotations and the
security characteristics relating to establishing such quotations
shall be determined by Galaxy.
II. Liquidating Distributions and Termination of Shawmut.
At the Effective Time of the Reorganization, each Acquired Fund
shall distribute in complete liquidation pro rata to the record
holders of each class of its shares at the Effective Time of the
Reorganization the shares of the class of the Acquiring Fund
identified in Section 2.01 to be received by the record holders
of such class of such Acquired Fund. In addition, each
shareholder of record of an Acquired Fund shall have the right to
receive any unpaid dividends or other distributions which were
declared before the Effective Time of the Reorganization with
respect to the shares of an Acquired Fund that are held by the
shareholder at the Effective Time of the Reorganization. In
accordance with instructions it receives from Shawmut, Galaxy
shall record on its books the ownership of each class of shares
of each Acquiring Fund by the record holders of the class of
shares of the Acquired Fund identified in Section 1.02. No
redemption or repurchase of an Acquiring Fund's shares credited
to former Shawmut shareholders in respect to an Acquired Fund's
shares represented by unsurrendered share certificates shall be
permitted until such certificates have been surrendered to
Galaxy's transfer agent for cancellation. The holder of any
certificate or certificates representing a class of shares of an
Acquired Fund shall immediately notify Galaxy of any loss,
destruction or mutilation of such certificate or certificates,
and the Board of Trustees of Galaxy, in its discretion, may
require such owner or his or her legal representative to give to
Galaxy a bond in such sum, limited or unlimited, and in such form
and with such surety or sureties, as the Board of Trustees of
Galaxy shall determine, to indemnify Galaxy against any claim
that may be made against it or on account of the alleged loss or
destruction of any such certificate or certificates. All of the
issued and outstanding shares of each class of each Acquired Fund
shall be cancelled on the books of Shawmut at the Effective Time
of the Reorganization and shall thereafter represent only the
right to receive the class of shares of the Acquiring Fund
identified in Section 1.02, and the Acquired Fund's transfer
books shall be closed permanently. As soon as practicable after
the Effective Time of the Reorganization, Shawmut shall make all
filings and take all other steps as shall be necessary and proper
to effect its complete dissolution, and shall file an application
pursuant to Section 8(f) of the 1940 Act for an order declaring
that it has ceased to be an investment company. After the
Effective Time of the Reorganization, Shawmut shall not conduct
any business except in connection with its liquidation,
dissolution, and deregistration.
III. Valuation Time. Subject to Section 1.05 hereof, the
Valuation Time shall be 4:00 P.M., Eastern Time, on such date as
may be agreed in writing by the duly authorized officers of both
parties hereto, which date shall not be later than the thirty-
first calendar day following the consummation of the merger
between Fleet Financial Group, Inc. and Shawmut National
Corporation described in an Agreement and Plan of Merger dated as
of February 20, 1995.
IV. Certain Representations, Warranties and Agreements of
Shawmut. Shawmut, on behalf of itself and each Acquired Fund,
represents and warrants to, and agrees with, Galaxy as follows:
(a) It is a Massachusetts business trust
duly created pursuant to its Declaration of Trust
for the purpose of acting as a management
investment company under the 1940 Act and is
validly existing under the laws of, and duly
authorized to transact business in, the
Commonwealth of Massachusetts. It is registered
with the Securities and Exchange Commission (the
"SEC") as an open-end management investment
company under the 1940 Act and such registration
is in full force and effect.
(b) It has power to own all of its
properties and assets and, subject to the
approvals of shareholders referred to herein, to
carry out and consummate the transactions
contemplated hereby, and has all necessary
federal, state and local authorizations to carry
on its business as now being conducted and to
consummate the transactions contemplated by this
Agreement.
(c) This Agreement has been duly authorized,
executed and delivered by Shawmut, and represents
Shawmut's valid and binding contract, enforceable
in accordance with its terms. The execution and
delivery of this Agreement does not and will not,
and the consummation of the transactions
contemplated by this Agreement will not, violate
Shawmut's Declaration of Trust or By-laws or any
agreement or arrangement to which it is a party or
by which it is bound.
(d) Each Acquired Fund has elected to
qualify and has qualified as a regulated
investment company under Part I of Subchapter M of
the Internal Revenue Code of 1986, as amended (the
"Code"), as of and since its first taxable year;
has been a regulated investment company under such
Part of the Code at all times since the end of its
first taxable year when it so qualified; and
qualifies and shall continue to qualify as a
regulated investment company until the Effective
Time of the Reorganization.
(e) All federal, state, local and foreign
income, profits, franchise, sales, withholding,
customs, transfer and other taxes, including
interest, additions to tax and penalties
(collectively, "Taxes") relating to the Acquired
Fund Assets due or properly shown to be due on any
return filed by any Acquired Fund with respect to
taxable periods ending on or prior to, and the
portion of any interim period up to, the date
hereof have been fully and timely paid or provided
for; and there are no levies, liens, or other
encumbrances relating to Taxes existing,
threatened or pending with respect to the Acquired
Fund Assets.
(f) The financial statements of each
Acquired Fund for its fiscal year ended October
31, 1994, examined by Price Waterhouse LLP, copies
of which have been previously furnished to Galaxy,
present fairly the financial position of each
Acquired Fund as of the respective dates indicated
and the results of its operations for the periods
indicated, in conformity with generally accepted
accounting principles.
(g) The unaudited financial statements of
each Acquired Fund for the six-month period ended
April 30, 1995, copies of which have been
previously furnished to Galaxy, present fairly the
financial position of each Acquired Fund as of
such date and the results of its operations for
the periods indicated, in conformity with
generally accepted accounting principles.
(h) Prior to the Valuation Time, each of the
first seven Acquired Funds listed in Section 1.02
shall have declared a dividend or dividends, with
a record date and ex-dividend date prior to the
Valuation Time, which, together with all previous
dividends, shall have the effect of distributing
to its shareholders all of its net investment
company income, if any, for the taxable periods or
years ended on or before October 31, 1994 and for
the period from said date to and including the
Effective Time of the Reorganization (computed
without regard to any deduction for dividends
paid), and all of its net capital gain, if any,
realized in taxable periods or years ended on or
before October 31, 1994 and in the period from
said date to and including the Effective Time of
the Reorganization.
(i) At both the Valuation Time and the
Effective Time of the Reorganization, there shall
be no known liabilities of any Acquired Fund,
whether accrued, absolute, contingent or
otherwise, not reflected in the net asset values
per share of its outstanding classes of shares.
(j) There are no legal, administrative or
other proceedings pending or, to Shawmut's
knowledge threatened, against Shawmut or an
Acquired Fund which could result in liability on
the part of Shawmut or an Acquired Fund.
(k) Subject to the approvals of shareholders
referred to herein, at both the Valuation Time and
the Effective Time of the Reorganization, it shall
have full right, power and authority to sell,
assign, transfer and deliver the Acquired Fund
Assets and, upon delivery and payment for the
Acquired Fund Assets as contemplated herein, an
Acquiring Fund shall acquire good and marketable
title thereto, free and clear of all liens and
encumbrances, and subject to no restrictions on
the ownership or transfer thereof (except as
imposed by federal or state securities laws).
(l) No consent, approval, authorization or
order of any court or governmental authority is
required for the consummation by Shawmut of the
transactions contemplated by this Agreement,
except such as may be required under the 1933 Act,
the Securities Exchange Act of 1934, as amended
("1934 Act"), the 1940 Act, the rules and
regulations under those Acts, or state securities
laws.
(m) Insofar as the following relate to
Shawmut, the registration statement filed by
Galaxy on Form N-14 relating to the shares of
certain Acquiring Funds that will be registered
with the SEC pursuant to this Agreement, which,
without limitation, shall include a proxy
statement of Shawmut and the prospectuses of
Shawmut and Galaxy with respect to the
transactions contemplated by this Agreement, and
any supplement or amendment thereto or to the
documents contained or incorporated therein by
reference (the "N-14 Registration Statement"), on
the effective date of the N-14 Registration
Statement, at the time of any shareholder's
meeting referred to herein and at the Effective
Time of the Reorganization: (i) shall comply in
all material respects with the provisions of the
1933 Act, the 1934 Act and the 1940 Act, the rules
and regulations thereunder, and state securities
laws, and (ii) shall not contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading.
(n) All of the issued and outstanding shares
of each class of each Acquired Fund have been duly
and validly issued, are fully paid and non-
assessable, and were offered for sale and sold in
conformity with all applicable federal and state
securities laws, and no shareholder of an Acquired
Fund has any preemptive right of subscription or
purchase in respect of such shares.
(o) Shawmut shall not sell or otherwise
dispose of any shares of an Acquiring Fund to be
received in the transactions contemplated herein,
except in distribution to its shareholders as
contemplated herein.
V. Certain Representations, Warranties and Agreements of
Galaxy. Galaxy, on behalf of itself and each Acquiring Fund,
represents and warrants to, and agrees with, Shawmut as follows:
(a) It is a Massachusetts business trust
duly created pursuant to its Declaration of Trust
for the purpose of acting as a management
investment company under the 1940 Act and is
validly existing under the laws of, and duly
authorized to transact business in, the
Commonwealth of Massachusetts. It is registered
with the SEC as an open-end management investment
company under the 1940 Act and such registration
is in full force and effect.
(b) It has power to own all of its
properties and assets and to carry out and
consummate the transactions contemplated herein,
and has all necessary federal, state and local
authorizations to carry on its business as now
being conducted and to consummate the transactions
contemplated by this Agreement.
(c) This Agreement has been duly authorized,
executed and delivered by Galaxy, and represents
Galaxy's valid and binding contract, enforceable
in accordance with its terms. The execution and
delivery of this Agreement did not, and the
consummation of the transactions contemplated by
this Agreement will not, violate Galaxy's
Declaration of Trust or Code of Regulations or any
agreement or arrangement to which it is a party or
by which it is bound.
(d) Each Acquiring Fund has elected or will
elect to qualify, and each of the first seven
Acquiring Funds listed in Section 1.02 has
qualified, as a regulated investment company under
Part I of Subchapter M of the Code, as of and
since its first taxable year; each of the first
seven Acquiring Funds listed in Section 1.02 has
been a regulated investment company under such
Part of the Code at all times since the end of its
first taxable year when it so qualified and
intends to continue to qualify as a regulated
investment company.
(e) The financial statements of each of the
first seven Acquiring Funds listed in Section 1.02
for its fiscal year ended October 31, 1994
examined by Coopers & Lybrand L.L.P., and for the
six-month period ended April 30, 1995, copies of
which have been previously furnished to Shawmut,
present fairly the financial position of each such
Acquiring Fund as of the dates indicated and the
results of its operations for the periods
indicated, in conformity with generally accepted
accounting principles.
(f) At both the Valuation Time and the
Effective Time of the Reorganization, there shall
be no known liabilities of any Acquiring Fund,
whether accrued, absolute, contingent or
otherwise, not reflected in the net asset values
per share of its outstanding classes to be issued
pursuant to this Agreement.
(g) There are no legal, administrative or
other proceedings pending or, to its knowledge,
threatened against Galaxy or an Acquiring Fund
which could result in liability on the part of
Galaxy or an Acquiring Fund.
(h) No consent, approval, authorization or
order of any court or governmental authority is
required for the consummation by Galaxy of the
transactions contemplated by this Agreement,
except such as may be required under the 1933 Act,
the 1934 Act, the 1940 Act, the rules and
regulations under those Acts, or state securities
laws.
(i) Insofar as the following relate to
Galaxy, the N-14 Registration Statement on its
effective date, at the time of any shareholders'
meetings referred to herein and at the Effective
Time of the Reorganization: (i) shall comply in
all material respects with the provisions of the
1933 Act, the 1934 Act and the 1940 Act, the rules
and regulations thereunder, and state securities
laws, and (ii) shall not contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading.
(j) The shares of each class of each
Acquiring Fund to be issued and delivered to an
Acquired Fund for the account of record holders of
shares of an Acquired Fund, pursuant to the terms
hereof, shall have been duly authorized as of the
Effective Time of the Reorganization and, when so
issued and delivered, shall be registered under
the 1933 Act and under applicable state securities
laws, duly and validly issued, fully paid and non-
assessable, and no shareholder of Galaxy shall
have any preemptive right of subscription or
purchase in respect thereto.
VI. Shareholder Action on Behalf of the Acquired Funds.
6.01 As soon as practicable after the effective date of the
N-14 Registration Statement, but in any event prior to the
Effective Time of the Reorganization and as a condition thereto,
the Board of Trustees of Shawmut shall call, and Shawmut shall
hold, a meeting of the shareholders of the Acquired Funds for the
purpose of considering and voting upon:
(a) Approval of this Agreement and the
transactions contemplated hereby, including,
without limitation:
(i) The transfer of the Acquired Fund Assets
belonging to each Acquired Fund to an
Acquiring Fund, and the assumption by each
Acquiring Fund of an Acquired Fund
Liabilities, in exchange for a class or
classes of shares of an Acquiring Fund, as
set forth in Section 1.02.
(ii) The liquidation of each Acquired Fund through
the distribution to its record holders of
shares of the class or classes of shares of
an Acquiring Fund as described in this
Agreement.
(b) Such other matters as may be determined
by the Boards of Trustees or authorized officers
of the parties.
6.02 Approval of this Reorganization Agreement by the
shareholders of the Acquired Funds shall constitute the waiver of
the application of any fundamental policy of such Acquired Funds
that might be deemed to prevent them from taking the actions
necessary to effectuate the Reorganization as described, and such
policies, if any, shall be deemed to have been amended
accordingly.
VII. N-14 Registration Statement and Policy Solicitation
Materials. Galaxy shall file the N-14 Registration Statement
under the 1933 Act, and Shawmut shall file the combined
prospectus/proxy statement contained therein under the 1934 Act
and 1940 Act proxy rules, with the SEC as promptly as
practicable. Each of Galaxy and Shawmut has cooperated and shall
continue to cooperate with the other, and has furnished and shall
continue to furnish the other with the information relating to
itself that is required by the 1933 Act, the 1934 Act, the 1940
Act, the rules and regulations under each of those Acts and state
securities laws, to be included in the N-14 Registration
Statement.
VIII. Effective Time of the Reorganization. Delivery of
the Acquired Fund Assets and the shares of the classes of each
Acquiring Fund to be issued pursuant to Article I and the
liquidation of Shawmut pursuant to Article II shall occur at the
opening of business on the next business day following the
Valuation Time, or on such other date, and at such place and time
and date, agreed to by the Boards of Trustees or authorized
officers of the parties hereto. The date and time at which such
actions are taken are referred to herein as the "Effective Time
of the Reorganization." To the extent any Acquired Fund Assets
are, for any reason, not transferred at the Effective Time of the
Reorganization, Shawmut shall cause such Acquired Fund Assets to
be transferred in accordance with this Agreement at the earliest
practicable date thereafter.
IX. Galaxy Conditions. The obligations of Galaxy hereunder
shall be subject to the following conditions precedent:
(a) This Agreement and the transactions
contemplated by this Agreement shall have been
approved by the shareholders of each Acquired
Fund, in the manner required by law.
(b) Shawmut shall have duly executed and
delivered to Galaxy such bills of sale,
assignments, certificates and other instruments of
transfer ("Transfer Documents") as Galaxy may deem
necessary or desirable to transfer all right,
title and interest of Shawmut and the Acquired
Funds in and to the Acquired Fund Assets. The
Acquired Fund Assets shall be accompanied by all
necessary state stock transfer stamps or cash for
the appropriate purchase price therefor.
(c) All representations and warranties of
Shawmut made in this Agreement shall be true and
correct in all material respects as if made at and
as of the Valuation Time and the Effective Time of
the Reorganization. As of the Valuation Time and
the Effective Time of the Reorganization there
shall have been no material adverse change in the
financial position of an Acquired Fund since the
date of the financial statements referred to in
Article IV(g) other than those changes incurred
in the ordinary course of business as an
investment company. No action, suit or other
proceeding shall be threatened or pending before
any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages
or other relief in connection with, this Agreement
or the transactions contemplated herein.
(d) Galaxy shall have received an opinion of
Dickstein, Shapiro & Morin, L.L.P., addressed to
Galaxy in form reasonably satisfactory to it and
dated the Effective Time of the Reorganization,
substantially to the effect that: (i) Shawmut is
a Massachusetts business trust duly organized and
validly existing under the laws of the
Commonwealth of Massachusetts; (ii) the shares of
each Acquired Fund outstanding at the Effective
Time of the Reorganization are duly authorized,
validly issued, fully paid and non-assessable by
such Acquired Fund, and to such counsel's
knowledge, no shareholder of such Acquired Fund
has any option, warrant or preemptive right to
subscription or purchase in respect thereof; (iii)
this Agreement and the Transfer Documents have
been duly authorized, executed and delivered by
Shawmut and represent legal, valid and binding
contracts, enforceable in accordance with their
terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors'
rights generally and court decisions with respect
thereto and such counsel shall express no opinion
with respect to the application of equitable
principles in any proceeding, whether at law or in
equity; or with respect to the provisions of this
Agreement intended to limit liability for
particular matters to an Acquired Fund and its
assets; (iv) the execution and delivery of this
Agreement did not, and the consummation of the
transactions contemplated by this Agreement will
not, violate the Declaration of Trust or By-laws
of Shawmut or any material agreement known to such
counsel to which Shawmut is a party or by which
Shawmut is bound; and (v) to such counsel's
knowledge, no consent, approval, authorization or
order of any court or governmental authority is
required for the consummation by Shawmut of the
transactions contemplated by this Agreement,
except such as have been obtained under the 1933
Act, the 1934 Act, the 1940 Act, the rules and
regulations under those Acts and such as may be
required under the state securities laws. Such
opinion may rely on the opinion of other counsel
to the extent set forth in such opinion, provided
such other counsel is reasonably acceptable to
Galaxy.
(e) Galaxy shall have received an opinion of
Drinker Biddle & Reath, addressed to Galaxy and
Shawmut in form reasonably satisfactory to them
and dated the Effective Time of the
Reorganization, substantially to the effect that
for federal income tax purposes (i) the transfers
of all of the Acquired Fund Assets hereunder, and
the assumptions by each Acquiring Fund of Acquired
Fund Liabilities, in exchange for shares of each
class of such Acquiring Fund, and the distribution
of said shares to the shareholders of an Acquired
Fund, as provided in this Agreement, will each
constitute a reorganization within the meaning of
Section 368(a)(1)(C), (D) or (F) of the Code and
with respect to each reorganization, the Acquired
Fund and the Acquiring Fund will each be
considered "a party to a reorganization" within
the meaning of Section 368(b) of the Code; (ii)
in accordance with Sections 361(a), 361(c)(1) and
357(a) of the Code, no gain or loss will be
recognized by any Acquired Fund as a result of
such transactions; (iii) in accordance with
Section 1032 of the Code, no gain or loss will be
recognized by an Acquiring Fund as a result of
such transactions; (iv) in accordance with Section
354(a)(1) of the Code, no gain or loss will be
recognized by the shareholders of any Acquired
Fund on the distribution to them by such Acquired
Fund of shares of any class of an Acquiring Fund
in exchange for their shares of any class of an
Acquired Fund; (v) in accordance with Section
358(a)(1) of the Code, the aggregate basis of
Acquiring Fund shares received by each shareholder
of any class of an Acquired Fund will be the same
as the aggregate basis of the shareholder's
Acquired Fund shares immediately prior to the
transactions; (vi) in accordance with Section
362(b) of the Code, the basis of the Acquired Fund
Assets to each Acquiring Fund will be the same as
the basis of such Acquired Fund Assets in the
hands of an Acquired Fund immediately prior to the
exchange; (vii) in accordance with Section 1223 of
the Code, a shareholder's holding period for
Acquiring Fund shares will be determined by
including the period for which the shareholder
held the shares of an Acquired Fund exchanged
therefor, provided that the shareholder held such
shares of an Acquired Fund as a capital asset; and
(viii) in accordance with Section 1223 of the
Code, the holding period of an Acquiring Fund with
respect to the Acquired Fund Assets will include
the period for which such Acquired Fund Assets
were held by an Acquired Fund.
(f) The SEC shall not have issued any
unfavorable advisory report under Section 25(b) of
the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions
contemplated by this Agreement under Section 25(c)
of the 1940 Act.
(g) The N-14 Registration Statement shall
have become effective under the 1933 Act and no
stop order suspending such effectiveness shall
have been instituted or, to the knowledge of
Galaxy, contemplated by the SEC and the parties
shall have received all permits and other
authorizations necessary under state securities
laws to consummate the transactions contemplated
by this Agreement.
(h) The President or Vice President of
Shawmut shall have certified that Shawmut has
performed and complied in all material respects
with each of its agreements and covenants required
by this Agreement to be performed or complied with
by it prior to or at the Valuation Time and the
Effective Time of the Reorganization.
(i) The merger between Fleet Financial
Group, Inc. and Shawmut National Corporation
described in an Agreement and Plan of Merger dated
as of February 20, 1995 shall have been
consummated.
X. Shawmut Conditions. The obligations of Shawmut
hereunder shall be subject to the following conditions precedent:
(a) This Agreement and the transactions
contemplated by this Agreement shall have been
approved by the shareholders of each Acquired Fund
of Shawmut in the manner required by law.
(b) All representations and warranties of
Galaxy made in this Agreement shall be true and
correct in all material respects as if made at and
as of the Valuation Time and the Effective Time of
the Reorganization. As of the Valuation Time and
the Effective Time of the Reorganization there
shall have been no material adverse change in the
financial condition of any Acquiring Fund since
the date of the financial statements referred to
in Article V(e) other than those changes incurred
in the ordinary course of business as an
investment company. No action, suit or other
proceeding shall be threatened or pending before
any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages
or other relief in connection with, this Agreement
or the transactions contemplated herein.
(c) Shawmut shall have received an opinion
of Drinker Biddle & Reath, addressed to Shawmut in
form reasonably satisfactory to it and dated the
Effective Time of the Reorganization,
substantially to the effect that: (i) Galaxy is a
Massachusetts business trust duly organized and
validly existing under the laws of the
Commonwealth of Massachusetts; (ii) the shares of
each class of each Acquiring Fund to be delivered
to an Acquired Fund as provided for by this
Agreement are duly authorized and upon delivery
will be validly issued, fully paid and
nonassessable by such Acquiring Fund and to such
counsel's knowledge, no shareholder of an
Acquiring Fund has any option, warrant or pre-
emptive right to subscription or purchase in
respect thereof; (iii) this Agreement has been
duly authorized, executed and delivered by Galaxy
and represents a legal, valid and binding
contract, enforceable in accordance with its
terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors'
rights generally and court decisions with respect
thereto and such counsel shall express no opinion
with respect to the application of equitable
principles in any proceeding, whether at law or in
equity; or with respect to the provisions of this
Agreement intended to limit liability for
particular matters to an Acquiring Fund and its
assets; (iv) the execution and delivery of this
Agreement did not, and the consummation of the
transactions contemplated by this Agreement will
not, violate the Declaration of Trust or Code of
Regulations of Galaxy, or any material agreement
known to such counsel to which Galaxy is a party
or by which Galaxy is bound; and (v) to such
counsel's knowledge no consent, approval,
authorization or order of any court or
governmental authority is required for the
consummation by Galaxy of the transactions
contemplated by this Agreement, except such as
have been obtained under the 1933 Act, the 1934
Act, the 1940 Act, the rules and regulations under
those Acts and such as may be required under the
state securities laws. Such opinion may rely on
the opinion of other counsel to the extent set
forth in such opinion, provided such other counsel
is reasonably acceptable to Galaxy.
(d) Shawmut shall have received an opinion
of Drinker Biddle & Reath, addressed to Galaxy and
Shawmut in the form reasonably satisfactory to
them and dated the Effective Time of the
Reorganization, with respect to the matters
specified in Section IX(e).
(e) The N-14 Registration Statement shall
have become effective under the 1933 Act and no
stop order suspending such effectiveness shall
have been instituted, or to the knowledge of
Galaxy, contemplated by the SEC and the parties
shall have received all permits and other
authorizations necessary under state securities
laws to consummate the transactions contemplated
by this Agreement.
(f) The SEC shall not have issued any
unfavorable advisory report under Section 25(b) of
the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions
contemplated by this Agreement under Section 25(c)
of the 1940 Act.
(g) The President or Vice President of
Galaxy shall have certified that Galaxy has
performed and complied in all material respects
with each of its agreements and covenants required
by this Agreement to be performed or complied with
by it prior to or at the Valuation Time and the
Effective Time of the Reorganization.
(h) The merger between Fleet Financial
Group, Inc. and Shawmut National Corporation
described in an Agreement and Plan of Merger dated
as of February 20, 1995 shall have been
consummated.
XI. Tax Documents. Shawmut shall deliver to Galaxy at the
Effective Time of the Reorganization confirmations or other
adequate evidence as to the adjusted tax basis of the Acquired
Fund Assets delivered to an Acquiring Fund in accordance with the
terms of this Agreement.
XII. Finder's Fees. Each party represents and warrants to
each of the other parties hereto that there is no person who is
entitled to any finder's or other similar fee or commission
arising out of the transactions contemplated by this Agreement.
XIII. Announcements. Any announcements or similar
publicity with respect to this Agreement or the transactions
contemplated herein shall be at such time and in such manner as
the parties shall agree; provided, that nothing herein shall
prevent any party upon notice to the other parties from making
such public announcements as such party's counsel may consider
advisable in order to satisfy the party's legal and contractual
obligations in such regard.
XIV. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall use
its best efforts to take, or cause to be taken, such action, to
execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be
done, all things necessary, proper or advisable under the
provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by
this Agreement, including without limitation, delivering and/or
causing to be delivered to Galaxy, each account, book, record or
other document of Shawmut required to be maintained by Section
31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder
(regardless of what person possesses the same). Shawmut has
instructed its service contractors to provide Galaxy with access
to and copies of all documents belonging to Shawmut.
XV. Termination of Representations and Warranties. The
representations and warranties of the parties set forth in this
Agreement shall terminate upon the delivery of the Acquired Fund
Assets to an Acquiring Fund and the issuance of the shares of an
Acquiring Fund at the Effective Time of the Reorganization.
XVI. Termination of Agreement.
16.01 This Agreement may be terminated by a party at any
time at or prior to the Effective Time of the Reorganization by
its Board of Trustees, as provided below:
(a) By Galaxy if the conditions set forth in
Article IX are not satisfied as specified in said
Section;
(b) By Shawmut if the conditions set forth
in Article X are not satisfied as specified in
said Section;
(c) By the mutual consent of the parties.
16.02 If a party terminates this Agreement because one or
more of its conditions precedent have not been fulfilled, or if
this Agreement is terminated by mutual consent, this Agreement
will become null and void without any liability of either party
or any of their investment portfolios to the other; provided,
however, that if such termination is by Galaxy pursuant to
Section 16.01(a) as a result of a breach by Shawmut of any of its
representations, warranties or covenants in this Agreement, or
such termination is by Shawmut pursuant to Section 16.01(b) as a
result of a breach by Galaxy of any of its representations,
warranties or covenants in this Agreement, nothing herein shall
affect the non-breaching party's right to damages on account of
such other party's breach.
XVII. Amendment and Waiver. At any time prior to or (to
the fullest extent permitted by law) after approval of this
Agreement by the shareholders of Shawmut, (a) the parties hereto
may, by written agreement authorized by their respective Boards
of Trustees or authorized officers and with or without the
approval of their shareholders, amend any of the provisions of
this Agreement, and (b) either party may waive any breach by the
other party or the failure to satisfy any of the conditions to
its obligations (such waiver to be in writing and authorized by
the President or Vice President of the waiving party with or
without the approval of such party's shareholders).
XVIII. Governing Law. This Agreement and the transactions
contemplated hereby shall be governed, construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the conflicts of law principles
otherwise applicable therein.
XIX. Successors and Assigns. This Agreement shall be
binding upon the respective successors and permitted assigns of
the parties hereto. This Agreement and the rights, obligations
and liabilities hereunder may not be assigned by either party
without the consent of the other party.
XX. Beneficiaries. Nothing contained in this Agreement
shall be deemed to create rights in persons not parties hereto,
other than the successors and permitted assigns of the parties.
XXI. Galaxy Liability.
21.01 The names "The Galaxy Fund" and "Trustees of The
Galaxy Fund" refer respectively to the trust created and the
trustees, as trustees but not individually or personally, acting
from time to time under a Declaration of Trust dated March 31,
1986, which is hereby referred to and a copy of which is on file
at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of Galaxy. The
obligations of Galaxy entered into in the name or on behalf
thereof by any of the trustees, representatives or agents are
made not individually, but in such capacities, and are not
binding upon any of the trustees, shareholders or representatives
of Galaxy personally, but bind only the trust property, and all
persons dealing with any series of shares of Galaxy must look
solely to the trust property belonging to such series for the
enforcement of any claims against Galaxy.
21.02 Both parties specifically acknowledge and agree that
any liability of Galaxy under this Agreement with respect to an
Acquiring Fund, or in connection with the transactions
contemplated herein with respect to an Acquiring Fund, shall be
discharged only out of the assets of that Acquiring Fund and that
no other portfolio of Galaxy shall be liable with respect
thereto.
XXII. Shawmut Liability.
22.01 The names "The Shawmut Funds" and "Trustees of The
Shawmut Funds" refer respectively to the trust created and the
trustees, as trustees but not individually or personally, acting
from time to time under a Declaration of Trust dated ___________,
which is hereby referred to and a copy of which is on file at the
office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of Shawmut. The
obligations of Shawmut entered into in the name or on behalf
thereof by any of the trustees, representatives or agents are
made not individually, but in such capacities, and are not
binding upon any of the trustees, shareholders or representatives
of Shawmut personally, but bind only the trust property, and all
persons dealing with any series of shares of Shawmut must look
solely to the trust property belonging to such series for the
enforcement of any claims against Shawmut.
22.02 Both parties specifically acknowledge and agree that
any liability of Shawmut under this Agreement with respect to an
Acquired Fund, or in connection with the transactions
contemplated herein with respect to an Acquired Fund, shall be
discharged only out of the assets of that Acquired Fund and that
no other portfolio of Shawmut shall be liable with respect
thereto.
XXIII. Notices. All notices required or permitted herein
shall be in writing and shall be deemed to be properly given when
delivered personally or by telecopier to the party entitled to
receive the notice or when sent by certified or registered mail,
postage prepaid, or delivered to a nationally recognized
overnight courier service, in each case properly addressed to the
party entitled to receive such notice at the address or
telecopier number stated below or to such other address or
telecopier number as may hereafter be furnished in writing by
notice similarly given by one party to the other party hereto:
If to Galaxy:
The Galaxy Fund
c/o Dwight E. Vicks, Jr.
President
Vicks Lithograph & Printing Corporation
Commercial Drive
P.O. Box 270
Yorkville, NY 13495
With copies to:
Barbara L. Worthen, Esq.
Fleet Investment Advisors Inc.
75 State Street
Boston, MA 02109
Telecopier Number: (617) 346-3140
Henry S. Hilles, Jr., Esq.
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, PA 19107
Telecopier Number: (215) 988-2757
If to Shawmut:
The Shawmut Funds
c/o Robert C. Rosselot, Esq.
Corporate Counsel
Federated Investors
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222
Telecopier Number: (412) 288-8141
With copies to:
Matthew G. Maloney, Esq.
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, DC 20037
Telecopier Number: (202) 887-0689
XXIV. Expenses. Each party represents to the other that
its expenses incurred in connection with the Reorganization will
be borne by one or both of the parties to the merger referred to
in Article III.
XXV. Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto and supersedes
any and all prior agreements, arrangements and understandings
relating to matters provided for herein.
XXVI. Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed and
delivered shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized officers
designated below as of the date first written above.
THE GALAXY FUND
ATTEST:
_________________________________ By: __________________________
THE SHAWMUT FUNDS
ATTEST:
_________________________________ By: __________________________
THE SHAWMUT FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
THE GALAXY FUND
440 Lincoln Street
Worcester, Massachusetts 01605-1959
STATEMENT OF ADDITIONAL INFORMATION
(1995 Special Meeting of Shareholders of
The Shawmut Funds)
This Statement of Additional Information is not a
prospectus but should be read in conjunction with the
Combined Proxy Statement/Prospectus dated
__________________, 1995 for the Special Meeting of
Shareholders of The Shawmut Fund, to be held on October 23,
1995. Copies of the Combined Proxy Statement/Prospectus may
be obtained at no charge by calling The Shareholder Services
Group, Inc. d/b/a 440 Financial at 1-800_________________.
Unless otherwise indicated, capitalized terms used
herein and not otherwise defined have the same meanings as
are given to them in the Combined Proxy
Statement/Prospectus.
Further information about Trust and Retail Shares of
the Existing Galaxy Funds is contained in and incorporated
by reference to said Funds' Statement of Additional
Information dated March 1, 1995, as revised June 12, 1995, a
copy of which is included herewith. The audited financial
statements and related independent accountant's report for
the Existing Galaxy Funds contained in the respective Annual
Reports dated October 31, 1994, are hereby incorporated
herein by reference. No other parts of the Annual Reports
are incorporated by reference herein.
Further information about Investment and Trust Shares
of the Shawmut Funds is contained in and incorporated by
reference to said Funds' Combined Statements of Additional
Information dated December 31, 1994, copies of which are
included herewith. The audited financial statements and
related independent accountant's report for the Shawmut
Funds contained in the Annual Report dated October 31, 1994
are hereby incorporated herein by reference. No other parts
of the Annual Report are incorporated by reference herein.
The date of this Statement of Additional Information is
______________________, 1995.
TABLE OF CONTENTS
Page
General Information
3
Pro Forma Financial Statements
PFS-1
Unaudited Financial Statements for the
Existing Galaxy Funds for the six-months
ended April 30, 1991
FS-1
Unaudited Financial Statements for The
Shawmut Funds for the six months ended
April 30, 1995
FS-174
GENERAL INFORMATION
The Shareholders of The Shawmut Funds ("Shawmut") are
being asked to approve or disapprove an Agreement and Plan
of Reorganization (the "Reorganization Agreement") dated as
of ______________, 1995 between Shawmut and The Galaxy Fund
("Galaxy"), and the transactions contemplated thereby. The
Reorganization Agreement contemplates the transfer of
substantially all of the assets of Shawmut's Growth Equity,
Prime Money Market, Limited Term Income, Fixed Income,
Intermediate Government Income, Connecticut Intermediate
Municipal Income and Massachusetts Intermediate Municipal
Income Funds and all of the assets and liabilities of
Shawmut's Growth and Income Equity, Small Capitalization
Equity, Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds to corresponding Galaxy Funds
in exchange for full and fractional shares representing
interests in such corresponding Galaxy Funds. The shares
issued by Galaxy will have an aggregate net asset value
equal to the aggregate net asset value of the shares of the
respective Shawmut Funds that are outstanding immediately
before the Effective Time of the Reorganization.
Following the exchange, the Shawmut Funds will make a
liquidating distribution of corresponding Galaxy Fund shares
to their shareholders. Each shareholder owning shares of a
particular Shawmut Fund at the Effective Time of the
Reorganization will receive shares of the corresponding
Galaxy Fund of equal value, plus the right to receive any
unpaid dividends and distributions that were declared before
the Effective Time of the Reorganization on Shawmut Fund
shares. Upon completion of the Reorganization, Shawmut will
be terminated under state law and deregistered under the
Investment Company Act of 1940.
The Special Meeting of Shareholders of The Shawmut
Funds to consider the Reorganization Agreement and the
related transactions will be held at 2:00 p.m. Eastern Time
on October 23, 1995 at Federated Investors Tower, 1001
Liberty Avenue, 19th Floor, Pittsburgh, Pennsylvania 15222-
3779. For further information about the transaction, see
the Combined Proxy Statement/Prospectus.
Banking laws and regulations currently prohibit a bank
holding company registered under the Bank Holding Company
Act of 1956, as amended, or any bank or non-bank affiliate
thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment
company continuously engaged in the issuance of its shares,
and prohibit banks generally from issuing, underwriting,
selling, or distributing securities such as shares of the
Galaxy Funds, but do not prohibit such a bank holding
company or its affiliates or banks generally from acting as
investment adviser, transfer agent, or custodian to such an
investment company or from purchasing shares of such a
company as agent for and upon the order of customers.
Fleet, Chase and
financial intermediaries which agree to provide shareholder
support services that are banks or bank affiliates are
subject to such banking laws and regulations. Should
legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with
their services to the Galaxy Funds, Galaxy might be required
to alter materially or discontinue its arrangement with such
companies and change its method of operation. It is
anticipated, however, that any resulting change in Galaxy's
method of operation would not affect a Galaxy Fund's net
asset value per share or result in financial loss to any
shareholder.
THE SHAWMUT FUNDS
GROWTH AND INCOME EQUITY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE
SHAWMUT FUNDS (THE "COMPANY") FOR USE AT A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD AT FEDERATED INVESTORS TOWER,
19TH FLOOR, 101 LIBERTY AVENUE, PITTSBURGH, PENNSYLVANIA
15222-3779 ON OCTOBER 23, 1995 AT 2:00 P.M. EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS _________________ AND
______________, AND EACH OF THEM, WITH FULL POWER OF
SUBSTITUTION, AS PROXIES OF THE UNDERSIGNED TO VOTE AT THE
ABOVE-STATED SPECIAL MEETING, AND AT ALL ADJOURNMENTS OR
POSTPONEMENTS THEREOF, ALL SHARES OF BENEFICIAL INTEREST
EVIDENCING INTERESTS IN THE GROWTH AND INCOME EQUITY FUND
HELD OF RECORD BY THE UNDERSIGNED ON _________, 1995, THE
RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND
UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER
SPECIFIED HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL
BE TREATED AS GRANTING AUTHORITY TO VOTE "FOR" PROPOSAL l.
TO VOTE MARK AN X IN BLUE OR BLACK INK ON THE PROXY CARD
BELOW. KEEP THIS PORTION FOR YOUR RECORDS.
____________________________________________________________
_____
(DETACH HERE AND RETURN THIS PORTION ONLY)
GROWTH AND INCOME EQUITY FUND
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
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1. PROPOSAL TO APPROVE AN
AGREEMENT AND PLAN OF
REORGANIZATION AND THE
TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE
TRANSFER OF SUBSTANTIALLY
ALL OF THE ASSETS OF THE
COMPANY'S GROWTH AND INCOME
EQUITY FUND (THE "CONTINUING
FUND") TO THE GALAXY FUND'S
GROWTH AND INCOME FUND (THE
"NEW FUND"), IN EXCHANGE FOR
SHARES OF THE NEW FUND, THE
DISTRIBUTION OF THE NEW
FUND'S SHARES SO
RECEIVED TO SHAREHOLDERS OF
THE CONTINUING FUND AND THE
TERMINATION UNDER STATE LAW
OF THE COMPANY.
2. IN THEIR
DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT
THEREOF.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
THE SHAWMUT FUNDS
SMALL CAPITALIZATION EQUITY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE
SHAWMUT FUNDS (THE "COMPANY") FOR USE AT A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD AT FEDERATED INVESTORS TOWER,
19TH FLOOR, 1001 LIBERTY AVENUE, PITTSBURGH, PENNSYLVANIA
15222-3779 ON OCTOBER 23, 1995 AT 2:00 P.M. EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS _________________ AND
______________, AND EACH OF THEM, WITH FULL POWER OF
SUBSTITUTION, AS PROXIES OF THE UNDERSIGNED TO VOTE AT THE
ABOVE-STATED SPECIAL MEETING, AND AT ALL ADJOURNMENTS OR
POSTPONEMENTS THEREOF, ALL SHARES OF BENEFICIAL INTEREST
EVIDENCING INTERESTS IN THE SMALL CAPITALIZATION EQUITY FUND
HELD OF RECORD BY THE UNDERSIGNED ON _________, 1995, THE
RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND
UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER
SPECIFIED HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL
BE TREATED AS GRANTING AUTHORITY TO VOTE "FOR" PROPOSAL l.
TO VOTE MARK AN X IN BLUE OR BLACK INK ON THE PROXY CARD
BELOW. KEEP THIS PORTION FOR YOUR RECORDS.
____________________________________________________________
_____
(DETACH HERE AND RETURN THIS PORTION ONLY)
SMALL CAPITALIZATION EQUITY FUND
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
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1. PROPOSAL TO APPROVE AN
AGREEMENT AND PLAN OF
REORGANIZATION AND THE
TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE
TRANSFER OF SUBSTANTIALLY
ALL OF THE ASSETS OF THE
COMPANY'S SMALL
CAPITALIZATION EQUITY FUND
(THE "CONTINUING FUND") TO
THE GALAXY FUND'S SMALL CAP
VALUE FUND (THE "NEW GALAXY
FUND"), IN EXCHANGE FOR
SHARES OF THE NEW GALAXY
FUND, THE DISTRIBUTION OF
THE NEW GALAXY FUND'S SHARES
SO RECEIVED TO SHAREHOLDERS
OF THE CONTINUING FUND AND
THE TERMINATION UNDER STATE
LAW OF THE COMPANY.
2. IN THEIR
DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT
THEREOF.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
THE SHAWMUT FUNDS
CONNECTICUT MUNICIPAL MONEY MARKET FUND
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE
SHAWMUT FUNDS (THE "COMPANY") FOR USE AT A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD AT FEDERATED INVESTORS TOWER,
19TH FLOOR, 1001 LIBERTY AVENUE, PITTSBURGH, PENNSYLVANIA
15222-3779 ON OCTOBER 23, 1995 AT 2:00 P.M. EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS _________________ AND
______________, AND EACH OF THEM, WITH FULL POWER OF
SUBSTITUTION, AS PROXIES OF THE UNDERSIGNED TO VOTE AT THE
ABOVE-STATED SPECIAL MEETING, AND AT ALL ADJOURNMENTS OR
POSTPONEMENTS THEREOF, ALL SHARES OF BENEFICIAL INTEREST
EVIDENCING INTERESTS IN THE CONNECTICUT MUNICIPAL MONEY
MARKET FUND HELD OF RECORD BY THE UNDERSIGNED ON ______ __,
1995, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING
MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, IN THEIR DISCRETION.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER
SPECIFIED HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL
BE TREATED AS GRANTING AUTHORITY TO VOTE "FOR" PROPOSAL l.
TO VOTE MARK AN X IN BLUE OR BLACK INK ON THE PROXY CARD
BELOW. KEEP THIS PORTION FOR YOUR RECORDS.
____________________________________________________________
_____
(DETACH HERE AND RETURN THIS PORTION ONLY)
CONNECTICUT MUNICIPAL MONEY MARKET FUND
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
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1. PROPOSAL TO APPROVE AN
AGREEMENT AND PLAN OF
REORGANIZATION AND THE
TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE
TRANSFER OF SUBSTANTIALLY
ALL OF THE ASSETS OF THE
COMPANY'S CONNECTICUT
MUNICIPAL MONEY MARKET FUND
(THE "CONTINUING FUND") TO
THE GALAXY FUND'S
CONNECTICUT MUNICIPAL MONEY
MARKET FUND (THE "NEW GALAXY
FUND"), IN EXCHANGE FOR
SHARES OF THE NEW GALAXY
FUND, THE DISTRIBUTION OF
THE NEW GALAXY FUND'S SHARES
SO RECEIVED TO SHAREHOLDERS
OF THE CONTINUING FUND AND
THE TERMINATION UNDER STATE
LAW OF THE COMPANY.
2. IN THEIR
DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT
THEREOF.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
THE SHAWMUT FUNDS
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE
SHAWMUT FUNDS (THE "COMPANY") FOR USE AT A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD AT FEDERATED INVESTORS TOWER,
19TH FLOOR, 1001 LIBERTY AVENUE, PITTSBURGH, PENNSYLVANIA
15222-3779 ON OCTOBER 23, 1995 AT 2:00 P.M. EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS _________________ AND
______________, AND EACH OF THEM, WITH FULL POWER OF
SUBSTITUTION, AS PROXIES OF THE UNDERSIGNED TO VOTE AT THE
ABOVE-STATED SPECIAL MEETING, AND AT ALL ADJOURNMENTS OR
POSTPONEMENTS THEREOF, ALL SHARES OF BENEFICIAL INTEREST
EVIDENCING INTERESTS IN THE MASSACHUSETTS MUNICIPAL MONEY
MARKET FUND HELD OF RECORD BY THE UNDERSIGNED ON ______ __,
1995, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING
MATTER AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, IN THEIR DISCRETION.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER
SPECIFIED HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL
BE TREATED AS GRANTING AUTHORITY TO VOTE "FOR" PROPOSAL l.
TO VOTE MARK AN X IN BLUE OR BLACK INK ON THE PROXY CARD
BELOW. KEEP THIS PORTION FOR YOUR RECORDS.
____________________________________________________________
_____
(DETACH HERE AND RETURN THIS PORTION ONLY)
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
[--- Unable To Translate Graphic ---]
[--- Unable To Translate Graphic ---]
[--- Unable To Translate Graphic ---]
1. PROPOSAL TO APPROVE AN
AGREEMENT AND PLAN OF
REORGANIZATION AND THE
TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE
TRANSFER OF SUBSTANTIALLY
ALL OF THE ASSETS OF THE
COMPANY'S MASSACHUSETTS
MUNICIPAL MONEY MARKET FUND
(THE "CONTINUING FUND") TO
THE GALAXY FUND'S
MASSACHUSETTS MUNICIPAL
MONEY MARKET FUND (THE "NEW
GALAXY FUND"), IN EXCHANGE
FOR SHARES OF THE NEW GALAXY
FUND, THE DISTRIBUTION OF
THE NEW GALAXY FUND'S SHARES
SO RECEIVED TO SHAREHOLDERS
OF THE CONTINUING FUND AND
THE TERMINATION UNDER STATE
LAW OF THE COMPANY.
2. IN THEIR
DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT
THEREOF.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
_______________________________
1This sentence may need to be reconsidered if there is a
material difference in pricing between Galaxy and Shawmut.