GALAXY FUND /DE/, 497, 1996-03-20

GALAXY FUND /DE/
497, 1996-03-20

Previous: DEFINED ASSET FUNDS CORPORATE INCOME FD INTERM TERM SER 33, 485BPOS, 1996-03-20

Next: ANGELES INCOME PROPERTIES LTD V, 10KSB, 1996-03-20

<PAGE> 1

TRUST

THE GALAXY FUND

SHORT-TERM BOND FUND

PROSPECTUS

FEBRUARY 29, 1996

<PAGE> 2

================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND
OR BY ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING BY THE FUND OR
BY ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . 5
In General . . . . . . . . . . . . . . . . . 5
Other Investment Policies
and Risk Considerations . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . 12
PRICING OF SHARES . . . . . . . . . . . . . . 13
HOW TO PURCHASE AND REDEEM SHARES . . . . . . 14
Distributor . . . . . . . . . . . . . . . . 14
Purchase of Shares . . . . . . . . . . . . . 14
Redemption of Shares . . . . . . . . . . . . 15
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . 15
TAXES . . . . . . . . . . . . . . . . . . . . 16
Federal . . . . . . . . . . . . . . . . . . 16
State and Local . . . . . . . . . . . . . . 16
MANAGEMENT OF THE FUND . . . . . . . . . . . 17
Investment Adviser . . . . . . . . . . . . . 17
Authority to Act as Investment Adviser . . . 17
Administrator . . . . . . . . . . . . . . . 18
DESCRIPTION OF GALAXY AND ITS SHARES . . . . 18
Shareholder Services Plan . . . . . . . . . 19
Affiliate Agreement for Sub-Account Services 20
CUSTODIAN AND TRANSFER AGENT . . . . . . . . 20
EXPENSES . . . . . . . . . . . . . . . . . . 20
PERFORMANCE AND YIELD INFORMATION . . . . . . 20
MISCELLANEOUS . . . . . . . . . . . . . . . . 21
</TABLE>

================================================================================
<PAGE> 3

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For applications and information regarding initial
Westboro, Massachusetts purchases and current performance, call 1-800-628-0414.
01581-5108 For additional purchases, redemptions, exchanges and
other shareholder services, call 1-800-628-0413.
</TABLE>

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes a series of Galaxy's shares ("Trust Shares") which
represent interests in the Short-Term Bond Fund (the "Fund") offered by Galaxy.

The Fund's investment objective is to seek a high level of current income
consistent with preservation of capital. Under normal market and economic
conditions, the Fund will invest substantially all of its assets in debt
obligations of domestic and foreign issuers rated at the time of purchase
within the three highest ratings of Standard & Poor's Ratings Group ("S&P") or
Moody's Investors Service Inc. ("Moody's") (or which, if unrated, are of
comparable quality) and in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and "money market" instruments.

This prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc. and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue two additional series of shares in the Fund,
Retail A Shares and Retail B Shares (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet
Financial Group, Inc., its affiliates, their correspondent banks and other
qualified banks, savings and loans associations and broker/dealers on behalf of
their customers. Trust Shares, Retail A Shares and Retail B Shares represent
equal pro rata interests in the Fund, except they bear different expenses which
reflect the difference in the range of service provided to them. See
"Financial Highlights," "Management of the Fund" and Description of Galaxy and
Its Shares" herein.

The Fund is advised by Fleet Investment Advisors Inc. and sponsored and
distributed by 440 Financial Distributors, Inc., which is unaffiliated with
Fleet Investment Advisors Inc. and its parent, Fleet Financial Group, Inc., and
affiliates.

SHARES OF THE FUND 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 FUND ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS OR OTHER FACTORS SO
THAT SHARES OF THE FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

THESE SECURITIES 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 PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

FEBRUARY 29, 1996

<PAGE> 4

EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction expenses
imposed by the Fund with respect to its Trust Shares, and (ii) the operating
expenses for Trust Shares of the Fund. Examples based on the table are also
shown.

<TABLE>
<CAPTION>
SHORT TERM
SHAREHOLDER TRANSACTION EXPENSES BOND FUND
------------------------------------------------- ----------
<S> <C>
Sales Load . . . . . . . . . . . . . . . . . . . None
Sales Load on Reinvested Dividends . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
-------------------------------------------------
Advisory Fees (After Fee Waivers) . . . . . . . . .55%
12b-1 Fees . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . .33%
------------------------------------------------- --------

Total Fund Operating Expenses (After Fee Waivers) .88%
------------------------------------------------- ========
</TABLE>

EXAMPLE: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING
(1) A 5% ANNUAL RETURN, AND (2) REDEMPTION OF YOUR INVESTMENT AT THE END OF THE
FOLLOWING PERIODS:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Short-Term Bond Fund $9 $28 $48 $106
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Trust Shares of the
Fund will bear directly or indirectly. The information contained in the
Expense Summary and Example is based on expenses incurred by the Fund during
the last fiscal year, restated to reflect the expenses which the Fund expects
to incur during the current fiscal year on its Trust Shares. Without voluntary
fee waivers by the Investment Adviser, Advisory Fees would be .75% and Total
Fund Operating Expenses would be 1.08% for Trust Shares of the Fund. For more
complete descriptions of these costs and expenses, see "Management of the
Fund" and "Description of Galaxy and its Shares" in this Prospectus and the
financial statements and notes incorporated by reference into the Statement of
Additional Information. Any fees that are charged by affiliates of Fleet
Investment Advisors Inc. or other institutions directly to their customer
accounts for services related to an investment in Trust Shares of the Fund are
in addition to and not reflected in the fees and expenses described above.

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES AND RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN.

<PAGE> 5

FINANCIAL HIGHLIGHTS

This Prospectus describes the Trust Shares in the Fund. Galaxy is also
authorized to issue two additional series of shares in the Fund, Retail A
Shares and Retail B Shares. As described below under "Description of Galaxy
and Its Shares," Trust Shares, Retail A Shares and Retail B Shares represent
equal pro rata interests in the Fund, except that (i) effective October 1, 1994,
Retail A Shares of the Fund bear the expenses incurred under Galaxy's
Shareholder Services Plan for Retail A Shares and Trust Shares at an annual
rate of up to .15% of the average daily net asset value of the Fund's
outstanding Retail A Shares, (ii) Retail B Shares of the Fund bear the expenses
incurred under Galaxy's Distribution and Services Plan for Retail B shares at
an annual rate of up to .80% of the average daily net asset value of the Fund's
outstanding Retail B Shares, and (iii) Trust Shares, Retail A Shares and Retail
B Shares bear differing transfer agency expenses. Retail Shares are offered
under a separate prospectus.

The financial highlights presented below have been audited by Cooper's &
Lybrand L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders dated October 31, 1995. Such financial
highlights should be read in conjunction with the financial statements
contained in the Annual Report to Shareholders and incorporated by reference
into the Statement of Additional Information. Information in the financial
highlights for periods prior to the fiscal year ended October 31, 1994 reflects
the investment results of both Trust Shares and Retail A Shares of the Fund.
More information about the performance of the Fund is also contained in the
Annual Report to Shareholders, which may be obtained without charge by
contacting Galaxy at its telephone numbers or address provided above.

<PAGE> 6

SHORT-TERM BOND FUND(1)

(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD.)

YEAR ENDED
OCTOBER 31,
1995 1994 YEAR ENDED PERIOD ENDED
-------------------- OCTOBER 31,(2) OCTOBER 31,
TRUST SHARES 1993 1992(1),(3)
-------------------- -------------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $ 9.73 $ 10.30 $ 10.09 $ 10.00
------- ------- ------- -------
Income from Investment Operations
Net Investment Income(3),(4) . . . . . . . . . 0.57 0.44 0.47 0.42
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . 0.33 (0.51) 0.22 0.09
------- ------- ------- -------
Total from Investment Operations: . . . . . . 0.90 (0.07) 0.69 0.51
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . (0.57) (0.44) (0.47) (0.42)
Dividends from net realized capital gains . . -- -- (0.01) --
Dividends in excess of net realized
capital gains . . . . . . . . . . . . . . . -- (0.06) -- --
------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . . . (0.57) (0.50) (0.48) (0.42)
------- ------- ------- -------
Net increase (decrease) in net asset value . . 0.33 (0.57) 0.21 0.09
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . $ 10.06 $ 9.73 $ 10.30 $ 10.09
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . 9.55% (0.66%) 6.98% 5.21%(5)

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . $35,088 $39,843 $85,211 $57,403(3)
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . 5.79% 4.45% 4.51% 5.77%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 0.74% 0.91% 0.86% 0.90%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 1.02% 1.11% 1.06% 1.20%(6)
Portfolio Turnover Rate . . . . . . . . . . . . 289% 233% 100% 114%(5)
</TABLE>

- -------------------

(1) The Fund commenced operations on December 30, 1991.

(2) For periods prior to the year ended October 31, 1994, the per share
amounts and selected ratios reflect the financial results of both Retail
and Trust Shares. On September 7, 1995, Retail Shares of the Fund were
redesignated "Retail A Shares."

(3) Net investment income per share for Trust Shares before waiver of fees by
the Investment Adviser and/or Administrator for the years ended October
31, 1995 and 1994 were $0.54 and $0.42, respectively.

(4) Net investment income per share before waiver of fees by the Investment
Adviser and/or Administrator for the years ended October 31, 1993 and for
the period ended October 31, 1992 were $0.45 and $0.40, respectively.

(5) Not Annualized.

(6) Annualized.

<PAGE> 7

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek a high level of current income
consistent with preservation of capital. The Fund will invest substantially
all of its assets in corporate debt obligations of domestic and foreign
corporations, such as bonds and debentures, obligations convertible into common
stock, "money market" instruments such as bank obligations and commercial
paper, obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and asset-backed and mortgage-backed securities. The Fund may
also enter into interest rate futures contracts to hedge against changes in
market values. See "Other Investment Policies and Risk Considerations." Under
normal market and economic conditions, at least 65% of the Fund's total assets
will be invested in bonds and debentures, subject to the quality standards
described below. The Fund will not invest in common stock, and any common
stock received through the conversion of convertible debt obligations will be
sold in an orderly manner as soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in debt obligations rated at the time of
purchase within the three highest ratings of S&P or Moody's (or which, if
unrated, are determined by Fleet Investment Advisors Inc. (the "Investment
Adviser" or "Fleet") to be of comparable quality) and in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and "money
market" instruments such as those listed below under "Other Investment Policies
and Risk Considerations." Unrated securities will be determined to be of
comparable quality to rated debt obligations if, among other things, other
outstanding obligations of the issuers of such securities are rated A or
better. When, in the opinion of the Investment Adviser, a defensive investment
posture is warranted, the Fund may invest temporarily and without limitation in
high-quality, short-term money market instruments. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The Fund may also invest, from time to time, in municipal securities. The
purchase of municipal securities may be advantageous when, as a result of
prevailing economic, regulatory or other circumstances, the performance of such
securities, on a pretax basis, is comparable to that of corporate or U.S. debt
obligations. In addition, the Fund may invest in obligations issued or
guaranteed by foreign governments or any of their political subdivisions or
instrumentalities. Such obligations include debt obligations issued by
Canadian Provincial Governments, which are similar to U.S. municipal securities
except that the income derived therefrom is fully subject to U.S. Federal
taxation. These instruments are denominated in either Canadian or U.S. dollars
and have an established over-the-counter market in the United States. Also
included are debt obligations of supranational entities. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction or development and
international banking institutions and related governmental agencies. Examples
of those include the International Bank for Reconstruction and Development
("World Bank"), the Asian Development Bank and the InterAmerican Development
Bank. Obligations of supranational entities may be supported by appropriated
but unpaid commitments of their member countries and there is no assurance that
those commitments will be undertaken or met in the future. The Fund may not
invest more than 35% of its total assets in the securities of foreign issuers.

Under normal conditions the Fund's portfolio securities will have an
average weighted maturity of less than three years.

The value of the Fund's portfolio securities will generally vary inversely
with changes in prevailing interest rates. See "Other Investment Policies and
Risk Considerations" below for information regarding additional investment
policies of the Short-Term Bond Fund.

The Investment Adviser will use its best efforts to achieve the Fund's
investment objective, although its

<PAGE> 8

achievement cannot be assured. The investment objective of the Fund may not be
changed without the approval of the holders of a majority of its outstanding
shares (as defined under "Miscellaneous"). Except as noted below under
"Investment Limitations," the Fund's investment policies may be changed without
shareholder approval. An investor should not consider an investment in the
Fund to be a complete investment program.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations And Money Market Instruments

The Fund may, in accordance with its investment policies, invest from time
to time in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and in "money market" instruments, including bank
obligations and commercial paper.

Obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities include U.S. Treasury securities, which differ only in their
interest rates, maturities and time of issuance: Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one
to ten years; and Treasury Bonds generally have initial maturities of more than
ten years. Obligations of certain agencies and instrumentalities of the U.S.
Government, such as those of the Government National Mortgage Association, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as those of
the Student Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. Some of these instruments may be variable or
floating rate instruments.

Bank obligations include bankers' acceptances, negotiable certificates of
deposit, and non-negotiable time deposits issued for a definite period of time
and earning a specified return by a U.S. bank which is a member of the Federal
Reserve System or is insured by the Federal Deposit Insurance Corporation, or
by a savings and loan association or savings bank which is insured by the
Federal Deposit Insurance Corporation. Bank obligations also include U.S.
dollar-denominated obligations of foreign branches of U.S. banks or of U.S.
branches of foreign banks, all of the same type as domestic bank obligations.
Investment in bank obligations is limited to the obligations of financial
institutions having more than $1 billion in total assets at the time of
purchase.

Investments in obligations of foreign branches of U.S. banks and of U.S.
branches of foreign banks may subject a Fund to additional risks, including
future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations. In addition,
foreign branches of U.S. banks and U.S. branches of foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks. The Fund will invest in the obligations of
U.S. branches of foreign banks or foreign branches of U.S. banks only when the
Investment Adviser believes that the credit risk with respect to the instrument
is minimal.

Commercial paper may include variable and floating rate instruments which
are unsecured instruments that

<PAGE> 9

permit the indebtedness thereunder to vary. Variable rate instruments provide
for periodic adjustments in the interest rate. Floating rate instruments
provide for automatic adjustment of the interest rate whenever some other
specified interest rate changes. Some variable and floating rate obligations
are direct lending arrangements between the purchaser and the issuer and there
may be no active secondary market. However, in the case of variable and
floating rate obligations with a demand feature, the Fund may demand payment of
principal and accrued interest at a time specified in the instrument or may
resell the instrument to a third party. In the event that an issuer of a
variable or floating rate obligation defaulted on its payment obligation, the
Fund might be unable to dispose of the note because of the absence of a
secondary market and could, for this or other reasons, suffer a loss to the
extent of the default. The Fund may also purchase Rule 144A securities. See
"Investment Limitations."

Types of Municipal Securities

The two principal classifications of municipal securities which may be
held by the Fund are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Fund 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 Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation securities is unable to meet its debt service obligations 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.

Variable and Floating Rate Municipal Securities

Municipal securities purchased by the Fund may include rated and unrated
variable and floating rate tax-exempt instruments.

There may be no active secondary market with respect to a particular
variable or floating rate instrument. Nevertheless, the periodic
readjustments of their interest rates tend to assure that their value to the
Fund will approximate their par value. Illiquid variable and floating rate
instruments (instruments which are not payable upon seven days' notice and do
not have an active trading market) that are acquired by the Fund are subject
to the 10% limit described in Investment Limitation No. 3 under "Investment
Limitations" in this Prospectus.

Repurchase and Reverse Repurchase Agreements

The Fund may purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually specified date and price
("repurchase agreements"). Repurchase agreements will be entered into only
with financial institutions such as banks and broker/dealers which are deemed
to be creditworthy by the Investment Adviser under guidelines approved by
Galaxy's Board of Trustees. The Fund will not enter into repurchase agreements
with Fleet or any of its affiliates. Unless a repurchase agreement has a
remaining maturity of seven days or less or may be terminated on demand by
notice of seven days or less, the repurchase agreement will be considered an
illiquid security and will be subject to the 10% limit described in Investment
Limitation No. 3 under "Investment Limitations" in this Prospectus.

<PAGE> 10

The seller under a repurchase agreement will be required to maintain the
value of the securities which are subject to the agreement and held by the Fund
at not less than the agreed upon repurchase price. If the seller defaulted on
its repurchase obligation, the Fund would suffer a loss to the extent that the
proceeds from a sale of the underlying securities (including accrued interest)
were less than the repurchase price (including accrued interest) under the
agreement. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action.

The Fund may also borrow funds for temporary purposes by selling portfolio
securities to financial institutions such as banks and broker/dealers and
agreeing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). Reverse repurchase agreements involve the risk that
the market value of the securities sold by the Fund may decline below the
repurchase price. The Fund would pay interest on amounts obtained pursuant to
a reverse repurchase agreement.

Securities Lending

The Fund may lend its portfolio securities to financial institutions such
as banks and broker/dealers in accordance with the investment limitations
described below. Such loans would involve risks of delay in receiving
additional collateral or in recovering the securities loaned or even loss of
rights in the collateral, should the borrower of the securities fail
financially. Any portfolio securities purchased with cash collateral would
also be subject to possible depreciation. Loans will generally be short-term,
will be made only to borrowers deemed by the Investment Adviser to be of good
standing and only when, in the Investment Adviser's judgment, the income to be
earned from the loan justifies the attendant risks. The Fund currently intends
to limit the lending of its portfolio securities so that, at any given time,
securities loaned by the Fund represent not more than one-third of the value of
its total assets.

Investment Company Securities

The Fund may invest in securities issued by other investment companies
which invest in high quality, short-term debt securities and which determine
their net asset value per share based on the amortized cost or penny-rounding
method. Investments in other investment companies will cause the Fund (and,
indirectly, the Fund's shareholders) to bear proportionately the costs incurred
in connection with the investment companies' operations. Securities of other
investment companies will be acquired by the Fund within the limits prescribed
by the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund
currently intends to limit its investments so that, as determined immediately
after a securities purchase is made: (a) not more than 5% of the value of its
total assets will be invested in the securities of any one investment company;
(b) not more than 10% of the value of its total assets will be invested in the
aggregate in securities of other investment companies as a group; (c) not more
than 3% of the outstanding voting stock of any one investment company will be
owned by the Fund; and (d) not more than 10% of the outstanding voting stock of
any one closed-end investment company will be owned in the aggregate by the
Fund, other investment portfolios of Galaxy, and any other investment companies
advised by the Investment Adviser. Any change by the Fund in the future with
respect to its policies concerning investments in securities issued by other
investment companies will be made only in accordance with the requirements of
the 1940 Act.

Interest Rate Futures Contracts

<PAGE> 11

Commodity Futures Trading Commission ("CFTC") and the Securities and Exchange
Commission ("SEC"). The purchase of futures instruments in connection with
securities which the Fund intends to purchase will require an amount of cash
and/or U.S. Government obligations, equal to the market value of the
outstanding futures contracts, to be deposited in a segregated account to
collateralize the position and thereby insure that the use of such futures is
unleveraged. The Fund will limit its hedging transactions in futures contracts
so that, immediately after any such transaction, the aggregate initial margin
that is required to be posted by the Fund under the rules of the exchange on
which the futures contract is traded does not exceed 5% of the Fund's total
assets after taking into account any unrealized profits and unrealized losses
on the Fund's open contracts. In addition, no more than one-third of the
Fund's total assets may be covered by such contracts.

Transactions in futures as a hedging device may subject the Fund to a
number of risks. Successful use of futures by the Fund is subject to the
ability of the Investment Adviser to predict correctly movements in the
direction of the market. In addition, there may be an imperfect correlation,
or no correlation at all, between movements in the price of futures contracts
and movements in the price of the instruments being hedged. There is no
assurance that a liquid market will exist for any particular futures contract
at any particular time. Consequently, the Fund may realize a loss on a futures
transaction that is not offset by a favorable movement in the price of
securities which the Fund holds or intends to purchase or may be unable to
close a futures position in the event of adverse price movements. Additional
information concerning futures transactions is contained in Appendix B to the
Statement of Additional Information.

When-Issued, Forward Commitment and Delayed Settlement Transactions

The Fund may purchase eligible securities on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. The Fund may also
purchase or sell eligible securities on a "delayed settlement" basis.
When-issued and forward commitment transactions, which involve a commitment by
the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the
Fund to lock in a price or yield on a security it owns or intends to purchase,
regardless of future changes in interest rates. Delayed settlement describes
settlement of a securities transaction in the secondary market which will occur
sometime in the future. When-issued, forward commitment and delayed settlement
transactions involve the risk, however, that the yield or price obtained in a
transaction may be less favorable than the yield or price available in the
market when the securities delivery takes place. It is expected that forward
commitments, when-issued purchases and delayed settlements will not exceed 25%
of the value of the Fund's total assets absent unusual market conditions. In
the event the Fund's forward commitments, when-issued purchases and delayed
settlements ever exceeded 25% of the value of its total assets, the Fund's
liquidity and the ability of the Investment Adviser to manage the Fund may be
adversely affected. The Fund does not intend to engage in when-issued
purchases, forward commitments and delayed settlements for speculative
purposes, but only in furtherance of their investment objectives.

Stand-By Commitments

The Fund may acquire "stand-by commitments" with respect to Municipal
Securities it holds. Under a stand-by commitment, a dealer agrees to purchase,
at the Fund's option, specified Municipal Securities at a specified price. The
Fund will acquire stand-by commitments solely to facilitate portfolio liquidity
and does not intend to exercise its rights thereunder for trading purposes. The
Fund expects that stand-by commitments will generally be available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, the Fund may pay for a stand-by commitment either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitment (thus reducing the yield otherwise available for the same
securities). Stand-by commitments acquired by the Fund would be valued at zero
in determining the Fund's net asset value.

<PAGE> 12

Asset-Backed Securities

The Fund may purchase asset-backed securities, which represent a
participation in, or are secured by and payable from, a stream of payments
generated by particular assets, most often a pool of assets similar to one
another. Assets generating such payments will consist of such instruments as
motor vehicle installment purchase obligations, credit card receivables and
home equity loans. Payment of principal and interest may be guaranteed up to
certain amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with entities issuing the securities. The
estimated life of an asset-backed security varies with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of the asset-backed security, will be primarily
a function of current market rates, although other economic and demographic
factors will be involved. The Fund will not invest more than 10% of its total
assets in asset-backed securities. See "Asset-Backed Securities" in the
Statement of Additional Information.

Mortgage-Backed Securities

The Fund may invest in mortgage-backed securities (including
collateralized mortgage obligations) that represent pools of mortgage loans
assembled for sale to investors by various governmental agencies and
government-related organizations, such as the Government National Mortgage
Association, the Federal National Mortgage Association, and the Federal Home
Loan Mortgage Corporation. Mortgage-backed securities provide a monthly
payment consisting of interest and principal payments. Additional payment may
be made out of unscheduled repayments of principal resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. To the extent that the 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 the Fund from investing in mortgaged-backed securities may be affected
by reinvestment of prepayments at higher or lower rates than the original
investment.

Other Mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers, and special purpose
entities. These private mortgage-backed securities may be supported by U.S.
Government mortgage-backed securities or some form of non- government credit
enhancement. Mortgage-backed securities have either fixed or adjustable
interest rates. The rate of return on mortgage-backed securities may be
affected by prepayments of 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, like other debt securities, the values of mortgage-related
securities, including government and government-related mortgage obligations
are considered to be investment companies, investments in such obligations will
be subject to the percentage limitations described under "Investment Company
Securities" above.

Stripped Obligations

To the extent consistent with its investment objective, the Fund may
purchase 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. These participations, which
may be issued by the U.S. Government or by private issuers, such as banks and
other institutions, are issued at their "face value," and may include stripped
mortgage-backed securities ("SMBS"), which are derivative multi-class mortgage
securities. Stripped securities, particularly SMBS, may exhibit greater price
volatility than ordinary debt securities because of the manner in which their
principal and interest are returned to investors.

<PAGE> 13

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 which are not issued by
the U.S. Government (or a U.S. Government agency or instrumentality) are
considered illiquid. Obligations issued by the U.S. Government may be
considered liquid under guidelines established by the Trust's Board of Trustees
if they can be disposed of promptly in the ordinary course of business at a
value reasonably close to that used in the calculation of net asset value per
share.

Guaranteed Investment Contracts

The Fund may invest in guaranteed investment contracts ("GICs") issued by
United States and Canadian insurance companies. Pursuant to GICs, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund payments at
negotiated, floating or fixed interest rates. A GIC is a general obligation of
the issuing insurance company and not a separate account. The purchase price
paid for a GIC becomes part of the general assets of the insurance company, and
the contract is paid from the company's general assets. The Fund will only
purchase GICs that are issued or guaranteed by insurance companies that at the
time of purchase are rated at least AA by S&P or receive a similar high quality
rating from a nationally recognized service which provides ratings of insurance
companies. GICs are considered illiquid securities and will be subject to the
Fund's 10% limitation on such investments, unless there is an active and
substantial secondary market for the particular instrument and market
quotations are readily available.

Bank Investment Contracts

The Fund may invest in bank investment contracts ("BICs") issued by banks
that meet the quality and asset size requirements for banks described above
under "U.S. Government Obligations and Money Market Instruments." Pursuant to
BICs, cash contributions are made to a deposit account at the bank in exchange
for payments at negotiated, floating or fixed interest rates. A BIC is a
general obligation of the issuing bank. BICs are considered illiquid
securities and will be subject to the Fund's 10% limitation on such
investments, unless there is an active and substantial secondary market for the
particular instrument and market quotations are readily available.

Foreign Securities

Investments by the Fund in foreign securities 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.

Although the Fund may invest in securities denominated in foreign
currencies, the Fund values its securities

<PAGE> 14

and other assets in U.S. dollars. As a result, the net asset value of the
Fund's shares may fluctuate with U.S. dollar exchange rates as well as with
price changes of the Fund's foreign securities in the various local markets and
currencies. Thus, an increase in the value of the U.S. dollar compared to the
currencies in which the Fund makes its foreign investments could reduce the
effect of increases and magnify the effect of decreases in the price of the
Fund's foreign 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 foreign 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.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if the
Investment Adviser believes that such a disposition is consistent with the
Fund's investment objective. Portfolio investments may be sold for a variety of
reasons, such as a more favorable investment opportunity or other circumstances
bearing on the desirability of continuing to hold such investments. A
portfolio turnover rate of 100% or more is considered high, although the rate
of portfolio turnover will not be a limiting factor in making portfolio
decisions. A high rate of portfolio turnover may result in the realization of
substantial capital gains and involves correspondingly greater transaction
costs. To the extent that net capital gains are realized, distributions
derived from such gains are treated as ordinary income for Federal income tax
purposes. See "Financial Highlights" and "Taxes -- Federal."

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy and
may not be changed with respect to the Fund without the affirmative vote of the
holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Other investment limitations that also cannot be changed
without such a vote of shareholders are contained in the Statement of
Additional Information under "Investment Objectives and Policies."

The Fund may not:

1. Make loans, except that (i) the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, and may
enter into repurchase agreements with respect to portfolio securities, and
(ii) the Fund may lend portfolio securities against collateral consisting of
cash or securities which are consistent with the 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.

2. Borrow money or issue senior securities, except from domestic banks
for temporary purposes and then in amounts not in excess of 10% of the value
of its total assets at the time of such borrowing (provided that the Fund may
borrow pursuant to reverse repurchase agreements in accordance with its
investment policies and in amounts not in excess of 10% of the value of its
total assets at the time of such borrowing); or mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time of such borrowing. The Fund
will not purchase securities while borrowings (including reverse repurchase
agreements) in excess of 5% of its total assets are outstanding.

3. Invest more than 10% of the value of its net assets in illiquid
securities, including repurchase agreements with remaining maturities in
excess of seven days, time deposits with maturities in excess of seven days,
restricted securities, non-negotiable time deposits and other securities
which are not readily marketable.

<PAGE> 15

4. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total assets
would be invested in such issuer, except that up to 25% of the value of its
total assets may be invested without regard to this limitation.

In addition, the Fund may not purchase any securities which would cause
25% or more of the value of the Fund's total assets at the time of purchase to
be invested in the securities of one or more issuers conducting their principal
business activities in the same industry; provided, however that (a) there is
no limitation with respect to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, (b) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents,
and (c) utilities will be classified according to their services. (For
example, gas, gas transmission, electric and gas, electric and telephone each
will be considered a separate industry.)

With respect to Investment Limitation No. 2 above, the Fund intends to
limit any borrowings (including reverse repurchase agreements) to not more than
10% of the value of its total assets at the time of such borrowing.

The Securities and Exchange Commission ("SEC") has adopted Rule 144A which
allows for a broader institutional trading market for securities otherwise
subject to restrictions on resale to the general public. Rule 144A establishes
a "safe harbor" from the registration requirements of the Securities Act of
1933 for resales of certain securities to qualified institutional buyers. The
Fund's investment in Rule 144A securities could have the effect of increasing
the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the 10% limitation on purchases of illiquid instruments
described under Investment Limitation No. 3 above, Rule 144A securities will
not be considered illiquid if the Investment Adviser has determined, in
accordance with guidelines established by the Board of Trustees, that an
adequate trading market exists for such securities.

If a percentage limitation is satisfied at the time of investment, a later
increase in such percentage resulting from a change in the value of the Fund's
portfolio securities will not constitute a violation of the limitation.

PRICING OF SHARES

Net asset value per share of the Fund is determined as of the close of
regular trading hours on the New York Stock Exchange (the "Exchange"),
currently 4:00 p.m. (Eastern Time). Net asset value per share is determined on
each day on which the Exchange is open for trading. Currently, the holidays
which Galaxy observes are New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Net asset value per share of the Fund for purposes of pricing sales and
redemptions is calculated separately for each series of shares by dividing the
value of all securities and other assets attributable to a particular series of
shares of the Fund, less the liabilities attributable to the shares of that
series of the Fund, by the number of outstanding shares of that series of the
Fund.

<PAGE> 16

values from dealers; and general market conditions. The Service may also
employ electronic data processing techniques and matrix systems to determine
value. Short-term securities are valued at amortized cost, which approximates
market value. The amortized cost method involves valuing a security at its
cost on the date of purchase and thereafter assuming a constant amortization to
maturity of the difference between the principal amount due at maturity and
cost.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Fund are sold on a continuous basis by Galaxy's distributor,
440 Financial Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc. d/b/a 440 Financial). The Distributor is a
registered broker/dealer with principal offices located at 290 Donald Lynch
Boulevard, Marlboro, Massachusetts 01752.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts at bank and trust institutions, including
subsidiaries of Fleet Financial Group, Inc. and to participants in employer-
sponsored defined contribution plans ("Institutions"). Trust Shares sold to
such investors ("Customers") will be held of record by Institutions. The
Institution is responsible for transmitting to the Distributor orders for
purchases of Trust Shares and for wiring required funds in payment to Galaxy's
custodian on a timely basis. The Distributor is responsible for transmitting
such orders to Galaxy's transfer agent for execution. Beneficial ownership of
Trust Shares will be recorded by the Institution and reflected in the account
statements it provides to its Customers. Confirmations of purchases and
redemptions of Trust Shares will be sent to the appropriate Institution.
Purchases of Trust Shares will be effected only on days on which the
Distributor, Galaxy's custodian and the purchasing Institution are open for
business ("Business Days").

A purchase order for Trust Shares received by the Distributor on a
Business Day prior to the close of regular trading hours on the Exchange
(currently, 4:00 p.m. Eastern Time) will be priced at the net asset value
determined on that day, provided that Galaxy's custodian receives the purchase
price in Federal funds or other immediately available funds prior to 4:00 p.m.
on the following Business Day, at which time the order will be executed. If
funds are not received by such date and time, the order will not be accepted
and notice thereof will be given promptly to the Institution which submitted
the order. Payments for orders which are not received or accepted will be
returned after prompt inquiry to the sending Institution. If an Institution
accepts a purchase order from its Customer on a non-Business Day, the order
will not be executed until it is received and accepted by the Distributor on a
Business Day in accordance with the foregoing procedures.

Galaxy reserves the right to reject any purchase order, in whole or in
part.

The issuance of Trust Shares is recorded on the books of the Fund and
share certificates will not be issued.

Customers may purchase Trust Shares through procedures established by
Institutions in connection with the requirements of their Customer accounts.
Such accounts may include discretionary investment management accounts,
custodial accounts, agency accounts and different types of tax-advantaged
accounts (including defined contribution plans). Investors should contact
their Institution (or, in the case of employee plans, their employer) for
further information concerning the types of eligible Customer accounts and the
related purchase and redemption procedures.

<PAGE> 17

Although Galaxy does not impose any minimum initial or subsequent
investment requirement with respect to Trust Shares, Institutions may impose
such requirements on the accounts maintained by its Customers, and may also
require that Customers maintain minimum account balances with respect to Trust
Shares.

Trust Shares of the Fund may also be available for purchase through
different types of retirement plans offered by the Institutions to its
Customers. Information pertaining to such plans is available directly from the
Institution.

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their Institution. It is the
responsibility of the Institution to transmit redemption orders to the
Distributor and to credit its Customers' accounts with the redemption proceeds
on a timely basis. No charge for wiring redemption payments is imposed by
Galaxy, although the Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

Redemption orders are effected at the net asset value per share next
determined after receipt and acceptance of the order by the Distributor.
Payment for redemption orders received by the Distributor on a Business Day
will normally be wired the following Business Day to the Institution. Payment
for redemption orders which are received on a non-Business Day will normally be
wired to the Institution on the next Business Day. However, in both cases
Galaxy reserves the right to wire redemption proceeds within seven days after
receiving the redemption order if, in its judgment, an earlier payment could
adversely affect the Fund.

Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized.

The Fund reserves the right to redeem shares in any account at their net
asset value involuntarily, upon 60 days' written notice, if the value of the
account is less than $250 as a result of redemptions.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Fund are declared daily and
paid monthly. Dividends on each share of the Fund are determined in the same
manner, irrespective of series, but may differ in amount because of the
difference in the expenses paid by the respective series. Net realized capital
gains are distributed at least annually.

Dividends and distributions will be paid in cash. Customers may elect to
have their dividends reinvested in additional Trust Shares of the Fund at the
net asset value of such shares on the ex-dividend date. Such election, or any
revocation thereof, must be communicated in writing by an Institution on behalf
of Customers to Galaxy's transfer agent and will become effective with respect
to dividends paid after its receipt. The crediting and payment of dividends to
Customers will be in accordance with the procedures governing such Customers'
accounts at their Institution.

<PAGE> 18

TAXES

FEDERAL

In General

The Fund qualified during its last taxable year and intends to continue to
qualify as a "regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). Such qualification generally relieves the Fund
of liability for federal income taxes to the extent the Fund's earnings are
distributed in accordance with the Code.

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its tax-exempt interest income (if any) net of certain
deductions for such year. In general, the Fund's investment company taxable
income will be its taxable income, including dividends, interest and short-
term capital gains (the excess of net short-term capital gain over net long-
term capital loss), subject to certain adjustments and excluding the excess of
any net long-term capital gain for the taxable year over the net short-term
capital loss, if any, for such year. The policy of the Fund is to distribute
as dividends substantially all of its investment company taxable income and any
net tax-exempt interest income each year. Such dividends will be taxable as
ordinary income to the Fund's shareholders who are not currently exempt from
Federal income taxes, whether such dividends are received in cash or reinvested
in additional shares. (Federal income taxes for distributions to an IRA or a
qualified retirement plan are deferred under the Code.) It is anticipated that
no part of any distribution will qualify for the dividends received deduction
for corporations.

Distribution by the Fund of the excess of its respective net long-term
capital gain over its net short-term capital loss is taxable to shareholders as
long-term capital gain, regardless of how long the shareholder has held shares
and whether such gains are received in cash or reinvested in additional shares.
Such distributions are not eligible for the dividends received deduction.

Dividends declared in October, November or December of any year which are
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by the Fund on December
31 of such year if such dividends are actually paid during January of the
following year.

If you are considering buying Shares of the Fund on or just before the
record date of a dividend, you should be aware that the amount of the
forthcoming dividend payment, although in effect a return of capital, generally
will be taxable to you.

A taxable gain or loss may be realized by a shareholder upon redemption,
transfer or exchange of Fund shares depending upon the tax basis of such shares
and their price at the time of redemption, transfer or exchange.

The foregoing summarizes some of the important Federal tax considerations
generally affecting the Fund and its shareholders and is not intended as a
substitute for careful tax planning. Accordingly, potential investors in the
Fund should consult their tax advisers with specific reference to their own tax
situation. Shareholders will be advised annually as to the Federal income tax
consequences of distributions made each year.

STATE AND LOCAL

Investors are advised to consult their tax advisers concerning the
application of state and local taxes, which may have different consequences
than those of the Federal income tax law described above.

<PAGE> 19

MANAGEMENT OF THE FUND

The business and affairs of the Fund are managed under the direction of
Galaxy's Board of Trustees. The Fund's Statement of Additional Information
contains the names of and general background information concerning the
Trustees.

INVESTMENT ADVISER

Fleet, with principal offices at 50 Kennedy Plaza, 2nd Floor, Providence,
Rhode Island 02903, serves as the Investment Adviser to the Fund. Fleet is an
indirect wholly-owned subsidiary of Fleet Financial Group, Inc., a registered
bank holding company with total assets of approximately $84.8 billion at
December 31, 1995. Fleet, which commenced operations in 1984, also provides
investment management and advisory services to other individual and
institutional clients, and manages the other investment portfolios of Galaxy:
the Money Market, Government, Tax-Exempt, U.S. Treasury, Institutional Treasury
Money Market, Connecticut Municipal Money Market, Massachusetts Municipal Money
Market, Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity, Asset Allocation, Growth and Income, Small Cap Value,
Intermediate Government Income, Corporate Bond, High Quality Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds.

Subject to the general supervision of Galaxy's Board of Trustees and in
accordance with the Fund's investment policies, Fleet manages the Fund, makes
decisions with respect to and places orders for all purchases and sales of its
portfolio securities and maintains related records.

Effective March 1, 1996, the portfolio manager of the Fund is Perry J.
Vieth. In this capacity, Mr Vieth is primarily responsible for the day-to-day
management of the Fund's investment portfolio. Mr. Vieth, a Vice President,
has over eleven years of experience as an investment manager and previously
managed the Shawmut Limited Term Income Fund for Shawmut Investment Advisors
and was a manager of Fuji Securities, Inc.'s derivative products group. He
also was responsible for fixed income risk management for NationsBank CRT.

For the services provided and expenses assumed with respect to the Fund,
the Investment Adviser is entitled to receive advisory fees, computed daily and
paid monthly, at the annual rate of .75% of the average daily net assets of the
Fund. The fee for the Fund is higher than fees paid by most other mutual
funds, although the Board of Trustees of Galaxy believes that it is not higher
than average advisory fees paid by funds with similar investment objectives and
policies.

Fleet may from time to time, in its discretion, waive advisory fees
payable by the Fund in order to help maintain a competitive expense ratio and
may from time to time allocate a portion of its advisory fees to Fleet Trust
Company or other subsidiaries of Fleet Financial Group, Inc. in consideration
for administrative and support services which they provide to beneficial
shareholders. Fleet is currently waiving a portion of the advisory fees
payable to it by the Fund so that it is entitled to receive an advisory fee at
the annual rate of .55% of the Fund's average daily net assets, but Fleet may
in its discretion revise or discontinue this waiver at any time. For the
fiscal year ended October 31, 1995, Fleet received advisory fees (after fee
waivers) at the effective rate of .45% of the Fund's average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

<PAGE> 20

such as Trust Shares of the Fund, but do not prohibit such a bank holding
company or its affiliates or banks generally from acting as investment adviser,
transfer agent, or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of customers. The
Investment Adviser, custodian and Institutions which have agreed to provide
shareholder support services that are banks or bank affiliates are subject to
such banking laws and regulations. Should legislative, judicial, or
administrative action prohibit or restrict the activities of such companies in
connection with their services to the Fund, Galaxy might be required to alter
materially or discontinue its arrangements with such companies and change its
method of operation. It is anticipated, however, that any resulting change in
the Fund's method of operation would not affect the Fund's net asset value per
share or result in financial loss to any shareholder. State securities laws on
this issue may differ from federal law and banks and financial institutions may
be required to register as dealers pursuant to state law.

ADMINISTRATOR

First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc. d/b/a 440 Financial ("FDISG"), located at 4400
Computer Drive, Westboro, Massachusetts 01581-5108, serves as the Fund's
administrator. FDISG is a wholly-owned subsidiary of First Data Corporation.

FDISG generally assists the Fund in its administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. For the
services provided to the Fund, FDISG is entitled to receive administration
fees, 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 Fund and the other
portfolios offered by Galaxy (collectively, the "Portfolios"), .085% of the
next $2.5 billion of combined average daily net assets and .08% of combined
average daily net assets over $5 billion. In addition, FDISG also receives a
separate annual fee from each Portfolio for certain fund accounting services.
From time to time, FDISG may waive all or a portion of the administration fee
payable to it by the Fund, either voluntarily or pursuant to applicable
statutory expense limitations. For the fiscal year ended October 31, 1995,
FDISG received administration fees at the effective annual rate of .088% of
the Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares into one or more classes or series of shares.
Pursuant to such authority, the Board of Trustees has authorized the issuance
of an unlimited number of shares in each of three series in the Fund as
follows: Class L - Series 1 shares (Trust Shares), Class L - Series 2 shares
(Retail A Shares) and Class L - Series 3 shares (Retail B Shares), each series
representing interests in the Fund. The Fund is classified as a diversified
company under the 1940 Act. The Board of Trustees has also authorized the
issuance of additional classes and series of shares representing interests in
other portfolios of Galaxy. For information regarding the Fund's Retail Shares
and these other portfolios, which are offered through separate prospectuses,
contact the Distributor at 1-800-628-0414.

Shares of each series in the Fund bear their pro rata portion of all
operating expenses paid by the Fund except as follows. Holders of the Fund's
Retail A and Retail B Shares bear the fees that are paid to Institutions under
Galaxy's Shareholder Services Plan described below and holders of the Fund's
Retail B Shares bear the fees described in the prospectus for such shares that
are paid under Galaxy's Distribution and Services Plan at an annual rate not to
exceed .80% of the average daily net asset value of the Fund's outstanding
Retail B shares. Currently, these payments are not made with respect to the
Fund's Trust Shares. In addition, shares of each series in the Fund bear
differing transfer agency expenses. Standardized yield and total return
quotations are comput-

<PAGE> 21

ed separately for each series of shares. The difference in the expenses paid
by the respective series will affect their performance.

Retail A Shares of the Fund are sold with a maximum front-end sales charge
of 3.75%. Retail B Shares are sold with a maximum contingent deferred sales
charge of 5.0%. Retail A and Retail B Shares have certain exchange and other
privileges which are not available with respect to Trust Shares.

Each share of Galaxy (irrespective of series designation) has a par value
of $.001 per share, represents an equal proportionate interest in the related
Fund with other shares of the same class, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to such Fund as
are declared in the discretion of Galaxy's Board of Trustees.

Shareholders are entitled to one vote for each full share held, and a
proportionate fractional vote for each fractional share held, and will vote in
the aggregate and not by class or series, except as otherwise expressly
required by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of shareholders of a particular class or
series.

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.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it
intends to enter into servicing agreements with Institutions (including Fleet
Bank and its affiliates). Pursuant to these servicing agreements Institutions
will render certain administrative and support services to Customers who are
the beneficial owners of Retail A Shares. Such services will be provided to
Customers who are the beneficial owners of Retail A Shares and are intended to
supplement the services provided by FDISG as administrator and transfer agent
to the shareholders of record of Retail A Shares. The Plan provides that
Galaxy will pay fees for such services at an annual rate of up to .30% of the
average daily net asset value of Retail A Shares of the Fund owned beneficially
by Customers. Institutions may also receive up to one-half of this fee for
providing 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 the
Fund; providing periodic mailings to Customers. Institutions may also receive
up to one-half of this fee for providing one or more of these additional
services to such Customers; providing Customers with information as to their
positions in Retail A Shares; responding to Customers inquiries; and providing
a service to invest the assets of Customers in Retail A Shares. These services
are described more fully in Galaxy's Statement of Additional Information under
"Shareholder Services Plan."

Although the Shareholder Services Plan has been approved with respect to
both Retail A Shares and Trust Shares of the Fund, as of the date of this
Prospectus, Galaxy intends to enter into servicing agreements under the
Shareholder Services Plan only with respect to Retail A Shares of the Fund, and
to limit the payment under these service agreements for the Fund to an
aggregate fee of not more than .15% (on an annualized basis) of the average
daily net asset value of the Retail A Shares of the Fund beneficially owned by
Customers of Institutions. Galaxy understands that Institutions may charge
fees to their customers who are the beneficial owners of Retail A Shares in
connection with their accounts with such Institutions. Any such fees would be
in addition to any amounts which may be received by an Institution under the
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 A Shares.

<PAGE> 22

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Trust Company, an affiliate
of the Investment Adviser, pursuant to which Fleet Trust Company performs
certain sub-account and administrative functions ("Sub-Account Services") on a
per account basis with respect to Trust Shares of the Fund held by defined
contribution plans, including: maintaining records reflecting separately with
respect to each plan participant's sub-account all purchases and redemption of
Trust Shares and the dollar value of Trust Shares in each sub-account;
crediting to each participant's sub-account all dividends and distributions
with respect to that sub-account; and transmitting to each participant a
periodic statement regarding the sub-account as well as any proxy materials,
reports and other material Fund communications. Fleet Trust Company is
compensated by FDISG for the Sub-Account Services and in connection therewith
the transfer agency fees payable by Trust Shares of the Fund to FDISG have
been increased by an amount equal to these fees. In substance therefore, the
holders of Trust Shares of the Fund indirectly bear these fees.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A., located at 1 Chase Manhattan Plaza, New
York, New York 10081, a wholly-owned subsidiary of The Chase Manhattan
Corporation, serves as the custodian of the Fund's assets. Chase Manhattan may
employ sub-custodians for the Fund upon approval of the Trustees in accordance
with the regulations of the SEC, for the purpose of providing custodial
services for the Fund's foreign assets held outside the United States. First
Data Investor Services Group, Inc. (formerly known as The Shareholder Services
Group, Inc. d/b/a 440 Financial) ("FDISG"), a wholly-owned subsidiary of First
Data Corporation serves as the Funds' transfer and dividend disbursing agent.
Services performed by both entities for the Fund are described in the Statement
of Additional Information. Communications to FDISG should be directed to FDISG
at P.O. Box 5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection
with the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities qualification fees; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing fund accounting
and custody fees; charges of the transfer agent and dividend disbursing agent;
certain insurance premiums; outside auditing and legal expenses; costs of
independent pricing services; costs of shareholders' reports and shareholder
meetings; and any extraordinary expenses. The Fund also pays for brokerage
fees and commissions in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
performance and yields of the Fund may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
bond indices or to rankings prepared by independent services or other financial
or industry publications that monitor the performance of mutual funds. For
example, the performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which mon-

<PAGE> 23

itors the performance of mutual funds.

Performance and yield data as reported in national financial publications
including, but not limited to, Money Magazine, Forbes, Barron's, The Wall
Street Journal and The New York Times, or publications of a local or regional
nature, may also be used in comparing the performance and yields of the Fund.
The performance and yield data will be calculated separately for Trust Shares,
Retail A Shares and Retail B Shares of the Fund.

The standard yield is computed by dividing the Fund's average daily net
investment income per share during a 30-day (or one month) base period
identified in the advertisement by the net asset value per share on the last
day of the period, and annualizing the result on a semi-annual basis. The Fund
may also advertise its "effective yield" which is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to
be reinvested.

The Fund may also advertise its performance using "average annual total
return" over various periods of time. Such total return figures reflect the
average percentage change in the value of an investment in the Fund from the
beginning date of the measuring period to the end of the measuring period.
Average total return figures will be given for the most recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well,
such as from the commencement of the Fund's operations, or on a year-by-year
basis. The Fund may also use "aggregate total return" figures for various
periods, representing the cumulative change in the value of an investment in
the Fund for the specified period. Both methods of calculating total return
assume that dividend and capital gain distributions made by the Fund during the
period are reinvested in Fund shares.

Performance and yields of the Fund will fluctuate and any quotation of
performance or yield should not be considered as representative of future
performance. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in the Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged directly by Institutions with
respect to accounts of Customers that have invested in Trust Shares of the Fund
will not be included in calculations of yield and performance.

The portfolio manager of the Fund and other investment professionals may
from time to time discuss in advertising, sales literature or other material,
including periodic publications, various topics of interest to shareholders and
prospective investors. The topics may include but are not limited to the
advantages and disadvantages of investing in tax-deferred and taxable
investments; Fund performance and how such performance may compare to various
market indices; shareholder profiles and hypothetical investor scenarios; the
economy; the financial and capital markets; investment strategies and
techniques; investment products; and tax, retirement and investment planning.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent certified public accountants.

As used in this Prospectus, a "vote of the holders of a majority of the
outstanding shares" of Galaxy or the Fund means, with respect to the approval
of an investment advisory agreement or a change in an investment objective or
fundamental investment policy, the affirmative vote of the holders of the
lesser of (a) more than 50% of the outstanding shares of Galaxy or the Fund, or
(b) 67% or more of the shares of Galaxy or the Fund present at a meeting if
more than 50% of the outstanding shares of Galaxy or the Fund are represented
at the meeting in person or by proxy.

<PAGE> 24

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 25

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 26
TRUST

THE GALAXY FUND

INTERMEDIATE GOVERNMENT INCOME FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 27
================================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND
OR BY ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING BY THE FUND OR
BY ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Investment Policies
and Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 17
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Affiliate Agreement for Sub-Account Services . . . . . . . . . . . . . . . . . . . . . . 19
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
================================================================================

<PAGE> 28
THE GALAXY FUND

4400 Computer Drive For applications and information regarding
Westboro, Massachusetts initiaL purchases and current performance, call
01581-5108 1-800-628-0414 For additional purchases,
redemptions, exchanges and other shareholder
services, call 1-800-628-0413.

The Galaxy Fund ("Galaxy") is an open-end management investment
company. This Prospectus describes a series of Galaxy's shares ("Trust
Shares") which represent interests in the Intermediate Government Income Fund
(the "Fund") offered by Galaxy.

The Fund's investment objective is to seek the highest level of
current income consistent with prudent risk of capital. Subject to this
objective, the Fund's investment adviser will consider the total rate of return
on portfolio securities in managing the Fund. Under normal market and economic
conditions, the Fund will invest substantially all of its assets in debt
obligations issued or guaranteed by the U. S. Government, its agencies or
instrumentalities, in debt obligations rated at the time of purchase within the
three highest ratings of Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service Inc. ("Moody's") (or which, if unrated, are of comparable
quality) and "money market" instruments. The Fund was previously called the
Intermediate Bond Fund.

The Fund is advised by Fleet Investment Advisors Inc. and sponsored
and distributed by 440 Financial Distributors, Inc., which is unaffiliated with
Fleet Investment Advisors Inc. and its parent, Fleet Financial Group, Inc., and
affiliates.

SHARES OF THE FUND 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 FUND ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS OR OTHER FACTORS SO
THAT SHARES OF THE FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

----------------------

THESE SECURITIES 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 PROSPECTUS.ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

FEBRUARY 29, 1996
<PAGE> 29
EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction
expenses imposed by the Fund with respect to its Trust Shares, and (ii) the
operating expenses for Trust Shares of the Fund. Examples based on the table
are also shown.

<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT
SHAREHOLDER TRANSACTIONS EXPENSES INCOME FUND
- --------------------------------- -----------
<S> <C>
Sales Load . . . . . . . . . . . . . . . . . . . . None
Sales Load on Reinvested Dividends . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
Advisory Fees (After Fee Waivers) . . . . . . . . . .55%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . .24%
------
Total Fund Operating Expenses (After Fee Waivers) . .79%
======
</TABLE>

- ---------------

EXAMPLE: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING
(1) A 5% ANNUAL RETURN, AND (2) REDEMPTION OF YOUR INVESTMENT AT THE END OF THE
FOLLOWING PERIODS:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Intermediate Government Income Fund . . . . . . . . $8 $25 $43 $96
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Trust Shares of the
Fund will bear directly or indirectly. The information contained in the
Expense Summary and Example is based on expenses incurred by the Fund during
the last fiscal year, restated to reflect the expenses which the Fund expects
to incur during the current fiscal year on its Trust Shares. Without voluntary
fee waivers by the Investment Adviser, Advisory Fees would be .75% and Total
Fund Operating Expenses for the Fund would be .99% for Trust Shares of the
Fund. For more complete descriptions of these costs and expenses, see
"Management of the Fund" and "Description of Galaxy and Its Shares" in this
Prospectus and the financial statements and notes incorporated by reference
into the Statement of Additional Information. Any fees that are charged by
affiliates of Fleet Investment Advisors Inc. or other institutions directly to
their customer accounts for services related to an investment in Trust Shares
of the Fund are in addition to and not reflected in the fees and expenses
described above.

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN.

2
<PAGE> 30
FINANCIAL HIGHLIGHTS

This Prospectus describes the Trust Shares in the Fund. Galaxy is
also authorized to issue an additional series of shares in the Fund . As
described below under "Description of Galaxy and Its Shares," Trust Shares and
Retail Shares represent equal pro rata interests in the Fund except that (i)
Retail A Shares of the Fund bear the expenses incurred under Galaxy's
Shareholder Services Plan at an annual rate of up to .15% of the average daily
net asset value of the Fund's outstanding Retail Shares and (ii) Trust Shares
and Retail A Shares bear differing transfer agency expenses. Retail A Shares
are offered under a separate prospectus.

The financial highlights presented below have been audited by Coopers
& Lybrand, L.L.P., Galaxy's independent accountants, whose report is contained
in Galaxy's Annual Report to Shareholders dated October 31, 1995. Such
financial highlights should be read in conjunction with the financial
statements contained in the Annual Report to Shareholders and incorporated by
reference into the Statement of Additional Information. Information in the
financial highlights for periods prior to the fiscal year ended October 31,
1994 reflects the investment results of both Trust Shares and Retail A Shares
of the Fund (Retail A Shares of the Fund were first offered during the fiscal
year ended October 31, 1992). More information about the performance of the
Fund is also contained in the Annual Report to Shareholders, which may be
obtained without charge by contacting Galaxy at its telephone numbers or
address provided above.

3
<PAGE> 31
INTERMEDIATE GOVERNMENT INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD.)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD
1995 1994 YEAR ENDED OCTOBER 31,(2) ENDED
------------------ ---------------------------------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991 1990 1989 1988(1,2)
------------------ -------- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73 $ 10.27 $ 10.40 $ 10.00
-------- -------- -------- -------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . 0.64 0.57 0.65 0.71 0.73 0.76 0.8 0.11
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . 0.60 (1.03) 0.10 0.40 0.71 (0.56) 0.16 0.29
-------- -------- -------- -------- ------- ------- ------- -------
Total from Investment Operations: . . . 1.24 (0.46) 0.75 1.11 1.44 0.20 0.98 0.40
Less Dividends:
Dividends from net investment income . . . . (0.64) (0.56) (0.64) (0.74) (0.71) (0.74) (0.96) --
Dividends in excess of net investment
income . . . . . . . . . . . . . . . . . . -- (0.01) (0.03) -- -- -- -- --
Dividends from net realized capital gains . . -- -- (0.19) -- -- -- (0.15) --
Dividends in excess of net realized
capital gains . . . . . . . . . . . . . . . -- (0.01) -- -- -- -- -- --
-------- -------- -------- -------- ------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . . (0.64) (0.58) (0.86) (0.74) (0.71) (0.74) (1.11) --
-------- -------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in net asset value . . 0.60 (1.04) (0.11) 0.37 0.73 (0.54) (0.13) 0.40
-------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73 $ 10.27 $ 10.40
Total Return . . . . . . . . . . . . . . . . . 13.18% (4.39%) 7.06% 10.95% 15.35% 2.06% 10.22% 3.90%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $186,037 $212,144 $447,359 $199,135 $99,942 $80,645 $71,400 $58,318
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . 6.39% 5.61% 6.03% 6.52% 7.25% 7.69% 8.19% 6.41%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 0.73% 0.75% 0.80% 0.80% 0.96% 0.98% 0.99% 0.98%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 0.94% 0.95% 1.00% 0.94% 0.96% 0.96% 0.99% 1.00%(6)
Portfolio Turnover Rate . . . . . . . . . . . . 145% 124% 153% 103% 150% 162% 112% 41%(5)
</TABLE>

(1) The Fund (formerly known as the Intermediate Bond Fund) commenced
operations on September 1, 1988.

(2) For periods prior to the year ended October 31, 1994, the per share
amounts and selected ratios reflect the financial results of both
Retail and Trust Shares. On September 7, 1995, Retail Shares of the
Fund were redesignated "Retail A Shares."

(3) Net investment income per share for Trust Shares before waiver of fees
by the Investment Adviser and/or Administrator for the years ended
October 31, 1995 and 1994 were $0.62 and $0.54, respectively.

(4) Net investment income per share before waiver of fees by the
Investment Adviser and/or Administrator for the years ended October
31, 1993, 1992, 1990 and 1989 were $0.63, $0.70, $0.76, and $0.82,
respectively.

(5) Not Annualized.

(6) Annualized.

4
<PAGE> 32
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek the highest level of
current income consistent with prudent risk of capital. Subject to this
objective, Fleet will consider the total rate of return on securities in
managing the Fund. The Fund will invest in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, in corporate debt
obligations such as bonds and debentures, obligations convertible into common
stock and "money market" instruments, such as bank obligations and commercial
paper, and in obligations of supranational banks. Examples of those include
the International Bank for Reconstruction and Development ("World Bank"), the
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational banks may be supported by appropriated but unpaid commitments of
their member countries and there is no assurance that those commitments will be
undertaken or met in the future. The Fund may also invest, from time to time,
in municipal securities. The purchase of municipal securities may be
advantageous when, as a result of prevailing economic, regulatory or other
circumstances, the performance of such securities, on a pretax basis, is
comparable to that of corporate or U.S. debt obligations. The Fund may also
enter into interest rate futures contracts to hedge against changes in market
values. See "Other Investment Policies and Risk Considerations." The Fund
will not invest in common stock, and any common stock received through the
conversion of convertible debt obligations will be sold in an orderly manner as
soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, debt obligations rated, at the
time of purchase, within the three highest ratings of S&P or Moody's (or which,
if unrated, are determined by Fleet Investment Advisors Inc. (the "Investment
Adviser" or "Fleet") to be of comparable quality and "money market" instruments
such as those listed below under "Other Investment Policies and Risk
Considerations." Unrated securities will be determined to be of comparable
quality to rated debt obligations if, among other things, other outstanding
obligations of the issuers of such securities are rated A or better.
Notwithstanding the foregoing, under normal market and economic conditions, at
least 65% of the Fund's assets will be invested in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. When,
in the opinion of the Investment Adviser, a defensive investment posture is
warranted, the Fund may invest temporarily and without limitation in high
quality, short-term "money market" instruments. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

In addition, the Fund may acquire obligations issued by Canadian
Provincial Governments. These obligations are similar to U.S. Municipal
Securities except that the income derived therefrom is fully subject to U.S.
Federal taxation. These instruments are denominated in either Canadian or U.S.
dollars and have an established over-the-counter market in the United States.

The Investment Adviser expects that under normal market conditions the
Fund's portfolio securities will have an average weighted maturity of three to
ten years.

The value of the Fund's portfolio securities will generally vary
inversely with changes in prevailing interest rates. See "Other Investment
Policies and Risk Considerations" below for information regarding additional
investment policies of the Fund.

The Investment Adviser will use its best efforts to achieve the Fund's
investment objective, although its achievement cannot be assured. The
investment objective of the Fund may not be changed without the approval of the
holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Except as noted below under "Investment Limitations," the
Fund's investment policies may be changed without shareholder approval. An
investor should not consider an investment in the Fund to be a complete
investment program.

5
<PAGE> 33
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations And Money Market Instruments

The Fund may, in accordance with its investment policies, invest from
time to time in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and in "money market" instruments, including
bank obligations and commercial paper.

Obligations issued or guaranteed by the U.S. Government, its agencies
and instrumentalities include U.S. Treasury securities, which differ only in
their interest rates, maturities and time of issuance: Treasury Bills have
initial maturities of one year or less; Treasury Notes have initial maturities
of one to ten years; and Treasury Bonds generally have initial maturities of
more than ten years. Obligations of certain agencies and instrumentalities of
the U.S. Government, such as those of the Government National Mortgage
Association, are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the Treasury; others, such as those of the
Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Student Loan Marketing Association, are
supported only by the credit of the instrumentality. No assurance can be
given that the U.S. Government would provide financial support to U.S.
Government-sponsored instrumentalities if it is not obligated to do so by law.
Some of these instruments may be variable or floating rate instruments.

Bank obligations include bankers' acceptances, negotiable certificates
of deposit, and non-negotiable time deposits issued for a definite period of
time and earning a specified return by a U.S. bank which is a member of the
Federal Reserve System or is insured by the Federal Deposit Insurance
Corporation, or by a savings and loan association or savings bank which is
insured by the Federal Deposit Insurance Corporation. Bank obligations also
include U.S. dollar-denominated obligations of foreign branches of U.S. banks
or of U.S. branches of foreign banks, all of the same type as domestic bank
obligations. Investment in bank obligations is limited to the obligations of
financial institutions having more than $1 billion in total assets at the time
of purchase.

Investments in obligations of foreign branches of U.S. banks and of
U.S. branches of foreign banks may subject the Fund to additional risks,
including future political and economic developments, the possible imposition
of withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations. In addition,
foreign branches of U.S. banks and U.S. branches of foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks. The Fund will invest in the obligations of
U.S. branches of foreign banks or foreign branches of U.S. banks only when the
Investment Adviser believes that the credit risk with respect to the instrument
is minimal.

6
<PAGE> 34
interest at a time specified in the instrument or may resell the instrument to
the third party. In the event that an issuer of a variable or floating rate
obligation defaulted on its payment obligation, the Fund might be unable to
dispose of the note because of the absence of a secondary market and could, for
this or other reasons, suffer a loss to the extent of the default. The Fund
may also purchase Rule 144A securities. See "Investment Limitations."

Types Of Municipal Securities

The Fund's portfolio may also include "moral obligation" securities,
which are normally issued by special purpose public authorities. If the issuer
of moral obligation securities is unable to meet its debt service obligations
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.

Variable And Floating Rate Municipal Securities

Municipal securities purchased by the Fund may include rated and
unrated variable and floating rate tax-exempt instruments. There may be no
active secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to the Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days' notice and do not have an active trading market) that
are acquired by the Fund are subject to the 10% limit described in Investment
Limitation No. 3 under "Investment Limitations" in this Prospectus.

Repurchase and Reverse Repurchase Agreements

The seller under a repurchase agreement will be required to maintain
the value of the securities which are subject to the agreement and held by the
Fund at not less than the agreed upon repurchase price. If the seller
defaulted on its repurchase obligation, the Fund would suffer a loss to the
extent that the proceeds from a sale of the underlying securities (including
accrued interest) were less than the repurchase price (including accrued
interest) under the agreement. In the event that such a defaulting seller
filed for bankruptcy or became insolvent, disposition of such securities by the
Fund might be delayed pending court action.

7
<PAGE> 35
The Fund may also borrow funds for temporary purposes by selling
portfolio securities to financial institutions such as banks and broker/dealers
and agreeing to repurchase them at a mutually specified date and price
("reverse repurchase agreements"). Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline below
the repurchase price. The Fund would pay interest on amounts obtained pursuant
to a reverse repurchase agreement.

Securities Lending

The Fund may lend its portfolio securities to financial institutions
such as banks and broker/dealers in accordance with the investment limitations
described below. Such loans would involve risks of delay in receiving
additional collateral or in recovering the securities loaned or even loss of
rights in the collateral, should the borrower of the securities fail
financially. Any portfolio securities purchased with cash collateral would
also be subject to possible depreciation. Loans will generally be short-term,
will be made only to borrowers deemed by the Investment Adviser to be of good
standing and only when, in the Investment Adviser's judgment, the income to be
earned from the loan justifies the attendant risks. The Fund currently
intends to limit the lending of its portfolio securities so that, at any given
time, securities loaned by the Fund represent not more than one-third of the
value of its total assets.

Investment Company Securities

Interest Rate Futures Contracts

The Fund may enter into contracts (both purchases and sales) which
provide for the future delivery of fixed-income securities (commonly known as
interest rate futures contracts). The Fund will not engage in futures
transactions for speculation, but only to hedge against changes in the market
values of securities which the Fund holds or intends to purchase. The Fund
will engage in futures transactions only to the extent permitted by the
Commodity Futures Trading Commission ("CFTC") and the Securities and Exchange
Commission. The purchase of futures instruments in connection with securities
which the Funds intend to purchase will require an amount of cash and/or U.S.
Government obligations, equal to the market value of the outstanding futures
contracts, to be deposited in a segregated account to collateralize the
position and thereby insure that the use of such futures is unleveraged. The
Fund will limit its hedging transactions in futures contracts so that,
immediately after any such transaction, the aggregate initial margin that is
required to be posted by the Fund under the rules of the

8
<PAGE> 36
exchange on which the futures contract is traded does not exceed 5% of the
Fund's total assets after taking into account any unrealized profits and
unrealized losses on the Fund's open contracts. In addition, no more than
one-third of the Fund's total assets may be covered by such contracts.

When-Issued, Forward Commitment And Delayed Settlement Transactions

The Fund may purchase eligible securities on a "when-issued" basis and
may purchase or sell securities on a "forward commitment" basis. The Fund may
also purchase or sell eligible securities on a "delayed settlement" basis.
When-issued and forward commitment transactions, which involve a commitment by
the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the
Fund to lock in a price or yield on a security it owns or intends to purchase,
regardless of future changes in interest rates. Delayed settlement describes
settlement of a securities transaction in the secondary market which will occur
sometime in the future. When-issued, forward commitment and delayed settlement
transactions involve the risk, however, that the yield or price obtained in a
transaction may be less favorable than the yield or price available in the
market when the securities delivery takes place. It is expected that forward
commitments, when-issued purchases and delayed settlements will not exceed 25%
of the value of the Fund's total assets absent unusual market conditions. In
the event the Fund's forward commitments, when-issued purchases and delayed
settlements ever exceeded 25% of the value of its total assets, the Fund's
liquidity and the ability of the Investment Adviser to manage the Fund may be
adversely affected.

The Fund does not intend to engage in when-issued purchases, forward
commitments and delayed settlements for speculative purposes, but only in
furtherance of their investment objectives.

Stand-By Commitments

Asset-Backed Securities

9
<PAGE> 37
obligations, credit card receivables and home equity loans. Payment of
principal and interest may be guaranteed up to certain amounts and for a
certain time period by a letter of credit issued by a financial institution
unaffiliated with entities issuing the securities. The estimated life of an
asset-backed security varies with the prepayment experience with respect to the
underlying debt instruments. The rate of such prepayments, and hence the life
of the asset-backed security, will be primarily a function of current market
rates, although other economic and demographic factors will be involved. The
Fund will not invest more than 10% of its total assets in asset-backed
securities. See "Asset-Backed Securities" in the Statement of Additional
Information.

Mortgage-Backed Securities

The Fund may invest in mortgage-backed securities that represent pools
of mortgage loans assembled for sale to investors by various governmental
agencies and government-related organizations such as the Government National
Mortgage Association, the Federal National Mortgage Association, and the
Federal Home Loan Mortgage Corporation. Mortgage-backed securities provide a
monthly payment consisting of interest and principal payments. Additional
payment may be made out of unscheduled repayments of principal resulting from
the sale of the underlying residential property, refinancing or foreclosure,
net of fees or costs that may be incurred. Prepayments of principal on
mortgage-backed securities may tend to increase due to refinancing of mortgages
as interest rates decline. To the extent that the 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 the Fund from investing in mortgaged-backed
securities may be affected by reinvestment of prepayments at higher or lower
rates than the original investment.

Other mortgage-backed securities are issued by private issuers,
generally originators of and investors in mortgage loans, including savings
associations, mortgage bankers, commercial banks, investment bankers, and
special purpose entities. These private mortgage-backed securities may be
supported by U.S. Government mortgage-backed securities or some form of non-
government credit enhancement. Mortgage-backed securities have either fixed or
adjustable interest rates. The rate of return on mortgage-backed securities
may be affected by prepayments of 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, like other debt securities, the values of
mortgage-related securities, including government and government-related
mortgage pools, generally will fluctuate in response to market interest rates.
To the extent that collateralized mortgage obligations are considered to be
investment companies, investments in such obligations will be subject to the
percentage limitations described under "Investment Company Securities" above.

Stripped Obligations

To the extent consistent with its investment objective, the Fund may
purchase 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. These participations, which
may be issued by the U.S. Government or by private issuers such as banks and
other institutions are issued at their "face value," and may include stripped
mortgage-backed securities ("SMBS"), which are derivative multi-class mortgage
securities. Stripped securities, particularly SMBS, may exhibit greater price
volatility than ordinary debt securities because of the manner in which their
principal and interest are returned to investors.

10
<PAGE> 38
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 which are not issued by the U.S.
Government (or a U.S. Government agency or instrumentality) are considered
illiquid. Obligations issued by the U.S. Government may be considered liquid
under guidelines established by the Trust's Board of Trustees if they can be
disposed of promptly in the ordinary course of business at a value reasonably
close to that used in the calculation of net asset value per share.

Guaranteed Investment Contracts

The Fund may invest in guaranteed investment contracts ("GICs") issued
by United States and Canadian insurance companies. Pursuant to GICs, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund payments at
negotiated, floating or fixed interest rates. A GIC is a general obligation of
the issuing insurance company and not a separate account. The purchase price
paid for a GIC becomes part of the general assets of the insurance company, and
the contract is paid from the company's general assets. The Fund will only
purchase GICs that are issued or guaranteed by insurance companies that at the
time of purchase are rated at least AA by S&P or receive a similar high quality
rating from a nationally recognized service which provides ratings of insurance
companies. GICs are considered illiquid securities and will be subject to the
Fund's 10% limitation on such investments, unless there is an active and
substantial secondary market for the particular instrument and market
quotations are readily available.

Bank Investment Contracts

The Fund may invest in bank investment contracts ("BICs") issued by
banks that meet the quality and asset size requirements for banks described
above under "U.S. Government Obligations and Money Market Instruments."
Pursuant to BICs, cash contributions are made to a deposit account at the bank
in exchange for payments at negotiated, floating or fixed interest rates. A
BIC is a general obligation of the issuing bank. BICs are considered illiquid
securities and will be subject to the Fund's 10% limitation on such
investments, unless there is an active and substantial secondary market for the
particular instrument and market quotations are readily available.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if
the Investment Adviser believes that such a disposition is consistent with the
Fund's investment objective. Portfolio investments may be sold for a variety of
reasons, such as a more favorable investment opportunity or other circumstances
bearing on the desirability of continuing to hold such investments. A
portfolio turnover rate of 100% or more is considered high, although the rate
of portfolio turnover will not be a limiting factor in making portfolio
decisions. A high rate of portfolio turnover may result in the realization of
substantial capital gains and involves correspondingly greater transaction
costs. To the extent that net capital gains are realized, distributions
derived from such gains are treated as ordinary income for Federal income tax
purposes. See "Financial Highlights" and "Taxes -- Federal."

11
<PAGE> 39
INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy
and may not be changed with respect to the Fund without the affirmative vote of
the holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Other investment limitations that also cannot be changed
without such a vote of shareholders are contained in the Statement of
Additional Information under "Investment Objectives and Policies."

The Fund may not:

1. Make loans, except that (i) the Fund may purchase or
hold debt instruments in accordance with its investment objective and
policies, and may enter into repurchase agreements with respect to
portfolio securities, and (ii) the Fund may lend portfolio securities
against collateral consisting of cash or securities which are
consistent with the 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.

2. Borrow money or issue senior securities, except from
domestic banks for temporary purposes and then in amounts not in
excess of 10% of the value of its total assets at the time of such
borrowing (provided that the Fund may borrow pursuant to reverse
repurchase agreements in accordance with its investment policies and
in amounts not in excess of 10% of the value of its total assets at
the time of such borrowing); or mortgage, pledge, or hypothecate any
assets except in connection with any such borrowing and in amounts not
in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of such borrowing. The
Fund will not purchase securities while borrowings (including reverse
repurchase agreements) in excess of 5% of its total assets are
outstanding.

3. Invest more than 10% of the value of its net assets
in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days, time deposits with maturities in
excess of seven days, restricted securities, non-negotiable time
deposits and other securities which are not readily marketable.

4. Purchase securities of any one issuer, other than
obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, if immediately after such purchase more than 5%
of the value of its total assets would be invested in such issuer,
except that up to 25% of the value of its total assets may be invested
without regard to this limitation.

In addition, the Fund may not purchase any securities which would
cause 25% or more of the value of the Fund's total assets at the time of
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry; provided, however
that (a) there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, (b)
wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents, and (c) utilities will be classified according to
their services. (For example, gas, gas transmission, electric and gas,
electric and telephone each will be considered a separate industry.)

12
<PAGE> 40
of increasing the level of illiquidity of the Fund during any period that
qualified institutional buyers were no longer interested in purchasing these
securities. For purposes of the 10% limitation on purchases of illiquid
instruments described under Investment Limitation No. 3 above, Rule 144A
securities will not be considered illiquid if the Investment Adviser has
determined, in accordance with guidelines established by the Board of Trustees,
that an adequate trading market exists for such securities.

If a percentage limitation is satisfied at the time of investment, a
later increase in such percentage resulting from a change in the value of the
Fund's portfolio securities will not constitute a violation of the limitation.

PRICING OF SHARES

Net asset value per share of the Fund is determined as of the close of
regular trading hours on the New York Stock Exchange (the "Exchange"),
currently 4:00 p.m. (Eastern Time). The net asset value per share is
determined on each day on which the 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 for purposes of pricing sales and
redemptions is calculated separately for each series of shares by dividing the
value of all securities and other assets attributable to a particular series of
shares of the Fund, less the liabilities attributable to the shares of that
series of the Fund, by the number of outstanding shares of that series of the
Fund.

The Fund's assets are valued for purposes of pricing sales and
redemptions by an independent pricing service ("Service") approved by Galaxy's
Board of Trustees. When, in the judgment of the Service, quoted bid prices for
portfolio securities are readily available and are representative of the bid
side of the market, these investments are valued at the mean between quoted bid
prices (as obtained by the Service from dealers in such securities) and asked
prices (as calculated by the Service based upon its evaluation of the market
for such securities). Other investments are carried at fair value as
determined by the Service, based on methods which include consideration of
yields or prices of bonds of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. The
Service may also employ electronic data processing techniques and matrix
systems to determine value. Short-term securities are valued at amortized
cost, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter assuming
a constant amortization to maturity of the difference between the principal
amount due at maturity and cost.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Fund are sold on a continuous basis by Galaxy's
distributor, 440 Financial Distributors, Inc. (the "Distributor"), a wholly-
owned subsidiary of First Data Investor Services Group, Inc. (formerly known as
The Shareholder Services Group, Inc. d/b/a 440 Financial). The Distributor is
a registered broker/dealer with principal offices located at 290 Donald Lynch
Boulevard, Marlboro, Massachusetts 01752.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts at bank

13
<PAGE> 41
and trust institutions, including subsidiaries of Fleet Financial Group, Inc.
and to participants in employer-sponsored defined contribution plans
("Institutions"). Trust Shares sold to such investors ("Customers") will be
held of record by Institutions. The Institution is responsible for
transmitting to the Distributor orders for purchases of Trust Shares and for
wiring required funds in payment to Galaxy's custodian on a timely basis. The
Distributor is responsible for transmitting such orders to Galaxy's transfer
agent for execution. Beneficial ownership of Trust Shares will be recorded by
the Institution and reflected in the account statements it provides to its
Customers. Confirmations of purchases and redemptions of Trust Shares will be
sent to the appropriate Institution. Purchases of Trust Shares will be
effected only on days on which the Distributor, Galaxy's custodian and the
purchasing Institution are open for business ("Business Days").

Galaxy reserves the right to reject any purchase order, in whole or in
part.

The issuance of Trust Shares is recorded on the books of the Fund and
share certificates will not be issued.

Customers may purchase Trust Shares through procedures established by
Institutions in connection with the requirements of their Customer accounts.
Such accounts may include discretionary investment management accounts,
custodial accounts, agency accounts and different types of tax- advantaged
accounts (including defined contribution plans). Investors should contact
their Institution (or, in the case of employee plans, their employer) for
further information concerning the types of eligible Customer accounts and the
related purchase and redemption procedures.

Although Galaxy does not impose any minimum initial or subsequent
investment requirement with respect to Trust Shares, Institutions or employers
may impose such requirements on the accounts maintained by its Customers, and
may also require that Customers maintain minimum account balances with respect
to Trust Shares.

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance
with procedures governing their accounts at their Institution. It is the
responsibility of the Institution to transmit redemption orders to the
Distributor and to credit its Customers' accounts with the redemption proceeds
on a timely basis. No charge for wiring redemption payments is imposed by
Galaxy, although the Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

14
<PAGE> 42
Redemption orders are effected at the net asset value per share next
determined after receipt and acceptance of the order by the Distributor.
Payment for redemption orders received by the Distributor on a Business Day
will normally be wired the following Business Day to the Institution. Payment
for redemption orders which are received on a non-Business Day will normally be
wired to the Institution on the next Business Day. However, in both cases
Galaxy reserves the right to wire redemption proceeds within seven days after
receiving the redemption order if, in its judgment, an earlier payment could
adversely affect the Fund.

Galaxy may require any information reasonably necessary to ensure that
a redemption has been duly authorized.

The Fund reserves the right to redeem shares in any account at their
net asset value involuntarily, upon 60 days' written notice, if the value of
the account is less than $250 as a result of redemptions.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Fund are declared daily
and paid monthly. Dividends on each share of the Fund are determined in the
same manner, irrespective of series, but may differ in amount because of the
difference in the expenses paid by the respective series. Net realized capital
gains are distributed at least annually.

Dividends and distributions will be paid in cash. Customers may elect
to have their dividends reinvested in additional Trust Shares of the Fund at
the net asset value of such shares on the payment date. Such election, or any
revocation thereof, must be communicated in writing by an Institution on behalf
of Customers to Galaxy's transfer agent and will become effective with respect
to dividends paid after its receipt. The crediting and payment of dividends to
Customers will be in accordance with the procedures governing such Customers'
accounts at their Institution.

TAXES

FEDERAL

The Fund qualified during its last taxable year and intends to
continue to qualify as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"). Such qualification generally
relieves the Fund of liability for federal income taxes to the extent the
Fund's earnings are distributed in accordance with the Code.

15
<PAGE> 43
of any distribution will qualify for the dividends received deduction for
corporations.

Distribution by the Fund of the excess of its net long-term capital
gain over its net short-term capital loss is taxable to shareholders as long-
term capital gain, regardless of how long the shareholder has held shares and
whether such gains are received in cash or reinvested in additional shares.
Such distributions are not eligible for the dividends received deduction.

Dividends declared in October, November or December of any year which
are payable to shareholders of record on a specified date in such months will
be deemed to have been received by shareholders and paid by the Fund on
December 31 of such year if such dividends are actually paid during January of
the following year.

If you are considering buying shares of the Fund on or just before the
record date of a dividend, you should be aware that the amount of the
forthcoming dividend payment, although in effect a return of capital, generally
will be taxable to you.

A taxable gain or loss may be realized by a shareholder upon
redemption, transfer or exchange of Fund shares depending upon the tax basis of
such shares and their price at the time of redemption, transfer or exchange.

The foregoing summarizes some of the important Federal tax
considerations generally affecting the Fund and its shareholders and is not
intended as a substitute for careful tax planning. Accordingly, potential
investors in the Fund should consult their tax advisers with specific reference
to their own tax situation. Shareholders will be advised annually as to the
Federal income tax consequences of distributions made each year.

STATE AND LOCAL

MANAGEMENT OF THE FUND

The business and affairs of the Funds are managed under the direction
of Galaxy's Board of Trustees. The Funds' Statement of Additional Information
contains the names of and general background information concerning the
Trustees.

INVESTMENT ADVISER

Fleet, with principal offices at 50 Kennedy Plaza, 2nd Floor,
Providence, Rhode Island 02903, serves as the Investment Adviser to the Funds.
Fleet is an indirect wholly-owned subsidiary of Fleet Financial Group, Inc., a
registered bank holding company with total assets of approximately $84.8
billion at December 31, 1995. Fleet, which commenced operations in 1984, also
provides investment management and advisory services to individual and
institutional clients, and manages the other investment portfolios of Galaxy:
the Money Market, Government, Tax-Exempt, U.S. Treasury, Connecticut Municipal
Money Market, Massachusetts Municipal Money Market, Institutional Treasury
Money Market, Equity Value, Equity Growth, Equity Income, International Equity,
Small Company Equity, Asset Allocation, Growth and Income, Small Cap Value,
Short-Term Bond, Corporate Bond, High Quality Bond, Tax-Exempt Bond, New York
Municipal Bond, Connecticut Municipal Bond, Massachusetts Municipal Bond and
Rhode Island Municipal Bond Funds.

Subject to the general supervision of Galaxy's Board of Trustees and
in accordance with the Fund's invest-

16
<PAGE> 44
ment policies, Fleet manages the Fund, makes decisions with respect to and
places orders for all purchases and sales of its portfolio securities and
maintains related records.

Effective March 1, 1996, the portfolio manager of the Fund is James J.
Evans. In this capacity, Mr. Evans is primarily responsible for the day-to-day
management of the Fund's investment portfolio. Mr. Evans, a Vice President,
joined Fleet in 1995, and previously was a portfolio manager at Lazard Freres
for nine years and Westinghouse Pension and Investment Corporation for two
years.

For the services provided and expenses assumed with respect to the
Fund, the Investment Adviser is entitled to receive advisory fees, computed
daily and paid monthly, at an annual rate of .75% of the average daily net
assets of the Fund. The fee for the Fund is higher than fees paid by most
other mutual funds, although the Board of Trustees of Galaxy believes that it
is not higher than the average advisory fees paid by funds with similar
investment objectives and policies.

AUTHORITY TO ACT AS INVESTMENT ADVISER

Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, or distributing securities such
as Trust Shares of the Fund, but do not prohibit such a bank holding company or
its affiliates or banks generally from acting as investment adviser, transfer
agent, or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of customers. The Investment
Adviser, custodian and Institutions which have agreed to provide shareholder
support services that are banks or bank affiliates are subject to such banking
laws and regulations. Should legislative, judicial, or administrative action
prohibit or restrict the activities of such companies in connection with their
services to the Fund, Galaxy might be required to alter materially or
discontinue its arrangements with such companies and change its method of
operation. It is anticipated, however, that any resulting change in the Fund's
method of operation would not affect the Fund's net asset value per share or
result in financial loss to any shareholder. State securities laws on this
issue may differ from federal law and banks and financial institutions may be
required to register as dealers pursuant to state law.

ADMINISTRATOR

First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), located at
4400 Computer Drive, Westboro, Massachusetts 01581-5108, serves as the Fund's
administrator. FDISG is a wholly-owned subsidiary of First Data Corporation.

17
<PAGE> 45
FDISG generally assists the Fund in its administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. For the
services provided to the Fund, FDISG is entitled to receive administration
fees, 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 Fund and the other
portfolios offered by Galaxy (collectively, the "Portfolios"), .085% of the
next $2.5 billion of combined average daily net assets and .08% of combined
average daily net assets over $5 billion. In addition, FDISG also receives a
separate annual fee from each Portfolio for certain fund accounting services.
From time to time, FDISG may waive all or a portion of the administration fee
payable to it by the Fund, either voluntarily or pursuant to applicable
statutory expense limitations. For the fiscal year ended October 31, 1995,
FDISG received administration fees at the effective annual rate of .088% of the
Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31,
1986. Galaxy's Declaration of Trust authorized the Board of Trustees to
classify or reclassify any unissued shares into one or more classes or series
of shares. Pursuant to such authority, the Board of Trustees has authorized
the issuance of an unlimited number of shares in each of two series in the Fund
as follows: Class D shares (Trust Shares) and Class D - Series 1 shares
(Retail A Shares), both series representing interests in the Fund. The Fund is
classified as a diversified company under the 1940 Act. The Board of Trustees
has also authorized the issuance of additional classes and series of shares
representing interests in other portfolios of Galaxy. For information
regarding the Fund's Retail Shares and these other portfolios, which are
offered through separate prospectuses, contact the Distributor at
1-800-628-0414.

Shares of each series in the Fund bear their pro rata portion of all
operating expenses paid by the Fund except as follows. Holders of the Fund's
Retail A Shares bear the fees that are paid to Institutions under Galaxy's
Shareholder Services Plan described below. Currently, these payments are not
made with respect to the Fund's Trust Shares. In addition, shares of each
series in the Fund bear differing transfer agency expenses. Standardized yield
and total return quotations are computed separately for each series of shares.
The differences in the expenses paid by the respective series will affect their
performance.

Retail A Shares of the Fund are sold with a maximum front-end sales
charge of 3.75% and have certain exchange and other privileges which are not
available with respect to Trust Shares.

Each share of Galaxy (irrespective of series designation) has a par
value of $.001 per share, represents an equal proportionate interest in the
related Fund with other shares of the same class, and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
such Fund as are declared in the discretion of Galaxy's Board of Trustees.

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.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it
intends to enter into servicing agree-

18
<PAGE> 46
ments with Institutions (including Fleet Bank and its affiliates). Pursuant to
these servicing agreements, Institutions will render certain administrative and
support services to Customers who are the beneficial owners of Retail A Shares.
Such services will be provided to Customers who are the beneficial owners of
Retail A Shares and are intended to supplement the services provided by FDISG
as administrator and transfer agent to the shareholders of record of Retail A
Shares. The Plan provides that Galaxy will pay fees for such services at an
annual rate of up to .30% of the average daily net asset value of Retail A
Shares of the Funds owned beneficially by Customers. Institutions may also
receive up to one-half of this fee for providing 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 the Fund; providing sub-accounting with
respect to Retail A Shares or the information necessary for sub-accounting; and
providing periodic mailings to Customers. Institutions may also receive up to
one-half of this fee for providing one or more of these additional services to
such Customers: providing Customers with information as to their positions in
Retail A Shares; responding to Customer inquiries; and providing a service to
invest the assets of Customers in Retail A Shares. These services are
described more fully in Galaxy's Statement of Additional Information under
"Shareholder Services Plan."

Although the Shareholder Services Plan has been approved with respect
to both Retail A Shares and Trust Shares of the Fund, as of the date of this
Prospectus, Galaxy intends to enter into servicing agreements under the
Shareholder Services Plan only with respect to Retail A Shares of the Fund, and
to limit the payment under these servicing agreements for each Fund to an
aggregate fee of not more than .15% (on an annualized basis) of the average
daily net asset value of the Retail A Shares of the Fund beneficially owned by
Customers of Institutions. Galaxy understands that Institutions may charge
fees to their Customers who are the beneficial owners of Retail A Shares in
connection with their accounts with such institutions. After such fees would
be in addition to any amounts which may be received by an Institution under the
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 A Shares.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Trust Company, an
affiliate of the Investment Adviser, pursuant to which Fleet Trust Company
performs certain sub-account and administrative functions ("Sub-Account
Services") on a per account basis with respect to Trust Shares of the Fund held
by defined contribution plans, including: maintaining records reflecting
separately with respect to each plan participant's sub-account all purchases
and redemptions of Trust Shares and the dollar value of Trust Shares in each
sub-account; crediting to each participant's sub-account all dividends and
distributions with respect to that sub-account; and transmitting to each
participant a periodic statement regarding the sub-account as well as any proxy
materials, reports and other material Fund communications. Fleet Trust Company
is compensated by FDISG for the Sub-Account Services and in connection
therewith the transfer agency fees payable by Trust Shares of the Fund to FDISG
have been increased by an amount equal to these fees. In substance, therefore,
the holders of Trust Shares of the Fund indirectly bear these fees.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A., located at 1 Chase Manhattan Plaza,
New York, New York 10081, a wholly-owned subsidiary of The Chase Manhattan
Corporation, serves as the custodian of the Fund's assets, and First Data
Investor Services Group, Inc. (formerly known as The Shareholder Services
Group, Inc. d/b/a 440 Financial) ("FDISG"), a wholly-owned subsidiary of First
Data Corporation, serves as the Funds' transfer and

19
<PAGE> 47
dividend disbursing agent. Services performed by both entities for the Fund
are described in the Statement of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 5108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection
with the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities qualification fees; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, fund accounting and custody fees;
charges of the transfer agent and dividend disbursing agent; certain insurance
premiums; outside auditing and legal expenses; costs of independent pricing
services; costs of shareholders' reports and shareholder meetings; and any
extraordinary expenses. The Fund also pays for brokerage fees and commissions
in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders,
the performance and yields of the Fund may be quoted and compared to those of
other mutual funds with similar investment objectives and to stock or other
relevant bond indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, the performance of the Fund may be compared to data
prepared by Lipper Analytical Services, Inc., a widely recognized independent
service which monitors the performance of mutual funds.

Performance and yield data as reported in national financial
publications including, but not limited to, Money Magazine, Forbes, Barron's,
The Wall Street Journal and The New York Times, or publications of a local or
regional nature, may also be used in comparing the performance and yields of
the Fund. The performance and yield data will be calculated separately for
Trust Shares and Retail A Shares of the Fund.

The standard yield is computed by dividing the Fund's average daily
net investment income per share during a 30-day (or one month) base period
identified in the advertisement by the net asset value per share on the last
day of the period, and annualizing the result on a semi-annual basis. The Fund
may also advertise its "effective yield" which is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to
be reinvested.

The Fund may also advertise its performance using "average annual
total return" over various periods of time. Such total return figures reflect
the average percentage change in the value of an investment in the Fund from
the beginning date of the measuring period to the end of the measuring period.
Average total return figures will be given for the most recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well,
such as from the commencement of the Fund's operations, or on a year-by- year
basis. The Fund may also use "aggregate total return" figures for various
periods, representing the cumulative change in the value of an investment in
the Fund for the specified period. Both methods of calculating total return
assume that div-

20
<PAGE> 48
idend and capital gain distributions made by the Fund during the period are
reinvested in Fund shares.

The portfolio manager of the Fund and other investment professionals
may from time to time discuss in advertising, sales literature or other
material, including periodic publications, various topics of interest to
shareholders and prospective investors. The topics may include but are not
limited to the advantages and disadvantages of investing in tax-deferred and
taxable investments; Fund performance and how such performance may compare to
various market indices; shareholder profiles and hypothetical investor
scenarios; the economy; the financial and capital markets; investment
strategies and techniques; investment products; and tax, retirement and
investment planning.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent certified public accountants.

As used in this Prospectus, a "vote of the holders of a majority of
the outstanding shares" of Galaxy or the Fund means, with respect to the
approval of an investment advisory agreement, distribution plan or a change in
an investment objective or fundamental investment policy, the affirmative vote
of the holders of the lesser of (a) more than 50% of the outstanding shares of
Galaxy or the Fund, or (b) 67% or more of the shares of Galaxy or the Fund
present at a meeting if more than 50% of the outstanding shares of Galaxy or
the Fund are represented at the meeting in person or by proxy.

21
<PAGE> 49
[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 50
[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 51
TRUST

THE GALAXY FUND

HIGH QUALITY BOND FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 52
================================================================================

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Investment Policies
and Risk Considerations . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 12
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . 13
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 14
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 15
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . 17
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . . . . . . . 18
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . 18
Affiliate Agreement for Sub-Account Services . . . . . . . . . . . . . 19
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . 19
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . . . . . . 20
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

================================================================================
</TABLE>
<PAGE> 53
THE GALAXY FUND

4400 Computer Drive For applications and information regarding
Westboro, Massachusetts initial purchases and current performance, call
01581-5108 1-800-628-0414 For additional purchases,
redemptions, exchanges and other shareholder
services, call 1-800-628-0413.

The Galaxy Fund ("Galaxy") is an open-end management investment
company. This Prospectus describes a series of Galaxy's shares ("Trust
Shares") which represent interests in the High Quality Bond Fund (the "Fund")
offered by Galaxy.

The Fund's investment objective is to seek a high level of current
income consistent with prudent risk of capital. Under normal market and
economic conditions, the Fund will invest substantially all of its assets in
high quality debt obligations that are rated at the time of purchase within the
two highest ratings of Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service Inc. ("Moody's") (or which, if unrated, are of comparable
quality) and in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and "money market" instruments.

This prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc. and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue two additional series of shares in the Fund,
Retail A Shares and Retail B Shares (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet
Financial Group, Inc., its affiliates, their correspondent banks and other
qualified banks, savings and loans associations and broker/dealers on behalf of
their customers. Trust Shares, Retail A Shares and Retail B Shares represent
equal pro rata interests in the Fund, except they bear different expenses which
reflect the difference in the range of service provided to them. See "Financial
Highlights," "Management of the Fund" and Description of Galaxy and Its Shares"
herein.

The Fund is advised by Fleet Investment Advisors Inc. and sponsored
and distributed by 440 Financial Distributors, Inc., which is unaffiliated with
Fleet Investment Advisors Inc. and its parent, Fleet Financial Group, Inc., and
affiliates.

SHARES OF THE FUND 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 FUND ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS OR OTHER FACTORS SO
THAT SHARES OF THE FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

This Prospectus sets forth concisely the information that prospective
investors should consider before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about
the Fund, contained in the Statement of Additional Information relating to the
Fund and bearing the same date, has been filed with the Securities and Exchange
Commission. The current Statement of Additional Information is available upon
request without charge by contacting Galaxy at its telephone numbers or address
shown above. The Statement of Additional Information, as it may be amended
from time to time, is incorporated by reference in its entirety into this
Prospectus.
------------------
THESE SECURITIES 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 PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

FEBRUARY 29, 1996
<PAGE> 54
EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction
expenses imposed by the Fund with respect to its Trust Shares, and (ii) the
operating expenses for Trust Shares of the Fund. Examples based on the table
are also shown.

<TABLE>
<CAPTION>
<S> <C>
HIGH QUALITY
SHAREHOLDER TRANSACTION EXPENSES BOND FUND
- -------------------------------- -------------
Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Sales Load on Reinvested Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
Advisory Fees (After Fee Waivers) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36%
----
Total Fund Operating Expenses (After Fee Waivers) . . . . . . . . . . . . . . . . . . . . . . . . . .91%
====
</TABLE>

- -----------

EXAMPLE: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT,
ASSUMING (1) A 5% ANNUAL RETURN, AND (2) REDEMPTION OF YOUR INVESTMENT AT THE
END OF THE FOLLOWING PERIODS:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
High Quality Bond Fund . . . . . . . . . . . . . . . . . . $9 $28 $49 $110
- - - --
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Trust Shares of the
Fund will bear directly or indirectly. The information contained in the
Expense Summary and Example is based on expenses incurred by the Fund during
the last fiscal year, restated to reflect the expenses which the Fund expects
to incur during the current fiscal year on its Trust Shares. Without voluntary
fee waivers by the Investment Adviser, Advisory Fees would be .75%, and Total
Fund Operating Expenses would be 1.11% for Trust Shares of the Fund. For more
complete descriptions of these costs and expenses, see "Management of the Fund"
and "Description of Galaxy and its Shares" in this Prospectus and the financial
statements and notes incorporated by reference into the Statement of Additional
Information. Any fees that are charged by affiliates of Fleet Investment
Advisors Inc. or other institutions directly to their customer accounts for
services related to an investment in Trust Shares of the Fund are in addition
to and not reflected in the fees and expenses described above.

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES AND RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN.

2
<PAGE> 55
FINANCIAL HIGHLIGHTS

This Prospectus describes the Trust Shares in the Fund. Galaxy is
also authorized to issue two additional series of shares in the Fund, Retail A
Shares and Retail B Shares. As described below under "Description of Galaxy
and Its Shares," Trust Shares, Retail A Shares and Retail B Shares represent
equal pro rata interests in the Fund, except that (i) effective October 1,
1994, Retail A Shares of the Fund bear the expenses incurred under Galaxy's
Shareholder Services Plan for Retail A Shares and Trust Shares at an annual
rate of up to .15% of the average daily net asset value of the Fund's
outstanding Retail A Shares, (ii) Retail B Shares of the Fund bear the expenses
incurred under Galaxy's Distribution and Services Plan for Retail B shares at
an annual rate of up to .80% of the average daily net asset value of the Fund's
outstanding Retail B Shares, and (iii) Trust Shares, Retail A Shares and Retail
B Shares bear differing transfer agency expenses. Retail Shares are offered
under a separate prospectus.

The financial highlights presented below have been audited by Cooper's
& Lybrand L.L.P., Galaxy's independent accountants, whose report is contained
in Galaxy's Annual Report to Shareholders dated October 31, 1995. Such
financial highlights should be read in conjunction with the financial
statements contained in the Annual Report to Shareholders and incorporated by
reference into the Statement of Additional Information. Information in the
financial highlights for periods prior to the fiscal year ended October 31,
1994 reflects the investment results of both Trust Shares and Retail A Shares
of the Fund. More information about the performance of the Fund is also
contained in the Annual Report to Shareholders, which may be obtained without
charge by contacting Galaxy at its telephone numbers or address provided above.

3
<PAGE> 56
HIGH QUALITY BOND FUND
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD.)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED
1995 1994 OCTOBER 31,(2) PERIOD ENDED
---------------------------- ---------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991(1,2)
---------------------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.00
--------- --------- --------- --------- --------
Income from Investment Operations
Net Investment Income (3,4) . . . . . . . . . . . 0.64 0.65 0.66 0.68 0.64
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . 1.09 (1.56) 0.93 0.36 0.33
--------- --------- --------- --------- --------
Total from Investment Operations: . . . . . 1.73 (0.91) 1.59 1.04 0.97
--------- --------- --------- --------- --------
Less Dividends:
Dividends from net investment income . . . . . . (0.64) (0.65) (0.66) (0.71) (0.62)
Dividends from net realized capital gains . . . -- -- (0.16) (0.08) --
Dividends in excess of net realized
capital gains . . . . . . . . . . . . . . . . -- (0.27) -- -- --
--------- --------- --------- --------- --------
Total Dividends: . . . . . . . . . . . . . . (0.64) (0.92) (0.82) (0.79) (0.62)
--------- --------- --------- --------- --------
Net increase (decrease) in net asset value . . . . 1.09 (1.83) 0.77 0.25 0.35
--------- --------- --------- --------- --------
Net Asset Value, End of Period . . . . . . . . . . $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
Total Return . . . . . . . . . . . . . . . . . . . 18.66% (8.39%) 15.63% 10.32% 10.04%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . $ 134,631 $ 118,776 $ 162,594 $ 108,774 $ 57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . 6.33% 6.28% 5.98% 6.55% 7.25%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . 0.85% 0.78% 0.76% 0.87% 0.95%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . 1.07% 0.98% 0.96% 0.94% 0.95%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . 110% 108% 128% 121% 145%(5)
</TABLE>

(1) The Fund commenced operations on December 14, 1990.

(2) For periods prior to the year ended October 31, 1994, the per share
amounts and selected ratios reflect the financial results of both
Retail and Trust Shares. On September 7, 1995, Retail Shares of the
Fund were redesignated "Retail A Shares."

(4) Net investment income per share before waiver of fees by the
Investment Adviser and/or Administrator for the years ended October
31, 1993, 1992 and1991 were $0.63, $0.67 and $0.64, respectively.

(5) Not Annualized.

(6) Annualized.

4
<PAGE> 57
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL

The Fund's investment objective is to seek a high level of current
income consistent with prudent risk of capital. The Fund will invest
substantially all of its assets in corporate debt obligations such as bonds,
debentures, obligations convertible into common stock, "money market"
instruments such as bank obligations and commercial paper, obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
obligations of supranational banks. Examples of those include the
International Bank for Reconstruction and Development ("World Bank"), the Asian
Development Bank and the InterAmerican Development Bank. Obligations of
supranational banks may be supported by appropriated but unpaid commitments of
their member countries and there is no assurance that those commitments will be
undertaken or met in the future. The Fund may also invest, from time to time,
in municipal securities. The purchase of municipal securities may be
advantageous when, as a result of prevailing economic, regulatory or other
circumstances, the performance of such securities, on a pretax basis, is
comparable to that of corporate or U.S. debt obligations. The Fund may enter
into interest rate futures contracts to hedge against changes in market values
of fixed-income instruments that the Fund holds or intends to purchase. See
"Other Investment Policies and Risk Considerations." At least 65% of the
Fund's total assets will be invested in non-convertible bonds. Any common
stock received through the conversion of convertible debt obligations will be
sold in an orderly manner as soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in high quality debt obligations that are
rated, at the time of purchase, within the two highest ratings of S&P or
Moody's (or, if unrated, are determined by Fleet Investment Advisors Inc. (the
"Investment Adviser" or "Fleet") to be of comparable quality) and in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and "money market" instruments such as those listed below
under "Other Investment Policies." Unrated securities will be determined to be
of comparable quality to high quality debt obligations if, among other things,
other outstanding obligations of the issuers of such securities are rated AA or
A-2/P-2 or better. When, in the opinion of the Investment Adviser, a defensive
investment posture is warranted, the Fund may invest temporarily and without
limitation in high quality, short-term "money market" instruments. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

The Fund may also invest up to 5% of its total assets in
dollar-denominated high quality debt obligations of U.S. companies issued
outside the United States. In addition, the Fund may acquire high quality debt
obligations issued by Canadian Provincial Governments, which are similar to
U.S. Municipal Securities except that the income derived therefrom is fully
subject to U.S. Federal taxation. These instruments are denominated in either
Canadian or U.S. dollars and have an established over-the-counter market in the
United States.

The Fund seeks to provide a current yield greater than that generally
available from a portfolio of high quality short-term obligations. The Fund's
average weighted maturity will vary from time to time depending on, among other
things, current market and economic conditions and the comparative yields on
instruments with different maturities. The Fund adjusts its average weighted
maturity and its holdings of corporate and U.S. Government debt securities in a
manner consistent with the Investment Adviser's assessment of prospective
changes in interest rates. The success of this strategy depends upon the
Investment Adviser's ability to predict changes in interest rates.

The value of the Fund's portfolio securities will generally vary
inversely with changes in prevailing interest rates. The high quality credit
criteria applied to the selection of portfolio securities are intended to
reduce adverse price changes due to credit considerations. See "Other
Investment Policies and Risk Considerations" below for information regarding
additional investment policies of the Fund.

5
<PAGE> 58
The Investment Adviser will use its best efforts to achieve the Fund's
investment objective, although its achievement cannot be assured. The
investment objective of the Fund may not be changed without the approval of the
holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Except as noted below under "Investment Limitations," the
Fund's investment policies may be changed without shareholder approval. An
investor should not consider an investment in the Fund to be a complete
investment program.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations and Money Market Instruments

The Fund may, in accordance with its investment policies, invest from
time to time in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and in "money market" instruments, including bank
obligations and commercial paper.

Obligations issued or guaranteed by the U.S. Government, its agencies
and instrumentalities include U.S. Treasury securities, which differ only in
their interest rates, maturities and time of issuance: Treasury Bills have
initial maturities of one year or less; Treasury Notes have initial maturities
of one to ten years; and Treasury Bonds generally have initial maturities of
more than ten years. Obligations of certain agencies and instrumentalities of
the U.S. Government, such as those of the Government National Mortgage
Association, are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the Treasury; others, such as those of the
Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law. Some of these
instruments may be variable or floating rate instruments.

Bank obligations include bankers' acceptances, negotiable certificates
of deposit, and non-negotiable time deposits issued for a definite period of
time and earning a specified return by a U.S. bank which is a member of the
Federal Reserve System or is insured by the Federal Deposit Insurance
Corporation, or by a savings and loan association or savings bank which is
insured by the Federal Deposit Insurance Corporation. Bank obligations also
include U.S. dollar-denominated obligations of foreign branches of U.S. banks
or of U.S. branches of foreign banks, all of the same type as domestic bank
obligations. Investment in bank obligations is limited to the obligations of
financial institutions having more than $1 billion in total assets at the time
of purchase.

6
<PAGE> 59
Commercial paper may include variable and floating rate instruments
which are unsecured instruments that permit the indebtedness thereunder to
vary. Variable rate instruments provide for periodic adjustments in the
interest rate. Floating rate instruments provide for automatic adjustment of
the interest rate whenever some other specified interest rate changes. Some
variable and floating rate obligations are direct lending arrangements between
the purchaser and the issuer and there may be no active secondary market.
However, in the case of variable and floating rate obligations with a demand
feature, the Fund may demand payment of principal and accrued interest at a
time specified in the instrument or may resell the instrument to a third party.
In the event that an issuer of a variable or floating rate obligation defaulted
on its payment obligation, the Fund might be unable to dispose of the note
because of the absence of a secondary market and could, for this or other
reasons, suffer a loss to the extent of the default. The Fund may also
purchase Rule 144A securities. See "Investment Limitations."

Types of Municipal Securities

The Fund's portfolio may also include "moral obligation" securities,
which are normally issued by special purpose public authorities. If the issuer
of moral obligation securities is unable to meet its debt service obligations
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.

Variable and Floating Rate Municipal Securities

Municipal Securities purchased by the Fund may include rated and
unrated variable and floating rate tax-exempt instruments. There may be no
active secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to the Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days' notice and do not have an active trading market) that
are acquired by the Fund are subject to the 10% limit described in Investment
Limitation No. 3 under "Investment Limitations" in this Prospectus.

Repurchase and Reverse Repurchase Agreements

The Fund may purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually specified date and price
("repurchase agreements"). Repurchase agreements will be entered into only with
financial institutions such as banks and broker/dealers which are deemed to be
creditworthy by the Investment Adviser under guidelines approved by Galaxy's
Board of Trustees. The Fund will not enter into repurchase agreements with
Fleet or any of its affiliates. Unless a repurchase agreement has a remaining
maturity of seven days or less or may be terminated on demand by notice of
seven days or less, the repurchase agreement will be considered an illiquid
security and will be subject to the 10% limit described in Investment
Limitation No. 3 under "Investment Limitations" in this Prospectus.

7
<PAGE> 60
lying securities (including accrued interest) were less than the repurchase
price (including accrued interest) under the agreement. In the event that such
a defaulting seller filed for bankruptcy or became insolvent, disposition of
such securities by the Fund might be delayed pending court action.

The Fund may also borrow funds for temporary purposes by selling
portfolio securities to financial institutions such as banks and broker/dealers
and agreeing to repurchase them at a mutually specified date and price
("reverse repurchase agreements"). Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline below
the repurchase price. The Fund would pay interest on amounts obtained pursuant
to a reverse repurchase agreement.

Securities Lending

The Fund may lend its portfolio securities to financial institutions
such as banks and broker/dealers in accordance with the investment limitations
described below. Such loans would involve risks of delay in receiving
additional collateral or in recovering the securities loaned or even loss of
rights in the collateral, should the borrower of the securities fail
financially. Any portfolio securities purchased with cash collateral would
also be subject to possible depreciation. Loans will generally be short-term,
will be made only to borrowers deemed by the Investment Adviser to be of good
standing and only when, in the Investment Adviser's judgment, the income to be
earned from the loan justifies the attendant risks. The Fund currently intends
to limit the lending of its portfolio securities so that, at any given time,
securities loaned by the Fund represent not more than one-third of the value of
its total assets.

Investment Company Securities

Interest Rate Futures Contracts

The Fund may enter into contracts (both purchases and sales) which
provide for the future delivery of fixed-income securities (commonly known as
interest rate futures contracts). The Fund will not engage in futures
transactions for speculation, but only to hedge against changes in the market
values of securities which the Fund hold or intend to purchase. The Fund will
engage in futures transactions only to the extent permitted by the Commodity
Futures Trading Commission ("CFTC") and the Securities and Exchange Commission
("SEC"). The purchase of futures instruments in connection with securities
which the Funds intend to purchase will require an amount of cash and/or U.S.
Government obligations, equal to the market value of the outstanding futures
contracts, to be deposited in a segregated account to collateralize the
position and thereby insure that the

8
<PAGE> 61
use of such futures is unleveraged. The Fund will limit its hedging
transactions in futures contracts so that, immediately after any such
transaction, the aggregate initial margin that is required to be posted by the
Fund under the rules of the exchange on which the futures contract is traded
does not exceed 5% of the Fund's total assets after taking into account any
unrealized profits and unrealized losses on the Fund's open contracts. In
addition, no more than one-third of the Fund's total assets may be covered by
such contracts.

Transactions in futures as a hedging device may subject the Fund to a
number of risks. Successful use of futures by the Fund is subject to the
ability of the Investment Adviser to predict correctly movements in the
direction of the market. In addition, there may be an imperfect correlation, or
no correlation at all, between movements in the price of futures contracts and
movements in the price of the instruments being hedged. There is no assurance
that a liquid market will exist for any particular futures contract at any
particular time. Consequently, the Fund may realize a loss on a futures
transaction that is not offset by a favorable movement in the price of
securities which the Fund holds or intends to purchase or may be unable to
close a futures position in the event of adverse price movements. Additional
information concerning futures transactions is contained in Appendix B to the
Statement of Additional Information.

When-Issued, Forward Commitment and Delayed Settlement Transactions

The Fund may purchase eligible securities on a "when-issued" basis and
may purchase or sell securities on a "forward commitment" basis. The Fund may
also purchase or sell eligible securities on a "delayed settlement" basis.
When-issued and forward commitment transactions, which involve a commitment by
the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the
Fund to lock in a price or yield on a security it owns or intends to purchase,
regardless of future changes in interest rates. Delayed settlement describes
settlement of a securities transaction in the secondary market which will occur
sometime in the future. When-issued, forward commitment and delayed settlement
transactions involve the risk, however, that the yield or price obtained in a
transaction may be less favorable than the yield or price available in the
market when the securities delivery takes place. It is expected that forward
commitments, when-issued purchases and delayed settlements will not exceed 25%
of the value of the Fund's total assets absent unusual market conditions. In
the event the Fund's forward commitments, when-issued purchases and delayed
settlements ever exceeded 25% of the value of its total assets, the Fund's
liquidity and the ability of the Investment Adviser to manage the Fund may be
adversely affected. The Fund does not intend to engage in when-issued
purchases, forward commitments and delayed settlements for speculative
purposes, but only in furtherance of their investment objectives.

Stand-By Commitments

Asset-Backed Securities

9
<PAGE> 62
another. Assets generating such payments will consist of such instruments as
motor vehicle installment purchase obligations, credit card receivables and
home equity loans. Payment of principal and interest may be guaranteed up to
certain amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with entities issuing the securities. The
estimated life of an asset-backed security varies with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of the asset-backed security, will be primarily
a function of current market rates, although other economic and demographic
factors will be involved. The Fund will not invest more than 10% of its total
assets in asset-backed securities. See "Asset-Backed Securities" in the
Statement of Additional Information.

Mortgage-Backed Securities

The Fund may invest in mortgage-backed securities (including
collateralized mortgage obligations) that represent pools of mortgage loans
assembled for sale to investors by various governmental agencies and
government-related organizations such as the Government National Mortgage
Association, the Federal National Mortgage Association, and the Federal Home
Loan Mortgage Corporation. Mortgage-backed securities provide a monthly
payment consisting of interest and principal payments. Additional payment may
be made out of unscheduled repayments of principal resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. To the extent that the 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 the Fund from investing in mortgaged-backed securities may be affected
by reinvestment of prepayments at higher or lower rates than the original
investment.

Other mortgage-backed securities are issued by private issuers,
generally originators of and investors in mortgage loans, including savings
associations, mortgage bankers, commercial banks, investment bankers, and
special purpose entities. These private mortgage-backed securities may be
supported by U.S. Government mortgage-backed securities or some form of
non-government credit enhancement. Mortgage-backed securities have either
fixed or adjustable interest rates. The rate of return on mortgage-backed
securities may be affected by prepayments of 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, like other debt securities, the
values or mortgage-related securities, including government and
government-related mortgage pools, generally will fluctuate in response to
market interest rates. To the extent that collateralized mortgage obligations
are considered to be investment companies, investments in such obligations will
be subject to the percentage limitations described under "Investment Company
Securities" above.

Stripped-Obligations

10
<PAGE> 63
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 which are not issued by the U.S.
Government (or a U.S. Government agency or instrumentality) are considered
illiquid. Obligations issued by the U.S. Government may be considered liquid
under guidelines established by the Trust's Board of Trustees if they can be
disposed of promptly in the ordinary course of business at a value reasonably
close to that used in the calculation of net asset value per share.

Guaranteed Investment Contracts

The Fund may invest in guaranteed investment contracts ("GICs") issued
by United States and Canadian insurance companies. Pursuant to GICs, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund payments at
negotiated, floating or fixed interest rates. A GIC is a general obligation of
the issuing insurance company and not a separate account. The purchase price
paid for a GIC becomes part of the general assets of the insurance company, and
the contract is paid from the company's general assets. The Fund will only
purchase GICs that are issued or guaranteed by insurance companies that at the
time of purchase are rated at least AA by S&P or receive a similar high quality
rating from a nationally recognized service which provides ratings of insurance
companies. GICs are considered illiquid securities and will be subject to the
Fund's 10% limitation on such investments, unless there is an active and
substantial secondary market for the particular instrument and market
quotations are readily available.

Bank Investment Contracts

The Fund may invest in bank investment contracts ("BICs") issued by
banks that meet the quality and asset size requirements for banks described
above under "U.S. Government Obligations and Money Market Instruments."
Pursuant to BICs, cash contributions are made to a deposit account at the bank
in exchange for payments at negotiated, floating or fixed interest rates. A
BIC is a general obligation of the issuing bank. BICs are considered illiquid
securities and will be subject to the Fund's 10% limitation on such
investments, unless there is an active and substantial secondary market for the
particular instrument and market quotations are readily available.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if
the Investment Adviser believes that such a disposition is consistent with the
Fund's investment objective. Portfolio investments may be sold for a variety of
reasons, such as a more favorable investment opportunity or other circumstances
bearing on the desirability of continuing to hold such investments. A
portfolio turnover rate of 100% or more is considered high, although the rate
of portfolio turnover will not be a limiting factor in making portfolio
decisions. A high rate of portfolio turnover may result in the realization of
substantial capital gains and involves correspondingly greater transaction
costs. To the extent that net capital gains are realized, distributions
derived from such gains are treated as ordinary income for Federal income tax
purposes. See "Financial Highlights" and "Taxes -- Federal."

11
<PAGE> 64
INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy
and may not be changed with respect to the Fund without the affirmative vote of
the holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Other investment limitations that also cannot be changed
without such a vote of shareholders are contained in the Statement of
Additional Information under "Investment Objectives and Policies."

The Fund may not:

1. Make loans, except that (i) the Fund may purchase or
hold debt instruments in accordance with its investment objective and
policies, and may enter into repurchase agreements with respect to
portfolio securities, and (ii) the Fund may lend portfolio securities
against collateral consisting of cash or securities which are
consistent with the 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.

2. Borrow money or issue senior securities, except from
domestic banks for temporary purposes and then in amounts not in
excess of 10% of the value of its total assets at the time of such
borrowing (provided that the Fund may borrow pursuant to reverse
repurchase agreements in accordance with its investment policies and
in amounts not in excess of 10% of the value of its total assets at
the time of such borrowing); or mortgage, pledge, or hypothecate any
assets except in connection with any such borrowing and in amounts not
in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of such borrowing. The
Fund will not purchase securities while borrowings (including reverse
repurchase agreements) in excess of 5% of its total assets are
outstanding.

3. Invest more than 10% of the value of its net assets
in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days, time deposits with maturities in
excess of seven days, restricted securities, non-negotiable time
deposits and other securities which are not readily marketable.

4. Purchase securities of any one issuer, other than
obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, if immediately after such purchase more than 5%
of the value of its total assets would be invested in such issuer,
except that up to 25% of the value of its total assets may be invested
without regard to this limitation.

In addition, the Fund may not purchase any securities which would
cause 25% or more of the value of the Fund's total assets at the time of
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry; provided, however
that (a) there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, (b)
wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents, and (c) utilities will be classified according to
their services. (For example, gas, gas transmission, electric and gas,
electric and telephone each will be considered a separate industry.)

12
<PAGE> 65
longer interested in purchasing these securities. For purposes of the 10%
limitation on purchases of illiquid instruments described under Investment
Limitation No. 3 above, Rule 144A securities will not be considered illiquid if
the Investment Adviser has determined, in accordance with guidelines
established by the Board of Trustees, that an adequate trading market exists
for such securities.

If a percentage limitation is satisfied at the time of investment, a
later increase in such percentage resulting from a change in the value of the
Fund's portfolio securities will not constitute a violation of the limitation.

PRICING OF SHARES

Net asset value per share of the Fund is determined as of the close of
regular trading hours on the New York Stock Exchange (the "Exchange"),
currently 4:00 p.m. (Eastern Time). The net asset value per share is
determined on each day on which the Exchange is open for trading. Currently,
the holidays which Galaxy observes are New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Net asset value per share for purposes of pricing sales and
redemptions is calculated separately for each series of shares by dividing the
value of all securities and other assets attributable to a particular series of
the Fund, less the liabilities attributable to shares of that series of the
Fund, by the number of outstanding shares of that series of the Fund.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Fund are sold on a continuous basis by Galaxy's
distributor, 440 Financial Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of First Data Investor Services Group, Inc. (formerly
known as The Shareholder Services Group, Inc. d/b/a 440 Financial). The
Distributor is a registered broker/dealer with principal offices located at 290
Donald Lynch Boulevard, Marlboro, Massachusetts 01752.

PURCHASE OF SHARES

13
<PAGE> 66
of record by Institutions. The Institution is responsible for transmitting to
the Distributor orders for purchases of Trust Shares and for wiring required
funds in payment to Galaxy's custodian on a timely basis. The Distributor is
responsible for transmitting such orders to Galaxy's transfer agent for
execution. Beneficial ownership of Trust Shares will be recorded by the
Institution and reflected in the account statements it provides to its
Customers. Confirmations of purchases and redemptions of Trust Shares will be
sent to the appropriate Institution. Purchases of Trust Shares will be
effected only on days on which the Distributor, Galaxy's custodian and the
purchasing Institution are open for business ("Business Days").

Galaxy reserves the right to reject any purchase order, in whole or in
part.

The issuance of Trust Shares is recorded on the books of the Fund and
Trust Share certificates will not be issued.

Customers may purchase Trust Shares through procedures established by
Institutions in connection with the requirements of their Customer accounts.
Such accounts may include discretionary investment management accounts,
custodial accounts, agency accounts and different types of tax-advantaged
accounts, (including defined contribution plans). Investors should contact
their Institution (or, in the case of employee plans, their employer) for
further information concerning the types of eligible Customer accounts and the
related purchase and redemption procedures.

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance
with procedures governing their accounts at their Institution. It is the
responsibility of the Institution to transmit redemption orders to the
Distributor and to credit its Customers' accounts with the redemption proceeds
on a timely basis. No charge for wiring redemption payments is imposed by
Galaxy, although the Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

14
<PAGE> 67
redemption order if, in its judgment, an earlier payment could adversely affect
the Fund.

Galaxy may require any information reasonably necessary to ensure that
a redemption has been duly authorized.

The Fund reserves the right to redeem shares in any account at their
net asset value involuntarily, upon 60 days' written notice, if the value of
the account is less than $250 as a result of redemptions.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Fund are declared daily
and paid monthly. Dividends on each share of the Fund are determined in the
same manner, irrespective of series, but may differ in amount because of the
difference in the expenses paid by the respective series. Net realized capital
gains are distributed at least annually.

Dividends and distributions will be paid in cash. Customers may elect
to have their dividends reinvested in additional Trust Shares of the Fund at
the net asset value of such shares on the ex-dividend date. Such election, or
any revocation thereof, must be communicated in writing by an Institution on
behalf of Customers to Galaxy's transfer agent and will become effective with
respect to dividends paid after its receipt. The crediting and payment of
dividends to Customers will be in accordance with the procedures governing such
Customers' accounts at their Institution.

TAXES

FEDERAL

The Fund qualified during its last taxable year and intends to
continue to qualify as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"). Such qualification generally
relieves the Fund of liability for Federal income taxes to the extent the
Fund's earnings are distributed in accordance with the Code.

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its tax-exempt interest income (if any) net of certain
deductions for such year. In general, the Fund's investment company taxable
income will be its taxable income, including dividends, interest and short-term
capital gains (the excess of net short-term capital gain over net long-term
capital loss), subject to certain adjustments and excluding the excess of any
net long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year. The policy of the Fund is to distribute as
dividends substantially all of its investment company taxable income and any
net tax-exempt interest income each year. Such dividends will be taxable as
ordinary income to the Fund's shareholders who are not currently exempt from
Federal income taxes, whether such dividends are received in cash or reinvested
in additional shares. (Federal income taxes for distributions to an IRA or a
qualified retirement plan are deferred under the Code.) It is anticipated that
no part of any distribution will qualify for the dividends received deduction
for corporations.

Distribution by the Fund of the excess of its net long-term capital
gain over net short-term capital loss is taxable to shareholders as long-term
capital gain, regardless of how long the shareholder has held shares and
whether such gains are received in cash or reinvested in additional shares.
Such distributions are not eligible for

15
<PAGE> 68
the dividends received deduction.

Dividends declared in October, November or December of any year which
are payable to shareholders of record on a specified date in such months will
be deemed to have been received by shareholders and paid by the Fund on
December 31 of such year if such dividends are actually paid during January of
the following year.

A taxable gain or loss may be realized by a shareholder upon
redemption, transfer or exchange of Fund shares depending upon the tax basis of
such shares and their price at the time of redemption, transfer or exchange.

The foregoing summarizes some of the important Federal tax
considerations generally affecting the Fund and its shareholders and is not
intended as a substitute for careful tax planning. Accordingly, potential
investors in the Fund should consult their tax advisers with specific reference
to their own tax situation. Shareholders will be advised annually as to the
Federal income tax consequences of distributions made each year.

STATE AND LOCAL

MANAGEMENT OF THE FUND

The business and affairs of the Fund are managed under the direction
of Galaxy's Board of Trustees. The Fund's Statement of Additional Information
contains the names of and general background information concerning the
Trustees.

INVESTMENT ADVISER

Fleet, with principal offices at 50 Kennedy Plaza, 2nd Floor,
Providence, Rhode Island 02903, serves as the Investment Adviser to the Funds.
Fleet is an indirect wholly-owned subsidiary of Fleet Financial Group, Inc., a
registered bank holding company with total assets of approximately $84.8
billion at December 31, 1995. Fleet, which commenced operations in 1984, also
provides investment management and advisory services to individual and
institutional clients; and manages other investment portfolios of Galaxy: the
Money Market, Government, Tax-Exempt, U.S. Treasury, Connecticut Municipal
Money Market, Massachusetts Municipal Money Market, Institutional Treasury
Money Market, Equity Value, Equity Growth, Equity Income, International Equity,
Small Company Equity, Asset Allocation, Growth and Income, Small Cap Value,
Short-Term Bond, Intermediate Government Income, Corporate Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds.

Subject to the general supervision of Galaxy's Board of Trustees and
in accordance with the Fund's investment policies, Fleet manages the Fund,
makes decisions with respect to and places orders for all purchases and sales
of its portfolio securities and maintains related records.

Effective March 1, 1996, Kenneth W. Thomae and Marie M. Schofield
serve as co-portfolio managers of the Fund. In this capacity, Mr. Thomae and
Ms. Schofield are primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. Thomae, a Vice President, has been with
Fleet and its predecessors since

16
<PAGE> 69
1985 and has been the Fund's portfolio manager since its inception. Ms.
Schofield, a Vice President, has been with Fleet since 1991 and previously a
portfolio manager at Bank of New England and BayBank Investment Management. She
has over twenty years of experience as a portfolio manager.

For the services provided and expenses assumed with respect to the
Fund, the Investment Adviser is entitled to receive advisory fees, computed
daily and paid monthly, at the annual rate of .75% of the average daily net
assets of the Fund. The fee for the Fund is higher than fees paid by most other
mutual funds, although the Board of Trustees of Galaxy believes that it is not
higher than average advisory fees paid by funds with similar investment
objectives and policies.

AUTHORITY TO ACT AS INVESTMENT ADVISER

ADMINISTRATOR

17
<PAGE> 70
to it by the Fund, either voluntarily or pursuant to applicable statutory
expense limitations. For the fiscal year ended October 31, 1995, FDISG
received administration fees at the effective rate of .088% of the Fund's
average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31,
1986. Galaxy's Declaration of Trust authorizes the Board of Trustees to
classify or reclassify any unissued shares into one or more classes or series
of shares. Pursuant to such authority, the Board of Trustees has authorized the
issuance of an unlimited number of shares in each of three series in the Fund
as follows: Class J-Series 1 shares (Trust Shares), Class J-Series 2 shares
(Retail A Shares) and Class J-Series 3 shares (Retail B Shares), each series
representing interests in the Fund. The Fund is classified as a diversified
company under the 1940 Act. The Board of Trustees has also authorized the
issuance of additional classes and series of shares representing interest in
other portfolios of Galaxy. For information regarding the Fund's Retail Shares
and these other portfolios, which are offered through separate prospectuses,
contact the Distributor at 1-800 628-0414.

Shares of each series in the Fund bear their pro rata portion of all
operating expenses paid by the fund except as follows. Holders of the Fund's
Retail A Shares bear the fees that are paid to Institutions under Galaxy's
Shareholder Service Plan described below and holders of the Fund's Retail B
Shares bear the fees described in the prospectus for such shares that are paid
under Galaxy's Distribution and Services Plan at an annual rate not to exceed
.80% of the average daily net asset value of the Fund's outstanding Retail B
Shares. Currently, these payments are not made with respect to the Fund's
Trust Shares. In addition, shares of each series in the Fund bear differing
transfer agency expenses. Standardized yield and total return quotations are
computed separately for each series of shares. The difference in the expenses
paid by the respective series will affect their performance.

Retail A Shares of the Fund are sold with a maximum front-end sales
charge of 3.75%. Retail B Shares are sold with a maximum contingent deferred
sales charge of 5.0%. Retail A and Retail B Shares have certain exchange and
other privileges which are not available with respect to Trust Shares.

Each share of Galaxy (irrespective of series designation) has a par
value of $.001 per share, represents an equal proportionate interest in the
related Fund with other shares of the same class, and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
such Fund as are declared in the discretion of Galaxy's Board of Trustees.

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.

SHAREHOLDER SERVICES PLAN

18
<PAGE> 71
Shares and are intended to supplement the services provided by FDISG as
administrator and transfer agent to the shareholders of record of Retail A
Shares. The Plan provides that Galaxy will pay fees for such services at an
annual rate of up to .30% (on an annualized basis) of the average daily net
asset value of Retail A Shares owned beneficially by Customers. Institutions
may also receive up to one-half of this fee for providing 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 the Fund; providing
sub-accounting with respect to Retail A Shares or the information necessary for
sub-accounting; and providing periodic mailings to Customers. Institutions may
also receive up to one-half of this fee for providing one or more of these
additional services to such Customers: providing Customers with information as
to their positions in Retail A Shares; responding to Customer inquiries; and
providing a service to invest the assets of Customers in Retail A Shares.
These services are described more fully in Galaxy's Statement of Additional
Information under "Shareholder Services Plan."

Although the Shareholder Services Plan has been approved with respect
to both Retail A Shares and Trust Shares of the Fund, as of the date of this
Prospectus, Galaxy intends to enter into servicing agreements under the
Shareholder Services Plan only with respect to Retail A Shares of the Fund, and
to limit the payment under these servicing agreements for the Fund to an
aggregate fee of not more than .15% (on an annualized basis) of the average
daily net asset value of the Retail A Shares of the Fund beneficially owned by
Customers of Institutions. Galaxy understands that Institutions may charge
fees to their Customers who are the beneficial owners of Retail A Shares in
connection with their accounts with such Institutions. Any such fees would be
in addition to any amounts which may be received by an Institution under the
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 A Shares.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Trust Company, an
affiliate of the Investment Adviser, pursuant to which Fleet Trust Company
performs certain sub-account and administrative functions ("Sub-Account
Services") on a per account basis with respect to Trust Shares of the Fund held
by defined contribution plans, including maintaining records reflecting
separately with respect to each plan participant's sub-account all purchases
and redemptions of Trust Shares and the dollar value of Trust Shares in each
sub-account; crediting to each Participant's sub-account all dividends and
distributions with respect to that sub-account; and transmitting to each
participant a periodic statement regarding the sub-account as well as any proxy
materials, reports and other material Fund communications. Fleet Trust Company
is compensated by FDISG for the Sub-Account Services and in connection
therewith the transfer agency fees payable by Trust Shares of the Fund to FDISG
have been increased by an amount equal to these fees. In substance, therefore,
the holders of Trust Shares of the Fund indirectly bear these fees.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A., located at 1 Chase Manhattan Plaza,
New York, New York 10081, a wholly-owned subsidiary of The Chase Manhattan
Corporation, serves as the custodian of the Fund's assets, and First Data
Investor Services Group, Inc. (formerly known as The Shareholder Services
Group, Inc. d/b/a 440 Financial) ("FDISG"), a wholly-owned subsidiary First
Data Corporation, serves as the Fund's transfer and dividend disbursing agent.
Services performed by both entities for the Fund are described in the Statement
of Additional Information. Communications to FDISG should be directed to FDISG
at P.O. Box 5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108.

19
<PAGE> 72
EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection
with the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities qualification fees; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, fund accounting
and custody fees; charges of the transfer agent and dividend disbursing agent;
certain insurance premiums; outside auditing and legal expenses; costs of
independent pricing services; costs of shareholders' reports and shareholder
meetings; and any extraordinary expenses. The Fund also pays for brokerage
fees and commissions in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders,
the performance and yields of the Fund may be quoted and compared to those of
other mutual funds with similar investment objectives and to stock or other
relevant bond indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, the performance of the Funds may be compared to data
prepared by Lipper Analytical Services, Inc., a widely recognized independent
service which monitors the performance of mutual funds.

Performance and yield data as reported in national financial
publications including, but not limited to, Money Magazine, Forbes, Barron's,
The Wall Street Journal and The New York Times, or publications of a local or
regional nature, may also be used in comparing the performance and yields of
the Fund. The performance and yield data will be calculated separately for
Trust Shares, Retail A Shares and Retail B Shares of the Fund.

The standard yield is computed by dividing the Fund's average daily
net investment income per share during a 30-day (or one month) base period
identified in the advertisement by the net asset value per share on the last
day of the period, and annualizing the result on a semi-annual basis. The Fund
may also advertise its "effective yield" which is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to
be reinvested.

The Fund may also advertise its performance using "average annual
total return" over various periods of time. Such total return figures reflect
the average percentage change in the value of an investment in the Fund from
the beginning date of the measuring period to the end of the measuring period.
Average total return figures will be given for the most recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well,
such as from the commencement of the Fund's operations, or on a year-by-year
basis. The Fund may also use "aggregate total return" figures for various
periods, representing the cumulative change in the value of an investment in
the Fund for the specified period. Both methods of calculating total return
assume that dividend and capital gain distributions made by the Fund during the
period are reinvested in Fund shares.

20
<PAGE> 73
included in calculations of yield and performance.

The portfolio manager of the Fund and other investment professionals
may from time to time discuss in advertising, sales literature or other
material, including periodic publications, various topics of interest to
shareholders and prospective investors. The topics may include but are not
limited to the advantages and disadvantages of investing in tax-deferred and
taxable investments; Fund performance and how such performance may compare to
various market indices; shareholder profiles and hypothetical investor
scenarios; the economy; the financial and capital markets; investment
strategies and techniques; investment products; and tax, retirement and
investment planning.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent certified public accountants.

As used in this Prospectus, a "vote of the holders of a majority of
the outstanding shares" of either Galaxy or the Fund means, with respect to the
approval of an investment advisory agreement or a change in an investment
objective or fundamental investment policy, the affirmative vote of the holders
of the lesser of (a) more than 50% of the outstanding shares of Galaxy or the
Fund, or (b) 67% or more of the shares of Galaxy or the Fund present at a
meeting if more than 50% of the outstanding shares of Galaxy or the Fund are
represented at the meeting in person or by proxy.

<PAGE> 74
TRUST

THE GALAXY FUND

SHORT-TERM BOND FUND

INTERMEDIATE GOVERNMENT INCOME FUND

HIGH QUALITY BOND FUND

PROSPECTUS

FEBRUARY 29, 1996

<PAGE> 75

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR BY THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.

TABLE OF CONTENTS

<TABLE>

PAGE
<S> <C>
EXPENSE SUMMARY 3
FINANCIAL HIGHLIGHTS 4
INVESTMENT OBJECTIVES AND POLICIES 8
Short-Term Bond Fund 8
Intermediate Government Income Funds 9
High Quality Bond Fund 9
Special Risk Considerations 10
Other Investment Policies
and Risk Considerations 11
INVESTMENT LIMITATIONS 17
PRICING OF SHARES 18
HOW TO PURCHASE AND REDEEM SHARES 19
Distributor 19
Purchase of Shares 19
Redemption of Shares 20
DIVIDENDS AND DISTRIBUTIONS 20
TAXES 21
Federal 21
State and Local 22
MANAGEMENT OF THE FUNDS 22
Investment Adviser 22
Authority to Act as Investment Adviser 23
Administrator 23
DESCRIPTION OF GALAXY AND ITS SHARES 24
Shareholder Services Plan 25
Affiliate Agreement for Sub-Account
Services 25
CUSTODIAN AND TRANSFER AGENT 26
EXPENSES 26
PERFORMANCE AND YIELD INFORMATION 26
MISCELLANEOUS 27
</TABLE>

<PAGE> 76

THE GALAXY FUND

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes three series of Galaxy's shares (collectively, the
"Trust Shares") which represent interests in three separate investment
portfolios (individually, a "Fund," collectively, the "Funds") offered to
investors by Galaxy, each having its own investment objective and policies:

The SHORT-TERM BOND FUND'S investment objective is to seek a high level of
current income consistent with preservation of capital. Under normal market
and economic conditions, the Fund will invest substantially all of its assets
in debt obligations of domestic and foreign issuers rated at the time of
purchase within the three highest ratings of Standard & Poor's Ratings Group
("S&P") or Moody's Investors Service, Inc. ("Moody's") (or which, if unrated,
are of comparable quality) and in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and "money market" instruments.

The INTERMEDIATE GOVERNMENT INCOME FUND'S investment objective is to seek
the highest level of current income consistent with prudent risk of capital.
Subject to this objective, the Fund's investment adviser will consider the
total rate of return on portfolio securities in managing the Fund. Under
normal market and economic conditions, the Fund will invest substantially all
of its assets in debt obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, in debt obligations rated at the time of
purchase within the three highest ratings of S&P or Moody's (or which, if
unrated, are of comparable quality) and "money market" instruments. The Fund
was previously called the Intermediate Bond Fund.

The HIGH QUALITY BOND FUND'S investment objective is to seek a high level
of current income consistent with prudent risk of capital. Under normal market
and economic conditions, the Fund will invest substantially all of its assets
in high quality debt obligations that are rated at the time of purchase within
the two highest ratings of S&P or Moody's (or which, if unrated, are of
comparable quality) and in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and "money market" instruments.

This Prospectus describes Trust Shares in each Fund. Trust Shares are
offered to investors maintaining qualified accounts at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc.,and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue an additional series of shares , Retail A
Shares, in the Intermediate Government Income Fund, and two additional series
of shares, Retail A shares and Retail B Shares, in each of the Short-Term Bond
Fund and High Quality Bond Fund (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet
Financial Group, Inc., its affiliates, their correspondent banks and other
qualified banks, savings and loans associations and broker/dealers on behalf of
their customers. Trust Shares, Retail A Shares and Retail B Shares in a Fund
represent equal pro rata interests in the Fund, except they bear different
expenses which reflect the difference in the range of services provided to
them. See "Financial Highlights," "Management of the Funds" and "Description
of Galaxy and Its Shares" herein.

Each of the Funds is advised by Fleet Investment Advisors Inc. and
sponsored and distributed by 440 Financial Distributors, Inc., which is
unaffiliated with Fleet Investment Advisors Inc. and its parent, Fleet
Financial Group, Inc., and affiliates.

<PAGE> 77

SHARES OF THE 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 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 FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

FEBRUARY 29, 1996

<PAGE> 78

EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction expenses
imposed by each Fund with respect to its Trust Shares, and (ii) the operating
expenses for Trust Shares of each Fund. Examples based on the table are also
shown.

<TABLE>
<CAPTION>
INTERMEDIATE HIGH
SHORT-TERM GOVERNMENT QUALITY
SHAREHOLDER TRANSACTION EXPENSES BOND FUND INCOME FUND BOND FUND
- -------------------------------- ---------- ------------ ---------
<S> <C> <C> <C>
Sales Load .................................. None None None
Sales Load on Reinvested Dividends .......... None None None
Deferred Sales Load ......................... None None None
Redemption Fees ............................. None None None
Exchange Fees ............................... None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
Advisory Fees (After Fee Waivers) ........... .55% .55% .55%
12b-l Fees .................................. None None None
Other Expenses .............................. .33% .24% .36%
---- ---- ----
Total Fund Operating Expenses
(After Fee Waivers) ....................... .88% .79% .91%
==== ==== ====
</TABLE>

- -------------
EXAMPLE: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING
(1) A 5% ANNUAL RETURN, AND (2) REDEMPTION OF YOUR INVESTMENT AT THE END OF THE
FOLLOWING PERIODS:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Short-Term Bond Fund ................. $9 $28 $48 $106
Intermediate Government Income Fund .. $8 $25 $43 $ 96
High Quality Bond Fund ............... $9 $28 $49 $110
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in the Funds will bear
directly or indirectly. The information contained in the Expense Summary and
Example is based on expenses incurred by each Fund during the last fiscal year,
restated to reflect the expenses which each Fund expects to incur during the
current fiscal year on its Trust Shares. Without voluntary fee waivers by the
Investment Adviser, "Advisory Fees" would be .75%, .75% and .75% and Total Fund
Operating Expenses would be 1.08%, .99% and 1.11% for Trust Shares of the
Short-Term Bond, Intermediate Government Income and High Quality Bond Funds,
respectively. For more complete descriptions of these costs and expenses, see
"Management of the Funds" and "Description of Galaxy and Its Shares" in this
Prospectus and the financial statements and notes incorporated by reference
into the Statement of Additional Information. Any fees that are charged by
affiliates of Fleet Investment Advisors Inc. or other institutions directly to
their customer accounts for services related to an investment in Trust Shares
of the Funds are in addition to and not reflected in the fees and expenses
described above.

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES AND RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN.

<PAGE> 79

FINANCIAL HIGHLIGHTS

This Prospectus describes the Trust Shares in each Fund. Galaxy is also
authorized to issue an additional series of shares , Retail A Shares, in the
Intermediate Government Income Fund, and two additional series of shares,
Retail A Shares and Retail B Shares, in each of the Short-Term Bond Fund and
High Quality Bond Fund. As described below under "Description of Galaxy and
Its Shares," Trust Shares, Retail A Shares and Retail B Shares represent equal
pro rata interests in a Fund, except that (i) effective October 1, 1994 Retail
A Shares of a Fund bear the expenses incurred under Galaxy's Shareholder
Services Plan for Retail A Shares and Trust Shares at an annual rate of up to
.15% of the average daily net asset value of the Fund's outstanding Retail A
Shares, (ii) Retail B Shares of a Fund bear the expenses incurred under
Galaxy's Distribution and Services Plan for Retail B Shares at an annual rate
of up to .80% of the average daily net asset value of the Fund's outstanding
Retail B Shares, and (iii) Trust Shares, Retail A Shares and Retail B Shares
bear differing transfer agency expenses. Retail Shares are offered under a
separate prospectus.

The financial highlights presented below for the Short-Term Bond,
Intermediate Government Income and High Quality Bond Funds have been audited
by Coopers & Lybrand L.L.P., Galaxy's independent accountants, whose report is
contained in Galaxy's Annual Report to Shareholders dated October 31, 1995.
Such financial highlights should be read in conjunction with the financial
statements contained in the Annual Report to Shareholders and incorporated by
reference into the Statement of Additional Information. Information in the
financial highlights for periods prior to the fiscal year ended October 31,
1994 reflects the investment results of both Retail A Shares and Trust Shares
of the Funds (Retail A Shares of the Intermediate Government Income Fund were
first offered during the fiscal year ended October 31, 1992). More information
about the performance of each Fund is also contained in the Annual Report to
Shareholders, which may be obtained without charge by contacting Galaxy at its
telephone numbers or address provided above.

<PAGE> 80

SHORT-TERM BOND FUND(1)

(For a share(2) OUTSTANDING THROUGHOUT EACH PERIOD.)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994 YEAR ENDED PERIOD ENDED
--------------------- OCTOBER 31, OCTOBER 31,
TRUST SHARES 1993(2) 1992(1),(2)
--------------------- ----------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ....... $ 9.73 $ 10.30 $ 10.09 $ 10.00
-------- ------- ------- -------
Income from Investment Operations
Net Investment Income(3),(4) .............. 0.57 0.44 0.47 0.42
Net realized and unrealized gain (loss)
on investments ........................... 0.33 (0.51) 0.22 0.09
-------- ------- ------- -------
Total from Investment Operations ....... 0.90 (0.07) 0.69 0.51
-------- ------- ------- -------
Less Dividends:
Dividends from net investment income ...... (0.57) (0.44) (0.47) (0.42)
Dividends from net realized capital gains.. -- -- (0.01) --
Dividends in excess of net realized
capital gains ............................ -- (0.06) -- --
-------- ------- ------- -------
Total Dividends ........................ (0.57) (0.50) (0.48) (0.42)
-------- ------- ------- -------
Net increase (decrease) in net
asset value ............................... 0.33 (0.57) 0.21 0.09
-------- ------- ------- -------
Net Asset Value, End of Period ............. $ 10.06 $ 9.73 $ 10.30 $ 10.09
======== ======= ======= =======
Total Return ............................... 9.55% (0.66%) 6.98% 5.21%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .......... $ 35,088 $39,843 $85,211 $57,403
Ratios to average net assets:
Net investment income including
reimbursement/waiver ..................... 5.79% 4.45% 4.51% 5.77%(6)
Operating expenses including
reimbursement/waiver ..................... 0.74% 0.91% 0.86% 0.90%(6)
Operating expenses excluding
reimbursement/waiver ..................... 1.02% 1.11% 1.06% 1.20%(6)
Portfolio Turnover Rate .................... 289% 233% 100% 114%(5)
</TABLE>

- -------------------

(1) The Fund commenced operations on December 30, 1991.

(5) Not Annualized.

(6) Annualized.

<PAGE> 81

INTERMEDIATE GOVERNMENT INCOME FUND(1)

(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD.)

YEAR ENDED
OCTOBER 31,
1995 1994 YEAR ENDED OCTOBER 31,(2) PERIOD ENDED
--------------------- ----------------------------------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991 1990 1989 1988(3),(4)
--------------------- -------- ------ ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ......................... $ 9.68 $ 10.72 $ 10.83 $10.46 $ 9.73 $ 10.27 $ 10.40 $10.00
======== ======== ======== ====== ======= ======= ======= ======
Income From Investment Operations:
Net Investment Income(3),(4) ...... 0.64 0.57 0.65 0.71 0.73 0.76 0.8 0.11
Net realized and unrealized gain
(loss) on investments ............ 0.60 (1.03) 0.10 0.40 0.71 (0.56) 0.16 0.29
-------- -------- -------- ------ ------- ------- ------- ------
Total from Investment
Operations ...................... 1.24 (0.46) 0.75 1.11 1.44 0.20 0.98 0.40
-------- -------- -------- ------- -------- -------- -------- ------
Less Dividends:
Dividends from net investment
income ........................... (0.64) (0.56) (0.64) (0.74) (0.71) (0.74) (0.96) --
Dividends in excess of net
investment income ................ -- (0.01) (0.03) -- -- -- -- --
Dividends from net realized
capital gains .................... -- -- (0.19) -- -- -- (0.15) --
Dividends in excess of net
realized capital gains ........... -- (0.01) -- -- -- -- -- --
-------- -------- -------- ------ ------- ------- ------- ------
Total Dividends .................. (0.64) (0.58) (0.86) (0.74) (0.71) (0.74) (1.11) --
-------- -------- -------- ------ ------- ------- ------- ------
Net increase (decrease) in net
asset value ...................... 0.60 (1.04) (0.11) 0.37 0.73 (0.54) (0.13) 0.40
-------- -------- -------- ------ ------- ------- ------- ------
Net Asset Value, End of Period ..... $ 10.28 $ 9.68 $ 10.72 $10.83 $ 10.46 $ 9.73 $10.27 $10.40
======== ======== ======== ====== ======= ======= ====== ======
Total Return ....................... 13.18% (4.39%) 7.06% 10.95% 15.35% 2.06% 10.22% 3.90%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)... $186,037 $212,144 $447,359 $199,135 $99,942 $80,645 $71,400 $58,318
Ratios to average net assets:
Net investment income including
reimbursement/waiver ............. 6.39% 5.61% 6.03% 6.52% 7.25% 7.69% 8.19% 6.41%(6)
Operating expenses including
reimbursement/waiver ............. 0.73% 0.75% 0.80% 0.80% 0.96% 0.98% 0.99% 0.98%(6)
Operating expenses excluding
reimbursement/waiver ............. 0.94% 0.95% 1.00% 0.94% 0.96% 0.96% 0.99% 1.00%(6)
Portfolio Turnover Rate ............ 145% 124% 153% 103% 150% 162% 112% 41%(5)
</TABLE>

- -------------
(1) The Fund (formerly known as the Intermediate Bond Fund) commenced
operations on September 1, 1988.

(3) Net investment income per share for Trust Shares before waiver of fees by
the Investment Adviser and/or Administrator for the years ended October
31, 1995 and 1994 were $0.62 and $0.54, respectively.

(4) Net investment income per share before waiver of fees by the Investment
Adviser and/or Administrator for the years ended October 31, 1993, 1992,
1990 and 1989 were $0.63, $0.70, $0.76, and $0.82, respectively.

(5) Not Annualized.

(6) Annualized.

<PAGE> 82

HIGH QUALITY BOND FUND

(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD.)

<TABLE>

YEAR ENDED
OCTOBER 31, YEAR ENDED
1995 1994 OCTOBER 31,(2) PERIOD ENDED
------------------- --------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991(1),(2)
-------------------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.00
======== ======== ======== ======== =======
Income from Investment Operations
Net Investment Income(3),(4) . . . . . . . . . . . . . . . 0.64 0.65 0.66 0.68 0.64
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . 1.09 (1.56) 0.93 0.36 0.33
-------- -------- -------- -------- -------
Total from Investment Operations . . . . . . . . . . . 1.73 (0.91) 1.59 1.04 0.97
-------- -------- -------- -------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . (0.64) (0.65) (0.66) (0.71) (0.62)
Dividends from net realized capital gains . . . . . . . . -- -- (0.16) (0.08) --
Dividends in excess of net realized
capital gains . . . . . . . . . . . . . . . . . . . . . . -- (0.27) -- -- --
-------- -------- -------- -------- -------
Total Dividends . . . . . . . . . . . . . . . . . . . (0.64) (0.92) (0.82) (0.79) (0.62)
-------- -------- -------- -------- -------
Net increase (decrease) in net asset value . . . . . . . . 1.09 (1.83) 0.77 0.25 0.35
-------- -------- -------- -------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
======== ======== ======== ======== =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . 18.66% (8.39%) 15.63% 10.32% 10.04%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $134,631 $118,776 $162,594 $108,774 $57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 6.33% 6.28% 5.98% 6.55% 7.25%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 0.85% 0.78% 0.76% 0.87% 0.95%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.07% 0.98% 0.96% 0.94% 0.95%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 110% 108% 128% 121% 145%(5)
</TABLE>

- ------------
(1) The Fund commenced operations on December 14, 1990.

(3) Net investment income per share for Trust Shares before waiver of fees by
the Investment Adviser and/or Administrator for the years ended October
31, 1995 and 1994 were $0.62 and $0.63, respectively.

(4) Net investment income per share before waiver of fees by the Investment
Adviser and/or Administrator for the years ended October 31, 1993, 1992
and 1991 were $0.63, $0.67 and $0.64, respectively.

(5) Not Annualized.

(6) Annualized.

<PAGE> 83

INVESTMENT OBJECTIVES AND POLICIES

Fleet Investment Advisors Inc. (the "Investment Adviser" or "Fleet") will
use its best efforts to achieve each Fund's investment objective, although
their achievement cannot be assured. The investment objective of a Fund may
not be changed without the approval of the holders of a majority of its
outstanding shares (as defined under "Miscellaneous"). Except as noted below
under "Investment Limitations," a Fund's investment policies may be changed
without shareholder approval. An investor should not consider an investment in
the Funds to be a complete investment program.

SHORT-TERM BOND FUND

The Short-Term Bond Fund's investment objective is to seek a high level of
current income consistent with preservation of capital. The Fund will invest
substantially all of its assets in corporate debt obligations of domestic and
foreign corporations such as bonds and debentures, obligations convertible into
common stock, "money market" instruments such as bank obligations and
commercial paper, obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and asset-backed and mortgage-backed securities.
The Short-Term Bond Fund may also enter into interest rate futures contracts to
hedge against changes in market values. See "Other Investment Policies and
Risk Considerations." Under normal market and economic conditions, at least
65% of the Fund's total assets will be invested in bonds and debentures,
subject to the quality standards described below. The Fund will not invest in
common stock, and any common stock received through the conversion of
convertible debt obligations will be sold in an orderly manner as soon as
possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in debt obligations rated at the time of
purchase within the three highest ratings of S&P or Moody's (or which, if
unrated, are determined by the Investment Adviser to be of comparable quality)
and in obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and "money market" instruments such as those listed below
under "Other Investment Policies and Risk Considerations." Unrated securities
will be determined to be of comparable quality to rated debt obligations if,
among other things, other outstanding obligations of the issuers of such
securities are rated A or better.When, in the opinion of the Investment
Adviser, a defensive investment posture is warranted, the Fund may invest
temporarily and without limitation in high-quality, short-term money market
instruments. See Appendix A to the Statement of Additional Information for a
description of S&P's and Moody's rating categories.

The Fund may also invest, from time to time, in Municipal Securities. The
purchase of Municipal Securities may be advantageous when, as a result of
prevailing economic, regulatory or other circumstances, the performance of such
securities, on a pretax basis, is comparable to that of corporate or U.S. debt
obligations. In addition, the Fund may invest in obligations issued or
guaranteed by foreign governments or any of their political subdivisions or
instrumentalities. Such obligations include debt obligations issued by
Canadian Provincial Governments, which are similar to U.S. Municipal Securities
except that the income derived therefrom is fully subject to U.S. Federal
taxation. These instruments are denominated in either Canadian or U.S. dollars
and have an established over-the-counter market in the United States. Also
included are debt obligations of supranational entities. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction or development and
international banking institutions and related governmental agencies. Examples
of these include the International Bank for Reconstruction and Development
("World Bank"), the Asian Development Bank and the InterAmerican Development
Bank. Obligations of supranational entities may be supported by appropriated
but unpaid commitments of their member countries, and there is no assurance
that these commitments will be undertaken or met in the future. The Fund may
not invest more than 35% of its total assets in the securities of foreign
issuers.

<PAGE> 84

Under normal conditions the Fund's portfolio securities will have an
average weighted maturity of less than three years.

INTERMEDIATE GOVERNMENT INCOME FUND

The Intermediate Government Income Fund's investment objective is to seek
the highest level of current income consistent with prudent risk of capital.
Subject to this objective, Fleet will consider the total rate of return on
securities in managing the Fund. The Fund will invest in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, in
corporate debt obligations, such as bonds and debentures, obligations
convertible into common stock and "money market" instruments, such as bank
obligations and commercial paper, and in obligations of supranational banks.
See "Investment Objectives and Policies -- Short-Term Bond Fund." The Fund may
also invest, from time to time, in Municipal Securities. See "Investment
Objectives and Policies -- Short-Term Bond Fund." The Intermediate Government
Income Fund may also enter into interest rate futures contracts to hedge
against changes in market values. See "Other Investment Policies and Risk
Considerations." The Fund will not invest in common stock, and any common
stock received through the conversion of convertible debt obligations will be
sold in an orderly manner as soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in debt obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, debt obligations rated,
at the time of purchase, within the three highest ratings of S&P or Moody's (or
which, if unrated, are determined by the Investment Adviser to be of comparable
quality) and "money market" instruments such as those listed below under
"Other Investment Policies and Risk Considerations." Unrated securities will
be determined to be of comparable quality to rated debt obligations if, among
other things, other outstanding obligations of the issuers of such securities
are rated A or better. Notwithstanding the foregoing, under normal market and
economic conditions, at least 65% of the Fund's assets will be invested in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. When, in the opinion of the Investment Adviser, a defensive
investment posture is warranted, the Fund may invest temporarily and without
limitation in high quality, short-term "money market" instruments. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

In addition, the Fund may acquire obligations issued by Canadian
Provincial Governments. See "Investment Objectives and Policies -- Short-Term
Bond Fund."

The Investment Adviser expects that under normal market conditions the
Fund's portfolio securities will have an average weighted maturity of three to
ten years.

HIGH QUALITY BOND FUND

The High Quality Bond Fund's investment objective is to seek a high level
of current income consistent with prudent risk of capital. The Fund will
invest substantially all of its assets in corporate debt obligations, such as
bonds, debentures, obligations convertible into common stock, "money market"
instruments such as bank oblig-

<PAGE> 85

ations and commercial paper, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and obligations of supranational
banks. See "Investment Objectives and Policies -- Short-Term Bond Fund." The
Fund may also invest, from time to time, in Municipal Securities. See
"Investment Objectives and Policies -- Short-Term Bond Fund." The High Quality
Bond Fund may also enter into interest rate futures contracts to hedge against
changes in the market values of fixed-income instruments that the Fund holds or
intends to purchase. See "Other Investment Policies and Risk Considerations."
At least 65% of the Fund's total assets will be invested in non-convertible
bonds. Any common stock received through the conversion of convertible debt
obligations will be sold in an orderly manner as soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in high quality debt obligations that are
rated, at the time of purchase, within the two highest ratings of S&P or
Moody's (or, if unrated, are determined by the Investment Adviser to be of
comparable quality) and in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and "money market" instruments
such as those listed below under "Other Investment Policies." Unrated
securities will be determined to be of comparable quality to high quality debt
obligations if, among other things, other outstanding obligations of the
issuers of such securities are rated AA or A-2/P-2 or better. When, in the
opinion of the Investment Adviser, a defensive investment posture is
warranted, the Fund may invest temporarily and without limitation in high
quality, short-term "money market" instruments. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The Fund seeks to provide a current yield greater than that generally
available from a portfolio of high quality short-term obligations. The High
Quality Bond Fund's average weighted maturity will vary from time to time
depending on, among other things, current market and economic conditions and
the comparative yields on instruments with different maturities. The Fund
adjusts its average weighted maturity and its holdings of corporate and U.S.
Government debt securities in a manner consistent with the Investment Adviser's
assessment of prospective changes in interest rates. The success of this
strategy depends upon the Investment Adviser's ability to predict changes in
interest rates.

The value of the Fund's portfolio securities will generally vary inversely
with changes in prevailing interest rates. The high quality credit criteria
applied to the selection of portfolio securities are intended to reduce adverse
price changes due to credit considerations. See "Other Investment Policies and
Risk Considerations" below for information regarding additional investment
policies of the High Quality Bond Fund.

SPECIAL RISK CONSIDERATIONS

Investments by the Short-Term Bond Fund in foreign securities 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, including the
difficulty of predicting interest rate patterns and fluctuations in 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. In addition, foreign issuers in general may be subject
to different accounting, auditing, reporting and recordkeeping standards than
those applica-

<PAGE> 86

ble to domestic companies, and securities of foreign issuers may be less liquid
and their prices more volatile than those of comparable domestic issuers.

Although the Short-Term Bond Fund may invest in securities denominated in
foreign currencies, the Fund values its securities and other assets in U.S.
dollars. As a result, the net asset value of the Fund's shares may fluctuate
with U.S. dollar exchange rates as well as with price changes of the Fund's
foreign securities in the various local markets and currencies. Thus, an
increase in the value of the U.S. dollar compared to the currencies in which
the Fund makes its foreign investments could reduce the effect of increases and
magnify the effect of decreases in the price of the Fund's foreign 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 foreign 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.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations and Money Market Instruments

The Funds may, in accordance with their investment policies, invest from
time to time in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and in "money market" instruments, including bank
obligations and commercial paper.

Obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities include U.S. Treasury securities, which differ only in their
interest rates, maturities and time of issuance: Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one
to ten years; and Treasury Bonds generally have initial maturities of more than
ten years. Obligations of certain agencies and instrumentalities of the
U.S.Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury; others, such
as those of the Federal Home Loan Banks, are supported by the right of the
issuer to borrow from the Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; still others, such as
those of the Student Loan Marketing Association, are supported only by the
credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law. Some of these
instruments may be variable or floating rate instruments.

Domestic and foreign banks are subject to extensive but different
government regulation which may limit the amount and types of their loans and
the interest rates that may be charged. In addition, the profitability of the
banking industry is largely dependent upon the availability and cost of funds
to finance lending operations and the quality of underlying bank assets.
Investments in obligations of foreign branches of U.S. banks and of U.S.
branches of foreign banks may subject a Fund to additional risks, including
future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationaliza-

<PAGE> 87

tion of foreign deposits, the possible establishment of exchange controls, or
the adoption of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations. In addition,
foreign branches of U.S. banks and U.S. branches of foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks. The Funds will invest in the obligations of
U.S. branches of foreign banks or foreign branches of U.S. banks only when the
Investment Adviser believes that the credit risk with respect to the instrument
is minimal.

Commercial paper may include variable and floating rate instruments which
are unsecured instruments that permit the indebtedness thereunder to vary.
Variable rate instruments provide for periodic adjustments in the interest
rate. Floating rate instruments provide for automatic adjustment of the
interest rate whenever some other specified interest rate changes. Some
variable and floating rate obligations are direct lending arrangements between
the purchaser and the issuer and there may be no active secondary market.
However, in the case of variable and floating rate obligations with a demand
feature, a Fund may demand payment of principal and accrued interest at a time
specified in the instrument or may resell the instrument to a third party. In
the event that an issuer of a variable or floating rate obligation defaulted on
its payment obligation, 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. The Funds may also purchase Rule
144A securities. See "Investment Limitations."

Types of Municipal Securities

The two principal classifications of Municipal Securities which may be
held by the Funds are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the 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.

Each Fund's portfolio may also include "moral obligation" securities,
which are normally issued by special purpose public authorities. If the issuer
of moral obligation securities is unable to meet its debt service obligations
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.

Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from regular Federal income tax are rendered by
bond counsel to the respective issuers at the time of issuance. Neither the
Funds nor the Investment Adviser will review the proceedings relating to the
issuance of Municipal Securities or the bases for such opinions.

Variable and Floating Rate Municipal Securities

Municipal Securities purchased by the Funds may include rated and unrated
variable and floating rate tax-exempt instruments. There may be no active
secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to a Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days' notice and do not have an active trading market) that
are acquired by the Funds are subject to the 10% limit described in Investment
Limitation No. 3 under "Investment Limitations" in this Prospectus.

<PAGE> 88

Repurchase and Reverse Repurchase Agreements

Each Fund may purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually specified date and price
("repurchase agreements"). Repurchase agreements will be entered into only with
financial institutions such as banks and broker/dealers which are deemed to be
creditworthy by the Investment Adviser under guidelines approved by Galaxy's
Board of Trustees. No Fund will enter into repurchase agreements with Fleet or
any of its affiliates. Unless a repurchase agreement has a remaining maturity
of seven days or less or may be terminated on demand by notice of seven days or
less, the repurchase agreement will be considered an illiquid security and will
be subject to the limit described in Investment Limitation No. 3 under
"Investment Limitations" in this Prospectus.

The seller under a repurchase agreement will be required to maintain the
value of the securities which are subject to the agreement and held by a Fund
at not less than the agreed upon repurchase price. If the seller defaulted on
its repurchase obligation, the Fund holding such obligation would suffer a loss
to the extent that the proceeds from a sale of the underlying securities
(including accrued interest) were less than the repurchase price (including
accrued interest) under the agreement. In the event that such a defaulting
seller filed for bankruptcy or became insolvent, disposition of such securities
by the Fund might be delayed pending court action.

Each Fund may also borrow funds for temporary purposes by selling
portfolio securities to financial institutions such as banks and broker/dealers
and agreeing to repurchase them at a mutually specified date and price
("reverse repurchase agreements"). Reverse repurchase agreements involve the
risk that the market value of the securities sold by a Fund may decline below
the repurchase price. A Fund would pay interest on amounts obtained pursuant to
a reverse repurchase agreement.

Securities Lending

Each Fund may lend its portfolio securities to financial institutions such
as banks and broker/dealers in accordance with the investment limitations
described below. Such loans would involve risks of delay in receiving
additional collateral or in recovering the securities loaned or even loss of
rights in the collateral, should the borrower of the securities fail
financially. Any portfolio securities purchased with cash collateral would
also be subject to possible depreciation. Loans will generally be short-term,
will be made only to borrowers deemed by the Investment Adviser to be of good
standing and only when, in the Investment Adviser's judgment, the income to be
earned from the loan justifies the attendant risks. The Funds currently intend
to limit the lending of their portfolio securities so that, at any given time,
securities loaned by a Fund represent not more than one-third of the value of
its total assets.

Investment Company Securities

The Funds may invest in securities issued by other investment companies
which invest in high quality, short-term debt securities and which determine
their net asset value per share based on the amortized cost or penny-rounding
method. Investments in other investment companies will cause a Fund (and,
indirectly, the Fund's shareholders) to bear proportionately the costs incurred
in connection with the investment companies' operations. Securities of other
investment companies will be acquired by a Fund within the limits prescribed by
the Investment Company Act of 1940, as amended (the "1940 Act"). Each Fund
currently intends to limit its investments so that, as determined immediately
after a securities purchase is made: (a) not more than 5% of the value of its
total assets will be invested in the securities of any one investment company;
(b) not more than 10% of the value of its total assets will be invested in the
aggregate in securities of other investment companies as a group; (c) not more
than 3% of the outstanding voting stock of any one investment company will be
owned by the Fund; and (d) not more than 10% of the outstanding voting stock of
any one closed-end investment company will be owned in the aggregate by the
Funds, other investment portfolios of Galaxy, and any other investment
compa-

<PAGE> 89

nies advised by the Investment Adviser. Any change by the Funds in the future
with respect to their policies concerning investments in securities issued by
other investment companies will be made only in accordance with the
requirements of the 1940 Act.

Interest Rate Futures Contracts

The Funds may enter into contracts (both purchases and sales) which
provide for the future delivery of fixed-income securities (commonly known as
interest rate futures contracts). The Funds will not engage in futures
transactions for speculation, but only to hedge against changes in the market
values of securities which the Funds hold or intend to purchase. The Funds
will engage in futures transactions only to the extent permitted by the
Commodity Futures Trading Commission ("CFTC") and the Securities and Exchange
Commission. The purchase of futures instruments in connection with securities
which the Funds intend to purchase will require an amount of cash and/or U.S.
Government obligations, equal to the market value of the outstanding futures
contracts, to be deposited in a segregated account to collateralize the
position and thereby insure that the use of such futures is unleveraged. Each
Fund will limit its hedging transactions in futures contracts so that,
immediately after any such transaction, the aggregate initial margin that is
required to be posted by the Fund under the rules of the exchange on which the
futures contract is traded does not exceed 5% of the Fund's total assets after
taking into account any unrealized profits and unrealized losses on the Fund's
open contracts. In addition, no more than one-third of each Fund's total
assets may be covered by such contracts.

Transactions in futures as a hedging device may subject the Funds to a
number of risks. Successful use of futures by the Funds is subject to the
ability of the Investment Adviser to predict correctly movements in the
direction of the market. In addition, there may be an imperfect correlation, or
no correlation at all, between movements in the price of futures contracts and
movements in the price of the instruments being hedged. There is no assurance
that a liquid market will exist for any particular futures contract at any
particular time. Consequently, the Funds may realize a loss on a futures
transaction that is not offset by a favorable movement in the price of
securities which they hold or intend to purchase or may be unable to close a
futures position in the event of adverse price movements. All income from
investments in futures contracts will be taxable. Additional information
concerning futures transactions, including special rules regarding the taxation
of such transactions, is contained in Appendix B to the Statement of Additional
Information.

When-Issued, Forward Commitment and Delayed Settlement Transactions

Each of the Funds may purchase eligible securities on a "when-issued"
basis and may purchase or sell securities on a "forward commitment" basis.
Each of the Funds may also purchase or sell eligible securities on a "delayed
settlement" basis. When-issued and forward commitment transactions, which
involve a commitment by a Fund to purchase or sell particular securities with
payment and delivery taking place at a future date (perhaps one or two months
later), permit a Fund to lock in a price or yield on a security it owns or
intends to purchase, regardless of future changes in interest rates. Delayed
settlement describes settlement of a securities transaction in the secondary
market which will occur sometime in the future. When-issued, forward
commitment and delayed settlement transactions involve the risk, however, that
the yield or price obtained in a transaction may be less favorable than the
yield or price available in the market when the securities delivery takes
place. It is expected that forward commitments, when-issued purchases and
delayed settlements will not exceed 25% of the value of a Fund's total assets
absent unusual market conditions. In the event a Fund's forward commitments,
when-issued purchases and delayed settlements ever exceeded 25% of the value of
its total assets, the Fund's liquidity and the ability of the Investment
Adviser to manage the Fund may be adversely affected. The Funds do not intend
to engage in when-issued purchases, forward commitments and delayed settlements
for speculative purposes, but only in furtherance of their respective
investment objectives.

<PAGE> 90

Stand-By Commitments

Each Fund may acquire "stand-by commitments" with respect to Municipal
Securities held by them. Under a stand-by commitment, a dealer agrees to
purchase, at a Fund's option, specified Municipal Securities at a specified
price. The Funds will acquire stand-by commitments solely to facilitate
portfolio liquidity and do not intend to exercise their rights thereunder for
trading purposes. The Funds expect that stand-by commitments will generally be
available without the payment of any direct or indirect consideration.
However, if necessary or advisable, a Fund may pay for a stand-by commitment
either separately in cash or by paying a higher price for portfolio securities
which are acquired subject to the commitment (thus reducing the yield otherwise
available for the same securities). Stand-by commitments acquired by a Fund
would be valued at zero in determining the Fund's net asset value.

Asset-Backed Securities

Each Fund may purchase asset-backed securities, which represent a
participation in, or are secured by and payable from, a stream of payments
generated by particular assets, most often a pool of assets similar to one
another. Assets generating such payments will consist of such instruments as
motor vehicle installment purchase obligations, credit card receivables and
home equity loans. Payment of principal and interest may be guaranteed up to
certain amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with entities issuing the securities. The
estimated life of an asset-backed security varies with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of the asset-backed security, will be primarily
a function of current market rates, although other economic and demographic
factors will be involved. A Fund will not invest more than 10% of its total
assets in asset-backed securities. See "Asset-Backed Securities" in the
Statement of Additional Information.

Mortgage-Backed Securities

Each Fund may invest in mortgage-backed securities (including
collateralized mortgage obligations) that represent pools of mortgage loans
assembled for sale to investors by various governmental agencies and
government-related organizations, such as the Government National Mortgage
Association, the Federal National Mortgage Association, and the Federal Home
Loan Mortgage Corporation. Mortgage-backed securities provide a monthly
payment consisting of interest and principal payments. Additional payment may
be made out of unscheduled repayments of principal resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. To the extent that the 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.

Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers, and special purpose
entities. These private mortgage-backed securities may be supported by U.S.
Government mortgage-backed securities or some form of non-government credit
enhancement. Mortgage-backed securities have either fixed or adjustable
interest rates. The rate of return on mortgage-backed securities may be
affected by prepayments of 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, like other debt securities, the values of mortgage-related
securities, including government and government-related mortgage pools,
generally

<PAGE> 91

will fluctuate in response to market interest rates. To the extent that
collateralized mortgage obligations are considered to be investment companies,
investments in such obligations will be subject to the percentage limitations
described under "Investment Company Securities" above.

Stripped Obligations

To the extent consistent with their investment objective, each of the
Funds may purchase 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. These
participations, which may be issued by the U.S. Government or by private
issuers such as banks and other institutions are issued at their "face value,"
and may include stripped mortgage-backed securities ("SMBS"), which are
derivative multi-class mortgage securities. Stripped securities, particularly
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 which are not issued by the
U.S. Government (or a U.S. Government agency or instrumentality) are considered
illiquid. Obligations issued by the U.S. Government may be considered liquid
under guidelines established by the Trust's Board of Trustees if they can be
disposed of promptly in the ordinary course of business at a value reasonably
close to that used in the calculation of net asset value per share.

Guaranteed Investment Contracts

Each Fund may invest in guaranteed investment contracts ("GICs") issued by
United States and Canadian insurance companies. Pursuant to GICs, a Fund makes
cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund payments at
negotiated, floating or fixed interest rates. A GIC is a general obligation of
the issuing insurance company and not a separate account. The purchase price
paid for a GIC becomes part of the general assets of the insurance company, and
the contract is paid from the company's general assets. The Funds will only
purchase GICs that are issued or guaranteed by insurance companies that at the
time of purchase are rated at least AA by S&P or receive a similar high quality
rating from a nationally recognized service which provides ratings of insurance
companies. GICs are considered illiquid securities and will be subject to the
Funds' limitation on such investments, unless there is an active and
substantial secondary market for the particular instrument and market
quotations are readily available.

Bank Investment Contracts

Each Fund may invest in bank investment contracts ("BICs") issued by banks
that meet the quality and asset size requirements for banks described above
under "U.S. Government Obligations and Money Market Instruments." Pursuant to
BICs, cash contributions are made to a deposit account at the bank in exchange
for payments at negotiated, floating or fixed interest rates. A BIC is a
general obligation of the issuing bank. BICs are considered illiquid
securities and will be subject to the Funds' limitation on such investments,
unless there is

<PAGE> 92

an active and substantial secondary market for the particular instrument and
market quotations are readily available.

Portfolio Turnover

Each Fund may sell a portfolio investment soon after its acquisition if
the Investment Adviser believes that such a disposition is consistent with the
Fund's investment objective. Portfolio investments may be sold for a variety of
reasons, such as a more favorable investment opportunity or other circumstances
bearing on the desirability of continuing to hold such investments. A
portfolio turnover rate of 100% or more is considered high, although the rate
of portfolio turnover will not be a limiting factor in making portfolio
decisions. A high rate of portfolio turnover may result in the realization of
substantial capital gains and involves correspondingly greater transaction
costs. To the extent that net capital gains are realized, distributions
derived from such gains are treated as ordinary income for Federal income tax
purposes. See "Financial Highlights" and "Taxes -- Federal."

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy and
may not be changed with respect to any Fund without the affirmative vote of the
holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Other investment limitations that also cannot be changed
without such a vote of shareholders are contained in the Statement of
Additional Information under "Investment Objectives and Policies."

No Fund may:

1. Make loans, except that (i) each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, and
may enter into repurchase agreements with respect to portfolio securities,
and (ii) each Fund may lend portfolio securities against collateral
consisting of cash or securities which are consistent with its permitted
investments, where the value of the collateral is equal at all times to at
least 100% of the value of the securities loaned.

2. Borrow money or issue senior securities, except from domestic banks
for temporary purposes and then in amounts not in excess of 10% of the value
of its total assets at the time of such borrowing (provided that each Fund
may borrow pursuant to reverse repurchase agreements in accordance with its
investment policies and in amounts not in excess of 10% of the value of its
total assets at the time of such borrowing); or mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10%
of the value of the Fund's total assets at the time of such borrowing. No
Fund will purchase securities while borrowings (including reverse
repurchase agreements) in excess of 5% of its total assets are outstanding.

3. Invest more than 10% of the value of its net assets in illiquid
securities, including repurchase agreements with remaining maturities in
excess of seven days, time deposits with maturities in excess of seven
days, restricted securities, non-negotiable time deposits and other
securities which are not readily marketable.

4. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total
assets would be invested in such issuer, except that up to 25% of the value
of its total assets may be invested without regard to this limitation.

In addition, the Funds may not purchase any securities which would cause
25% or more of the value of a

<PAGE> 93

Fund's total assets at the time of purchase to be invested in the securities of
one or more issuers conducting their principal business activities in the same
industry; provided, however that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, (b) wholly-owned finance companies will be considered to be
in the industries of their parents if their activities are primarily related to
financing the activities of the parents, and (c) utilities will be classified
according to their services. (For example, gas, gas transmission, electric and
gas, electric and telephone each will be considered a separate industry.)

With respect to Investment Limitation No. 2 above, each Fund intends to
limit any borrowings (including reverse repurchase agreements) to not more than
10% of the value of its total assets at the time of such borrowing.

The Securities and Exchange Commission ("SEC") has adopted Rule 144A which
allows for a broader institutional trading market for securities otherwise
subject to restrictions on resale to the general public. Rule 144A establishes
a "safe harbor" from the registration requirements of the Securities Act of
1933 for resales of certain securities to qualified institutional buyers. A
Fund's investment in Rule 144A securities could have the effect of increasing
the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the limitation on purchases of illiquid instruments described
under Investment Limitation No. 3 above, Rule 144A securities will not be
considered illiquid if the Investment Adviser has determined, in accordance
with guidelines established by the Board of Trustees, that an adequate trading
market exists for such securities.

If a percentage limitation is satisfied at the time of investment, a later
increase in such percentage resulting from a change in the value of a Fund's
portfolio securities will not constitute a violation of the limitation.

PRICING OF SHARES

Net asset value per share of the Funds is determined as of the close of
regular trading hours on the New York Stock Exchange (the "Exchange"),
currently 4:00 p.m. (Eastern Time). The net asset value per share is
determined on each day on which the 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 for purposes of pricing sales and
redemptions is calculated separately for each series of shares by dividing the
value of all securities and other assets attributable to a particular series of
shares of a Fund, less the liabilities attributable to shares of that series of
the Fund, by the number of outstanding shares of that series of the Fund.

The Funds' assets are valued for purposes of pricing sales and redemptions
by an independent pricing service ("Service") approved by Galaxy's Board of
Trustees. When, in the judgment of the Service, quoted bid prices for portfolio
securities are readily available and are representative of the bid side of the
market, these investments are valued at the mean between quoted bid prices (as
obtained by the Service from dealers in such securities) and asked prices (as
calculated by the Service based upon its evaluation of the market for such
securities). Other investments are carried at fair value as determined by the
Service, based on methods which include consideration of yields or prices of
bonds of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. The Service may also
employ electronic data processing techniques and matrix systems to determine
value. Short-term securities are valued at amortized cost, which approximates
market value. The amortized cost method involves valuing a security at its
cost on the date of purchase and thereafter assuming a constant amortization to
maturity of the difference between the principal amount due at maturity and
cost.

<PAGE> 94

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in each Fund are sold on a continuous basis by Galaxy's
distributor, 440 Financial Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of First Data Investor Services Group, Inc. (formerly
known as The Shareholder Services Group, Inc. d/b/a 440 Financial). The
Distributor is a registered broker/dealer with principal offices located at
290 Donald Lynch Boulevard, Marlboro, Massachusetts 01752.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts at bank and trust institutions, including
subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans ("Institutions"). Trust Shares
sold to such investors ("Customers") will be held of record by Institutions.
The Institution is responsible for transmitting to the Distributor orders for
purchases of Trust Shares and for wiring required funds in payment to Galaxy's
custodian on a timely basis. The Distributor is responsible for transmitting
such orders to Galaxy's transfer agent for execution. Beneficial ownership of
Trust Shares will be recorded by the Institution and reflected in the account
statements it provides to its Customers. Confirmations of purchases and
redemptions of Trust Shares will be sent to the appropriate Institution.
Purchases of Trust Shares will be effected only on days on which the
Distributor, Galaxy's custodian and the purchasing Institution are open for
business ("Business Days").

Galaxy reserves the right to reject any purchase order, in whole or in
part. The issuance of Trust Shares is recorded on the books of the Funds and
share certificates will not be issued.

Customers may purchase Trust Shares through procedures established by
Institutions in connection with the requirements of their Customer accounts.
Such accounts may include discretionary investment management accounts,
custodial accounts, agency accounts and different types of tax-advantaged
accounts. Investors should contact their Institution (or in the case of
employee plans, their employer) for further information concerning the types of
eligible Customer accounts and the related purchase and redemption procedures.

Although Galaxy does not impose any minimum initial or subsequent
investment requirement with respect to Trust Shares, Institutions may impose
such requirements on the accounts maintained by their Customers, and may also
require that Customers maintain minimum account balances with respect to Trust
Shares.

Trust Shares of the Funds may also be available for purchase through
different types of retirement plans offered by the Institutions to their
Customers. Information pertaining to such plans is available directly from the
Institution.

<PAGE> 95

REDEMPTION OF SHARES

Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized.

Each Fund reserves the right to redeem shares in any account at their net
asset value involuntarily, upon 60 days' written notice, if the value of the
account is less than $250 as a result of redemptions.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Funds are declared daily and
paid monthly. Dividends on each share of the Funds are determined in the same
manner, irrespective of series, but may differ in amount because of the
difference in the expenses paid by the respective series. Net realized capital
gains are distributed at least annually.

Dividends and distributions will be paid in cash. Customers may elect to
have their dividends reinvested in additional Trust Shares of a Fund at the net
asset value of such shares on the payment date. Such election, or any
revocation thereof, must be communicated in writing by an Institution on behalf
of Customers to Galaxy's transfer agent and will become effective with respect
to dividends paid after its receipt. The crediting and payment of dividends to
Customers will be in accordance with the procedures governing such Customers'
accounts at their Institution.

TAXES

FEDERAL

In General

Each Fund qualified during its last taxable year and intends to continue
to qualify as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). Such qualification generally relieves a Fund
of liability for federal income taxes to the extent the Fund's earnings are
distributed in accordance with the Code.

<PAGE> 96

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that a Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its tax-exempt interest income (if any) net of certain
deductions for such year. In general, a Fund's investment company taxable
income will be its taxable income, including dividends, interest and short-term
capital gains (the excess of net short-term capital gain over net long-term
capital loss), subject to certain adjustments and excluding the excess of any
net long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year. The policy of each Fund is to distribute as
dividends substantially all of its investment company taxable income and any
net tax-exempt interest income each year. Such dividends will be taxable as
ordinary income to each Fund's shareholders who are not currently exempt from
Federal income taxes, whether such dividends are received in cash or reinvested
in additional shares. (Federal income taxes for distributions to an IRA or a
qualified retirement plan are deferred under the Code.) It is anticipated that
no part of any distribution will qualify for the dividends received deduction
for corporations.

Distribution by a Fund of the excess of its net long-term capital gain
over its respective net short-term capital loss is taxable to shareholders as
long-term capital gain, regardless of how long the shareholder has held shares
and whether such gains are received in cash or reinvested in additional
shares. Such distributions are not eligible for the dividends received
deduction.

Dividends declared in October, November or December of any year which are
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by a Fund on December 31
of such year if such dividends are actually paid during January of the
following year.

If you are considering buying shares of a Fund on or just before the
record date of a capital gain distribution, you should be aware that the amount
of the forthcoming distribution payment, although in effect a return of
capital, generally will be taxable to you.

The foregoing summarizes some of the important Federal tax considerations
generally affecting the Funds and their shareholders and is not intended as a
substitute for careful tax planning. Accordingly, potential investors in the
Funds should consult their tax advisers with specific reference to their own
tax situation. Shareholders will be advised annually as to the Federal income
tax consequences of distributions made each year.

STATE AND LOCAL

MANAGEMENT OF THE FUNDS

The business and affairs of the Funds are managed under the direction of
Galaxy's Board of Trustees. The Funds' Statement of Additional Information
contains the names of and general background information concerning the
Trustees.

<PAGE> 97

INVESTMENT ADVISER

Fleet, with principal offices at 50 Kennedy Plaza, 2nd Floor, Providence,
Rhode Island 02903, serves as the Investment Adviser to the Funds. Fleet is an
indirect wholly-owned subsidiary of Fleet Financial Group, Inc., a registered
bank holding company with total assets of approximately $84.8 billion at
December 31, 1995. Fleet, which commenced operations in 1984, also provides
investment management and advisory services to individual and institutional
clients, and manages the other investment portfolios of Galaxy: the Money
Market, Government, Tax-Exempt, U.S. Treasury, Connecticut Municipal Money
Market, Massachusetts Municipal Money Market, Institutional Treasury Money
Market, Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity, Asset Allocation, Growth and Income, Small Cap Value, Corporate
Bond, Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds.

Subject to the general supervision of Galaxy's Board of Trustees and in
accordance with each Fund's investment policies, Fleet manages each Fund, makes
decisions with respect to and places orders for all purchases and sales of its
portfolio securities and maintains related records.

Effective March 1, 1996, the portfolio manager of the Short-Term Bond Fund
is Perry J. Vieth. In this capacity, Mr. Vieth is primarily responsible for the
day-to-day management of that Fund's investment portfolio. Mr. Vieth, a Vice
President, has over eleven years of experience as an investment manager and
previously managed the Shawmut Limited Term Income Fund for Shawmut Investment
Advisors and was a manager of Fuji Securities, Inc.'s derivative products
group. He also was responsible for fixed income risk management at NationsBank
CRT.

Effective March 1, 1996, the portfolio manager of the Intermediate
Government Income Fund is James J. Evans. In this capacity, Mr. Evans is
primarily responsible for the day-to-day management of that Fund's investment
portfolio. Mr. Evans, a Vice President, joined Fleet in 1995, and previously
was a portfolio manager at Lazard Freres for nine years and Westinghouse
Pension and Investment Corporation for two years.

Effective March 1, 1996, Kenneth W. Thomae and Marie M. Schofield serve as
co-portfolio managers of the High Quality Bond Fund. In this capacity, Mr.
Thomae and Ms. Schofield are primarily responsible for the day-to-day
management of this Fund's investment portfolio. Mr. Thomae, a Vice President,
has been with Fleet and its predecessors since 1985 and has been the Fund's
portfolio manager since its inception. Ms. Schofield, a Vice President, has
been with Fleet since 1991 and previously a portfolio manager at Bank of New
England and BayBank Investment Management. She has over twenty years of
experience as a portfolio manager.

For the services provided and expenses assumed with respect to the Funds,
the Investment Adviser is entitled to receive advisory fees, computed daily and
paid monthly, at an annual rate of .75% of the average daily net assets of each
Fund. The fee for the Funds is higher than fees paid by most other mutual
funds, although the Board of Trustees of Galaxy believes that it is not higher
than average advisory fees paid by funds with similar investment objectives and
policies.

Fleet may from time to time, in its discretion, waive advisory fees
payable by the Funds in order to help maintain a competitive expense ratio and
may from time to time allocate a portion of its advisory fees to Fleet Trust
Company or other subsidiaries of Fleet Financial Group, Inc. in consideration
for administrative and support services which they provide to beneficial
shareholders. Fleet is currently waiving a portion of the advisory fees
payable to it by the Short-Term Bond, Intermediate Government Income and High
Quality Bond Funds' such that it is entitled to receive an advisory fee at the
annual rate of .55% of each such Fund's average daily net assets, but Fleet
may, in its discretion, revise or discontinue this waiver at any time. For the
fiscal year ended October 31, 1995, Fleet received advisory fees (after fee
waivers) at the effective annual rates of .45%, .53% and .53%, respectively, of
the Short-Term Bond, Intermediate Government Income and High Quality Bond
Funds' average daily net assets.

<PAGE> 98

AUTHORITY TO ACT AS INVESTMENT ADVISER

Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, or distributing securities such
as shares of the Funds, but do not prohibit such a bank holding company or its
affiliates or banks generally from acting as investment adviser, transfer
agent, or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of customers. The Investment
Adviser, custodian and Institutions which have agreed to provide shareholder
support services that are banks or bank affiliates are subject to such banking
laws and regulations. Should legislative, judicial, or administrative action
prohibit or restrict the activities of such companies in connection with their
services to the Funds, Galaxy might be required to alter materially or
discontinue its arrangements with such companies and change its method of
operation. It is anticipated, however, that any resulting change in the Funds'
method of operation would not affect a Fund's net asset value per share or
result in financial loss to any shareholder. State securities laws on this
issue may differ from federal law and banks and financial institutions may be
required to register as dealers pursuant to state law.

ADMINISTRATOR

First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), located at
4400 Computer Drive, Westboro, Massachusetts 01581-5108, serves as the Funds'
administrator. FDISG is a wholly-owned subsidiary of First Data Corporation.

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. For the
services provided to the Funds, FDISG is entitled to receive administration
fees, 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 Funds and the
other portfolios offered by Galaxy (collectively, the "Portfolios"), .085% of
the next $2.5 billion of combined average daily net assets and .08% of combined
average daily net assets over $5 billion. In addition, FDISG also receives a
separate annual fee from each Portfolio for certain fund accounting services.
From time to time, FDISG may waive all or a portion of the administration fee
payable to it by the Funds, either voluntarily or pursuant to applicable
statutory expense limitations. For the fiscal year ended October 31, 1995,
FDISG received administration fees at the effective annual rate of .088% of
each Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares into one or more classes or series of shares.
Pursuant to such authority, the Board of Trustees has authorized the issuance
of an unlimited number of shares in each series of the Funds as follows: Class
D shares (Trust Shares) and Class D-Special Series 1 shares (Retail A Shares),
each series representing interests in the Intermediate Government Income Fund;
Class J-Series 1 shares (Trust Shares) , Class J-Series 2 shares (Retail A
Shares) and Class J-Series 3 shares (Retail B shares), each series representing
interests in the High Quality Bond Fund; and Class L-Series 1 shares (Trust
Shares) , Class L-Series 2 shares (Retail A Shares) and Class L-Series 3
shares (Retail B shares), each series representing interests in the Short-Term
Bond Fund. Each Fund is classified as a diversified company under the 1940
Act. The Board of Trustees has also authorized the issuance of additional
classes and series of shares rep-

<PAGE> 99

resenting interests in the other portfolios of Galaxy. For information
regarding the Funds' Retail Shares and these other portfolios, which are
offered through separate prospectuses, contact the Distributor at
1-800-628-0414.

Shares of each series in a Fund bear their pro rata portion of all
operating expenses paid by that Fund except as follows. Holders of a Fund's
Retail A Shares bear the fees that are paid to Institutions under Galaxy's
Shareholder Services Plan described below. Holders of Retail B Shares of the
Short-Term Bond Fund and High Quality Bond Fund bear the fees described in the
prospectus for such shares that are paid under Galaxy's Distribution and
Services Plan at an annual rate not to exceed .80% of the average daily net
asset value of a Fund's outstanding Retail B Shares. Currently, these payments
are not made with respect to a Fund's Trust Shares . In addition, shares of
each series in a Fund bear differing transfer agency expenses. Standardized
yield and total return quotations are computed separately for each series of
shares. The differences in the expenses paid by the respective series will
affect their performance.

Retail A Shares of the Funds are sold with a maximum front-end sales
charge of 3.75%. Retail B Shares of the Short-Term Bond Fund and High Quality
Bond Fund are sold with a maximum contingent deferred sales charge of 5.0%.
Retail A and Retail B Shares have certain exchange and other privileges which
are not available with respect to Trust Shares.

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.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it
intends to enter into servicing agreements with Institutions (including Fleet
Bank and its affiliates). Pursuant to these servicing agreements,
Institutions will render certain administrative and support services to
Customers who are the beneficial owners of Retail A Shares. Such services will
be provided to Customers who are the beneficial owners of Retail A Shares and
are intended to supplement the services provided by FDISG as administrator and
transfer agent to the shareholders of record of Retail A Shares. The Plan
provides that Galaxy will pay fees for such services at an annual rate of up to
.30% of the average daily net asset value of Retail A Shares of the Funds owned
beneficially by Customers. Institutions may also receive up to one-half of
this fee for providing 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 sub-accounting with respect to Retail A Shares
or the information necessary for sub-accounting; and providing periodic
mailings to Customers. Institutions may also receive up to one-half of this
fee for providing one or more of these additional services to such Customers;
providing Customers with information as to their positions in Retail A Shares;
responding to Customer inquiries; and providing a service to invest the assets
of Customers in Retail A Shares. These services are described more fully in
Galaxy's Statement of Additional Information under

<PAGE> 100

"Shareholder Services Plan."

Although the Shareholder Services Plan has been approved with respect to
both Retail A Shares and Trust Shares of the Funds, as of the date of this
Prospectus, Galaxy intends to enter into servicing agreements under the
Shareholder Services Plan only with respect to Retail A Shares of each Fund,
and to limit the payment under these servicing agreements for each Fund to an
aggregate fee of not more than .15% (on an annualized basis) of the average
daily net asset value of the Retail A Shares of the Fund beneficially owned by
Customers of Institutions. Galaxy understands that Institutions may charge
fees to their Customers who are the beneficial owners of Retail A Shares in
connection with their accounts with such Institutions. Any such fees would be
in addition to any amounts which may be received by an Institution under the
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 A Shares.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Trust Company, an affiliate
of the Investment Adviser, pursuant to which Fleet Trust Company performs
certain sub-account and administrative functions ("Sub-Account Services") on a
per account basis with respect to Trust Shares of each Fund held by defined
contribution plans, including maintaining records reflecting separately with
respect to each plan participant's sub-account all purchases and redemptions of
Trust Shares and the dollar value of Trust Shares in each sub-account;
crediting to each participant's sub-account all dividends and distributions
with respect to that sub-account; and transmitting to each participant a
periodic statement regarding the sub-account as well as any proxy materials,
reports and other material Fund communications. Fleet Trust Company is
compensated by FDISG for the Sub-Account Services and in connection therewith
the transfer agency fees payable by Trust Shares of the Funds to FDISG have
been increased by an amount equal to these fees. In substance, therefore, the
holders of Trust Shares of these Funds indirectly bear these fees.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A., located at 1 Chase Manhattan Plaza, New
York, New York 10081, a wholly-owned subsidiary of The Chase Manhattan
Corporation, serves as the custodian of the Funds' assets. Chase Manhattan may
employ sub-custodians for the Short-Term Bond Fund upon approval of the
Trustees in accordance with the regulations of the SEC, for the purpose of
providing custodial services for the Fund's foreign assets held outside the
United States. First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), a wholly-owned
subsidiary of First Data Corporation, serves as the Funds' transfer and
dividend disbursing agent. Services performed by both entities for the Funds
are described in the Statement of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 5108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection
with the performance of their services for the Funds. Galaxy bears the
expenses incurred in the Funds' operations. Such expenses include taxes;
interest; fees (including fees paid to its trustees and officers who are not
affiliated with FDISG); SEC fees; state

<PAGE> 101

securities qualification fees; costs of preparing and printing prospectuses
for regulatory purposes and for distribution to existing shareholders;
advisory, administration, shareholder servicing, fund accounting and custody
fees; charges of the transfer agent and dividend disbursing agent; certain
insurance premiums; outside auditing and legal expenses; costs of independent
pricing services; costs of shareholders' reports and shareholder meetings; and
any extraordinary expenses. The Funds also pay for brokerage fees and
commissions in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
performance and yields of the Funds may be quoted and compared to those of
other mutual funds with similar investment objectives and to stock or other
relevant bond indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, the performance of the Funds may be compared to data
prepared by Lipper Analytical Services, Inc., a widely recognized independent
service which monitors the performance of mutual funds.

Performance and yield data as reported in national financial publications
including, but not limited to, Money Magazine, Forbes, Barron's, The Wall
Street Journal and The New York Times, or publications of a local or regional
nature, may also be used in comparing the performance and yields of the Funds.
The performance and yield data will be calculated separately for Trust Shares,
Retail A Shares and Retail B Shares of the Funds.

The standard yield is computed by dividing a Fund's average daily net
investment income per share during a 30-day (or one month) base period
identified in the advertisement by the net asset value per share on the last
day of the period, and annualizing the result on a semi-annual basis. A Fund
may also advertise its "effective yield" which is calculated similarly but,
when annualized, the income earned by an investment in a Fund is assumed to be
reinvested.

The Funds may also advertise their performance using "average annual total
returns" over various periods of time. Such total return figures reflect the
average percentage change in the value of an investment in a Fund from the
beginning date of the measuring period to the end of the measuring period.
Average total return figures will be given for the most recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well,
such as from the commencement of a Fund's operations, or on a year-by-year
basis. Each Fund may also use "aggregate total return" figures for various
periods, representing the cumulative change in the value of an investment in a
Fund for the specified period. Both methods of calculating total return assume
that dividend and capital gain distributions made by a Fund during the period
are reinvested in Fund shares.

Performance and yields of the Funds will fluctuate and any quotation of
performance or yield should not be considered as representative of future
performance. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged directly by Institutions with
respect to accounts of Customers that have invested in Trust Shares of a Fund
will not be included in calculations of yield and performance.

The portfolio managers of the Funds and other investment professionals may
from time to time discuss in advertising, sales literature or other material,
including periodic publications, various topics of interest to shareholders and
prospective investors. The topics may include but are not limited to the
advantages and disadvan-

<PAGE> 102

tages of investing in tax-deferred and taxable investments; Fund performance
and how such performance may compare to various market indices; shareholder
profiles and hypothetical investor scenarios; the economy; the financial and
capital markets; investment strategies and techniques; investment products; and
tax, retirement and investment planning.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports describing the
Funds' investment operations and annual financial statements audited by
independent certified public accountants.

As used in this Prospectus, a "vote of the holders of a majority of the
outstanding shares" of Galaxy or a particular Fund means, with respect to the
approval of an investment advisory agreement or a change in an investment
objective or fundamental investment policy, the affirmative vote of the holders
of the lesser of (a) more than 50% of the outstanding shares of Galaxy or such
Fund, or (b) 67% or more of the shares of Galaxy or such Fund present at a
meeting if more than 50% of the outstanding shares of Galaxy or such Fund are
represented at the meeting in person or by proxy.

<PAGE> 103

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 104

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 105
THE GALAXY FUND

Statement of Additional Information

Trust Shares of the

Short-Term Bond Fund

Intermediate Government Income Fund

High Quality Bond Fund

February 29, 1996

<PAGE> 106

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectuses (the "Prospectuses") for Trust
Shares of the Short-Term Bond, Intermediate Government Income and High
Quality Bond Funds, each dated February 29, 1996, of The Galaxy Fund ("Galaxy"),
as they may from time to time be supplemented or revised. This Statement of
Additional Information is incorporated by reference in its entirety into each
such Prospectus. No investment in shares of the Funds should be made without
reading the Prospectuses. Copies of the Prospectuses may be obtained by
writing Galaxy c/o First Data Investor Services Group, Inc., 4400 Computer
Drive, Westboro, Massachusetts 01581 or by calling Galaxy at (800) 628-0414.

<PAGE> 107
<TABLE>
<CAPTION>
TABLE OF CONTENTS

Page

<S> <C>
INVESTMENT OBJECTIVES AND POLICIES 1
Variable and Floating Rate Obligations 1
Bank Obligations 1
Asset-Backed Securities 1
Municipal Securities 2
When-Issued Securities and Forward Commitment and
Delayed Settlement Transactions 5
Stand-By Commitments 5
Repurchase Agreements; Reverse Repurchase Agreements;
Loans of Portfolio Securities 6
Government Securities 6

Foreign Currency Exchange Transactions -- Short-Term
Bond Fund 7

Additional Investment Limitations 8

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 9

DESCRIPTION OF SHARES 10

ADDITIONAL INFORMATION CONCERNING TAXES 13
In General 13
Taxation of Certain Financial Instruments 16
State Taxation 18

TRUSTEES AND OFFICERS 18
Shareholder and Trustee Liability 22

ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS 23
Custodian and Transfer Agent 25

PORTFOLIO TRANSACTIONS 26

SHAREHOLDER SERVICES PLAN 27

EXPENSES 29

DISTRIBUTOR 29

AUDITORS 30

COUNSEL 30

PERFORMANCE AND YIELD INFORMATION 30

MISCELLANEOUS 33

FINANCIAL STATEMENTS 35

</TABLE>

-i-

<PAGE> 108

Page

APPENDIX A A-1
APPENDIX B B-1

-ii-

<PAGE> 109
THE GALAXY FUND

The Galaxy Fund ("Galaxy") is an open-end management investment company
currently offering shares of beneficial interest in twenty-four investment
portfolios.

This Statement of Additional Information relates to Trust Shares of three
of those investment portfolios: the Short-Term Bond Fund, Intermediate
Government Income Fund (formerly, the Intermediate Bond Fund) and High Quality
Bond Fund (the "Funds"). This Statement of Additional Information provides
additional investment information with respect to all Funds and should be
read in conjunction with the current Prospectuses.

INVESTMENT OBJECTIVES AND POLICIES

VARIABLE AND FLOATING RATE OBLIGATIONS

The Funds may purchase variable and floating rate instruments as described
in their Prospectuses. If such an instrument is not rated, the investment
adviser to the Funds (Fleet Investment Advisors Inc. ("Fleet" or the
"Investment Adviser")) must determine that such instrument is comparable to
rated instruments eligible for purchase by a Fund and will consider
the earning power, cash flows and other liquidity ratios of the issuers
and guarantors of such instruments and will continuously
monitor their financial status in order to meet payment on demand.
In determining average weighted portfolio maturity of each of these Funds, a
variable or floating rate instrument issued or guaranteed by the U.S.
Government or an agency or instrumentality thereof will be deemed to have a
maturity equal to the period remaining until the obligation's next interest
rate adjustment. Variable and floating rate obligations with a demand
feature will be deemed to have a maturity equal to the longer of the period
remaining to the next interest rate adjustment or the demand notice period.

BANK OBLIGATIONS

Investments by the Funds in non-negotiable time deposits are limited to no
more than 5% of each such Fund's total assets at the time of purchase.

ASSET-BACKED SECURITIES

Asset-backed securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in an underlying pool
of assets, or as debt instruments, which are also known as collateralized
obligations, and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and

<PAGE> 110

issuing such debt. Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties.

The yield characteristics of asset-backed securities differ from traditional
debt securities. A major difference is that the principal amount of the
obligations may be prepaid at any time because the underlying assets (i.e.
loans) generally may be prepaid at any time. As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments will increase, while slower than expected prepayments,
will decrease, yield to maturity.

Prepayments on asset-backed securities generally increase with falling
interest rates and decrease with rising interest rates; furthermore prepayment
rates are influenced by a variety of economic and social factors.
In general, the collateral supporting non-mortgage asset-backed securities
is of shorter maturity than mortgage loans and is less likely to
experience substantial prepayments. Like other fixed income securities,
when interest rates rise, the value of an asset-backed security generally
will decline; however, when interest rates decline, the value of an asset-backed
security with prepayment features may not increase as much as that of other
fixed income securities.

Asset-backed securities are subject to greater risk of default during periods
of economic downturn. Also, the secondary market for certain asset-backed
securities may not be as liquid as the market for other types of securities,
which could result in a Fund's experiencing difficulty in valuing or liquidating
such securities. For these reasons, under certain circumstances, asset-backed
securities may be considered illiquid securities.

MUNICIPAL SECURITIES

The Funds may also invest in Municipal Securities when such investments
are deemed appropriate by Fleet in light of the Funds' investment objectives.
As a result of the favorable tax treatment afforded such obligations under the
Internal Revenue Code of 1986, as amended, yields on municipal obligations can
generally be expected under normal market conditions to be lower than yields on
corporate and U.S. Government obligations, although from time to time
Municipal Securities have outperformed, on a total return basis, comparable
corporate and federal debt obligations as a result of prevailing economic,
regulatory or other circumstances.

-2-

<PAGE> 111

Municipal Securities acquired by the Funds include debt obligations
issued by governmental entities to obtain funds for various public
purposes, including the construction of a wide range of public facilities, the
refunding of outstanding obligations, the payment of general operating
expenses, and the extension of loans to public institutions and facilities.
Private activity bonds that are issued by or on behalf of public authorities to
finance various privately operated facilities are "Municipal Securities" if the
interest paid thereon is exempt from regular federal income tax and not treated
as a specific tax preference item under the federal alternative minimum tax.

The two principal categories of Municipal Securities include "general
obligation" and "revenue" issues. The Funds' portfolios may also
include "moral obligation" issues, which are normally issued by special purpose
authorities. There are, of course, variations in the quality of Municipal
Securities, both within a particular category and between categories, and the
yields on Municipal Securities depend upon a variety of factors, including
general market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligation, and the rating of the issue. The ratings of a
nationally recognized statistical rating organization ("NRSRO"), such as
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings
Group ("S&P"), described in the Prospectus for each Fund and in Appendix A
hereto, represent such rating services' opinion as to the quality of Municipal
Securities. It should be emphasized that these ratings are general and are not
absolute standards of quality. Municipal Securities with the same maturity,
interest rate and rating may have different yields. Municipal Securities of
the same maturity and interest rate with different ratings may have the same
yield. Subsequent to its purchase by a Fund, an issue of Municipal Securities
may cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Fund.

The payment of principal and interest on most Municipal Securities purchased
by the Funds will depend upon the ability of the issuers to meet their
obligations. Each state, the District of Columbia, each of their political
subdivisions, agencies, instrumentalities and authorities and each multistate
agency of which a state is a member is a separate "issuer" as that term is used
in this Statement of Additional Information and the Funds' Prospectuses. The
non-governmental user of facilities financed by private activity bonds is also
considered to be an "issuer." An issuer's obligations under its Municipal
Securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Code and laws, if any, which may be enacted by federal or state
legislatures extending the time for payment of principal or interest, or both,
or imposing other constraints

-3-

<PAGE> 112

upon enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.

Among other instruments, the Funds may purchase short-term General
Obligation Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue
Anticipation Notes, Tax-Exempt Commercial Paper, Construction Loan Notes and
other forms of short-term loans. Such instruments are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues. In addition, the Funds may invest in long-term
tax-exempt instruments,such as municipal bonds and private activity bonds to
the extent consistent with the limitations set forth in the Prospectus for each
Fund.

Private activity bonds are or have been issued to obtain funds to provide,
among other things, privately operated housing facilities, pollution control
facilities, convention or trade show facilities, mass transit, airport, port or
parking facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal. Private activity bonds are also
issued to privately held or publicly owned corporations in the financing of
commercial or industrial facilities. State and local governments are
authorized in most states to issue private activity bonds for such purposes in
order to encourage corporations to locate within their communities. The
principal and interest on these obligations may be payable from the general
revenues of the users of such facilities.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Securities. For example, under the Tax Reform Act of
1986, interest on certain private activity bonds must be included in an
investor's federal alternative minimum taxable income, and corporate investors
must include all tax-exempt interest in their federal alternative minimum
taxable income. Galaxy cannot, of course, predict what legislation may be
proposed in the future regarding the income tax status of interest on Municipal
Securities, or which proposals, if any, might be enacted.

Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Funds
nor Fleet will review the proceedings relating to the issuance of Municipal
Securities or the bases for such opinions.

-4-

<PAGE> 113

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENT AND DELAYED SETTLEMENT
TRANSACTIONS

When a Fund agrees to purchase securities on a "when-issued," "forward
commitment" or "delayed settlement" basis, the Fund's custodian will set aside
cash or liquid portfolio securities equal to the amount of the commitment in a
separate account. In the event of a decline in the value of the securities
that the custodian has set aside, the Fund may be required to place additional
assets in the separate account in order to ensure that the value of the account
remains equal to the amount of the Fund's commitment. A Fund's net assets may
fluctuate to a greater degree if it sets aside portfolio securities to cover
such purchase commitments than if it sets aside cash. Because a Fund sets
aside liquid assets to satisfy its purchase commitments in the manner
described, its liquidity and ability to manage its portfolio might be affected
in the event its commitments to purchase "forward commitments," commitments to
purchase "when-issued" securities or commitments to purchase securities on a
"delayed settlement" basis exceeded 25% of the value of its assets.

When a Fund engages in "when-issued," "forward commitment" or "delayed
settlement" transactions, it relies on the seller to consummate the trade.
Failure of the seller to do so may result in the Fund's incurring a loss or
missing an opportunity to obtain a price considered to be advantageous for a
security. For purposes of determining the average weighted maturity of a
Fund's portfolio, the maturity of "when-issued" securities is calculated from
the date of settlement of the purchase to the maturity date.

STAND-BY COMMITMENTS

Under a "stand-by commitment," a dealer agrees to purchase from a Fund, at
the Fund's option, specified securities at a specified price. "Stand-by
commitments" are exercisable by the Fund at any time before the maturity of the
underlying security, and may be sold, transferred or assigned by the Fund only
with respect to the underlying instruments.

Although "stand-by commitments" are often available without the payment of
any direct or indirect consideration, if necessary or advisable, a Fund may pay
for a "stand-by commitment" either separately in cash or by paying a higher
price for securities that are acquired subject to the commitment. Where the
Fund pays any consideration directly or indirectly for a "stand-by commitment,"
its cost will be reflected as unrealized depreciation for the period during
which the commitment is held by the Fund.

The Funds will enter into "stand-by commitments" only with banks and
broker/dealers that present minimal credit risks. In

-5-

<PAGE> 114

evaluating the creditworthiness of the issuer of a "stand-by commitment," the
Fund's Investment Adviser will review periodically the issuer's assets,
liabilities, contingent claims and other relevant financial information.

The Funds will acquire "stand-by commitments" solely to facilitate liquidity
and do not intend to exercise their rights thereunder for trading purposes.
"Stand-by commitments" will be valued at zero in determining a Fund's net asset
value.

REPURCHASE AGREEMENTS; REVERSE REPURCHASE AGREEMENTS; LOANS OF PORTFOLIO
SECURITIES

Each Fund may enter into repurchase agreements. The repurchase price
under repurchase agreements generally equals the price paid by a Fund plus
interest negotiated on the basis of current short-term rates (which may be more
or less than the rate on the securities underlying the repurchase agreement).
Securities subject to repurchase agreements will be held by a Fund's custodian
or sub-custodian in a segregated account or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a Fund
under the Investment Company Act of 1940, as amended (the "1940 Act").

Each Fund may enter into reverse repurchase agreements. Whenever a Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account liquid assets such as cash or liquid securities equal to the
repurchase price (including accrued interest). The Fund will monitor the
account to ensure such equivalent value is maintained. Reverse repurchase
agreements are considered to be borrowings by a Fund under the 1940 Act.

A Fund that loans portfolio securities would continue to accrue interest on
the securities loaned and would also earn income on the loans. Any cash
collateral received by the Funds would be invested in high quality, short-term
"money market" instruments.

GOVERNMENT SECURITIES

Examples of the types of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (hereinafter, "U.S. Government
obligations") that may be held by the Funds include, without limitation, direct
obligations of the U.S. Treasury, and securities issued or guaranteed by the
Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, Government National Mortgage
Association, Federal National Mortgage Association, General Services
Administration, Student Loan Marketing Association, Central Bank for

-6-

<PAGE> 115

Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Resolution Trust Corporation and Maritime Administration.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS -- SHORT-TERM BOND FUND

Because the Short-Term Bond Fund may buy and sell securities
denominated in currencies other than the U.S. dollar, and receive
interest, dividends and sale proceeds in currencies other than the U.S. dollar,
the Fund may enter into foreign currency exchange transactions to convert
United States currency to foreign currency and foreign currency to United
States currency as well as convert foreign currency to other foreign
currencies. The Fund either enters into these transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange
market, or uses forward contracts to purchase or sell foreign currencies.

A forward foreign currency exchange contract is an obligation by the Fund to
purchase or sell a specific currency at a specified price and future date,
which may be any fixed number of days from the date of the contract. Forward
foreign currency exchange contracts establish an exchange rate at a future
date. These contracts are transferable in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward foreign currency exchange contract generally has no
deposit requirement and is traded at a net price without commission. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Fund's portfolio securities or in foreign
exchange rates, or prevent loss if the prices of these securities should
decline.

The Fund may enter into foreign currency hedging transactions in an attempt

to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Since consideration of the prospect for currency
parities will be incorporated into the Fund's long-term investment decisions,
the Fund will not routinely enter into foreign currency hedging transactions
with respect to portfolio security transactions; however, it is important to
have the flexibility to enter into foreign currency hedging transactions when it
is determined that the transactions would be in the Fund's best interest.
Although these transactions tend to minimize the risk of loss due to a decline
in the value of the hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of the hedged currency
increase. The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of these

-7-

<PAGE> 116

securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The projection of
currency market movements is extremely difficult, and the successful
execution of a hedging strategy is highly uncertain.

ADDITIONAL INVESTMENT LIMITATIONS

In addition to the investment limitations disclosed in their Prospectuses,
the Funds are subject to the following investment limitations, which may be
changed with respect to a particular Fund only by a vote of the holders of a
majority of such Fund's outstanding shares (as defined under "Miscellaneous" in
the Prospectuses).

Each Fund may not:

1. Purchase securities on margin (except such short-term credits as may be
necessary for the clearance of purchases), make short sales of
securities or maintain a short position.

2. Act as an underwriter within the meaning of the Securities Act of 1933;
except insofar as a Fund might be deemed to be an underwriter upon
disposition of restricted portfolio securities; and except to the
extent that the purchase of securities directly from the issuer thereof
in accordance with the Fund's investment objective, policies and
limitations may be deemed to be underwriting.

3. Purchase or sell real estate; except that each Fund may
purchase securities that are secured by real estate, and may purchase
securities of issuers which deal in real estate or interests therein.

4. Purchase or sell commodities or commodity contracts or invest in oil,
gas, or other mineral exploration or development programs or mineral
leases; provided however, that each Fund may enter into
interest rate futures contracts to the extent permitted under the
Commodity Exchange Act and the 1940 Act; and further provided that the
Short-Term Bond and Corporate Bond Funds may enter into forward
currency contracts and foreign currency futures contracts and related
options to the extent permitted by their respective investment
objectives and policies.

5. Invest in or sell put options, call options, straddles, spreads, or any
combination thereof.

-8-

<PAGE> 117
6. Invest in companies for the purpose of exercising management or
control.

7. Purchase securities of other investment companies except in connection
with a merger, consolidation, reorganization, or acquisition of assets;
provided, however, that all Funds may acquire such securities in
accordance with the 1940 Act.

In addition to the above limitations:

8. The Funds, with the exception of the Short-Term Bond Fund, may not
purchase foreign securities, except that the Intermediate Government
Income and High Quality Bond Funds may purchase certificates of
deposit, bankers' acceptances, or other similar obligations issued by
U.S. branches of foreign banks, or foreign branches of U.S. banks, and
obligations of Canadian Provincial Governments in accordance with each
Fund's investment objective and policies.

The investment restrictions described below are not fundamental policies of
Galaxy and may be changed by Galaxy's Board of Trustees. These non-fundamental
investment policies require that:

(A) the Funds may not purchase any security if, as a result, the Fund
would then have more than 5% of its total assets invested in securities of
companies (including predecessors) that have been in continuous operation for
less than three years; and

(B) the Funds may not invest in warrants (other than warrants acquired by a
Fund as part of a unit or attached to securities at the time of purchase) if,
as a result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of a Fund's net assets or if, as a result, more than 2%
of a Fund's net assets would be invested in warrants not listed on a recognized
United States or foreign stock exchange, to the extent permitted by applicable
state securities laws.

In order to permit the sale of Fund shares in certain states, Galaxy may
make other commitments more restrictive than the investment policies and
limitations described above and in the Prospectuses.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Trust Shares of the Funds are sold on a continuous basis by 440 Financial
Distributors, Inc. (the "Distributor"), and the Distributor has agreed to use
appropriate efforts to solicit all purchase orders. In addition, Trust Shares
in the Funds are offered to investors maintaining qualified accounts at bank
and trust

-9-

<PAGE> 118

institutions, including institutions affiliated with Fleet Financial
Group, Inc., and to participants in employer-sponsored defined contribution
plans.

If the Board of Trustees determines that conditions exist that make
payment of redemption proceeds wholly in cash unwise or undesirable, Galaxy may
make payment wholly or partly in securities or other property. Such
redemptions will only be made in "readily marketable" securities. In such an
event, a shareholder would incur transaction costs in selling the securities
or other property.

Galaxy may suspend the right of redemption or postpone the date of payment
for shares for more than seven days during any period when (a) trading in the
markets the Funds normally utilize is restricted, or an emergency, as defined
by the rules and regulations of the Securities and Exchange Commission (the
"SEC") exists making disposal of a Fund's investments or determination of its
net asset value not reasonably practicable; (b) the New York Stock Exchange is
closed (other than customary weekend and holiday closings); or (c) the SEC has
by order permitted such suspension.

Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized.

DESCRIPTION OF SHARES

Galaxy is a Massachusetts business trust. Galaxy's Declaration of Trust
authorizes the Board of Trustees to issue an unlimited number of shares and to
classify or reclassify any unissued shares into one or more additional classes
by setting or changing in any one or more respects their respective
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption. Pursuant to such authority, the Board of Trustees has authorized
the issuance of twenty-four classes of shares, each representing interests
in one of twenty-four separate investment portfolios: Money Market Fund,
Government Fund, Tax-Exempt Fund, U.S. Treasury Fund, Connecticut Municipal
Money Market Fund, Massachusetts Municipal Money Market Fund, Institutional
Treasury Money Market Fund, Equity Value Fund, Equity Growth Fund, Equity
Income Fund, International Equity Fund, Small Company
Equity Fund, Asset Allocation Fund, Growth and Income Fund, Small Cap Value
Fund, Short-Term Bond Fund, Intermediate Government Income Fund, High Quality
Bond Fund, Corporate Bond Fund, Tax-Exempt Bond Fund, New York Municipal Bond
Fund, Connecticut Municipal Bond Fund, Massachusetts Municipal Bond Fund and
Rhode Island Municipal Bond Fund. As stated in the applicable Prospectuses,
two separate series of shares (Retail A Shares and Trust Shares) of the
Funds

-10-

<PAGE> 119

(plus a third series of shares, i.e. Retail B Shares, of the Short-Term
Bond and High-Quality Bond Funds ("CDSC Funds") are offered under separate
Prospectuses to different categories of investors.

Shares have no preemptive rights and only such conversion or exchange rights
as the Board of Trustees may grant in its discretion. When issued for payment
as described in the Prospectuses, shares will be fully paid and non-assessable.
Except as noted below with respect to the Shareholder Services Plan (which is
currently applicable only to Retail A Shares of a Fund), the Distribution and
Services Plan for Retail B Shares of a Fund, and differing transfer agency
fees, Trust Shares, Retail A Shares and Retail B Shares bear pro rata the same
expenses and are entitled equally to a Fund's dividends and distributions. In
the event of a liquidation or dissolution of Galaxy or an individual Fund,
shareholders of a particular Fund would be entitled to receive the assets
available for distribution belonging to such Fund, and a proportionate
distribution, based upon the relative asset values of Galaxy's respective
Funds, of any general assets of Galaxy not belonging to any particular Fund,
which are available for distribution. Shareholders of a Fund are entitled to
participate in the net distributable assets of the particular Fund involved in
liquidation, based on the number of shares of the Fund that are held by each
shareholder, except that currently each Fund's Retail A Shares would be solely
responsible for the Fund's payments to Service Organizations under the
Shareholder Services Plan and each CDSC Fund's Retail B Shares would be solely
responsible for the Fund's payments to the Distributor and to Service
Organizations under the Distribution and Services Plan.

Holders of all outstanding shares of a particular Fund will vote together in
the aggregate and not by series on all matters, except that only Retail A
Shares and Trust Shares of a Fund will be entitled to vote on matters submitted
to a vote of shareholders pertaining to Galaxy's Shareholder Services Plan for
Retail A and Trust Shares and only Retail B Shares of a Fund will be entitled
to vote on matters submitted to a vote of shareholders pertaining to Galaxy's
Distribution and Services Plan for Retail B Shares. Further, shareholders of
all of the Funds, as well as those of any other investment portfolio now or
hereafter offered by Galaxy, will vote together in the aggregate and not
separately on a Fund-by-Fund basis, except as otherwise required by law or when
permitted by the Board of Trustees. Rule 18f-2 under the 1940 Act
provides that any matter required to be submitted to the holders
of the outstanding voting securities of an investment company such
as Galaxy shall not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
shares of each Fund affected by the matter. A particular Fund is deemed to be
affected by a matter unless it is clear that the interests of each Fund in the
matter

-11-

<PAGE> 120

are substantially identical or that the matter does not affect any
interest of the Fund. Under the Rule, the approval of an investment advisory
agreement or any change in fundamental investment policy would be effectively
acted upon with respect to a Fund only if approved by a majority of the
outstanding shares of such Fund (irrespective of series designation). However,
the Rule also provides that the ratification of the appointment of independent
public accountants, the approval of principal underwriting contracts, and the
election of trustees may be effectively acted upon by shareholders of Galaxy
voting without regard to class or series.

Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held, and will vote in the aggregate, and not by
class or series, except as otherwise required by the 1940 Act or other
applicable law or when the matter to be voted upon affects only the interests
of the shareholders of a particular class or series. Voting rights are not
cumulative and, accordingly, the holders of more than 50% of the aggregate of
Galaxy's outstanding shares may elect all of the trustees, irrespective of the
votes of other shareholders.

Galaxy does not intend to hold annual shareholder meetings except as may be
required by the 1940 Act. Galaxy's Declaration of Trust provides that a
meeting of shareholders shall be called by the Board of Trustees upon a written
request of shareholders owning at least 10% of the outstanding shares of Galaxy
entitled to vote.

Galaxy's Declaration of Trust authorizes the Board of Trustees, without
shareholder approval (unless otherwise required by applicable law), to (a) sell
and convey the assets of a Fund to another management investment company for
consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding shares of the Fund involved to
be redeemed at a price which is equal to their net asset value and which may be
paid in cash or by distribution of the securities or other consideration
received from the sale and conveyance; (b) sell and convert a Fund's assets
into money and, in connection therewith, to cause all outstanding shares of the
Fund involved to be redeemed at their net asset value; or (c) combine the
assets belonging to a Fund with the assets belonging to another Fund of Galaxy
and, in connection therewith, to cause all outstanding shares of any Fund to be
redeemed at their net asset value or converted into shares of another class of
Galaxy's shares at the net asset value. In the event that shares are redeemed
in cash at their net asset value, a shareholder may receive in payment for such
shares, due to changes in the market prices of the Fund's portfolio securities,
an amount that is more or less than the original investment. The exercise of
such authority by the Board of Trustees will be subject to the provisions of
the 1940 Act, and the Board of Trustees will not

-12-

<PAGE> 121

take any action described in this paragraph unless the proposed action has been
disclosed in writing to the Fund's shareholders at least 30 days prior thereto.

ADDITIONAL INFORMATION CONCERNING TAXES
IN GENERAL

The following summarizes certain additional tax considerations generally
affecting the Funds and their shareholders that are not described in the
Funds' Prospectuses. No attempt is made to present a detailed explanation of
the tax treatment of the Funds or their shareholders, and the discussion here
and in the Prospectuses is not intended as a substitute for careful tax
planning. Potential investors should consult their tax advisers with specific
reference to their own tax situation.

Each Fund is treated as a separate corporate entity under the Internal
Revenue Code of 1986, as amended (the "Code"), and each Fund intends to qualify
as a "regulated investment company" under the Code. By following this policy,
each Fund expects to eliminate or reduce to a nominal amount the federal income
taxes to which it may be subject. If for any taxable year a Fund does not
qualify for the special federal tax treatment afforded regulated investment
companies, all of the Fund's taxable income would be subject to tax at regular
corporate rates without any deduction for distributions to shareholders. In
such event, a Fund's distributions to shareholders (including amounts derived
from interest on Municipal Securities) would be taxable as ordinary income, to
the extent of the current and accumulated earnings and profits of the
particular Fund, and would be eligible for the dividends received deduction in
the case of corporate shareholders.

Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that each Fund distribute to its
shareholders an amount equal to at least the sum of 90% of its investment
company taxable income and 90% of its tax-exempt interest income (if any) net
of certain deductions for such year (the "90% distribution requirement"). In
addition, each Fund must satisfy certain requirements with respect to the
source of its income for a taxable year. At least 90% of the gross income of
each Fund must be derived from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock, securities
or foreign currencies, and other income (including, but not limited to, gains
from options, futures, or forward contracts) derived with respect to the Fund's
business of investing in such stock, securities or currencies (the "90% gross
income test"). The Treasury Department may by regulation exclude from
qualifying income foreign currency gains which are not directly related to a
Fund's principal business of investing in stock or securities, or

-13-

<PAGE> 122

options and futures with respect to stock or securities. Any income derived
by a Fund from a partnership or trust is treated for this purpose as derived
with respect to the Fund's business of investing in stock, securities or
currencies, only to the extent that such income is attributable to items of
income which would have been qualifying income if realized by the Fund in the
same manner as by the partnership or trust.

A Fund will not be treated for a taxable year as a regulated investment
company under the Code if 30% or more of the Fund's gross income for such year
is derived from gains realized on the sale or other disposition of the
following investments held for less than three months (the "30% test"): (1)
stock and securities (as defined in Section 2(a)(36) of the 1940 Act); (2)
options, futures and forward contracts other than those on foreign currencies;
and (3) foreign currencies (and options, futures and forward contracts on
foreign currencies) that are not directly related to a Fund's principal
business of investing in stock and securities (and options and futures with
respect to stocks and securities). Interest (including original issue discount
and accrued market discount) received by a Fund upon maturity or disposition of
a security held for less than three months will not be treated as gross income
derived from the sale or other disposition of such security within the meaning
of this requirement, any other income that is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose. Although proposed legislation would repeal the
30% test, it is unclear if or when such legislation would become effective.
With respect to covered call options, if the call is exercised by the holder,
the premium and the price received upon exercise constitute the proceeds of
sale, and the difference between the proceeds and the cost of the securities
subject to the call is capital gain or loss. Premiums from expired call options
written by a Fund and net gains from closing purchase transactions are treated
as short-term capital gains for federal income tax purposes, and losses on
closing purchase transactions are short-term capital losses. With respect to
forward contracts, futures contracts, options on futures contracts, and other
financial instruments subject to the mark-to-market rules described below under
"Taxation of Certain Financial Instruments," the Internal Revenue Service (the
"Service") has ruled in private letter rulings issued to other registered
investment companies that a gain realized from such a contract, option or
financial instrument will be treated as being derived from a security held for
three months or more (regardless of the actual period for which the contract,
option or instrument is held), if the gain arises as a result of a constructive
sale under the mark-to- market rules, and will be treated as being derived from
a security held for less than three months only if the contract, option or
instrument is terminated (or transferred) during the taxable year (other than
by reason of marking-to-market) and less

-14-

<PAGE> 123

than three months time has elapsed between the date the contract, option or
instrument is acquired and the termination date. Although a private letter
ruling is binding on the Service only with respect to the taxpayer receiving the
ruling, it is anticipated that the Service would take the same position with
respect to the Funds. Increases and decreases in the value of a Fund's forward
contracts, futures contracts, options on futures contracts and other investments
that qualify as part of a "designated hedge," as defined in Section 851(g) of
the Code, may be netted for purposes of determining whether the 30% test is met.

A Fund will designate any distribution of the excess of net long-term
capital gain over net short-term capital loss as a capital gain dividend in a
written notice mailed to shareholders within 60 days after the close of the
Fund's taxable year. Shareholders should note that, upon the sale or exchange
of Fund Shares, if the shareholder has not held such Shares for more than six
months, any loss on the sale or exchange of those Shares will be treated as
long-term capital loss to the extent of the capital gain dividends received
with respect to the Shares.

Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%, but because of limitations on itemized deductions otherwise allowable
and the phase-out of personal exemptions, the maximum effective marginal rate
of tax for some taxpayers may be higher. An individual's long-term capital
gains are taxable at a maximum nominal rate of 28%. For corporations, long-term
capital gains and ordinary income are both taxable at a maximum nominal rate of
35% (an effective marginal rate of 39% applies in the case of corporations
having taxable income between $100,000 and $335,000, and an effective marginal
rate of 38% applies in the case of corporations having taxable income between
$15,000,000 and $18,333,333).

A 4% non-deductible excise tax is imposed on regulated investment companies
that fail to currently distribute specified percentages of their ordinary
taxable income and capital gain net income (excess of capital gains over
capital losses). Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and any capital gain net income
prior to the end of each calendar year to avoid liability for this excise tax.

The Funds will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or gross sale proceeds paid to
any shareholder who (i) has failed to provide a correct tax identification
number, (ii) is subject to withholding by the Internal Revenue Service for
failure to properly include on his or her return payments of taxable interest
or dividends, or (iii) has failed to certify to the

-15-

<PAGE> 124
Funds that he or she is not subject to back up withholding when required to do
so or that he or she is an "exempt recipient."

TAXATION OF CERTAIN FINANCIAL INSTRUMENTS

Special rules govern the federal income tax treatment of financial
instruments that may be held by the Funds. These rules may have a particular
impact on the amount of income or gain that the Funds must distribute to their
respective shareholders to comply with the 90% distribution requirement, on the
income or gain qualifying under the 90% gross income test and on their ability
to comply with the 30% test described above.

Generally, futures contracts and options on futures contracts held by the
Funds and certain foreign currency contracts entered into by the Short-Term
Bond Fund (as described above) (collectively, the "Instruments") at the close
of their taxable year are treated for federal income tax purposes as sold for
their fair market value on the last business day of such year, a process known
as "mark-to-market." Forty percent of any gain or loss resulting from such
constructive sales will be treated as short-term capital gain or loss, and 60%
of such gain or loss will be treated as long-term capital gain or loss without
regard to the period a Fund has held the Instruments ("the 40%-60% rule"). The
amount of any capital gain or loss actually realized by a Fund in a subsequent
sale or other disposition of those Instruments is adjusted to reflect any
capital gain or loss taken into account by the Fund in a prior year as a result
of the constructive sale of the Instruments. Losses with respect to futures
contracts to sell related options, and certain foreign currency contracts,
which are regarded as parts of a "mixed straddle" because their values
fluctuate inversely to the values of specific securities held by the Funds, are
subject to certain loss deferral rules, which limit the amount of loss
currently deductible on either part of the straddle to the amount thereof that
exceeds the unrecognized gain (if any) with respect to the other part of the
straddle, and to certain wash sales regulations. Under short sales rules,
which also are applicable, the holding period of the securities forming part of
the straddle (if they have not been held for the long-term holding period) will
be deemed not to begin prior to termination of the straddle. With respect to
certain Instruments, deductions for interest and carrying charges may not be
allowed. Notwithstanding the rules described above, with respect to futures
contracts that are part of a "mixed straddle" to sell related options, and
certain foreign currency contracts that are properly identified as such, a Fund
may make an election which will exempt (in whole or in part) those identified
futures contracts, options and foreign currency contracts from the Rules of
Section 1256 of the Code including "the 40%-60% rule" and "mark-to-market," but
gains and losses will be subject to such short sales, wash sales and loss
deferral rules and the requirement to capitalize interest and

-16-

<PAGE> 125
carrying charges. Under Temporary Regulations, a Fund would be allowed (in lieu
of the foregoing) to elect either (1) to offset gains or losses from portions
that are part of a mixed straddle by separately identifying each mixed straddle
to which such treatment applies, or (2) to establish a mixed straddle account
for which gains and losses would be recognized and offset on a periodic basis
during the taxable year. Under either election, "the 40%-60% rule" will apply
to the net gain or loss attributable to the Instruments, but in the case of a
mixed straddle account election, not more than 50% of any net gain may be
treated as long-term and no more than 40% of any net loss may be treated as
short-term.

A foreign currency contract must meet the following conditions in order to
be subject to the mark-to-market rules described above: (1) the contract must
require delivery of a foreign currency of a type in which regulated futures
contracts are traded or upon which the settlement value of the contract
depends; (2) the contract must be entered into at arm's length at a price
determined by reference to the price in the interbank market; and (3) the
contract must be traded in the interbank market. The Treasury Department has
broad authority to issue regulations under the provisions respecting foreign
currency contracts. As of the date of this Statement of Additional
Information, the Treasury Department has not issued any such regulations.
Other foreign currency contracts entered into by a Fund may result in the
creation of one or more straddles for federal income tax purposes, in which
case certain loss deferral, short sales, and wash sales rules and the
requirement to capitalize interest and carrying charges may
apply.

Some of the non-U.S. dollar denominated investments that a Fund may make,
such as foreign securities, European Depository Receipts and foreign currency
contracts, may be subject to the provisions of Subpart J of the Code, which
govern the federal income tax treatment of certain transactions denominated in
terms of a currency other than the U.S. dollar or determined by reference to
the value of one or more currencies other than the U.S dollar. The types of
transactions covered by these provisions include the following: (1) the
acquisition of, or becoming the obligor under, a bond or other debt instrument
(including, to the extent provided in Treasury regulations, preferred stock);
(2) the accruing of certain trade receivables and payables; and (3) the
entering into or acquisition of any forward contract, futures contract, option
and similar financial instrument. The disposition of a currency other than the
U.S. dollar by a U.S. taxpayer also is treated as a transaction subject to the
special currency rules. However, foreign currency-related regulated futures
contracts and nonequity options are generally not subject to the special
currency rules if they are or would be treated as sold for their fair market
value at year-end under the mark-to-market rules, unless an

-17-

<PAGE> 126

election is made to have such currency rules apply. With respect to
transactions covered by the special rules, foreign currency gain or loss is
calculated separately from any gain or loss on the underlying transaction and is
normally taxable as ordinary gain or loss. A taxpayer may elect to treat as
capital gain or loss foreign currency gain or loss arising from certain
identified forward contracts, futures contracts and options that are capital
assets in the hands of the taxpayer and which are not part of a straddle. In
accordance with Treasury regulations, certain transactions that are part of a
"Section 988 hedging transaction" (as defined in the Code and Treasury
regulations) may be integrated and treated as a single transaction or otherwise
treated consistently for purposes of the Code. "Section 988 hedging
transactions" are not subject to the mark-to-market or loss deferral rules under
the Code. Gain or loss attributable to the foreign currency component of
transactions engaged in by the Funds, which is not subject to the special
currency rules (such as foreign equity investments other than certain preferred
stocks), is treated as capital gain or loss and is not segregated from the gain
or loss on the underlying transaction.

The Funds may be subject to U.S. federal income tax on a portion of any
"excess distribution" or a gain from the disposition of passive foreign
investment companies even if it distributes the income to its shareholders.

STATE TAXATION

Depending upon the extent of Galaxy's activities in states and localities in
which its offices are maintained, in which its agents or independent
contractors are located, or in which it is otherwise deemed to be conducting
business, each Fund may be subject to the tax laws of such states or
localities. In addition, in those states and localities that have income tax
laws, the treatment of a Fund and its shareholders under such laws may differ
from their treatment under federal income tax laws. Under state or local law,
distributions of net investment income may be taxable to shareholders as
dividend income even though a substantial portion of such distributions may be
derived from interest on U.S. Government obligations which, if realized
directly, would be exempt from such income taxes. Shareholders are advised to
consult their tax advisers concerning the application of state and local taxes.

TRUSTEES AND OFFICERS

The trustees and executive officers of Galaxy, their addresses, principal
occupations during the past five years, and other affiliations are as follows:

-18-

<PAGE> 127

Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations

Dwight E. Vicks, Jr. Chairman & President & Director,
Vicks Lithograph & Trustee Vicks Lithograph &
Printing Corporation Printing Corporation
Commercial Drive (book manufacturing and
P.O. Box 270 commercial printing);
Yorkville, NY 13495 Director, Utica Fire
Age 61 Insurance Company;
Trustee, Savings Bank of
Utica; Director, Monitor
Life Insurance Company;
Director, Commercial
Travelers Mutual
Insurance Company;
Trustee, The Galaxy VIP
Fund; Trustee, Galaxy
Fund II.

John T. O'Neill1 President Executive Vice President,
Hasbro, Inc. Treasurer & and CFO, Hasbro, Inc
200 Narragansett Trustee (toy and game
Park Drive manufacturer), since
Pawtucket, RI 02862 1987; Trustee, The Galaxy
Age 54 VIP Fund; Trustee, Galaxy
Fund II; Managing
Partner, KPMG Peat
Marwick (accounting
firm), 1986.

Louis DeThomasis Trustee President, Saint Mary's
Saint Mary's College College of Minnesota;
of Minnesota Director, Bright Day
Winona, MN 55987 Travel, Inc.; Trustee,
Age 54 Religious Communities
Trust; Trustee, The
Galaxy VIP Fund; Trustee,
Galaxy Fund II.

-19-

<PAGE> 128

Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations

Donald B. Miller Trustee Chairman, Horizon Media,
10725 Quail Covey Road Inc. (broadcast
Boynton Beach, FL 33436 services);
Age 69 Director/Trustee,
Lexington Funds;
President and CEO, Media
General Broadcast
Services, Inc. (1986 to
1989); Chairman,
Executive Committee,
Compton International,
Inc. (advertising
agency); Trustee,
Keuka College; Trustee,
The
Galaxy VIP Fund; Trustee,
Galaxy Fund II.

James M. Seed Trustee Chairman and President,
The Astra Ventures, The Astra Projects,
Inc. Incorporated (land
One Citizens Plaza development); President,
Providence, RI 02903 The Astra Ventures,
Age 54 Incorporated (previously,
Buffinton Box Company -
manufacturer of cardboard
boxes); Trustee, The
Galaxy VIP Fund; Trustee,
Galaxy Fund II;
Commissioner, Rhode
Island Investment
Commission.

Bradford S. Wellman1 Trustee Private Investor;
2468 Ohio Street President, Ames &
Bangor, ME 04401 Wellman, from 1978 to
Age 64 1991; President, Pingree
Associates, Inc., from
1974 until 1990;
Director, Essex County
Gas Company, until
January 1994; Director,
Maine Mutual Fire
Insurance Co.; Member,
Maine Finance Authority;
Trustee, The Galaxy VIP
Fund; Trustee, Galaxy
Fund II.

-20-

<PAGE> 129

Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations

W. Bruce McConnel, III Secretary Partner of the law firm
Philadelphia National Drinker Biddle & Reath,
Bank Building Philadelphia,
Broad & Chestnut Sts. Pennsylvania.
Philadelphia, PA 19107
Age 52

Neil Forrest Vice First Data Investor
First Data Investor President Services Group. Inc.
Services Group, Inc. and (1992 to present);
4400 Computer Drive Assistant Vice President,
Westboro, MA 01581 Treasurer Investment Marketing and
Age 35 Strategic Planning,
Manufacturers and Traders
Trust Co. (1990-1992).

Louis Russo Assistant Vice President, First
First Data Investor Treasurer Data Investor Services
Services Group, Inc. Group, Inc. since 1990;
4400 Computer Drive Director, Funds
Westboro, MA 01581 Accounting, Fidelity
Age 43 Investments from 1988 to
1990.

_________________________

1. An interested person within the definition set forth in Section 2(a)(19)
of the 1940 Act.

Each trustee receives an annual aggregate fee of $23,000 for his
services as a trustee to Galaxy, The Galaxy VIP Fund and Galaxy Fund II, plus
an additional $1,500 for each in-person Galaxy Board meeting attended and $750
for each Galaxy Fund II Board meeting attended and is reimbursed for expenses
incurred in attending meetings. Each trustee of Galaxy and The Galaxy VIP Fund
also receives $500 for each telephone Board meeting attended. The Chairman of
the Boards of Galaxy and The Galaxy VIP Fund are entitled to an additional
annual aggregate fee in the amount of $3,000, and the President and Treasurer
of Galaxy and The Galaxy VIP Fund is entitled to an additional annual aggregate
fee of $2,000 for their services in these respective capacities. Beginning
March 1, 1996, each trustee is also entitled to participate in the Galaxy, The
Galaxy VIP Fund and Galaxy Fund II Deferred Compensation Plans (the "Plans").
The Plans, which are substantially identical, provide that a trustee

-21-

<PAGE> 130

may defer all or a portion of the compensation earned from each of the Trusts to
a deferred compensation account. Monies in the deferred compensation account
will be invested according to investment options selected by the trustee. No
employee of First Data Investor Services Group, Inc.(formerly known as The
Shareholder Services Group, Inc. d/b/a/ 440 Financial) receives any compensation
from Galaxy for acting as an officer. No person who is an officer, director or
employee of Fleet, or any of its affiliates, or of the Sub-Adviser, serves as a
trustee, officer or employee of Galaxy. The trustees and officers of Galaxy own
less than 1% of its outstanding shares.

The following chart provides certain information about the fees received by
Galaxy's trustees in the most recently completed fiscal year.

<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Compensation
Accrued as from Galaxy
Aggregate Part of and Fund
Name of Compensation Fund Complex*Paid
Person/Position from Galaxy Expenses to Trustees
<S> <C> <C> <C>
Bradford S. Wellman $19,500 None $27,500
Trustee
Dwight E. Vicks, Jr. $22,900 None $31,650
Chairman & Trustee
Donald B. Miller $19,500 None $27,500
Trustee
Rev. Louis DeThomasis $19,500 None $27,500
Trustee
John T. O'Neill $21,750 None $30,125
President, Treasurer
& Trustee
James M. Seed $19,500 None $27,500
Trustee
</TABLE>
_____________

* The "Fund Complex" consists of The Galaxy Fund, The Galaxy VIP Fund and
Galaxy Fund II.

SHAREHOLDER AND TRUSTEE LIABILITY

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. However, Galaxy's Declaration of Trust provides that shareholders shall
not be subject to any personal liability for the acts or obligations of Galaxy,
and that every note, bond, contract, order or other

-22-

<PAGE> 131

undertaking made by Galaxy shall contain a provision to the effect that the
shareholders are not personally liable thereunder. The Declaration of Trust
provides for indemnification out of the trust property of any shareholder held
personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions outside such
capacity or some other reason. The Declaration of Trust also provides that
Galaxy shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of Galaxy and shall satisfy any judgment
thereon. Thus, the risk of shareholder liability is limited to circumstances in
which Galaxy itself would be unable to meet its obligations.

The Declaration of Trust states further that no trustee, officer or agent of
Galaxy shall be personally liable for or on account of any contract, debt,
claim, damage, judgment or decree arising out of or connected with the
administration or preservation of the trust estate or the conduct of any
business of Galaxy; nor shall any trustee be personally liable to any person
for any action or failure to act except by reason of his own bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties as trustee.
The Declaration of Trust also provides that all persons having any claim
against the trustees or Galaxy shall look solely to the trust property for
payment.

With the exceptions stated, the Declaration of Trust provides that a trustee
is entitled to be indemnified against all liabilities and expenses reasonably
incurred by him in connection with the defense or disposition of any proceeding
in which he may be involved or with which he may be threatened by reason of his
being or having been a trustee, and that the Board of Trustees shall indemnify
representatives and employees of Galaxy to the same extent to which they
themselves are entitled to indemnification.

ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS

Fleet serves as investment adviser to the Funds. In its advisory agreement,
Fleet has agreed to provide investment advisory services to the Funds as
described in the Prospectuses. The Investment Adviser has also agreed to pay
all expenses incurred by it in connection with its activities under the
advisory agreement other than the cost of securities (including brokerage
commissions) purchased for the Funds. See "Expenses" in the Prospectuses.

For the fiscal years ended October 31, 1993, October 31, 1994 and
October 31, 1995, Galaxy paid Fleet fees (net of waivers) of $1,772,737,
$2,055,130 and $1,467,085, respectively,

-23-

<PAGE> 132

with respect to the Intermediate Government Income Fund; $722,296, $862,228 and
$783,564, respectively, with respect to the High Quality Bond Fund; and
$355,130, $463,521 and $293,801, respectively, with respect to the Short-Term
Bond Fund.

For the fiscal years ended October 31, 1993, October 31, 1994 and October
31, 1995, Fleet waived advisory fees of $644,334, $757,729, and $557,058,
respectively, with respect to the Intermediate Government Income Fund;
$268,355, $316,813 and $297,640, respectively, with respect to the High Quality
Bond Fund; and $129,168, $175,814 and $130,602, respectively, with respect to
the Short-Term Bond Fund.

For the fiscal year ended October 31, 1995, Fleet reimbursed advisory fees
of $60,356, $34,946 and $65,354 with respect to the Intermediate Government
Income Fund, High Quality Bond Fund and Short-Term Bond Fund, respectively.

The advisory agreement provides that the Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds in connection with the performance of its duties under the advisory
agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Investment
Adviser in the performance of its duties or from reckless disregard by it of
its duties and obligations thereunder. Unless sooner terminated, the advisory
agreement will continue in effect with respect to a particular Fund from year
to year as long as such continuance is approved at least annually (i) by the
vote of a majority of trustees who are not parties to such advisory agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
by Galaxy's Board of Trustees, or by a vote of a majority of the outstanding
shares of such Fund. The term "majority of the outstanding shares of such Fund"
means, with respect to approval of an advisory agreement, the vote of the lesser
of (i) 67% or more of the shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund. The advisory agreement may be terminated by Galaxy or by Fleet on sixty
days' written notice, and will terminate immediately in the event of its
assignment.

Fleet Trust Company, an affiliate of the Investment Adviser, is paid a fee
for sub-account and administrative services performed with respect to Trust
Shares of the Funds held by defined contribution plans. Pursuant to an
agreement between Fleet Trust Company and First Data, Fleet Trust Company
will be paid $21.00 per year for each defined contribution plan participant
account. As of October 31, 1995, there were

-24-

<PAGE> 133

approximately 13,537 defined contribution plan participant sub-accounts invested
in Trust Shares of the Funds; thus it is expected that Fleet Trust Company will
receive annually approximately $284,277 for sub-account services. First Data
bears this expense directly, and shareholders of Trust Shares of the Funds bear
this expense indirectly through fees paid to FDISG for transfer agency services.

First Data Investor Services Group, Inc.(formerly known as The Shareholder
Services Group, Inc. d/b/a 440 Financial) ("FDISG"), a wholly-owned subsidiary
of First Data Corporation, serves as Galaxy's administrator. Under the
administration agreement, FDISG has agreed to maintain office facilities for
Galaxy, furnish Galaxy with statistical and research data, clerical, accounting,
and bookkeeping services, certain other services such as internal auditing
services required by Galaxy, and compute the net asset value and net income of
the Funds. FDISG prepares the Funds' annual and semi-annual reports to the
Securities and Exchange Commission, federal and state tax returns, and filings
with state securities commissions, arranges for and bears the cost of processing
share purchase and redemption orders, maintains the Funds' financial accounts
and records, and generally assists in all aspects of Galaxy's operations.

Prior to March 31, 1995, Galaxy's administrator and transfer agent was 440
Financial Group of Worcester, Inc., a wholly-owned subsidiary of State Mutual
Life Assurance Company of America. On March 31, 1995, FDISG acquired
all of the assets of 440 Financial Group of Worcester, Inc.

For the fiscal years ended October 31, 1993, October 31, 1994 and
October 31, 1995, FDISG and/or its predecessors received administration
fees(net of fee waivers) of $245,412, $312,525 and $244,446, respectively,
with respect to the Intermediate Government Income Fund; $103,731, $131,746
and $130,250, respectively, with respect to the High Quality Bond Fund; and
$49,474, $71,444 and $57,153, respectively, with respect to the Short-Term
Bond Fund.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan") serves as custodian to
the Funds pursuant to a Global Custody Agreement. Under its custody agreement,
Chase Manhattan has agreed to: (i) maintain a separate account or accounts in
the name of each Fund; (ii) hold and disburse portfolio securities on account
of each Fund; (iii) collect and make disbursements of money on behalf of each
Fund; (iv) collect and receive all income and other payments and distributions
on account of each Fund's portfolio securities; (v) respond to correspondence
from security brokers and others relating to its duties; and (vi) make periodic

-25-

<PAGE> 134

reports to the Board of Trustees concerning the Funds' operations. Chase
Manhattan is authorized to select one or more banks or trust companies to serve
as sub-custodian for the Funds, provided that Chase Manhattan shall remain
responsible for the performance of all of its duties under the custodian
agreement and shall be liable to the Funds for any loss which shall occur as a
result of the failure of a sub-custodian to exercise reasonable care with
respect to the safekeeping of the Funds' assets. In addition, Chase Manhattan
may employ sub-custodians for the Short-Term Bond Fund upon prior approval by
the Board of Trustees in accordance with the regulations of the SEC, for the
purpose of providing custodial services for the foreign assets of that Fund held
outside the United States. The assets of the Funds are held under bank
custodianship in compliance with the 1940 Act.

FDISG also serves as Galaxy's transfer agent and dividend disbursing
agent pursuant to a Transfer Agency Agreement ("Transfer Agency Agreement").
Under the Transfer Agency Agreement, FDISG has agreed to: (i) issue and
redeem shares of each Fund; (ii) transmit all communications by each Fund to
its shareholders of record, including reports to shareholders, dividend and
distribution notices and proxy materials for meetings of shareholders; (iii)
respond to correspondence by security brokers and others relating to its
duties; (iv) maintain shareholder accounts; and (v) make periodic reports to
the Board of Trustees concerning Galaxy's operations.

PORTFOLIO TRANSACTIONS

Debt securities purchased or sold by the Funds are generally traded in the
over-the-counter market on a net basis (i.e., without commission) through
dealers, or otherwise involve transactions directly with the issuer of an
instrument. The cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down.

The Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year.

In purchasing or selling securities for the Funds, Fleet will seek to
obtain the best net price and the most favorable execution of orders. To the
extent that the execution and price offered by more than one broker/dealer are
comparable, Fleet may effect transactions in portfolio securities with
broker/dealers who provide research, advice or other services such as market
investment literature.
-26-

<PAGE> 135

Except as permitted by the SEC or applicable law, the Funds will not acquire
portfolio securities from, make savings deposits in, enter into repurchase or
reverse repurchase agreements with, or sell securities to, the Investment
Adviser, First Data, or their affiliates, and will not give preference to
affiliates and correspondent banks of Fleet with respect to such transactions.

Galaxy is required to identify any securities of its "regular brokers or
dealers" that it has acquired during its most recent fiscal year. At October
31, 1995, (a) the Short-Term Bond Fund had entered into repurchase
transactions with Chase Securities, Inc. in the amount of $1,119,271 to be
repurchased on November 1, 1995 at $1,119,450; (b) the Intermediate Government
Income Fund had entered into repurchase transactions with Chase Securities,
Inc. in the amount of $14,755,581 to be repurchased on November 1, 1995 at
$14,757,937; and (c) the High Quality Bond Fund had entered into repurchase
transactions with Chase Securities, Inc. in the amount of $1,377,652 to be
repurchased on November 1, 1995 at $1,377,872. Chase Securities, Inc. is
considered a "regular broker or dealer" of Galaxy. Chase Manhattan Bank, N.A.
is the parent of Chase Securities, Inc.

Investment decisions for each Fund are made independently from those for the
other Funds and for any other investment companies and accounts advised or
managed by Fleet. When a purchase or sale of the same security is made at
substantially the same time on behalf of a Fund, another portfolio of Galaxy,
and/or another investment company or account, the transaction will be averaged
as to price, and available investments allocated as to amount, in a manner
which Fleet believes to be equitable to the Fund and such other portfolio,
investment company or account. In some instances, this investment procedure may
adversely affect the price paid or received by a Fund or the size of the
position obtained or sold by such Fund. To the extent permitted by law, Fleet
may aggregate the securities to be sold or purchased for a Fund with those to
be sold or purchased for its other portfolios, or other investment companies or
accounts in order to obtain best execution.

SHAREHOLDER SERVICES PLAN

As stated in the Prospectuses for each Fund, Galaxy may enter into
agreements ("Shareholder Services Agreements") with Institutions and other
organizations (including Fleet Bank and its affiliates) (collectively, "Service
Organizations") pursuant to which Service Organizations will be compensated by
Galaxy for providing certain administrative and support services to Customers
who are the beneficial owners of Retail A Shares and Trust Shares of a Fund.
As of October 31, 1995, Galaxy had entered into Shareholder Services Agreements
only with Fleet Bank. Such services are intended to supplement the services
provided by Galaxy's Administrator and transfer agent. In

-27-

<PAGE> 136

consideration for payment of up to .15% (on an annualized basis) of the average
daily net asset value of Retail A Shares and Trust Shares covered by a
Shareholder Services Agreement, Service Organizations may provide one or more of
the following services to Customers: aggregating and processing purchase and
redemption requests and placing net purchase and redemption orders with the
Distributor; arranging for bank wires; processing dividend payments from a Fund;
providing sub-accounting with respect to Retail A Shares and Trust Shares or the
information necessary for sub-accounting; providing periodic mailings to
Customers (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices); and providing
other similar services if permitted by applicable statutes, rules and
regulations. In consideration for a separate payment of up to .15% (on an
annualized basis) of the average daily net asset value of Retail A Shares and
Trust Shares covered by a Shareholder Services Agreement, Service Organizations
may provide one or more of these additional services to Customers: providing
Customers periodically with information as to their positions in Retail A Shares
and Trust Shares; responding to Customer inquiries about services performed by
Service Organizations; providing a service to invest the assets of Customers in
Retail A Shares and Trust Shares; and providing other similar services if
permitted by applicable statutes, rules and regulations.

While the Shareholder Services Plan (the "Plan") authorizes aggregate
payments of up to .30% of the net asset value of all Retail A Shares and Trust
Shares of the Funds, Galaxy currently intends to enter into Shareholder
Services Agreements only with respect to Retail A Shares of the Funds.
Further, Galaxy intends to limit the consideration paid under Shareholder
Services Agreements to no more than .15% of the average daily net asset value
(on an annualized basis) of the Retail A Shares of the Funds.

Each Shareholder Services Agreement between Galaxy and a Service
Organization relating to the Plan described above requires that, with respect
to those Funds which declare dividends on a daily basis, the Service
Organization agree to waive a portion of the servicing fee payable to it under
the Plan to the extent necessary to ensure that the fees required to be accrued
with respect to the shares of the Funds on any day do not exceed the income to
be accrued to such Retail A Shares on that day.

For the one-month period ended October 31, 1994 (date of implementation of
Shareholder Services Plan), payments to Service Organizations totaled $3,465,
$12,348, and $4,524 with respect to the Retail A Shares of the High Quality
Bond Fund, Intermediate Government Income Fund and Short-Term Bond Fund,
respectively.

-28-

<PAGE> 137
For the fiscal year ended October 31, 1995, payments to Service
Organizations totaled $39,826, $122,743, and $45,148 with respect to the Retail
A Shares of the High Quality Bond Fund, Intermediate Government Income Fund and
Short-Term Bond Fund, respectively.

Galaxy's Shareholder Services Agreements are governed by the Plan that has
been adopted by Galaxy's Board of Trustees in connection with the offering of
Trust and Retail A Shares of each Fund. Pursuant to the Plan, the Board of
Trustees reviews, at least quarterly, a written report of the amounts paid
under the Shareholder Services Agreements and the purposes for which the
expenditures were made. In addition, the arrangements with Service
Organizations must be approved annually by a majority of Galaxy's Trustees,
including a majority of the Trustees who are not "interested persons" of Galaxy
as defined in the 1940 Act and who have no direct or indirect financial
interest in such arrangements (the "Disinterested Trustees").

The Board of Trustees has approved Galaxy's arrangements with Service
Organizations based on information provided by Galaxy's service contractors
that there is a reasonable likelihood that the arrangements will benefit the
Funds and their shareholders by affording Galaxy greater flexibility in
connection with the efficient servicing of the accounts of the beneficial
owners of Retail A Shares of the Funds. Any material amendment to Galaxy's
arrangements with Service Organizations must be approved by a majority of
Galaxy's Board of Trustees (including a majority of the Disinterested
Trustees). So long as Galaxy's arrangements with Service Organizations are in
effect, the selection and nomination of the members of Galaxy's Board of
Trustees who are not "interested persons" (as defined in the 1940 Act) of
Galaxy will be committed to the discretion of such Disinterested Trustees.

EXPENSES

If expenses borne by any Fund in any fiscal year exceed expense limitations
imposed by applicable state securities regulations, Fleet and FDISG will
reimburse Galaxy for any such excess in proportion to the fees payable to them
with respect to each portfolio to the extent required by such regulations and
up to the amount of the fees payable to them, provided, however, that to the
extent required by such state regulations, Fleet and FDISG have agreed
to effect such reimbursement regardless of the amount of fees payable to them.
Any such reimbursement would be made no less frequently than the payment of
fees to each organization. Such reimbursements, if any, will be estimated,
reconciled and paid on a monthly basis. The fees which the Service
Organizations may charge to customers for services provided in connection with
their investments in Galaxy are not

-29-

<PAGE> 138

covered by the state securities expense limitations described above.

DISTRIBUTOR

440 Financial Distributors, Inc., a wholly-owned subsidiary of FDISG,
serves as Galaxy's Distributor. On March 31, 1995, FDISG acquired all
of the issued and outstanding stock of the Distributor. Prior to that time,
the Distributor was a wholly-owned subsidiary of 440 Financial Group of
Worcester, Inc. and an indirect subsidiary of State Mutual Life Assurance
Company of America.

Unless otherwise terminated, the Distribution Agreement among Galaxy, the
Distributor and its parent, FDISG, remains in effect until February 28,
1997, and thereafter will continue from year to year upon annual approval by
Galaxy's Board of Trustees, or by the vote of a majority of the outstanding
shares of Galaxy and by the vote of a majority of the Board of Trustees of
Galaxy who are not parties to the Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The Agreement will terminate in the event of its assignment, as
defined in the 1940 Act.

AUDITORS

Coopers & Lybrand L.L.P., independent certified public accountants, with
offices at One Post Office Square, Boston, Massachusetts 02109, serve as
auditors to Galaxy. The financial highlights for the Funds included in their
Prospectuses and the financial statements for the Funds contained in Galaxy's
Annual Reports to Shareholders and incorporated by reference into this
Statement of Additional Information for the respective fiscal periods ended
October 31 of each calendar year have been audited by Coopers & Lybrand L.L.P.
for the periods included in their report thereon which appears therein.

COUNSEL

Drinker Biddle & Reath (of which W. Bruce McConnel, III, Secretary of
Galaxy, is a partner), 1345 Chestnut Street, Suite 1100, Broad and Chestnut
Streets, Philadelphia, Pennsylvania 19107, are counsel to Galaxy and will pass
upon certain legal matters on its behalf.

-30-

<PAGE> 139

PERFORMANCE AND YIELD INFORMATION

The Funds' 30-day (or one month) standard yields described in their
Prospectuses are calculated separately for each series of shares in each Fund
in accordance with the method prescribed by the SEC for mutual funds:

a - b
YIELD = 2[( - - - - +1 )6 - 1]
cd

Where: a = dividends and interest earned by a
Fund during the period;

b = expenses accrued for the period
(net of reimbursements);

c = average daily number of shares
outstanding during the period,
entitled to receive dividends; and

d = maximum offering price per share
on the last day of the period.

For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by a
Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the Fund. Except as noted below,
interest earned on debt obligations held by a Fund is calculated by computing
the yield to maturity of each obligation based on the market value of the
obligation (including actual accrued interest) at the close of business on the
last business day of each month, or, with respect to obligations purchased
during the month, the purchase price (plus actual accrued interest) and
dividing the result by 360 and multiplying the quotient by the market value of
the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that the
obligation is held by the Fund. For purposes of this calculation, it is
assumed that each month contains 30 days. The maturity of an obligation with a
call provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date. With respect to debt
obligations purchased at a discount or premium, the formula generally calls for
amortization of the discount or premium. The amortization schedule will be
adjusted monthly to reflect changes in the market value of such debt
obligations. Expenses accrued for the period (variable "b" in the formula)
include all recurring fees charged by a Fund to all shareholder accounts in
proportion to the length of the base period and the Fund's mean (or median)
account size. Undeclared earned income will be

-31-

<PAGE> 140

subtracted from the offering price per share (variable "d" in the formula).

Interest earned on tax-exempt obligations that are issued without original
issue discount and have a current market discount is calculated by using the
coupon rate of interest instead of the yield to maturity. In the case of
tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount), the yield to maturity
is the imputed rate based on the original issue discount calculation. On the
other hand, in the case of tax-exempt obligations that are issued with original
issue discount but which have discounts based on current market value that are
less than the then- remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.

With respect to mortgage or other receivables-backed obligations that are
expected to be subject to monthly payments of principal and interest
("pay-downs"), (i) gain or loss attributable to actual monthly pay downs are
accounted for as an increase or decrease to interest income during the period,
and (ii) each Fund may elect either (a) to amortize the discount and premium on
the remaining security, based on the cost of the security, to the weighted
average maturity date, if such information is available, or to the remaining
term of the security, if any, if the weighted average date is not available or
(b) not to amortize discount or premium on the remaining security.

Based on the foregoing calculation, (i) the standard yield for Trust Shares
of the Intermediate Government Income, High Quality Bond and Short-Term Bond
Funds for the 30-day period ended October 31, 1995 were 6.15%, 5.48% and
5.22%, respectively.

Each Fund that advertises its "average annual total return" computes such
return separately for each series of shares by determining the average annual
compounded rate of return during specified periods that equates the initial
amount invested to the ending redeemable value of such investment according to
the following formula:

ERV l/n
T = [(-----) - 1]
P

Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the l, 5 or 10 year (or other) periods at the end

-32-

<PAGE> 141

of the applicable period (or a fractional portion thereof);

P = hypothetical initial payment of $1,000; and

n = period covered by the computation, expressed in years.

Each Fund that advertises its "aggregate total return" computes such returns
separately for each series of shares by determining the aggregate compounded
rates of return during specified periods that likewise equate the initial
amount invested to the ending redeemable value of such investment. The formula
for calculating aggregate total return is as follows:

ERV
Aggregate Total Return = [(-----) - l]
P

The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.

Aggregate total return for Trust Shares of the Intermediate Government
Income Fund for the period September 1, 1988 (inception) to October 31,
1995 was 73.29%. From September 1, 1988 (inception) to October 31, 1995,
average annual total return for Trust Shares of the Intermediate Government
Income Fund was 7.97%. For the one-year and five-year periods ended October
31, 1995, the average annual total returns for Trust Shares of the
Intermediate Government Income Fund were 13.18% and 8.19%, respectively.

Aggregate total return for Trust Shares of the High Quality Bond Fund
from December 14, 1990 (inception) to October 31, 1995 was 52.59%. From
December 14, 1990 (inception) to October 31, 1995, average annual total
return for Trust Shares of the High Quality Bond Fund was 8.98%. For the
one-year period ended October 31, 1995, the average annual total return for
Trust Shares of the High Quality Bond Fund was 18.66%.

Aggregate total returns for Trust Shares of the Short-Term Bond Fund from
December 30, 1991 (inception) to October 31, 1995 was 22.49%. From December 30,
1991 (inception) to October 31, 1995, average annual total returns for Trust
Shares of the Short-Term Bond Fund was 5.43%. For the one-year period ended
October

-33-

<PAGE> 142

31, 1995, the average annual total returns for Trust Shares of the Short-Term
Bond Fund was 9.55%.

MISCELLANEOUS

As used in the Prospectuses, "assets belonging to a particular series of a
Fund" means the consideration received by Galaxy upon the issuance of shares in
that particular series of the Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale of such investments, any funds or payments derived from
any reinvestment of such proceeds and a portion of any general assets of Galaxy
not belonging to a particular series or Fund. In determining the net asset
value of a particular Series of a Fund, assets belonging to the particular
series of the Fund are charged with the direct liabilities in respect of that
series and with a share of the general liabilities of Galaxy, which are
allocated in proportion to the relative asset values of the respective series
and Funds at the time of allocation. Subject to the provisions of Galaxy's
Declaration of Trust, determinations by the Board of Trustees as to the direct
and allocable liabilities, and the allocable portion of any general assets with
respect to a particular series or Fund, are conclusive.

As of December 22, 1995, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail
Shares of each of Galaxy's investment portfolios were as follows: Short-Term
Bond Fund -- Womat Leasing, MSN 217, Attn: Mark Roberts, One Corporate Center,
Hartford, CT 06103-3220 (9.94%); Tax-Exempt Fund -- Hope H. Van Beuren, E. Main
RR 25 Enterprise Center, Middletown, RI 02842 (14.36%); Rhode Island Municipal
Bond Fund -- Norstar Trust Co., Gales & Co., Funds Control, Attn: Julie
Hogestyn, One East Avenue, Rochester, NY (44.57%); James R. McCulloch, c/o
MICROFIBRE, P.O. Box 12008, Pawtucket, RI 02860 (8.38%).

As of December 22, 1995, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Trust
Shares of each of Galaxy's investment portfolios were as follows: Corporate
Bond Fund -- BNE Unified Retirement Trust, Attn: Ben Branch, Trustee, 21
Merchants Road, 4th Floor, Boston, MA 02109 (64%); Shawmut Bank CT N.A.
Trustee The Shawmut National Corporation Employees Thrift Plan Daily Fund; c/o
Kenneth Weissman, Director, Corporate Benefits, Shawmut National Corporation,
777 Main Street, Hartford, CT 06115-2001 (10.09%); Shawmut Bank N.A. Trustee
for The Balanced Fund Employee Benefit, c/o Doris Cote, 446 Main Street,
Worcester, MA 01608 (9.31%); High Quality Bond Fund -- Fleet Savings Plus Plan
HQ, c/o 50 Kennedy Plaza, Providence, RI 02903 (14.53%); Tax-Exempt Bond Fund
- -- NUSCO Retiree Health Veba

-34-

<PAGE> 143

Trust, P.O. Box 270, Hartford, CT 06141 (15.51%); Rhode Island Municipal Bond
Fund -- Vera Clark, 175 East Avenue, Westerly, RI 02891 (7.68%); Connecticut
Municipal Bond Fund -- Shawmut Bank CT N.A. Agent for Florence M. Roberts c/o
Anna Marie Simonelli, 777 Main Street - MSN 762, Hartford, CT 06115 (8.10%);
Ruthan Wein, 18 Timberline Dr., Farmington, CT 06032 (7.97%); Emma Gaeta, c/o
Nancy Gaeta, 152 West 58th St., Apt. 6C, New York, NY 10019 (7.22%); Albert M.
Ross, Jr. c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903
(5.22%); Massachusetts Municipal Bond Fund -- Joseph S. Teller, 8 Kilsyth
Terrace #21, Brighton, MA 02146 (6.22%); Philip H. Tobey, c/o Fleet Bank, 50
Kennedy Plaza, Providence, Rhode Island 02903 (5.35%).

As of December 22, 1995, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding shares
of the Institutional Treasury Money Market Fund were as follows: Fleet
New York, Fleet Investment Service, Attn: Barbara Healy, One East
Avenue, Rochester, NY 14638 (94.37%); Connecticut Municipal Money
Market Fund -- Shawmut Bank, Attn: Maureen Sanborn (CT), Deposit
Balancing, 150 Windsor Street -- MSN 294, Hartford, CT 06120-2992
(58.52%); Olsen & Co., Attn: Corporate Actions of 0503, One Federal
Street, Boston, MA 02110-2003 (25.99%); Massachusetts Municipal Money Market
Fund -- Olsen & Co., Attn: Corporate Actions of 0503, One Federal Street,
Boston, MA 02110-2003 (44.90%); Shawmut Bank, Attn: Maureen Sanborn (Mass), 150
Windsor Street - MSN 294, Hartford, CT 06120-2992 (7.31%); Clement McIver,
Jr., c/o Methods Machine Tool, 65 Union Avenue, Sudbury, MA 01776-2245
(5.45%).

FINANCIAL STATEMENTS

Galaxy's Annual Reports to Shareholders with respect to the Funds for the
fiscal year ended October 31, 1995 have been filed with the Securities and
Exchange Commission. The financial statements in such Annual Reports(the
"Financial Statements") are incorporated into this Statement of Additional
Information by reference. The Financial Statements included in the Annual
Reports for the Funds for the fiscal year ended October 31, 1995 have been
audited by Galaxy's independent accountants, Coopers & Lybrand L.L.P., whose
report thereon also appears in such Annual Reports and is incorporated herein
by reference. The Financial Statements in such Annual Reports have been
incorporated herein in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

-35-

<PAGE> 144

APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

The following is a description of the securities ratings of Duff & Phelps
Credit Rating Co. ("D&P"), Fitch Investors Service, L.P. ("Fitch"), Standard &
Poor's Ratings Group, Division of McGraw Hill ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), IBCA Limited and IBCA Inc. ("IBCA") and Thomson
BankWatch ("Thomson").

CORPORATE AND TAX-EXEMPT BOND RATINGS

The four highest ratings of D&P for tax-exempt and corporate fixed-income
securities are AAA, AA, A and BBB. Securities rated AAA are of the highest
credit quality. The risk factors are considered to be negligible, being only
slightly more than for risk-free U.S. Treasury debt. Securities rated AA are
of high credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. Securities
that are rated "A" have protection factors that are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress. Securities that are rated "BBB" have below average protection factors
but are still considered sufficient for prudent investment. Considerable
variability in risk is present during economic cycles. The AA, A and BBB
ratings may be modified by an addition of a plus (+) or minus (-) sign to show
relative standing within these major rating categories.

The four highest ratings of Fitch for tax-exempt and corporate bonds are
AAA, AA, A and BBB. Plus (+) and minus (-) signs are used with a rating symbol
to indicate the relative position of a credit within the rating category. AAA
bonds are considered to be investment grade and of the highest credit quality.
The obligor is judged to have an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events. AA bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated
in the AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-1+.
A bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings. BBB bonds are considered to
be investment grade and of satisfactory credit quality. The obligor's ability
to pay interest and repay principal is considered to be adequate. Adverse
changes in economic

A-1

<PAGE> 145

conditions and circumstances, however, are more likely to have an adverse
impact on these bonds, and therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher than
for bonds with higher ratings.

The four highest ratings of S&P for tax-exempt and corporate bonds are AAA,
AA, A and BBB. Bonds rated AAA bear the highest rating assigned by S&P to a
debt obligation and the AAA rating indicates in its opinion an extremely strong
capacity to pay interest and repay principal. Bonds rated AA by S&P are judged
by it to have a very strong capacity to pay interest and repay principal, and
they differ from AAA issues only in small degree. Bonds rated A are considered
to have a strong capacity to pay interest and repay principal although they are
somewhat more susceptible to the adverse effects of changes in circumstances
and economic conditions than bonds of a higher rated category. Bonds rated BBB
are regarded as having an adequate capacity to pay interest and repay
principal. Whereas such bonds normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in this
category than for higher rated categories. The AA, A and BBB ratings may be
modified by an addition of a plus (+) or minus (-) sign to show relative
standing within these major rating categories.

The four highest ratings of Moody's for tax-exempt and corporate bonds are
Aaa, Aa, A and Baa. Tax-exempt and corporate bonds rated Aaa are judged to be
of the "best quality." The rating of Aa is assigned to bonds which are of
"high quality by all standards." Aa bonds are rated lower than Aaa bonds
because margins of protection may not be as large or fluctuations of protective
elements may be of greater amplitude or there may be other elements which make
the long-term risks appear somewhat larger. Bonds that are rated A possess
many favorable investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present that suggest a susceptibility
to impairment sometime in the future. Bonds that are rated Baa are considered
as medium grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Moody's may modify a rating of Aa, A or Baa by adding
numerical modifiers of 1, 2 or 3 to show relative standing
within these categories. The foregoing ratings are sometimes presented in
parentheses preceded with a "con" indicating the bonds are rated conditionally.
Such parenthetical rating denotes the probable credit stature upon

A-2

<PAGE> 146

completion of construction or elimination of the basis of the condition.

The four highest ratings of IBCA for tax-exempt and corporate bonds are AAA,
AA, A and BBB. IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year, which is issued by bank holding
companies and their principal banking subsidiaries. Obligations rated AAA by
IBCA have the lowest expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial, such that adverse changes
in business, economic or financial conditions are unlikely to increase
investment risk significantly. Obligations for which there is a very low
expectation of investment risk are rated AA. Obligations rated A have a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is strong, although changes in business, economic or financial
conditions may lead to increased investment risk. Obligations rated BBB
currently have a low expectation of investment risk. Capacity for timely
repayment of principal and interest is adequate, although adverse changes in
business, economic or financial conditions are more likely to lead to increased
investment risk than for obligations in higher categories. IBCA may append a
rating of plus (+) or minus (-) to a rating to denote relative status within a
major rating category.

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

The highest rating of D&P for commercial paper is Duff 1. D&P employs three
designations, Duff 1 plus, Duff 1 and Duff 1 minus, within the highest rating
category. Duff 1 plus indicates highest certainty of timely payment. Short-
term liquidity, including internal operating factors and/or access to
alternative sources of funds, is judged to be "outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations." Duff 1 indicates very
high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are considered
to be minor. Duff 1 minus indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small. Duff 2 indicates good certainty of
timely payment. Liquidity factors and company fundamentals are sound.
Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small. Duff 3 indicates satisfactory liquidity and other protection factors
qualify such issues as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is expected. Duff 4
indicates speculative investment characteristics.

A-3

<PAGE> 147

Fitch's short-term ratings apply to tax-exempt and corporate debt
obligations that are payable on demand or have original maturities of up to
three years. The four highest ratings of Fitch for short-term securities are
F-1+, F-1, F-2 and F-3.F-1+ securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment. F-1 securities possess very strong
credit quality. Issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+. F-2 securities
possess good credit quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment,
but the margin of safety is not as great as the F-1+ and F-1 categories. F-3
securities possess fair credit quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate; however, near-term adverse changes could cause these securities to be
rated below investment grade. Fitch may also use the symbol "LOC" with its
short-term ratings to indicate that the rating is based upon a letter of credit
issued by a commercial bank.

S&P's commercial paper ratings are current assessments of the likelihood of
timely payment of debt considered short-term in the relevant market. Issues
assigned A-1 ratings, in S&P's opinion, indicate that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus (+)
designation. Issues rated A-2 by S&P indicate that capacity for timely payment
on these issues is satisfactory. However, the relative degree of safety is not
as high as for issues designated A-1. Issues rated A-3 have an adequate
capacity for timely payment. They are, however, somewhat more vulnerable to
the adverse effects of changes and circumstances than obligations carrying the
higher designations. Issues rated B are regarded as having only a speculative
capacity for timely payment.

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Issuers rated Prime-1 (or related supporting
institutions) in the opinion of Moody's "have a superior capacity for repayment
of short-term promissory obligations." Principal repayment capacity will
normally be evidenced by the following characteristics: leading market
positions in well established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earning coverage of fixed
financial charges and high internal cash generation; and well established
access to a range of financial markets and assured sources of alternate
liquidity. Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
capacity will normally be evidenced by many of

A-4

<PAGE> 148

the characteristics of Prime-1 rated issues, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
by external conditions. Ample alternate liquidity is maintained. Issuers
rated Prime-3 (or related supporting institutions) have an acceptable capacity
for repayment of short-term promissory obligations. Issuers rated Not Prime do
not fall within any of the Prime rating categories.

IBCA assesses the investment quality of unsecured debt with an original
maturity of less than one year which is issued by bank holding companies and
their principal banking subsidiaries. The designation A1 by IBCA indicates
that the obligation is supported by the highest capacity for timely repayment.
Obligations rated A2 are supported by a good capacity for timely repayment.
Obligations rated A3 are supported by a satisfactory capacity for timely
repayment. Obligations are rated B if there is an uncertainty as to the
capacity to ensure timely repayment.

Thomson commercial paper ratings assess the likelihood of an untimely or
incomplete payment of principal or interest of debt having a maturity of one
year or less, which is issued by a bank holding company or an entity within the
holding company structure. The designation TBW-1 represents the highest rating
category and indicates a very high degree of likelihood that principal and
interest will be paid on a timely basis. The designation TBW-2 represents the
second highest rating category and indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated TBW-1. The designation
TBW-3 represents the lowest investment grade category and indicates that while
more susceptible to adverse developments (both internal and external) than
obligations with higher ratings, the capacity to service principal and interest
in a timely fashion is considered adequate.

TAX-EXEMPT NOTE RATINGS

A S&P rating reflects the liquidity concerns and market access risks unique
to notes due in three years or less. Notes rated SP-1 are issued by issuers
that exhibit very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics are
given a plus (+) designation. Notes rated SP-2 are issued by issuers that
exhibit satisfactory capacity to pay principal and interest. Notes rated SP-3
are issued by issuers that exhibit speculative capacity to pay principal and
interest.

Moody's ratings for state and municipal notes and other short-term loans are
designated MIG and variable rate demand obligations are designated VMIG. Such
ratings recognize the

A-5

<PAGE> 149

differences between short-term credit risk and long-term risk. Loans bearing
the designation MIG-1 or VMIG-1 are of the best quality, enjoying strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing. Loans bearing
the designation MIG-2 or VMIG-2 are of high quality, with margins of protection
ample although not so large as with loans rated MIG-1 or VMIG-1. Loans bearing
the designation MIG-3 or VMIG-3 are of favorable quality with all security
elements accounted for but lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established. Loans bearing the
designation MIG-4 or VMIG-4 are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.

Fitch uses its short-term ratings described above under "Corporate and Tax-
Exempt Commercial Paper Ratings" for tax-exempt notes.

A-6

<PAGE> 150

APPENDIX B

As stated in the applicable Prospectuses, the Funds may enter into futures
transactions for hedging purposes. The following is a description of such
transactions.

I. INTEREST RATE FUTURES CONTRACTS

Use of Interest Rate Futures Contracts. Bond prices are established in both
the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the
future for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, the Funds may use interest rate
futures contracts as a defense, or hedge, against
anticipated interest rate changes and not for speculation. As described below,
this would include the use of futures contract sales to protect against
expected increases in interest rates and futures contract purchases to offset
the impact of interest rate declines.

The Funds presently could accomplish a similar result to that which they
hope to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because
of the liquidity that is often available in the futures market, the protection
is more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Funds, through using futures contracts.

DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate futures
contract sale would create an obligation by a Fund, as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price. A futures contract purchase would create an
obligation by the Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price. The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until at or near that date. The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made.

B-1

<PAGE> 151

Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery of
securities. Closing out a futures contract sale is effected by a Fund's
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date. If the price
of the sale exceeds the price of the offsetting purchase, the Fund immediately
is paid the difference and thus realizes a gain. If the offsetting purchase
price exceeds the sale price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by a Fund
entering into a futures contract sale. If the offsetting sale price exceeds
the purchase price, the Fund realizes a gain, and if the purchase price exceeds
the offsetting sale price, the Fund realizes a loss.

Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Funds would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the exchange membership.

A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper. The Funds may trade in any interest rate futures contracts
for which there exists a public market, including, without limitation, the
foregoing instruments.

EXAMPLE OF FUTURES CONTRACT SALE. The Funds would engage in an interest
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the
loss in market value that would otherwise accompany a decline in long-term
securities prices. Assume that the market value of a certain security held by a
particular Fund tends to move in concert with the futures market prices of
long-term United States Treasury bonds ("Treasury bonds"). The adviser wishes
to fix the current market value of this portfolio security until some point in
the future. Assume the portfolio security has a market value of 100, and the
adviser believes that, because of an anticipated rise in interest rates,
the value will decline to 95. The Fund might enter into futures contract
sales of Treasury bonds for an equivalent of 98. If the market value
of the portfolio security does indeed decline from 100 to 95, the
equivalent futures market price for the Treasury bonds might also decline from
98 to 93.

B-2

<PAGE> 152

In that case, the five point loss in the market value of the portfolio
security would be offset by the five point gain realized by closing out the
futures contract sale. Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.

The adviser could be wrong in its forecast of interest rates, and the
equivalent futures market price could rise above 98. In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase. The benefit of this increase would be reduced by
the loss realized on closing out the futures contract sale.

If interest rate levels did not change, the Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date). In each transaction, transaction expenses would
also be incurred.

EXAMPLE OF FUTURES CONTRACT PURCHASE. A Fund would engage in an interest
rate futures contract purchase when it is not fully invested in long-term bonds
but wishes to defer for a time the purchase of long-term bonds in light of the
availability of advantageous interim investments, e.g., shorter term securities
whose yields are greater than those available on long-term bonds. A Fund's
basic motivation would be to maintain for a time the income advantage from
investing in the short-term securities; the Fund would be endeavoring at the
same time to eliminate the effect of all or part of an expected increase in
market price of the long-term bonds that the Fund may purchase.

For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10%, tends to move in concert with futures
market prices of Treasury bonds. The adviser wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond. Assume the long-term bond
has a market price of 100, and the adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 9 1/2%) in four months. The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98. At the same time, the Fund would assign a pool of investments in short-
term securities that are either maturing in four months or earmarked for sale
in four months, for purchase of the long-term bond at an assumed market price
of 100. Assume these short-term securities are yielding 15%. If the market
price of the long-term bond does indeed rise from 100 to 105, the equivalent
futures market price for Treasury bonds might also rise from 98 to 103. In
that case, the 5 point increase in the price that the Fund pays for the long-
term bond would be offset

B-3

<PAGE> 153

by the 5 point gain realized by closing out the futures contract purchase.

The adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98. If short-term rates at the same time fall to 10% or
below, it is possible that the Fund would continue with its purchase program
for long-term bonds. The market price of available long-term bonds would have
decreased. The benefit of this price decrease, and thus yield increase, will be
reduced by the loss realized on closing out the futures contract purchase.

If, however, short-term rates remained above available long-term rates, it
is possible that the Fund would discontinue its purchase program for long-term
bonds. The yield on short-term securities in the portfolio, including those
originally in the pool assigned to the particular long-term bond, would remain
higher than yields on long-term bonds. The benefit of this continued
incremental income will be reduced by the loss realized on closing out the
futures contract purchase. In each transaction, expenses would also be
incurred.

II. MUNICIPAL BOND INDEX FUTURES CONTRACTS

A municipal bond index assigns relative values to the bonds included in the
index and the index fluctuates with changes in the market values of the bonds
so included. The Chicago Board of Trade has designed a futures contract based
on the Bond Buyer Municipal Bond Index. This Index is composed of 40 term
revenue and general obligation bonds, and its composition is updated regularly
as new bonds meeting the criteria of the Index are issued and existing bonds
mature. The Index is intended to provide an accurate indicator of trends and
changes in the municipal bond market. Each bond in the Index is independently
priced by six dealer-to-dealer municipal bond brokers daily. The 40 prices
then are averaged and multiplied by a coefficient. The coefficient is used to
maintain the continuity of the Index when its composition changes. The Chicago
Board of Trade, on which futures contracts based on this Index are traded, as
well as other U.S. commodities exchanges, are regulated by the Commodity
Futures Trading Commission. Transactions on such exchange are cleared through
a clearing corporation, which guarantees the performance of the parties to each
contract.

The New York Municipal Bond Fund, Connecticut Municipal Bond Fund,
Massachusetts Municipal Bond Fund and Rhode Island Municipal Bond Fund will
sell index futures contracts in order to offset a decrease in market value of
their respective portfolio securities that might otherwise result from a market
decline. A Fund may do so either to hedge the value of its portfolio as a
whole, or to protect against declines, occurring prior to sales of securities,
in the value of

B-4

<PAGE> 154

the securities to be sold. Conversely, a Fund will purchase index futures
contracts in anticipation of purchases of securities. In a substantial
majority of these transactions, a Fund will purchase such securities upon
termination of the long futures position, but a long futures position may be
terminated without a corresponding purchase of securities.

Closing out a futures contract sale prior to the settlement date may be
effected by a Fund's entering into a futures contract purchase for the same
aggregate amount of the index involved and the same delivery date. If the
price in the sale exceeds the price in the offsetting purchase, the Fund is
paid the difference and thus realizes a gain. If the offsetting purchase price
exceeds the sale price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by a
Fund's entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the Fund realizes a gain, and if the purchase price
exceeds the offsetting sale price, the Fund realizes a loss.

EXAMPLE OF A MUNICIPAL BOND INDEX FUTURES CONTRACT

Consider a portfolio manager holding $1 million par value of each of the
following municipal bonds on February 2 in a particular year.

Current Price
(points and
Maturity thirty-seconds
Issue Coupon Issue Date Date of a point)
<S> <C> <C> <C> <C>
Ohio HFA 9 3/8 5/05/83 5/1/13 94-2
NYS Power 9 3/4 5/24/83 1/1/17 102-0
San Diego, CA IDR 10 6/07/83 6/1/18 100-14
Muscatine, IA Elec 10 5/8 8/24/83 1/1/08 103-16
Mass Health & Ed 10 9/23/83 7/1/16 100-12
</TABLE>

The current value of the portfolio is $5,003,750.

To hedge against a decline in the value of the portfolio, resulting from a
rise in interest rates, the portfolio manager can use the municipal bond index
futures contract. The current value of the Municipal Bond Index is 86-09.
Suppose the portfolio manager takes a position in the futures market opposite
to his or her cash market position by selling 50 municipal bond index futures
contracts (each contract represents $100,000 in principal value) at this price.

On March 23, the bonds in the portfolio have the following values:

Ohio HFA 81-28

B-5

<PAGE> 155

Ohio HFA 81-28
NYS Power 98-26
San Diego, CA IDB 98-11
Muscatine, IA Elec 99-24
Mass Health & Ed 97-18

The bond prices have fallen, and the portfolio has sustained a loss of
$130,312. This would have been the loss incurred without hedging. However,
the
Municipal Bond Index also has fallen, and its value stands at 83-27. Suppose
now
the portfolio manager closes out his or her futures position by buying back 50
municipal bond index futures contracts at this price.

The following table provides a summary of transactions and the results of
the hedge.

CASH MARKET FUTURES MARKET

February 2 $5,003,750 long posi- Sell 50 Municipal Bond
tion in municipal futures contracts at
bonds 86-09

March 23 $4,873,438 long posi- Buy 50 Municipal Bond
tion in municipal futures contracts at
bonds 83-27
___________________ _____________________

$130,312 Loss $121,875 Gain

While the gain in the futures market did not entirely offset the loss in the
cash market, the $8,437 loss is significantly lower than the loss which would
have been incurred without hedging.

The numbers reflected in this appendix do not take into account the effect
of brokerage fees or taxes.

III. MARGIN PAYMENTS

Unlike purchases or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the broker or in a segregated account
with Galaxy's custodian an amount of cash or cash equivalents, known as initial
margin, based on the value of the contract. The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds
by the customer to finance the transactions. Rather, the initial margin
is in the nature of a performance bond or good faith deposit on the
contract which is returned to the Fund upon termination of
the futures contract assuming all contractual obligations have been satisfied.
Subsequent payments, called variation margin, to and from the broker, will be
made on a daily basis as the price of the underlying instruments fluctuates
making the long and short

B-6

<PAGE> 156

positions in the futures contract more or less valuable, a process known as
marking-to-the-market. For example, when a particular Fund has purchased a
futures contract and the price of the contract has risen in response to a rise
in the underlying instruments, that position will have increased in value and
the Fund will be entitled to receive from the broker a variation margin payment
equal to that increase in value. Conversely, where the Fund has purchased a
futures contract and the price of the future contract has declined in response
to a decrease in the underlying instruments, the position would be less
valuable and the Fund would be required to make a variation margin payment
to the broker. At any time prior to expiration of the futures contract, the
adviser may elect to close the position by taking an opposite position,
subject to the availability of a secondary market, which
will operate to terminate the Fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Fund, and the Fund realizes a loss or gain.

IV. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

There are several risks in connection with the use of futures by the Funds
as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the price of the
instruments that are the subject of the hedge. The price of the futures may
move more than or less than the price of the instruments being hedged. If the
price of the futures moves less than the price of the instruments which are the
subject of the hedge, the hedge will not be fully effective but, if the price
of the instruments being hedged has moved in an unfavorable direction, a Fund
would be in a better position than if it had not hedged at all. If the
price of the instruments being hedged has moved in a favorable
direction, this advantage will be partially offset by the loss on the
futures. If the price of the futures moves more than the price of the hedged
instruments, the Funds involved will experience either a loss or gain on the
futures, which will not be completely offset by movements in the price of
the instruments which are the subject of the hedge. To compensate for the
imperfect correlation of movements in the price of instruments being
hedged and movements in the price of futures contracts, a Fund may
buy or sell futures contracts in a greater dollar amount than
the dollar amount of instruments being hedged if the volatility over
a particular time period of the prices of such instruments has been greater
than the volatility over such time period of the futures, or if otherwise
deemed to be appropriate by the investment adviser. Conversely, a Fund may buy
or sell fewer futures contracts if the volatility over a particular time period
of the prices of the instruments being hedged is less than the volatility over
such time period of the futures contract being used, or if otherwise deemed to
be appropriate by the Investment Adviser. It is also possible that,

B-7

<PAGE> 157

where a Fund had sold futures to hedge its portfolio against a decline in
the market, the market may advance and the value of instruments held in the
Fund may decline. If this occurred, the Fund would lose money on the
futures and also experience a decline in value in its portfolio securities.

Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest its cash at that time because
of concern as to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by a reduction
in the price of the instruments that were to be purchased.

In instances involving the purchase of futures contracts by a Fund, an amount
of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with Galaxy's custodian
and/or in a margin account with a broker to collateralize the position and
thereby insure that the use of such futures is unleveraged.

In addition to the possibility that there may be an imperfect correlation, or
no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions that could distort the normal relationship
between the cash and futures markets. Second, with respect to financial
futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather
than making or taking delivery. To the extent participants decide to make or
take delivery, liquidity in the futures market could be reduced thus producing
distortions. Third, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements
in the securities market. Therefore, increased participation by speculators
in the futures market may also cause temporary price distortions. Due
to the possibility of price distortion in the futures market, and because
of the imperfect correlation between the movements in the cash market
and movements in the price of futures, a correct forecast of
general market trends or interest rate movements by the adviser may still not
result in a successful hedging transaction over a short time frame.

Positions in futures may be closed out only on an exchange or board of trade
which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be

B-8

<PAGE> 158

active secondary markets, there is no assurance that a liquid secondary market
on any exchange or board of trade will exist for any particular contract or at
any particular time. In such event, it may not be possible to close a futures
investment position, and in the event of adverse price movements, a Fund would
continue to be required to make daily cash payments of variation margin.
However, in the event futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of the
securities, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee
that the price of the securities will in fact correlate with the price
movements in the futures contract and thus provide an offset on a futures
contract.

Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price
beyond the limit, thus preventing the liquidation of open futures positions.
The trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it
difficult or impossible to liquidate existing positions or to recover excess
variation margin payments.

Successful use of futures by the Funds is also subject to the adviser's
ability to predict correctly movements in the direction of the market. For
example, if a particular Fund has hedged against the possibility of a decline
in the market adversely affecting securities held by it and securities prices
increase instead, the Fund will lose part or all of the benefit to the
increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily variation margin requirements. Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market. The Funds may have to sell securities at a time
when it may be disadvantageous to do so.

B-9