SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No.______)
Filed by the Registrant [X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X ] 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):
[ ] $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 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[X ] 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:
_______________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________
3) Filing Party:
_______________________________________________________________
4) Date Filed:
_______________________________________________________________
September 28, 1995
Dear Shawmut Fund Shareholder:
The Board of Trustees of The Shawmut Funds has called a special shareholder
meeting to consider a proposal that could expand the services available to
shareholders. At this meeting, shareholders will be asked to approve a
proposal to combine The Shawmut Funds with The Galaxy Fund--a $5.89 billion
mutual fund complex managed by Fleet Investment Advisors Inc.
In light of the pending merger of Shawmut National Corporation with Fleet
Financial Group, Inc., and after careful review of the merits of the proposal,
the Board of Trustees has determined that the reorganization is in the best
interest of The Shawmut Funds and its shareholders.
To move forward, however, a majority of the shareholders of The Shawmut
Funds must first vote in favor of the transaction. Accordingly, enclosed you
will find a proxy card for the upcoming shareholder meeting scheduled to be
held on October 30, 1995. IT IS IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN
YOUR CARD AS SOON AS POSSIBLE TO ENSURE YOUR VOTE IS COUNTED AT THE MEETING.
The Shawmut Fund Board of Trustees unanimously endorses the proposed
reorganization that is discussed in detail in the combined proxy statement and
fund prospectus which are enclosed. The consolidation of the Shawmut and
Galaxy Funds may benefit shareholders in two key ways:
1. Shareholders will now be able to choose from a broad array of investment
portfolios.
2. We anticipate that as of the reorganization date your expense ratios may
be lower in several funds.
The target date to reorganize The Shawmut Funds into The Galaxy Fund,
pending shareholder approval, is November 6, 1995. In connection with the
reorganization, you should know the following:
. Trust and institutional shareholders will be able to continue to invest
on a no-load basis.
. The reorganization will be a tax-free event and will not involve
additional costs for shareholders.
. Shawmut portfolios will be combined into comparable Galaxy portfolios
with similar investment objectives and policies. Four of the Shawmut
Fund portfolios--Shawmut Growth and Income Equity Fund, Shawmut Small
Capitalization Equity Fund and the Shawmut Massachusetts and Connecticut
Municipal Money Market Funds--will be reorganized into newly created
portfolios within The Galaxy Fund.
. The value of your investment will not change solely as a result of the
reorganization.
The enclosed materials should provide you with the necessary details to make
an informed decision about the proposal. If you have further questions about
the reorganization, please call your account officer at Shawmut Bank.
We are truly excited about the reorganization and the potential benefits it
provides to current trust and institutional shareholders who invest with The
Shawmut Funds. Hopefully, you will agree by voting "yes" and returning your
proxy card as soon as possible.
Sincerely,
Edward C. Gonzales
President, The Shawmut Funds
September 28, 1995
Dear Shawmut Fund Shareholder:
On August 22, 1995, The Board of Trustees of The Shawmut Funds met to
consider and approve a proposal for reorganizing The Shawmut Funds with The
Galaxy Fund, a family of mutual funds managed by Fleet Investment Advisors
Inc. In light of the pending merger of Shawmut National Corporation with Fleet
Financial Group, Inc., and after careful review of the merits of the proposal,
the Board of Trustees of The Shawmut Funds has determined that the
reorganization is in the best interest of The Shawmut Funds and their
shareholders.
Specifically, by combining The Shawmut and Galaxy Funds, shareholders will
be able to invest in a wider array of mutual fund portfolios and benefit from
new shareholder services. Also, combining the assets of the two Fund families
could result in a more efficient mutual fund operation and potentially lower
expense ratios for Fund shareholders.
IMPORTANT--IT CAN'T HAPPEN WITHOUT YOU!
While the Shawmut Fund Board of Trustees unanimously endorses the proposed
reorganization, the ultimate decision rests with you, the shareholder. For the
reorganization to move forward, a majority of The Shawmut Fund shareholders
must approve the transaction. The benefits of a Shawmut Fund/Galaxy Fund
reorganization are described in the proxy statement and summarized below.
If you wish to be a part of the advantages gained through a consolidation of
these two fund families, please vote "yes" on the enclosed proxy. The proxy
should then be signed and returned as soon as possible in the postage paid
envelope we have provided. This will assure that your shares will be
represented at the shareholder meeting scheduled for October 30, 1995.
CHOOSE FROM 29 FUNDS TO MEET ALL YOUR INVESTMENT NEEDS
If you approve the Fund reorganization, you will have the flexibility to
invest in 29 different investment portfolios. For instance, you'll be able to
span the investment world with the Galaxy International Equity Fund. Diversify
your investments easily with the Galaxy Asset Allocation Fund. Put the power
of indexing to work for you with the Galaxy Large Company Index Fund. Or
continue to invest in the widely popular Shawmut Growth and Income Equity
Fund, which will continue operations as a Galaxy portfolio. All these
investment opportunities would be available to help you customize an
investment mix that is right for your personal financial goals.
ENJOY THE VERY BEST IN NEW SHAREHOLDER SERVICES
Galaxy offers a host of shareholder services to make it easier for you to
manage your investments. Through InvestConnect, Galaxy's audio response
service, you can receive performance and account balance updates, any time of
day or night, with a few simple key strokes on your telephone. Registered
representatives are available to answer questions about your investments 24
hours a day, 7 days a week, through Galaxy's toll-free customer information
center. And, as a Galaxy shareholder, you will automatically receive a free
subscription to the Galaxy Observer, a quarterly magazine filled with
investment news and ideas.
To help track your investments, Galaxy will send you a monthly statement
which summarizes the activity in each of your Galaxy accounts (Note: Shawmut
Partnership and Target Savings Account customers will continue to receive
their own monthly statement.) Galaxy also provides a special year-end
statement, as well as a cost basis statement for those shareholders who make
redemptions during the year.
REORGANIZATION PLAN IS DESIGNED TO ASSURE A SMOOTH TRANSITION FOR SHAWMUT FUND
SHAREHOLDERS
The target date to reorganize The Shawmut Funds into The Galaxy Fund,
pending shareholder approval, is November 6, 1995. In connection with the
reorganization you should note the following:
. 7 Shawmut Fund portfolios will be transferred into comparable Galaxy
portfolios with similar investment objectives and policies. Four of the
Shawmut Fund portfolios--Shawmut Growth and Income Equity Fund, Shawmut
Small Capitalization Equity Fund, and the Shawmut Massachusetts and
Connecticut Municipal Money Market Funds--will be reorganized into
newly created portfolios within Galaxy.
. The value of your investment will not change solely as a result of the
reorganization.
. The reorganization will be a tax-free event for Shawmut Fund
shareholders and will not involve any sales charges, commissions, or
transactions charges.
. A welcome package, introducing you to the Galaxy Family of Mutual Funds
and the various shareholder services offered by Galaxy, will be mailed
to you in November.
PLEASE FEEL FREE TO CALL IF YOU HAVE QUESTIONS
To help you make an informed decision, we have sent you a combined proxy
statement and fund prospectus. These materials describe the investment
objectives of the various Galaxy Fund portfolios which will acquire The
Shawmut Funds and provide more information about fund management fees and
sales charges for the Galaxy Funds. Additional questions about The Galaxy
Funds can be directed towards a registered representative at the Galaxy
customer service center by calling 1-800-628-0414. If you have questions about
the procedure for voting your fund shares or details concerning the
reorganization, please call 1-800-SHAWMUT.
We look forward to receiving your proxy soon.
Sincerely,
Edward C. Gonzales
President, The Shawmut Funds
P.S. We are confident the wider breadth of investment products and services
resulting from a reorganization will help make it easier for Shawmut Fund
shareholders to achieve their financial goals. Hopefully, you will agree
by voting "yes" and returning your proxy card as soon as possible.
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 30, 1995
To Shawmut Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders (the
"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 30, 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 August 30, 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.
John McGonigle
Secretary
September 28, 1995
TABLE OF CONTENTS
PAGE
----
Summary................................................................... 1
Proposed Reorganization................................................. 1
Reasons for the Reorganization.......................................... 1
Federal Income Tax Consequences......................................... 1
Overview of the Shawmut Funds and Galaxy Funds.......................... 1
Voting Information...................................................... 21
Risk Factors............................................................ 22
Information Relating to the Proposed Reorganization....................... 24
Description of the Reorganization Agreement............................. 24
Capitalization.......................................................... 27
Federal Income Tax Consequences......................................... 29
Comparison of Investment Policies and Risk Factors........................ 30
Investment Policies and Risk Factors--Shawmut Growth Equity Fund
and Galaxy Equity Growth Fund.......................................... 30
Investment Policies and Risk Factors--Shawmut Prime Money Market Fund
and Galaxy Money Market Fund........................................... 31
Investment Policies and Risk Factors--Shawmut Limited Term Income Fund
and Galaxy Short-Term Bond Fund........................................ 31
Investment Policies and Risk Factors--Shawmut Fixed Income Fund
and Galaxy Corporate Bond Fund......................................... 33
Investment Policies and Risk Factors--Shawmut Intermediate Government
Income Fund and Galaxy Intermediate Government Income Fund............. 33
Investment Policies and Risk Factors--Shawmut Connecticut/Massachusetts
Intermediate Municipal Income Funds and Galaxy
Connecticut/Massachusetts
Municipal Bond Funds................................................... 34
Investment Policies and Risks--General.................................. 35
Investment Limitations.................................................. 37
Purchase and Redemption Information, Exchange
Privileges, Distribution and Pricing................................... 40
Other Information....................................................... 44
Information Relating to Voting Matters.................................... 46
General Information..................................................... 46
Shareholder and Board Approvals......................................... 46
Appraisal Rights........................................................ 48
Quorum.................................................................. 49
Annual Meetings......................................................... 49
Additional Information about Galaxy....................................... 50
Additional Information about Shawmut...................................... 52
Litigation................................................................ 54
Financial Highlights...................................................... 55
Financial Statements...................................................... 73
Other Business............................................................ 73
Shareholder Inquiries..................................................... 73
Appendix I--Agreement and Plan of Reorganization.......................... A-1
Appendix II--Portfolio Reviews--Galaxy Funds.............................. B-1
COMBINED PROXY STATEMENT/PROSPECTUS
DATED SEPTEMBER 28, 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 (the "Shareholders") to be held on October 30, 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
September 19, 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 Income Intermediate Government Income Fund
Fund
Shawmut Connecticut Intermediate Municipal Connecticut Municipal Bond Fund
Income Fund
Shawmut Massachusetts Intermediate Massachusetts Municipal Bond Fund
Municipal Income 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 Money Market Fund
Market Fund
Shawmut Massachusetts Municipal Massachusetts Municipal Money Market Fund
Money Market Fund
Shawmut Small Capitalization Equity Small Cap Value Fund
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 25
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 September 28, 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 September 28, 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.
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
Annual Report to Shareholders and the most recent 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 2-24 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 or shortly after 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 supranational 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 herein by reference,
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 ENDED
MAXIMUM OCTOBER 31, 1994
THE SHAWMUT FUNDS ADVISORY FEE (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 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
1940 Act (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. The 12b-1
Plan also applies to Investment Shares of the Connecticut Intermediate
Municipal Income, Massachusetts Intermediate Municipal Income and
Massachusetts Municipal Money Market Funds, except that such Funds do not
currently have an Investment Class of 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
FEE IN YEAR ENDED
ADVISORY FEE OCTOBER 31, 1994
THE GALAXY FUND (% OF AVERAGE 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 Money 0.40% of the first $750 million 0.00%*
Market Fund................ of net assets plus 0.35% of net
assets in excess of $750 million
Massachusetts Municipal 0.40% of the first $750 million 0.00%*
Money Market Fund.......... of net assets plus 0.35% of net
assets in excess of $750 million
Small Cap Value Fund....... 0.75% 0.00%*
- --------
+ Fleet has voluntarily 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 generally lower contractual advisory fees) is
similar in all material respects to Shawmut's existing investment advisory
contract with Shawmut Bank.
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 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. 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. The Galaxy Advisory Agreement is identical in these respects.
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 Chase.
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 (after fee
waivers)............... .53%(1) .53%(1) .75% .75% .75% .75%
12b-1 Fees.............. .25%(2) None None None None None
Other Expenses (after
fee waivers and/or
expense
reimbursements)........ .70%(3) .70%(3) .85% .38% .72% .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 its
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 be 2.69% and 2.19%, respectively.
(5) Absent voluntary expense reimbursements by its investment adviser, which
can be terminated at any time, the operating expenses for the Retail
Shares and Trust Shares of the Galaxy Equity Growth Fund would be 1.60%
and 1.13%, respectively.
(6) Absent voluntary waivers, which can be terminated at any time after the
current fiscal year, 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%
12b-1 Fees.............. .25%(2) None None None None None
Other Expenses (after
fee waivers and/or
expense
reimbursements)........ .17%(3) .17%(3) .45% .19% .34% .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 distributor.
(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 by 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 after the
current fiscal year, 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
GALAXY SHORT-
SHAWMUT LIMITED TERM 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%
12b-1 Fees................ .25%(3) None None None None
None
Other Expenses (after fee
waivers and expense
reimbursements).......... .54%(4) .54%(4) .55% .24% .55%
..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 Shares 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 average 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 would be 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 after the
current fiscal year, 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
SHARES SHARES TRUST SHARES TRUST 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%
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% of the
average daily net assets of its 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 after the
current fiscal year, 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
SHAWMUT INTERMEDIATE GALAXY INTERMEDIATE
GOVERNMENT GOVERNMENT PRO FORMA
INCOME FUND INCOME 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 Fees/Advisory
Fees (after fee waivers). .65%(1) .65%(1) .55%(2) .55%(2) .55% .55%
12b-1 Fees................ .25%(3) None None None None None
Other Expenses (after fee
waivers and/or expense
reimbursements).......... .46%(4) .46%(4) .55% .24% .51% .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%.
(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% of the average 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
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 after the
current fiscal year, 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
CONNECTICUT GALAXY
INTERMEDIATE CONNECTICUT
MUNICIPAL MUNICIPAL PRO FORMA
INCOME FUND* BOND FUND COMBINED FUND
------------ ---------------- ----------------
RETAIL TRUST RETAIL TRUST
ALL 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%
12b-1 Fees................ .00%(3) None None None None
Other Expenses (after
waivers and/or expense
reimbursements).......... .50%(4) .95% .70% .60% .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 would be 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 after the
current fiscal year, 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
Shares with sales load...................... $25 $36 $48 $ 83
Shares without sales load................... $ 5 $16 $29 $ 64
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
MASSACHUSETTS GALAXY
INTERMEDIATE MASSACHUSETTS
MUNICIPAL MUNICIPAL PRO FORMA
INCOME FUND* BOND FUND COMBINED FUND
------------- ---------------- ----------------
RETAIL TRUST RETAIL TRUST
ALL 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%
12b-1 Fees............... .00%(3) None None None None
Other Expenses (after
waivers and/or expense
reimbursements)......... .50%(4) .95% .69% .60% .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 average 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 after the
current fiscal year, 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
Shares with sales load...................... $25 $36 $48 $ 84
Shares without sales load................... $ 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 (after fee
waivers)............... .82%(1) .82%(1) N/A N/A .75% .75%
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 .74% .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 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 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 after
the current fiscal year, 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 MONEY PRO 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%
12b-1 Fees.............. .25%(2) None N/A None
Other Expenses (after
fee waivers and/or
expense
reimbursements)........ .23%(3) .23%(3) N/A .22%
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 after the
current fiscal year, the pro forma operating expenses for 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 MASSACHUSETTS GALAXY MASSACHUSETTS
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%
12b-1 Fees............... .00%(2) N/A None
Other Expenses (after fee
waivers and/or expense
reimbursements)......... .39%(3) N/A .22%
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 for the Fund 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 after the
current fiscal year, the pro forma operating expenses for 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
Money Market Fund............................. $ 6 $18 $32 $71
Galaxy Massachusetts Municipal
Money Market Fund............................. N/A N/A N/A N/A
Pro Forma Combined
All Shares.................................... $ 6 $19 $34 $76
SHAWMUT SMALL GALAXY SMALL
CAPITALIZATION CAP VALUE 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 (after fee
waivers)............... .76%(1) .76%(1) N/A N/A .75%. 75%
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 .86% .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 after the
current fiscal year, 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) 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
------------------- -------------------
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)
- --------
* Prior to November 1, 1995 the Galaxy Money Market Fund sold only one series
of shares.
(1) The Galaxy Corporate Bond, Growth and Income, Connecticut Municipal Money
Market, 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........................ (1) (1)
- --------
* For the period December 12, 1994 (commencement of operations) through April
30, 1995.
(1) The Galaxy Growth and Income, Connecticut Municipal Money Market,
Massachusetts 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 30, 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 August 30,
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.
Both the Shawmut Limited Term Income Fund and the Galaxy Short-Term Bond
Fund have average dollar- weighted maturities of less than three years.
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 rated 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 category.
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 projects 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/Prospectus.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. There are eleven 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 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 Income Fund Connecticut Municipal Bond Fund
All Shares* Retail Shares
Trust Shares
Shawmut Massachusetts Intermediate Municipal Income Fund Massachusetts Municipal Bond 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
Shawmut Connecticut Municipal Money Market Fund Connecticut Municipal Money Market
Fund
Investment Shares Shares
Trust Shares Shares
Shawmut Massachusetts Municipal Money Market Fund Massachusetts Municipal Money Market
Fund
All Shares Shares
Shawmut Small Capitalization Equity Fund Small Cap Value 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 expects to liquidate a limited number of holdings of certain of the
Shawmut Funds in light of the investment policies of Galaxy and the strategies
of its investment adviser. The transaction costs that will result from such
sales are expected to be minimal.
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 November 6, 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 each of the
Shawmut Funds (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 at a meeting on
August 22, 1995, 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 or shortly after
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 or Shawmut Bank 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 Board of
Trustees unanimously approved the Reorganization Agreement and directed that
it be submitted to Shareholders of each Shawmut Fund 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 of any Shawmut Fund 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 meetings held on June 12, 1995 and September 7, 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.
As stated above, the consummation of the pending merger of Shawmut National
Corporation and Fleet Financial Group, Inc. would terminate the existing
investment advisory contract between Shawmut and Shawmut Bank. The parties
expect that there will be an interval of a few days between the consummation
of this merger and the Effective Time of the Reorganization of Shawmut and
Galaxy. Shawmut and Fleet expect to enter into an investment advisory
agreement whereby Fleet will act as investment adviser without compensation to
Shawmut during this interval. Otherwise, the terms and conditions of this
agreement will be identical in material respects to Shawmut's existing
investment advisory contract with Shawmut Bank.
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............ 784,948,492 852,074,673 1,637,114,686
Investment/Retail Shares.... 207,427,726 528,783,187 736,210,913
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
GALAXY
SHAWMUT SHORT- PRO FORMA
LIMITED TERM INCOME TERM BOND COMBINED
------------------- -------------- --------------
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 N/A N/A
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 N/A N/A
Trust Shares................ 8,070,908 3,367,839 11,657,452
Net Asset Value Per Share
Investment/Retail Shares.... $9.61 N/A N/A
Trust Shares................ $9.61 $10.33 $10.33
GALAXY
SHAWMUT INTERMEDIATE INTERMEDIATE PRO FORMA
GOVERNMENT INCOME GOVERNMENT INCOME COMBINED
-------------------- ----------------- ------------
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............. N/A $ 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............. N/A 395,833 395,833
Net Asset Value Per Share
Investment/Retail Shares. $9.70 $9.88 $9.68
Trust Shares............. N/A $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............. N/A $ 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............. N/A 675,800 675,800
Net Asset Value Per Share
Investment/Retail Shares. $9.73 $9.56 $9.56
Trust Shares............. N/A $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 (the "Code"), 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 series 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 (the "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 ratings 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 purchased 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 Fund may invest in
securities denominated in foreign currencies, the Fund values its securities
and other assets in U.S. dollars and it 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 Fund is 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 and 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 highest 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 in 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 derivative
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.
Unlike the Shawmut Fixed Income Fund, the Galaxy Corporate Bond Fund may
also invest in municipal securities. 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 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 average portfolio maturity
of the Galaxy Muni Bond Funds varies, while the average portfolio maturity of
the Shawmut Muni Bond Funds is between three to ten years.
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 derivative 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 Muni 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 Fleet. 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 Reorganizing 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 objective.
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. 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
Fund's investment 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 Intermediate 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
GICs, and the Galaxy Corporate Bond Fund may invest in BICs, 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 (except the Galaxy Equity Growth Fund) 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; (ii) the
Shawmut Prime Money Market Fund may hold certain money market instruments
including repurchase agreements and variable amount demand master notes; (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; (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, investments 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; (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.
Another fundamental investment limitation of the Existing Galaxy Funds is
that 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, DISTRIBUTIONS AND
PRICING
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 Fund and the Connecticut Municipal Money Market
Fund and shares of the Massachusetts Municipal Money Market Fund and the
Massachusetts and Connecticut Intermediate Municipal Income Funds are sold
without a sales charge. No sales charge is imposed on the Trust Shares of any
of the Shawmut Funds. 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.
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 investors must be in an 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 reserves 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 the Galaxy Funds 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
(except for The Connecticut Municipal Bond and Massachusetts Municipal Bond
Funds) to participants in employer-sponsored defined contribution plans. Trust
Shares of the Corporate Bond Fund are also offered to Direct Investors and
Customers of Institutions (as defined below). The Galaxy Funds also issue
Retail Shares, which are offered primarily to individuals or corporations
purchasing either for their own accounts or for the accounts of others
("Direct Investors") 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
("Institutions") on behalf of their customers ("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 series of shares in its Connecticut
and Massachusetts Municipal Money Market Funds, which is offered to Direct
Investors and Customers of Institutions. 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 November 1, 1995, Galaxy will impose a front-end sales load on
purchases of Retail Shares of certain of the Galaxy Funds. Accordingly, the
public offering price of Galaxy Retail Shares as of November 1, 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 a Galaxy Fund (or any of the other portfolios offered by Galaxy or
otherwise advised by Fleet or its affiliates) before November 1, 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. Trust Shares will continue to be sold
without a sales charge.
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.
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 initial investment for certain retirement
plan accounts is $500 ($250 for a separate IRA account). 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 requirement 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
third 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 a 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 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, Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds 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 each 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. Each of Galaxy's Money Market, Connecticut Municipal Money
Market and Massachusetts Municipal Money
Market Funds 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 each 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 a 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, Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds) 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 investment portfolios.
Galaxy and Shawmut are organized as Massachusetts business trusts and are
subject to the provisions of their respective Declaration of Trust and Bylaws
or Code of Regulations. 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. The
Shawmut 12b-1 Plan also applies to Investment Shares of the Connecticut
Intermediate Municipal Income, Massachusetts Intermediate Municipal Income and
the Massachusetts Municipal Money Market Funds except that such Funds do not
currently have an Investment Class of 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, the Declaration of
Trust and By-Laws of 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 Municipal 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.
Galaxy and Shawmut have been advised by Shawmut Bank that the shares of each
Shawmut Fund held by personal trust accounts over which Shawmut Bank has
voting power will be voted by Shawmut Bank FOR the proposal presented at the
Meeting. Other shares of the Shawmut Funds over which Shawmut Bank has voting
power will be voted in accordance with instructions received from the
fiduciaries or beneficial owners.
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 did not hold of
record any shares 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 but did hold of record 54.74% 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 outstanding shares of the Shawmut Funds
are as follows: Growth and Income Equity Fund: Shawmut Bank CT, N.A., Trustee
for The Shawmut National Corporation Employees Thrift Daily Fund, c/o Kenneth
Weissman, Director of Corporate Benefits, Shawmut National Corporation, 777
Main Street, Hartford, CT 06115-2001 (13.14%); Shawmut Bank, N.A. as Trustee
for The Balanced Fund Employee Fund c/o Davis Cote, 448 Main Street,
Worcester, MA 02803 (7.81%); Growth Equity Fund: Shawmut Bank CT, N.A.,
Trustee for the Shawmut National Corporation Employees Retirement Plan Misc.
Assets Fund, c/o Thomas Botticelli, Vice President, Shawmut Bank CT, N.A., 777
Main Street, Hartford, CT 06116 (14.83%); Shawmut Bank CT, N.A., Trustee for
Northeast Savings Thrift and Profit Sharing Plan, c/o Lisa Schlaa-Bauner,
Northeast Savings Bank, P.O. Box 6000, Farmington, CT 06032 (5.56%); Small
Capitalization Equity Fund: Shawmut Bank CT, N.A., Trustee Shawmut National
Corporation Employees Retirement Plan Misc. Assets Fund, c/o Thomas
Botticelli, Vice President, Shawmut Bank CT, N.A., 777 Main Street, Hartford,
CT 06116 (26.08%); Shawmut Bank CT, N.A., Trustee for the Shawmut National
Corporation Employees Thrift Plan Daily Fund, c/o Kenneth Weissman, Director
of Corporate Benefits, Shawmut National Corporation, 777 Main Street,
Hartford, CT 06115-2001 (12.60%); Limited Term Income Fund: Shawmut Bank,
N.A., agent for the Carlson Holdings Corp. Cash Mgmt. Account--East, c/o Robin
Boweman, Vice President, One Federal Street, MSN-0414, Boston, MA 02211
(5.89%); Shawmut Bank CT, N.A., Trustee for the Shawmut National Corporation
Employees Thrift Plan, c/o Kenneth Weissman, Director of Corporate Benefits,
Shawmut National Corporation, 777 Main Street, Hartford, CT 06115-2001
(6.71%); Wornat Leasing, MSN17, Attn: Mark Roberts, One Corporate Center,
Hartford, CT 08103-3220 (9.51%); Fixed Income Fund: Shawmut Bank CT, N.A.,
Trustee for The Shawmut National Corporation Employees Thrift Plan Daily Fund,
c/o Kenneth Weissman, Director of Corporate Benefits, Shawmut National
Corporation, 777 Main Street, Hartford, CT 06115-2001 (14.02%); Shawmut Bank,
N.A., Trustee for The Balanced Fund Employee Benefit, c/o Doris Cote, 448 Main
Street, Worcester, MA 01808 (13.55%); Massachusetts Municipal Money Market
Fund: Shawmut Bank CT, N.A. and Ann C. Lucas, Co-Trustees for Donald P.
Corbett, F/B/C Francella O. Corbett, c/o Peter Varnie, Vice President, Shawmut
Bank CT, 777 Main Street, Hartford, CT 06115 (9.93%); Clement Moever, Jr., c/o
Methods Machine Tool, 65 Union Ave., Sudbury, MA 01776-2245 (8.18%);
Connecticut Municipal Money Market Fund; Shawmut Bank, Attn: Maureen Sanborn,
Deposit Balancing, 150 Windsor Street, MSN-284, Hartford, CT 08120-2902
(54.74%); Prime Money Market Fund: Shawmut Bank CT, N.A., Trustee for the
Shawmut National Corporation Employees Thrift Plan Daily Fund, c/o Kenneth
Weissman, Director of Corporate Benefits, Shawmut National Corporation, 777
Main Street, Hartford, CT 06115-2001 (6.44%); Connecticut Intermediate
Municipal Income Fund: Eleanor D. Deccerelli, 13 Wheeler St., P.O. Box 289,
Shelton, CT 08434-0289 (6.26%).
The name, address and share ownership of the persons who beneficially owned
5% or more of the outstanding shares of the Shawmut Funds at August 30, 1995
and the percentage of Galaxy's shares to be owned by such persons upon
consummation of the Reorganization are as follows: Growth and Income Equity
Fund: Shawmut Bank CT, N.A., Trustee for The Shawmut National Corporation
Employees Thrift Daily Fund, c/o Kenneth Weissman, Director of Corporate
Benefits, Shawmut National Corporation, 777 Main Street, Hartford, CT 06115-
2001 (13.14%); Shawmut Bank, N.A. as for The Balanced Fund Employee Fund c/o
Davis Cote, 448 Main Street, Worcester, MA 02803 (7.81%); Growth Equity Fund:
Shawmut Bank CT, N.A., Trustee for the Shawmut National Corporation Employees
Retirement Plan Misc. Assets Fund, c/o Thomas Botticelli, Vice President,
Shawmut Bank CT, N.A., 777 Main Street, Hartford, CT 06116 (0.98%); Shawmut
Bank CT, N.A., Trustee for Northeast Savings Thrift and Profit Sharing Plan,
c/o Lisa Schlaa-Bauner, Northeast Savings Bank, P.O. Box 6000, Farmington, CT
06032 (0.37%); Small Capitalization Equity Fund: Shawmut Bank CT, N.A.,
Trustee, Shawmut National Corporation Employees Retirement Plan Misc. Assets
Fund, c/o Thomas Botticelli, Vice President, Shawmut Bank, CT, N.A., 777 Main
Street, Hartford, CT 06116 (26.08%); Shawmut Bank CT, N.A., Trustee for the
Shawmut National Corporation Employees Thrift Plan Daily Fund, c/o Kenneth
Weissman, Director of Corporate Benefits, Shawmut National Corporation, 777
Main Street, Hartford, CT 06115-2001 (12.60%); Limited Term Income Fund:
Shawmut Bank, N.A., agent to the Carlson Holdings Corp.
Cash Mgmt. Account--East, c/o Robin Boweman, Vice President, One Federal
Street, Boston, MA 02211 MSN-0414 (2.34%); Shawmut Bank CT, N.A., Trustee for
the Shawmut National Corporation Employees Thrift Plan, c/o Kenneth Weissman,
Director of Corporate Benefits, Shawmut National Corporation, 777 Main Street,
Hartford, CT 06115-2001 (2.66%); Wornat Leasing, MSN17, Attn: Mark Roberts,
One Corporate Center, Hartford, CT 08103-3220 (3.77%); Fixed Income Fund:
Shawmut Bank CT, N.A., Trustee for The Shawmut National Corporation Employees
Thrift Plan Daily Fund, c/o Kenneth Weissman, Director of Corporate Benefits,
Shawmut National Corporation, 777 Main Street, Hartford, CT 06115-2001
(10.19%); Shawmut Bank, N.A., Trustee for the Balanced Fund Employee Benefit,
c/o Doris Cote, 448 Main Street, Worcester, MA 01808 (9.85%); Massachusetts
Municipal Money Market Fund: Shawmut Bank CT, N.A. and Ann C. Lucas, Co-
Trustees for Donald P. Corbett, F/B/C Francella O. Corbett, c/o Peter Varnie,
Vice President, Shawmut Bank CT, 777 Main Street, Hartford, CT 06115 (9.93%);
Clement Moever, Jr., c/o Methods Machine Tool, 65 Union Ave., Sudbury, MA
01776-2245 (8.18%); Connecticut Municipal Money Market Fund: Shawmut Bank,
Attn: Maureen Sanborn, Deposit Balancing, 150 Windsor Street, MSN-284,
Hartford, CT 08120-2902 (54.74%); Prime Money Market Fund: Shawmut Bank CT,
N.A., Trustee for the Shawmut National Corporation Employees Thrift Plan Daily
Fund, c/o Kenneth Weissman, Director of Corporate Benefits, Shawmut National
Corporation, 777 Main Street, Hartford, CT 06115-2001 (2.84%); Connecticut
Intermediate Municipal Income Fund: Eleanor D. Deccerelli, 13 Wheeler St.,
P.O. Box 289, Shelton, CT 08434-0289 (1.81%).
The name, address and share ownership of the entities or persons that would
beneficially own of record more than 5% of the outstanding Shares of the pro
forma combined Galaxy Funds upon consummation of the Reorganization based upon
their holdings and outstanding shares at August 30, 1995 are as follows:
Corporate Bond Fund: Shawmut Bank CT, N.A., Trustee, the Shawmut National
Corporation Employees Thrift Plan Daily Fund, c/o Kenneth Weissman, Director
of Corporate Benefits, Shawmut National Corporation, 777 Main Street,
Hartford, CT 06115-2001 (10.91%); Shawmut Bank, N.A., Trustee, The Balanced
Fund Employees Benefit, c/o Doris Cote, 446 Main Street, Worcester, MA 01608
(9.85%); BNE Unified Retirement Trust, David Keiran, Controller, 45 Milk
Street, Boston, MA 02109 (64.32%); Cole Hersee Pension, 20 Old Colony Avenue,
South Boston, MA 02109 (13.09%); Growth and Income Fund: Shawmut Bank CT,
N.A., Trustee for The Shawmut National Corporation Employees Thrift Daily
Fund, c/o Kenneth Weissman, Director of Corporate Benefits, Shawmut National
Corporation, 777 Main Street, Hartford, CT 06115-2001 (13.14%); Shawmut Bank,
N.A. as for The Balanced Fund Employee Fund c/o Davis Cote, 448 Main Street,
Worcester, MA 02803 (7.81%); Small Capitalization Equity Fund: Shawmut Bank
CT, N.A., Trustee Shawmut National Corporation Employees Retirement Plan Misc.
Assets Fund, c/o Thomas Botticelli, Vice President, Shawmut Bank CT, N.A., 777
Main Street, Hartford, CT 06116 (26.08%); Shawmut Bank CT, N.A., Trustee for
the Shawmut National Corporation Employees Thrift Plan Daily Fund, c/o Kenneth
Weissman, Director of Corporate Benefits, Shawmut National Corporation, 777
Main Street, Hartford, CT 06115-2001 (12.60%); Massachusetts Municipal Money
Market Fund: Shawmut Bank CT, N.A. and Ann C. Lucas, Co-Trustees for Donald P.
Corbett, F/B/C Francella O. Corbett, c/o Peter Varnie, Vice President, Shawmut
Bank CT, 777 Main Street, Hartford, CT 06115 (9.93%); Clement Moever, Jr., c/o
Methods Machine Tool, 65 Union Ave., Sudbury, MA 01776-2245 (8.18%);
Connecticut Municipal Money Market Fund; Shawmut Bank, Attn: Maureen Sanborn,
Deposit Balancing, 150 Windsor Street, MSN-284, Hartford, CT 08120-2902
(54.74%).
At August 30, 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
August 30, 1995, the trustees and officers of Galaxy owned less than 1% of the
outstanding shares of each of the corresponding Galaxy Funds.
At August 30, 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: Galaxy Corporate Bond Fund: BNE Unified Retirement Trust, Attn:
David Keiran, Controller, 45 Mile Street, Boston, MA 02109 (64.32%); Cole
Hersee Pension, 20 Old Colony Avenue, South Boston, MA 02109 (13.09%).
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.
POSITIONS
NAME AND ADDRESS WITH GALAXY PRINCIPAL OCCUPATION DURING PAST 5 YEARS AND OTHER
AFFILIATIONS
- ---------------- ----------- --------------------------------------------------------
- -------
Dwight E. Vicks, Jr. Chairman & President & Director, Vicks Lithograph & Printing
Vicks Lithograph & Trustee Corporation (book manufacturing and commercial
Printing Corporation printing); Director, Utica Fire Insurance Company;
Commercial Drive Trustee, Savings Bank of Utica; Director, Monitor
P.O. Box 270 Life Insurance Company; Director, Commercial
Yorkville, NY 13495 Travelers Mutual Insurance Company; Trustee, The
Galaxy VIP Fund; Trustee, Galaxy Fund II.
John T. O'Neill/1/ President, Executive Vice President and CFO, Hasbro, Inc. (toy
Hasbro, Inc. Treasurer & and game manufacturer), since 1987; Trustee, The
200 Narragansett Trustee Galaxy VIP Fund; Trustee, Galaxy Fund II; Managing
Park Drive Partner, KPMG Peat Marwick (accounting firm), 1986.
Pawtucket, RI 02862
Louis DeThomasis Trustee President, Saint Mary's College of Minnesota;
Saint Mary's College Director, Bright Day Travel, Inc.; Trustee,
of Minnesota Religious Communities Trust; Trustee, The Galaxy
Winona, MN 55987 VIP Fund; Trustee, Galaxy Fund II.
Donald B. Miller Trustee Chairman, Horizon Media, Inc. (broadcast services);
10725 Quail Covey Road Director/Trustee, Lexington Funds; President and
Boynton Beach, FL 33436 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 Projects,
The Astra Ventures, Inc. Incorporated (land development); President, The
One Citizens Plaza Astra Ventures, Incorporated (previously, Buffinton
Providence, RI 02903 Box Company-- manufacturer of cardboard boxes);
Trustee, The Galaxy VIP Fund; Trustee, Galaxy Fund
II; Commissioner, Rhode Island Investment
Commission.
POSITIONS
NAME AND ADDRESS WITH GALAXY PRINCIPAL OCCUPATION DURING PAST 5 YEARS AND OTHER
AFFILIATIONS
- ---------------- ----------- -----------------------------------------------------
- ----------
Bradford S. Wellman/1/ Trustee Private Investor; President, Ames & Wellman, from
2468 Ohio Street 1978 to 1991; President, Pingree Associates, Inc.,
Bangor, ME 04401 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 President The Shareholder Services Group, Inc. d/b/a 440
The Shareholder and Assistant Financial (1992 to present); Vice President,
Services Group, Inc., Treasurer Investment Marketing and Strategic Planning,
d/b/a 440 Financial Manufacturers and Traders Trust Co. (1990-1992).
440 Lincoln Street
Worcester, MA 01605-1959
W. Bruce McConnel, III Secretary Partner of the law firm Drinker Biddle & Reath,
Philadelphia National Philadelphia, Pennsylvania.
Bank Building
Broad and Chestnut Sts.
Philadelphia, PA 19107
Louis Russo Assistant Vice President, The Shareholder Services Group,
The Shareholder Treasurer Inc., d/b/a 440 Financial since 1990; Director,
Services Group, Inc., Funds Accounting, Fidelity Investments from 1988 to
d/b/a 440 Financial 1990.
440 Lincoln Street
Worcester, MA 01605-1959
- --------
/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,
Federated Investors Trustee Federated Advisers, Federated Management, and
Tower Federated Research; Chairman and Director,
Pittsburgh, Pennsylvania 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 Manufacturing Co.; Chairman of
28th Floor the Board, Children's Hospital of Pittsburgh;
One Oxford Centre Director, Trustee or Managing General Partner of
Pittsburgh, Pennsylvania the Funds; formerly, Senior Partner, Ernst &
Young LLP.
John T. Conroy, Jr. Trustee President, Investment Properties Corporation;
Wood/IPC Senior Vice President, John R. Wood and
Commercial Dept. Associates, Inc., Realtors; President, Northgate
John R. Wood and Village Development Corporation; Partner or
Associates, Inc., Trustee in private real estate ventures in
Realtors Southwest Florida; Director, Trustee, or Managing
3255 Tamiami Trail North General Partner of the Funds; formerly,
Naples, Florida President, Naples Property Management, Inc.
William J. Copeland Trustee Director and Member of the Executive Committee,
One PNC Plaza Michael Baker, Inc.; Director, Trustee or
23rd Floor Managing General Partner of the Funds; formerly,
Pittsburgh, Pennsylvania 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, The Emerging Germany
571 Hayward Mill Road Fund, Inc.; Director, Trustee, or Managing
Concord, Massachusetts General Partner of the Funds; formerly, Director,
Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist,
3471 Fifth Avenue, Presbyterian and Montefiore Hospitals; Professor
Suite 1111 of Medicine and Trustee, University of
Pittsburgh, Pennsylvania Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center;
Director, Trustee, or Managing General Partner of
the Funds.
POSITION WITH
NAME AND ADDRESS THE SHAWMUT FUNDS PRINCIPAL OCCUPATIONS
- ---------------- ----------------- ---------------------
Edward L. Flaherty, Jr.@ Trustee Attorney-at-law; Shareholder, Henny, Kochuba,
Two Gateway Center Meyer and Flaherty; Director, Eat'N Park
Suite 674 Restaurants, Inc., and Statewide Settlement
Pittsburgh, Pennsylvania 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 and Trustee, Federated
Federated Investors Treasurer and Investors; Vice President and Treasurer,
Tower Trustee Federated Advisers, Federated Management,
Pittsburgh, Pennsylvania 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 Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing
Boston, Massachusetts 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; Shareholder, Henny, Kochuba,
Two Gateway Center Meyer and Flaherty; Chairman, Meritcare, Inc.;
Suite 674 Director, Eat'N Park Restaurants, Inc.; Director,
Pittsburgh, Pennsylvania Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon
Financial, F.A.
Wesley W. Posvar Trustee Professor, Foreign Policy and Management
1202 Cathedral of Consultant; Trustee, Carnegie Endowment for
Learning International Peace, RAND Corporation, Online
University of Pittsburgh Computer Library Center, Inc., and U.S. Space
Pittsburgh, Pennsylvania 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 consultant; Director,
4905 Bayard Street Trustee, or Managing General Partner of the
Pittsburgh, Pennsylvania Funds.
J. Christopher Donahue Vice President President and Trustee, Federated Investors,
Federated Investors Federated Advisers, Federated Management, and
Tower Federated Research; President and Director,
Pittsburgh, Pennsylvania 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.
POSITION WITH
NAME AND ADDRESS THE SHAWMUT FUNDS PRINCIPAL OCCUPATIONS
- ---------------- ----------------- ---------------------
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated
Federated Investors Investors; Director, Federated Research Corp.;
Tower Chairman and Director, Federated Securities
Pittsburgh, Pennsylvania 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, General Counsel, and
Federated Investors and Secretary Trustee, Federated Investors; Vice President,
Tower Secretary, and Trustee, Federated Advisers,
Pittsburgh, Pennsylvania 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 Administrative
Federated Investors and Assistant Services; Vice President and Assistant Treasurer
Tower Treasurer of some of the Funds.
Pittsburgh, Pennsylvania
- --------
* 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.
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
GROWTH EQUITY FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------------
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............................................... 1.46%(b) 1.21%(b)
Net Investment Income.................................. 1.14%(b) 1.39%(b)
Expense Waiver/Reimbursement (a)....................... 1.32%(b) 1.07%(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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED
PRIME MONEY MARKET FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
---------------------
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.............................................. 0.70%(b) 0.45%(b)
Net Investment Income................................. 5.18%(b) 5.41%(b)
Expense Waiver/Reimbursement (a)...................... 0.47%(b) 0.22%(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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED
LIMITED TERM INCOME FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
FIXED INCOME FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
INTERMEDIATE GOVERNMENT INCOME FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
-------------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
GROWTH AND INCOME EQUITY FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
CONNECTICUT MUNICIPAL MONEY MARKET FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
-------------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------
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 BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED:
SMALL CAPITALIZATION EQUITY FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------------
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 31, 1995 and,
with respect to the Corporate Bond Fund and Intermediate Government Income
Fund, June 12, 1995 and September 9, 1995, respectively, 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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
EQUITY GROWTH FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
-----------------
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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
MONEY MARKET FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
------------------
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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
SHORT-TERM BOND FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
----------------
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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
CORPORATE BOND FUND(1)
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
--------------
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 Operations............................. 0.60
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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
INTERMEDIATE GOVERNMENT INCOME FUND(1)
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
-----------------
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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
CONNECTICUT MUNICIPAL
BOND FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
---------------
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 BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
MASSACHUSETTS MUNICIPAL
BOND FUND
PERIOD ENDED
APRIL 30, 1995
(UNAUDITED)
---------------
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 September 9, 1995 with
respect to the Intermediate Government Income Fund, 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
included in Galaxy's Prospectuses and incorporated by reference in Galaxy's
Statement of Information, and incorporated by reference in this Combined Proxy
Statement/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 September 19, 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 goodwill, 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 through Retail Shares
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. 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's 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 non- assessable 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, but such
counsel need 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 Shawmut.
(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 July 16, 1992, 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
John T. O'Neill
Executive Vice President and Chief Financial Officer
Hasbro, Inc.
200 Narragansett Park Drive
Pawtucket, R.I. 02862-0200
Telecopier Number: (401) 431-8467
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
[SIGNATURE OMITTED]
THE SHAWMUT FUNDS
[SIGNATURE OMITTED]
Galaxy Equity Growth Fund
by Bob Armknecht
Portfolio Manager
Healthy returns from growth stocks generally, plus strong gains
from many individual holdings, helped the Galaxy Equity Growth Fund
outperform the stock market as a whole over the past year. For the 12
months ended October 31, 1994, the total returns for the Fund's Retail
and Trust Shares were 4.72% and 4.80%, respectively. That compares with
3.84% for the S&P 500 and 1.54% for the average growth fund tracked by
Lipper Analytical Services.
Since its inception in December of 1990, the Fund's Retail and
Trust Shares have produced average annual returns of 11.02% and 11.04%,
respectively.
Galaxy Equity Growth Fund
Growth of $10,000 investment*
The graphic presentation displayed here consists of a 3-D mountain chart
representing growth of a $10,000 investment in the Galaxy Equity Growth
Fund since the Fund's inception on 12/14/90. The shaded chart features
three distinct rows ("mountains"), shaded in light gray for the Fund's
Trust Shares, charcoal for the Fund's Retail Shares and gray for the S&P
500 Index, as described in a legend appearing below the chart. The
chart shows how a $10,000 investment in Trust Shares in 1990 would have
grown to $16,215 in 1994; a $10,000 investment in Retail Shares in 1990
would have grown to $15,059 in 1994; and compares these to the S&P 500
Index, the results of which, for an equity growth fund for that period
show that a $10,000 investment in a 1990 would have grown to $15,090 in
1994.
*Since inception on 12/14/90. The S&P 500 is an unmanaged index.
Results for the index do not reflect the expenses and investment
management fees incurred by the Fund.
Technology and Consumer Stocks Lead
The Galaxy Equity Growth Fund invests in large, high-quality
companies with an above-average potential for earnings. The stocks of
these companies performed particularly well over the past year, as the
economy picked up steam.
During the year different sectors outperformed the market at
different times. Technology and consumer stocks made the largest gains,
responding to a growing economy. Fortunately, we'd invested heavily in
those areas. The Fund's technology holdings such as Microsoft, Corp.,
AMP, Inc. and Hewlett-Packard Co. benefited from the expansion of the
technological "information superhighway." In the consumer area, where
stocks became undervalued in 1993, the Fund enjoyed strong gains from
its investments in Gillette Co., Johnson & Johnson, Procter & Gamble and
Merck & Co.
Having increased the Fund's cash reserves in late January, we were
able to take advantage of the lower prices that occurred in the spring
and early summer. We used this opportunity to add to these and other
holdings in the technology and consumer sectors. We also made new
investments in drug and hospital stocks. Among the new investments were
the health maintenance organizations U.S. Health care and United Health
Care Corp. We sold the Fund's shares in American Home Products and
Glaxo, believing changes in the health care industry would make their
products less competitive.
A few investments did not perform as we'd hoped. These included
bank stocks such as J.P. Morgan & Co., and Banc One Corp., which were
hurt by investor concerns over rising interest rates, and transportation
stocks, which did not benefit as we expected from the growing economy.
Looking Ahead
We believe stock prices overall may be vulnerable to a correction
as rising interest rates increase investor anxiety and make fixed income
investments more competitive with stocks. In that environment, we
believe investors would favor growth stocks for their predictable, above-
average earnings potential. Consequently, we expect to keep about 10%
of the Fund's assets in cash. This should give us the flexibility to
purchase new investments at attractive prices.
Cyclical issues, such as chemical stocks, could be especially
sensitive to a correction. For this reason, we've begun to restructure
the Fund's cyclical holdings and emphasize stocks with strong individual
earnings stories over industry themes. As always we will maintain a
well-diversified portfolio of high quality stocks seeking above-average
potential for growth over the next three to five years.
Galaxy Equity Growth Fund
Portfolio Distribution as of October 31, 1994
The graphic presentation displayed here consists of a 3-D pie chart
representing Portfolio Distribution in the Galaxy Equity Growth Fund as
of October 31, 1994. Each slice of the pie represents an investment
category and is sized according to the percentage of the Fund's
investment in that category. The categories of investments and their
percentages, starting at the top of the pie and moving clockwise, are:
Capital Goods - 10%; Financial - 9%; Energy - 8%; Other - 26%; Consumer
Staples - 23%; Technology - 14%; Consumer Cyclicals - 10%.
Bob Armknecht has been managing the Galaxy Equity Growth Fund since its
inception in December 1990. He has managed equity portfolios for Fleet
Investment Advisors Inc. since 1988.
Galaxy Short-Term Bond Fund
By Kenneth W. Thomae
Portfolio Manager
In the face of sharply rising interest rates, the Galaxy Short-
Term Bond Fund stabilized its share price and provided strong current
income by maintaining a flexible portfolio. For the 12 months ended
October 31, 1994, the Fund's Retail and Trust Shares had total returns
of -0.68% and -0.66%, respectively. That compares to 0.10% for the
average short-term bond fund tracked by Lipper Analytical Services and
1.16% for the Lehman One to Three Year Government Index.
The Fund's longer-term performance remains relatively healthy.
Since inception in December of 1991, the Fund's Retail and Trust Shares
have averaged annual returns of 4.01% and 4.02%, respectively.
Galaxy Short-Term Bond Fund
Portfolio Distribution
The graphic presentation displayed here consists of a 3-D pie chart
representing Portfolio Distribution in the Galaxy Short-Term Bond Fund
as of October 31, 1994. Each slice of the pie represents an investment
category and is sized according to the percentage of the Fund's
investment in that category. The categories of investments and their
percentages, starting at the top of the pie and moving clockwise, are:
Corporate Bonds & Notes - 18%; Other - 6%; and U.S. Government & Agency
Obligations - 76%.
Barbell Strategy Continued
During the period, we continued the "barbell" strategy we'd
adopted in 1993. We kept more than half the Fund's portfolio in issues
that matured in less than four months and the rest in issues that
matured in six to nine years. Our short-term position helped insulate
the portfolio from interest rate fluctuations and made it easier to
purchase higher-yielding investments as interest rates rose. In the
meantime, the Fund benefited from the strong yields of its longer-term
investments. While the longer-term investments were somewhat more
vulnerable to price declines as interest rates rose, they offered the
potential for capital appreciation if longer-term rates began to fall.
As interest rates spiked up again in the summer of 1994, we
shortened the maturities of the Fund's investments. By the end of the
period about 65% of the Fund was invested in issues with maturities of
four to five months and the rest was invested in issues with maturities
of three to six years. Between April and October 1994, the average
maturity of the Fund's portfolio fell from 2.7 years to 1.8 years.
For most of the period we reduced the Fund's investments in
corporate issues (corporates), whose yields were not particularly
attractive relative to government securities. As we reduced the Fund's
allocation to corporates, we increase the Fund's investments in U.S.
agency issues, whose yields compared favorably to Treasury securities.
This mix on investments helped the Fund produce a relatively robust
yield for shareholders. As of October 31, 1994, the Fund's Retail and
Trust Shares had annualized SEC 30-day yields of 5.09% and 5.29%,
respectively.
New Opportunities
We believe the Galaxy Short-Term Bond Fund is well-positioned to
ride out the further increases we expect in short-term interest rates.
If interest rates rise, we would continue to enjoy the strong yields
from the Fund's longer-term investments and use the Fund's short-term
holdings to purchase new investments with higher yields. Once it
appears rates on short- and intermediate-term issues are peaking, we
expect to increase the Fund's average maturity to lock in the better
yields and enhance the potential for capital appreciation.
Galaxy Short-Term Bond Fund
Growth of $10,000 investment*
The graphic presentation displayed here consists of a 3-D mountain chart
representing growth of a $10,000 investment in the Galaxy Short-Term
Bond Fund since the Fund's inception on 12/30/91. The shaded chart
features three distinct rows ("mountains"), shaded in light gray for the
Fund's Trust Shares, charcoal for the Fund's Retail Shares and gray for
the Lehman Brothers One to Three Year Government Bond Index, as
described in a legend appearing below the chart. The chart shows how a
$10,000 investment in Trust Shares in 1991 would have grown to $11,280
in 1994; a $10,000 investment in Retail Shares in 1990 would have grown
to $11,179 in 1994; and compares these to the Lehman Brothers index, the
results of which, for a short-term bond fund for that period, show that
a $10,000 investment in 1990 would have grown to $11,181 in 1994.
Since inception on 12/30/91. The Lehman Brothers One to Three Year
Government Bond Index is an unmanaged index. Results for the index do
not reflect the expenses and investment management fees incurred by the
Fund.
Ken Thomae has managed the Galaxy Short-Term Bond Fund since its
inception in December 1991. He has managed fixed-income portfolios for
Fleet Investment Advisors Inc. and its predecessors since 1985.
Galaxy Intermediate Bond Fund (Now known as the Galaxy Intermediate
Government Income Fund)
By Bruce Barton
Portfolio Manager
The rise in interest rates over the last year was especially
harmful to the prices of intermediate-term bonds. In this environment
we maintained a relatively neutral average maturity for investments in
the Galaxy Intermediate Bond Fund and used variable rate issues to make
the most of rising bond yields.
For the 12 months ended October 31, 1994, the Fund's Retail and
Trust Shares had total returns of -4.42% and -4.39%, respectively. By
comparison, the average intermediate bond fund tracked by Lipper
Analytical Services returned -2.98%. The benchmark Lehman Intermediate
Bond Index includes more shorter-term issues, whose prices tend to
suffer less when interest rates rise. During the period the Index
returned -1.93%
..
The Fund's longer-term performance remains quite healthy. Since
the Fund's inception in 1988, Retail and Trust Shares have both average
annual returns of 7.15%.
Growth Intermediate Bond Fund
Growth of $10,000 investment*
The graphic presentation displayed here consists of a 3-D mountain chart
representing growth of a $10,000 investment in the Galaxy Intermediate
Bond Fund since the Fund's inception on 9/1/88. The shaded chart
features three distinct rows ("mountains"), shaded in light gray for the
Fund's Trust Shares, charcoal for the Fund's Retail Shares and gray for
the Lehman Brothers Intermediate/Corporate Bond Index, as described in a
legend appearing below the chart. The chart shows how a $10,000
investment in Trust Shares in 1988 would have grown to $16,524 in 1994;
a $10,000 investment in Retail Shares in 1988 would have grown to
$15,306 in 1994; and compares these to the Lehman Brothers index, the
results of which, for an intermediate bond fund for that period, show
that a $10,000 investment in 1988 would have grown to $15,310 in 1994.
*Since inception on 9/1/88. The Lehman Brothers Intermediate
Government/Corporate Bond Index is an unmanaged index. Results for the
index do not reflect the expenses and investment management fees
incurred by the Funds
Protecting Share Value
Anticipating higher interest rates, we shortened the Fund's
average maturity in the fall of 1993. We continued this strategy as
interest rates rose during the first three quarters of 1994. At the end
of the period the Fund had an average maturity of about eight years.
This was still longer than the average for the Lehman Intermediate Bond
Index, which was about four years.
For much of the period we invested in variable rate bonds, whose
interest rates are adjusted regularly to keep up with market conditions.
Because of these adjustments, the price of variable rate bonds behave
like the prices of shorter-maturity issues __ making them generally less
sensitive to rising interest rates than the prices of fixed rate issues.
The variable rate securities also helped the Fund make the most of
rapidly rising yields. As of October 31, 1994, the Fund's Retail and
Trust Shares had annualized SEC 30-day yields of 6.43% and 6.73%,
respectively.
In addition, we focused more of the Fund's portfolio on government
bonds, whose yields rose more quickly than the yields on corporate
bonds. The prices of government bonds also tend to be more stable when
interest rates rise. During the period, we increased the Fund's
allocation to government bonds from 53% to 66%. We gave particular
attention to government agency issues, whose prices had become quite
attractive.
Looking Ahead
We bought many government bonds at discounted prices. We believe
that this may provide additional capital appreciation for Fund
shareholders if interest rates come back down. To further benefit from
rising bond prices, and lock in higher yields, we've started purchasing
10-year government bonds. Once it appears rates have peaked, we'll
probably also trade the Fund's variable rate investments for fixed rate
securities.
Galaxy Intermediate Bond Fund
Portfolio Distribution as of October 31, 1994
The graphic presentation displayed here consists of a 3-D pie chart
representing Portfolio Distribution in the Galaxy Intermediate Bond Fund
as of October 31, 1994. Each slice of the pie represents an investment
category and is sized according to the percentage of the Fund's
investment in that category. The categories of investments and their
percentages, starting at the top of the pie and moving clockwise, are:
Corporate Bonds & Notes - 29%; Other -5%; and U.S. Government & Agency
Obligations - 66%.
Bruce Barton has managed the Galaxy Intermediate Bond Fund since its
inception in 1988.
Galaxy Connecticut Municipal Bond Fund
By Steve Woodruff
Portfolio Manager
Over the past year we focused on municipal issues offering above-
average income and price stability in the face of sharply rising
interest rates. This included bonds with high coupons, outstanding
credit ratings and intermediate-term maturities. For the 12 months
ended October 31, 1994, Retail and Trust Shares of the Galaxy
Connecticut Municipal Bond Fund had total returns of -6.39% and -6.37%,
respectively, versus a -6.21% return for the average Connecticut
municipal bond fund tracked by Lipper Analytical Services.
During the year, the Fund's average coupon was less than the
average coupon for the Lehman Municipal Bond Index, and the Fund's
average maturity was greater. As a result, the Index outperformed the
Fund with a return of -4.36%.
Historic fluctuations in interest rates have hampered the Fund's
performance since its inception in March of 1993. During that time, the
Fund's Retail and Trust Shares have averaged annual returns of -0.61%
and -0.59%, respectively.
Buying Higher Coupons
Once interest rates began to rise, we focused all the Fund's new
investments on bonds with coupons of 5% or more and sold many bonds with
coupons of less than 5%. In addition to protecting the value of Fund
shares, this helped improve its yield. At the end of October 1994, the
Fund's Retail and Trust Shares had SEC 30-day yields of 5.31% and 5.56%,
respectively, on an annualized basis. These equal taxable yields of
8.92% and 9.35%, respectively, for tax-payers in the 36% federal income
tax bracket who live in Connecticut.
During this difficult period, we further insulated the Fund's
value by focusing on bonds with the highest credit rating from Moody's
Investors Service and Standard & Poor's Corp. and by maintaining an
average maturity for bonds in the portfolio of about 12 years. In
addition, we reduced the Fund's investments in bonds that were trading
at discounted prices. Discounted municipals are particularly vulnerable
to rising interest rates especially now that new legislation has raised
the taxes on gains investors earn from these issues.
Going Forward
The relatively high levels of personal income in Connecticut
should maintain good demand for tax-free investments. At the same time,
the supplies of municipal bonds should remain at current levels. This
would likely mean good support for municipal bond prices in coming
months and could even accentuate a rise in prices if long-term interest
rates come back down. While interest rates remain high, we expect to
maintain our current strategies and hold a well-diversified portfolio of
top-quality municipal bonds with intermediate-term maturities.
Galaxy Connecticut Municipal Bond Fund
Growth of $10,000 investment*
The graphic presentation displayed here consists of a 3-D pyramid chart
representing growth of a $10,000 investment in the Galaxy Connecticut
Municipal Bond Fund since the Fund's inception on 3/16/93. The shaded
chart features three distinct rows ("pyramids"), shaded in light gray
for the Fund's Trust Shares, charcoal for the Fund's Retail Shares and
gray for the Lehman Brothers Municipal Bond Index, as described in a
legend appearing below the chart. The chart shows how a $10,000
investment in Trust Shares in 1993 would have peaked at 10/31/93 and
ended at $9,904 in 1994; a $10,000 investment in Retail Shares in 1993
would have peaked at 10/31/93 and ended at $10,231 in 1994; and compares
these to the Lehman Brothers index, the results of which, for a
municipal bond fund for that period, show that a $10,000 investment in
1993 would have peaked at 10/31/93 and ended at $9,906 in 1994.
*Since inception on 3/16/93. The Lehman Brothers Municipal Bond Index
is an unmanaged index. Results for the index are calculated since
3/31/93 because the results are calculated at month-end only. Results
for the index do not reflect the expenses and investment management fees
incurred by the fund.
Steve Woodruff has managed the Galaxy Connecticut Municipal Bond Fund
since the Fund began in March of 1993. He has managed fixed-income
portfolios for Fleet Investment Advisors Inc. since 1991.
Galaxy Massachusetts Municipal Bond Fund
By David Lindsay
Portfolio Manager
During the unprecedented rise in interest rates of the past year,
the Galaxy Massachusetts Municipal Bond Fund sought to reduce the
volatility of its asset value, while providing strong income, by
gradually reducing the average maturity of its investments and
maximizing income for shareholders.
For the 12 months ended October 31, 1994, the Fund's Retail and
Trust Shares both had total returns of -6.46%, versus -5.89% for the
average Massachusetts Municipal Bond Fund tracked by Lipper Analytical
Services. During the period, the Fund had a slightly longer average
maturity than the benchmark Lehman Municipal Bond Index. Because
shorter-maturity issues are generally less sensitive to rising interest
rates, the Index had a somewhat better performance, returning -4.36%.
An historically strong volatility in interest rates has restrained
the Funds' performance since its inception in March of 1993. Over that
time, the annual returns for the Fund's Retail and Trust Shares have
both averaged -0.88%.
Looking for Stronger Yields
In the face of dramatic declines in municipal bond prices, we
protected the value of Fund shares by focusing on short-term investments
whose prices would fall less when interest rates rose. By concentrating
on municipals with maturities of less than 10 years, we shortened the
Fund's average maturity to 13.5 years by the end of the period.
In addition, we tried to maximize the Fund's income by emphasizing
municipals with relatively strong yields. As of the end of October, the
Fund's Retail and Trust Shares had SEC 30-day yields of 5.36% and 5.38%,
respectively, on an annualized basis. These are equal to taxable yields
of 9.23% and 9.27%, respectively, for taxpayers in the 36% federal
income tax brackets who live in Massachusetts.
Future Strategies
We believe the Galaxy Massachusetts Municipal Bond Fund is well
positioned for the current interest rate environment. The newly issued
securities that the Fund bought during 1993 should outperform the rest
of the market if interest rates fall. At the same time, 40% of the
portfolio is now invested in municipals with maturities of less than 10
years. While the yields on these bonds are close to those for longer-
term municipals, the prices of the bonds should be less sensitive to
rising interest rates than the prices of longer-term issues.
Once we believe long-term rates have peaked, we will probably
lengthen the Fund's maturity to seek increased income. In the meantime,
we'll look for areas of strong municipal bond supply, where we can
invest at especially attractive prices and yields.
Galaxy Massachusetts Municipal Bond Fund
Growth of $10,000 investment*
The graphic presentation displayed here consists of a 3-D pyramid chart
representing growth of a $10,000 investment in the Galaxy Massachusetts
Municipal Bond Fund since the Fund's inception on 3/16/93. The shaded
chart features three distinct rows ("pyramids"), shaded in light gray
for the Fund's Trust Shares, charcoal for the Fund's Retail Shares and
gray for the Lehman Brothers Municipal Bond Index, as described in a
legend appearing below the chart. The chart shows how a $10,000
investment in Trust Shares in 1993 would have peaked at 10/31/93 and
ended at $9,904 in 1994; a $10,000 investment in Retail Shares in 1993
would have peaked at 10/31/93 and ended at $10,231 in 1994; and compares
these to the Lehman Brothers index, the results of which, for a
municipal bond fund for that period, show that a $10,000 investment in
1993 would have peaked at 10/31/93 and ended at $9,906 in 1994.
*Since inception on 3/12/93. The Lehman Brothers Municipal Bond Index
is an unmanaged index. Results for the index are calculated since
3/31/93 because the results are calculated at month-end only. Results
for the index do not reflect the expenses and investment management fees
incurred by the Fund.
David Lindsay has managed the Galaxy Massachusetts Municipal Bond Fund
since its inception in March 1993. He has managed fixed-income
portfolios for Fleet Investment Advisors since 1986.
Investment returns and principal values will vary with market conditions
so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Past performance is no guarantee of future
results. Total return figures in this report include changes in share
price, and reinvestment of dividends and capital gains distributions, if
any.
THE SHAWMUT FUNDS
SHAWMUT 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, 1001 LIBERTY AVENUE,
PITTSBURGH, PENNSYLVANIA 15222-3779, ON OCTOBER 30, 1995, AT 2:00 P.M.
EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS ROBERT C. ROSSELOT, KATHLEEN R.
O'BRIEN, STEPHEN R. NEWCAMP, COLLEEN GALLAGHER, AND PATRICIA F. CONNER,
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 SHAWMUT GROWTH AND INCOME EQUITY FUND HELD OF
RECORD BY THE UNDERSIGNED ON AUGUST 30, 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.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS KEEP THIS
PORTION FOR YOUR RECORDS.
_____________________________________________________________
(DETACH HERE AND RETURN THIS PORTION ONLY)
SHAWMUT 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 SHAWMUT 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.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
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.
THE SHAWMUT FUNDS
SHAWMUT 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 30, 1995, AT 2:00 P.M.
EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS ROBERT C. ROSSELOT, KATHLEEN R.
O'BRIEN, STEPHEN R. NEWCAMP, COLLEEN GALLAGHER, AND PATRICIA F. CONNER,
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 SHAWMUT SMALL CAPITALIZATION EQUITY FUND HELD OF
RECORD BY THE UNDERSIGNED ON AUGUST 30, 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.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS KEEP THIS
PORTION FOR YOUR RECORDS.
_____________________________________________________________
(DETACH HERE AND RETURN THIS PORTION ONLY)
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
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[--- 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 SHAWMUT 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.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
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.
THE SHAWMUT FUNDS
SHAWMUT 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 30, 1995, AT 2:00 P.M.
EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS ROBERT C. ROSSELOT, KATHLEEN R.
O'BRIEN, STEPHEN R. NEWCAMP, COLLEEN GALLAGHER, AND PATRICIA F. CONNER,
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 SHAWMUT CONNECTICUT MUNICIPAL MONEY MARKET FUND
HELD OF RECORD BY THE UNDERSIGNED ON AUGUST 30, 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.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS KEEP THIS
PORTION FOR YOUR RECORDS.
_____________________________________________________________
(DETACH HERE AND RETURN THIS PORTION ONLY)
SHAWMUT CONNECTICUT MUNICIPAL MONEY MARKET FUND
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
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[--- 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 SHAWMUT 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.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
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.
THE SHAWMUT FUNDS
SHAWMUT 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 30, 1995, AT 2:00 P.M.
EASTERN TIME.
THE UNDERSIGNED HEREBY APPOINTS ROBERT C. ROSSELOT, KATHLEEN R.
O'BRIEN, STEPHEN R. NEWCAMP, COLLEEN GALLAGHER, AND PATRICIA F. CONNER,
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 SHAWMUT MASSACHUSETTS MUNICIPAL MONEY MARKET
FUND HELD OF RECORD BY THE UNDERSIGNED ON AUGUST 30, 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.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS KEEP THIS
PORTION FOR YOUR RECORDS.
_____________________________________________________________
(DETACH HERE AND RETURN THIS PORTION ONLY)
SHAWMUT 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 SHAWMUT
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.
________________________ ________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
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.