Exhibit (5)
GALAXY FUND II
ADVISORY AGREEMENT
AGREEMENT made as of JUNE 30, 1994 between GALAXY FUND II, a Massachusetts
business trust, located in Stamford, Connecticut ("Galaxy II"), and FLEET
INVESTMENT ADVISORS INC. located in Rochester, New York (the "Adviser").
WHEREAS, Galaxy II is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, Galaxy II desires to retain the Adviser as investment adviser to
the investment companies listed on Schedule A attached hereto (individually, a
"Fund," and collectively, the "Funds");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. DELIVERY OF DOCUMENTS.
The Adviser acknowledges that it has received copies of each of the
following as certified by Galaxy II:
(a) Galaxy II's Declaration of Trust, as filed with the State Secretary of
the Commonwealth of Massachusetts on February 28, 1990 and all
amendments thereto (such Declaration of Trust, as presently in effect
and as it shall from time to time be amended, is herein called the
"Declaration of Trust");
(b) Galaxy II's By-laws and any amendments thereto (such By-laws as
presently in effect and as they shall from time to time be amended, is
herein called the By-laws);
(c) Resolutions of Galaxy's Board of Trustees authorizing the appointment
of the Adviser and approving this Agreement;
(d) Galaxy II's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC") on
February 28, 1990 and all amendments thereto;
(e) Galaxy II's Registration Statement on Form N-lA under the Securities
Act of 1933, as amended (the "1933 Act") Registr. No. 33-33617 and
under the 1940 Act as filed with the SEC on February 28, 1990 and all
amendments thereto; and
(f) Galaxy II's most recent prospectus with respect to the Funds (such
prospectus, as presently in effect and all amendments and supplements
thereto herein called a "Prospectus").
Galaxy II will furnish the Adviser from time to time with execution copies
of all amendments of, or supplements to, the foregoing.
2. SERVICES.
Galaxy II hereby appoints the Adviser to act as investment adviser to the
Funds for the period and on the terms set forth in this Agreement. Intending to
be legally bound, the Adviser accepts such appointment and agrees to furnish the
services required herein to the Funds for the compensation hereinafter provided.
Subject to the supervision of Galaxy II's Board of Trustees, the Adviser
will employ professional portfolio managers and will provide with respect to the
Funds a continuous investment program for each Fund, including investment
research and management with respect to all securities and investments and cash
equivalents in such Fund. The Adviser will monitor the correlation of the
performance of each index fund in relation to its index as provided in the
applicable Prospectus and Statement of Additional Information and will provide,
from time to time, information regarding such correlation to the Board of
Trustees of Galaxy II. The Adviser will use a computer model to determine and
monitor the investments for each index fund and the percentage of each such
Fund's assets to be invested in each investment. The Adviser will determine
from time to time what securities and other investments will be purchased,
retained or sold by each Fund and will arrange for the purchase and sale of
securities and other investments of each Fund. The Adviser will provide the
services under this Agreement in accordance with each Fund's investment
objective, policies and restrictions as stated in the Prospectus and Statement
of Additional Information and resolutions of Galaxy II's Board of Trustees
applicable to such Fund.
3. COVENANTS BY ADVISER.
The Adviser agrees with respect to the services provided to each Fund that
it:
(a) will conform with all Rules and Regulations of the SEC applicable to
it as an investment adviser and will in addition conduct its
activities under this Agreement in accordance with any applicable
regulations of federal regulatory agencies;
(b) will use the same skill and care in providing such services as it uses
in providing services to other investment companies;
(c) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer.
In placing orders with brokers and dealers, the Adviser will attempt
to obtain the best net price and the most favorable execution of its
orders. Consistent with this obligation, when the execution and price
offered by two or more brokers or dealers are comparable, the Adviser
may, in its discretion, purchase and sell portfolio securities from
and to brokers and dealers who provide Galaxy II or other accounts
over which the
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Adviser exercises investment discretion with research advice and other
services. The Adviser is authorized, in fulfilling its obligations
hereunder, to pay to a broker or dealer who provides brokerage and
research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) a commission for executing a
portfolio transaction for any Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities to the particular Fund and to Galaxy II. Except as
permitted by the 1940 Act, the portfolio securities will not be
purchased from or sold to the Adviser, or any affiliated person of
either Galaxy II, or the Adviser, PROVIDED, HOWEVER, that subject to
the provisions of this paragraph and to the extent permitted by law,
the Adviser may purchase or sell portfolio securities through an
affiliate of the Adviser acting as broker;
(d) will maintain all books and records with respect to the securities
transactions for the Funds, keep Galaxy II's books of account with
respect to the Funds and furnish Galaxy II's Board of Trustees with
reports concerning material regulatory or financial developments
affecting the Funds and such other periodic and special reports as the
Board may request with respect to the Funds;
(e) will treat confidentially and as proprietary information of Galaxy II
all records and other information relative to the Funds and prior,
present or potential shareholders, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior notification
to and approval in writing by Galaxy II, which approval shall not be
unreasonably withheld and will be deemed granted where the Adviser may
be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by Galaxy II).
4. SERVICES NOT EXCLUSIVE.
The services furnished by the Adviser hereunder are deemed not to be
exclusive, and nothing in this Agreement shall (i) prevent the Adviser or any
affiliated person (as defined in the 0000 Xxx) of the Adviser from acting as
investment adviser or manager for any other person or persons (a "client"),
including other management investment companies with investment objectives and
policies the same as or similar to those of any Fund or (ii) limit or restrict
the Adviser or any such affiliated person from buying, selling or trading any
securities or other investments (including any securities or other investments
which any Fund is eligible to buy) for its or their own accounts or for the
accounts of others for whom it or they may be acting; PROVIDED, HOWEVER, that
investments suitable and appropriate for the Funds will be allocated in
accordance with a formula believed by the Adviser to be equitable to each and
further that the Adviser agrees that it will not undertake any activities which,
in its reasonable judgment, will adversely affect the performance of its
obligations to any Fund under this Agreement.
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5. BOOKS AND RECORDS.
In compliance with the requirements of Rule 3la-3 under the 1940 Act, the
Adviser hereby agrees that all records which it maintains for Galaxy II are the
property of Galaxy II and further agrees to surrender promptly to Galaxy II any
of such records upon Galaxy II's request. The Adviser further agrees to
preserve for the periods prescribed by Rule 3la-2 under the 1940 Act the records
required to be maintained by Rule 3la-1 under the 1940 Act.
6. EXPENSES.
During the term of this Agreement, the Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities (including brokerage commissions, if any) purchased for
the Funds.
7. COMPENSATION.
For the services provided and the expenses assumed with respect to each
Fund pursuant to this Agreement, Galaxy II will pay the Adviser from the assets
belonging to such Fund and the Adviser will accept as full compensation therefor
fees, computed daily and paid monthly, at an annual rate of 0.10% of the average
daily net assets of each Fund other than the Municipal Bond Fund, and at an
annual rate of 0.25% of the average daily net assets of the Municipal Bond Fund.
For the purpose of determining fees payable to the Adviser, the value of each
Fund's net assets shall be computed at the times and in the manner specified in
the Prospectus and or Statement of Additional Information. Neither the Adviser
nor its affiliates will charge an annual account maintenance fee to defray the
costs of maintaining shareholder accounts for a period of at least two years
from the date of this Agreement to the shareholders of the Galaxy II Large
Company Index Fund, Small Company Index Fund, Utility Index Fund, Municipal Bond
Fund, and U.S. Treasury Index Fund.
If in any fiscal year the aggregate expenses of a Fund (as defined under
the securities regulations of any state having jurisdiction over the Fund)
exceed the expense limitations of any such state, the Adviser will reimburse
Galaxy II for such excess expenses to the extent required by state law in the
same proportion as its advisory fee bears to the Fund's aggregate fees for
investment advice and administration fee. A reduction pursuant to this
paragraph 7, if any, will be estimated and reconciled daily and paid on a
monthly basis.
8. LIMITATION OF LIABILITY.
The Adviser shall not be liable for any error of judgment or mistake of law
or for any loss suffered by Galaxy II, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its duties or from reckless disregard
of its obligations and duties under this Agreement.
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9. DURATION AND TERMINATION.
This Agreement shall become effective upon June 30, 1994 and, if not sooner
terminated, shall continue in effect until June 30, 1996. Thereafter, this
Agreement shall continue in effect with respect to each Fund for successive
twelve month periods ending on June 30, PROVIDED such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of Galaxy II's Board of Trustees who are not parties to this Agreement,
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by Galaxy II's Board of Trustees
or by the vote of a majority of the outstanding voting securities of such Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any Fund
at any time, without the payment of any penalty, by Galaxy II's Board of
Trustees or by vote of a majority of the outstanding voting securities of such
Fund, or by the Adviser, on 60 days' written notice (which notice may be waived
by the party entitled to receive the same). This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning as such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective with respect to any
Fund until approved by the vote of a majority of the outstanding voting
securities of that Fund.
11. MISCELLANEOUS.
The Adviser expressly agrees that notwithstanding the termination of or
failure to continue this Agreement with respect to any Fund, the Adviser shall
continue to be legally bound to provide the services required herein for the
other Funds for the period and on the terms set forth in this Agreement.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by
Massachusetts law.
12. NAMES; MASSACHUSETTS BUSINESS TRUST.
The names "Galaxy Fund II" and "Trustees of Galaxy Fund II" 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 February 22, 1990 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
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and the principal office of the Trust. The obligations of "Galaxy II" entered
into in the name or on behalf thereof by any of the Trustees, nominees,
representatives, agents, officers or employees, whether past, present or future,
are made not individually, but in such capacities, and are not binding upon any
of such individuals or the shareholders personally, but bind only the property
of Galaxy II, and all persons dealing with a Fund must look solely to the
property of Galaxy II belonging to such Fund for the enforcement of any claims
against Galaxy II.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
GALAXY FUND II (known as IBM Mutual Funds
until 6-30-94)
By /s/ Xxxx X. Xxxx
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FLEET INVESTMENT ADVISORS INC.
By /s/ Xxxxxxx X. Xxxxx
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SCHEDULE A
LARGE COMPANY INDEX FUND
SMALL COMPANY INDEX FUND
UTILITY INDEX FUND
U.S. TREASURY INDEX FUND
MUNICIPAL BOND FUND
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