EXHIBIT (d)(1)
THE GALAXY FUND
ADVISORY AGREEMENT
AGREEMENT made as of June 3, 2004 between THE GALAXY FUND, a
Massachusetts business trust, located in Boston, Massachusetts ("Galaxy"), and
COLUMBIA MANAGEMENT ADVISORS, INC., an Oregon corporation, located in Boston,
Massachusetts (the "Adviser").
WHEREAS, Galaxy is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Galaxy desires to retain the Adviser as investment adviser to
the Money Market Fund, Government Money Market Fund, Tax-Exempt Money Market
Fund, U.S. Treasury Money Market Fund, Institutional Government Money Market
Fund, Connecticut Municipal Money Market Fund, Massachusetts Municipal Money
Market Fund, Prime Reserves, Government Reserves, Tax-Exempt Reserves,
Institutional Money Market Fund, Institutional Treasury Money Market Fund and
New York Municipal Money Market Fund (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:
(a) Galaxy's Declaration of Trust, as filed with the State
Secretary of the Commonwealth of Massachusetts on March 31, 1986 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's Code of Regulations and any amendments thereto
(such Code of Regulations, as presently in effect and as it shall from
time to time be amended, is herein called the "Code of Regulations");
(c) Resolutions of Galaxy's Board of Trustees authorizing
the appointment of the Adviser and approving this Agreement;
(d) Galaxy's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission
("SEC") on April 14, 1986 and all amendments thereto;
(e) Galaxy's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") (Registration No.
33-4806) and under the 1940 Act as filed with the SEC on April 14, 1986
and all amendments thereto; and
(f) Galaxy's most recent prospectuses with respect to the
Funds (such prospectuses, as presently in effect and all amendments and
supplements thereto, herein called "Prospectuses").
Galaxy will furnish the Adviser from time to time with execution copies
of all amendments of, or supplements to, the foregoing.
2. Services. Galaxy 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's Board of Trustees, the Adviser
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
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 review,
monitor and report to the Board of Trustees on the performance and investment
procedures of any sub-adviser approved pursuant to Section 3; assist and consult
with any sub-adviser in connection with a Fund's continuous investment program;
and provide the Board of Trustees and any sub-adviser with such information
concerning relevant economic and political developments as the Adviser shall
deem appropriate or as shall be requested by the Board of Trustees. The Adviser
will provide the services under this Agreement in accordance with each Fund's
investment objective, policies and restrictions as stated in the Prospectuses
and resolutions of Galaxy's Board of Trustees applicable to such Fund.
3. Sub-Adviser. It is understood that the Adviser may from time to
time employ or associate with itself such person or persons as the Adviser
believes to be fitted to assist it in the performance of this Agreement (herein
a "Sub-Adviser"); provided, however, that the compensation of such person or
persons shall be paid by the Adviser and that the Adviser shall be as fully
responsible to Galaxy for the acts and omissions of any such person as it is for
its own acts and omissions; and provided, however, that the retention of any
Sub-Adviser shall be approved as may be required by the 1940 Act.
4. 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 those regulations
of the Board of Governors of the Federal Reserve System pertaining to
the investment advisory activities of bank holding companies which are
applicable to the Adviser;
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(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
with research advice and other services. Except as permitted by the SEC,
portfolio securities will not be purchased from or sold to the Adviser,
the Funds' distributor (the "Distributor"), or any affiliated person of
Galaxy, the Adviser, or the Distributor, 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 the
Distributor or an affiliate of the Distributor or the Adviser acting as
broker;
(d) will maintain all books and records with respect to the
securities transactions for the Funds, keep Galaxy's books of account
with respect to the Funds and furnish Galaxy's Board of Trustees such
periodic and special reports as the Board may request with respect to
the Funds;
(e) will treat confidentially and as proprietary information
of Galaxy 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, which approval shall not be
unreasonably withheld and may not be 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).
5. 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, 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 the Adviser agrees that it will not undertake any
activities which, in its judgment, will adversely affect the performance of its
obligations to the Funds under this Agreement.
6. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Funds are the property of Galaxy and further agrees to
surrender promptly to Galaxy any of such records upon
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Galaxy's request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
7. 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.
8. Compensation. For the services provided and the expenses assumed
with respect to the Funds pursuant to this Agreement, Galaxy will pay the
Adviser from the assets belonging to the Fund involved and the Adviser will
accept as full compensation therefor fees, computed daily and paid monthly, at
an annual rate of .40% of the net assets of the Money Market Fund, Government
Money Market Fund and Tax-Exempt Money Market Fund; .40% of the first
$750,000,000 of net assets of the U.S. Treasury Money Market Fund, Connecticut
Municipal Money Market Fund, Massachusetts Municipal Money Market Fund, Prime
Reserves, Government Reserves, Tax-Exempt Reserves and New York Municipal Money
Market Fund plus .35% of net assets of each such Fund in excess of $750,000,000;
and .20% of the net assets of the Institutional Government Money Market Fund,
Institutional Money Market Fund and Institutional Treasury Money Market Fund.
If in any fiscal year the aggregate expenses of any Fund (as defined
under the securities regulations of any state having jurisdiction over each
Fund) exceed the expense limitations of any such state, the Adviser will
reimburse Galaxy for such excess expenses to the extent described in any
undertaking provided by the Adviser to such state.
9. 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, 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.
10. Duration and Termination. This Agreement shall become effective
with respect to each Fund on the day such Fund first commences the public
offering of its shares and, unless sooner terminated, shall continue in effect
until August 10, 2005. Thereafter, if not terminated, this Agreement shall
continue in effect with respect to a particular Fund for successive twelve month
periods ending on August 10, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of Galaxy'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'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'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.)
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11. Amendment of this Agreement. No provisions 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 a particular Fund until approved by the vote of a
majority of the outstanding voting securities of that Fund.
12. Miscellaneous. The Adviser expressly agrees that notwithstanding
the termination of or failure to continue this Agreement with respect to a
particular 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 New
York law.
13. Names. 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 the principal office of Galaxy. The obligations of "The Galaxy Fund" entered
into 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 property of Galaxy, and all persons dealing with any class of
shares of Galaxy must look solely to the property of Galaxy belonging to such
class for the enforcement of any claims against Galaxy.
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.
THE GALAXY FUND
By /s/ Xxxx X. Xxxxxx
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President
COLUMBIA MANAGEMENT
ADVISORS, INC.
By /s/ Xxxxx Xxxxxx
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