GALAXY FUND /DE/, 497, 1996-03-18

GALAXY FUND /DE/
497, 1996-03-18

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<PAGE> 1

GALAXY
MONEY MARKET
FUND

February 29, 1996

P R O S P E C T U S
Trust Shares

FN-270 15021 (3/96) pkg. 50
<PAGE> 2
TRUST

THE GALAXY FUND

MONEY MARKET FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 3
===============================================================================

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 BY ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN 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
Quality Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investments, Strategies and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Repurchase and Reverse Repurchase
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Guaranteed Investment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Asset-Backed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 13
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
===============================================================================

<PAGE> 4
THE GALAXY FUND

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

The Fund's investment objective is to seek as high a level of current income
as is consistent with liquidity and stability of principal. The Fund invests in
"money market" instruments with remaining maturities of one year or less, such
as domestic and foreign bank certificates of deposit, bankers' acceptances and
commercial paper (including variable and floating rate obligations) in addition
to obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements relating to such obligations.

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 an additional series of shares in the Fund ("Retail A
Shares"), which 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 loan associations
and broker/dealers on behalf of their customers. Trust Shares and Retail A
Shares 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 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely the information about the Fund that a
prospective investor 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 ___, 1996

<PAGE> 5
EXPENSE SUMMARY

Set forth below is a summary of the operating expenses for Trust Shares of
the Fund. Examples based on the summary are also shown.

<TABLE>
<CAPTION>
MONEY
ANNUAL FUND OPERATING EXPENSES MARKET
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FUND
- --------------------------------------- ------
<S> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . .40%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . .18%
----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . .58%
====
</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>
Money Market Fund . . . . . . . . . . . $6 $18 $32 $71
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in the Fund bears
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. 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
relating to the Fund. Any fees 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> 6
FINANCIAL HIGHLIGHTS

Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail Shares (now
designated Retail A Shares), and the Fund began offering a new series of shares
designated as Trust Shares. This Prospectus describes the Trust Shares in the
Fund. Retail A Shares in the Fund are offered under a separate prospectus.
Trust Shares and Retail A 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 .10% of the
average daily net asset value of the Fund's outstanding Retail A Shares, and
(ii) Trust Shares and Retail A Shares bear differing transfer agency expenses.
See "Management of the Fund" and "Description of Galaxy and Its Shares."

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 for the fiscal year ended 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, 1995 reflects the investment results of Retail A Shares of
the Fund and is intended to provide investors with a longer-term perspective of
the Fund's financial history. More information about the performance of the
Fund is 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> 7
MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD ENDED
1995 YEARS ENDED OCTOBER 31,(1) OCTOBER 31,
------------ ------------------------------------------------------------------------ ------------
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
------------ ---- ---- ---- ---- ---- ---- ----- ---------
<S> (C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- -----
Income from
Investment Operations:
Net Investment Income(3,4) 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
Net realized and unrealized
gain (loss) on investments -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Total from Investment
Operations: . . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
----- ----- ----- ----- ----- ----- ----- ----- -----
Less Dividends:
Dividends from net
investment income . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
Dividends from net realized
capital gains(5) . . . . . -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Dividends: . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in
net asset value . . . . . . -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return6 . . . . . . . . 5.43% 3.35% 2.78% 4.07% 6.40% 8.11% 9.09% 7.08% 6.09%(7)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . $334,054 $797,399 $577,558 $590,911 $415,541 $444,303 $410,121 $210,712 $192,400
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . 5.30% 3.38% 2.74% 3.74% 6.24% 7.82% 8.73% 6.92% 6.27%
Operating expenses including
reimbursement/waiver . . . 0.55% 0.64% 0.63% 0.58% 0.59% 0.59% 0.58% 0.59% 0.52%
Operating expenses excluding
reimbursement/waiver . . . 0.56% 0.64% 0.63% 0.58% 0.59% 0.59% 0.59% 0.59% 0.57%
</TABLE>

1 Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail Shares (now
designated as Retail A Shares) and the Fund began issuing a second series of
shares designated as Trust Shares.
2 The Fund commenced operations on November 17, 1986.
3 Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the year ended October 31, 1989
and the period ended October 31, 1987 were $0.09 and $0.06, respectively.
4 Net investment income per share for Trust Shares before reimbursement/waiver
of fees by the Investment Adviser and/or Administrator for the year ended
October 31, 1995 was $0.05.
5 Represents less than $0.01 per share for years 1992 and 1987.
6 Total Return for 1994 includes the effect of the voluntary capital
contribution of $1.6 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have been
3.35%.
7 Not Annualized.
8 Annualized.

4
<PAGE> 8

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek as high a level of current income
as is consistent with liquidity and stability of principal. The Fund seeks to
achieve its objective by investing in "money market" instruments that are
determined by Fleet Investment Advisors Inc., the Fund's investment adviser
(the "Investment Adviser" or "Fleet"), to present minimal credit risk and meet
certain rating criteria. Instruments that may be purchased by the Fund include
obligations of domestic and foreign banks (including negotiable certificates of
deposit, non-negotiable time deposits, savings deposits, and bankers'
acceptances); commercial paper (including variable and floating rate notes);
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; and repurchase agreements issued by financial institutions
such as banks and broker/dealers. These instruments have remaining maturities
of one year or less (except for certain variable and floating rate notes and
securities underlying certain repurchase agreements). For more information,
including applicable quality requirements, see "Quality Requirements" and
"Investments, Strategies and Risks" below.

The Investment Adviser will use its best efforts to achieve the investment
objective of the Fund, although such 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. The Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less in an effort to maintain a stable net asset value
per share of $1.00. The value of the Fund's portfolio securities will generally
vary inversely with changes in prevailing interest rates.

QUALITY REQUIREMENTS

The Fund will purchase only those instruments which meet the applicable
quality requirements described below. The Fund will not purchase a security
(other than a U.S. Government security) unless the security or the issuer with
respect to comparable securities (i) is rated by at least two nationally
recognized statistical rating organizations ("Rating Agencies") (such as
Standard & Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc.
("Moody's") or Fitch Investors Service, L.P. ("Fitch"), in the highest category
for short-term debt securities, (ii) is rated by only one Rating Agency that
has issued a rating in such Rating Agency's highest category for short-term
debt, or (iii) if not rated, the security is determined to be of comparable
quality. These rating categories are determined without regard to
sub-categories and gradations. The Fund will follow applicable regulations in
determining whether a security rated by more than one Rating Agency can be
treated as being in the highest short-term rating category. See "Investment
Limitations" below.

<PAGE> 9
INVESTMENTS, STRATEGIES AND RISKS

U.S. GOVERNMENT OBLIGATIONS

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 the Government National Mortgage Association, are supported
by the full faith and credit of the U.S. Treasury; others, such as those of
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 U.S. Government obligations may be
issued as variable or floating rate instruments.

Securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities have historically involved little risk of loss of principal.
However, due to fluctuations in interest rates, the market value of such
securities may vary during the period a shareholder owns Shares of the Fund.

MONEY MARKET INSTRUMENTS

"Money Market" instruments include bank obligations and commercial paper.

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 that 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 that 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.
Investments in bank obligations are limited to the obligations of financial
institutions having more than $1 billion in total assets at the time of
purchase. Investments in non-negotiable time deposits are limited to no more
than 5% of the Fund's total assets at the time of purchase.

Domestic and foreign banks are subject to extensive but different government
regulations 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 investment 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. Investments in the obligations of U.S.
branches of foreign banks or foreign branches of U.S. banks will be made only
when the Investment Adviser believes that the credit risk with respect to the
instrument is minimal.

6
<PAGE> 10
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 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. Substantial holdings of variable
and floating rate instruments could reduce portfolio liquidity. The Fund may
also purchase Rule 144A securities. See "Investment Limitations."

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. Income on repurchase agreements is taxable.

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"). A reverse repurchase agreement involves 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 its investment limitations. 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, and 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.

7
<PAGE> 11
GUARANTEED INVESTMENT CONTRACTS

The Fund may invest in guaranteed investment contracts ("GICs") issued by
United States insurance companies. Pursuant to such contracts, 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 in accordance with the applicable quality requirements
described above under "Quality Requirements." GICs are considered illiquid
securities and will be subject to the Fund's 10% limitation on illiquid
investments, unless there is an active and substantial secondary market for the
particular instrument and market quotations are readily available.

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, such as motor vehicle receivables and credit card receivables. The
Fund will only purchase asset-backed securities that meet the applicable
quality requirements described above under "Quality Requirements." See
"Asset-Backed Securities" in the Statement of Additional Information.

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, (ii)
the Fund may enter into repurchase agreements with respect to portfolio
securities, and (iii) the Fund may lend portfolio securities against
collateral consisting of cash or securities that are consistent with it'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. Invest in obligations having remaining maturities in excess of one
year, except that certain variable and floating rate instruments and
securities subject to repurchase agreements may bear longer maturities
(provided certain provisions are met).

3. Purchase securities of any one issuer, other than U.S. Government
obligations, if immediately after such purchase more than 5% of the value
of its total assets would be invested in the securities of such issuer (the
"5% Limitation"), except that up to 25% of the value of its total assets
may be invested without regard to this 5% limitation.

4. 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

8
<PAGE> 12
not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of its 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.

5. Invest more than 10% of the value of its total 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.

In addition to the foregoing limitations, the Fund may not purchase
securities that would cause 25% or more of the value of its 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, or by
domestic banks or U.S. branches of foreign banks; (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 3. above (a) in certain
circumstances, the guarantor of a guaranteed security may also be considered to
be an issuer in connection with such guarantee; and (b) securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
securities backed by the full faith and credit of the United States) are deemed
to be U.S. Government obligations.

With respect to Investment Limitation No. 4 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 Fund may follow non-fundamental operating policies that are more
restrictive than its fundamental investment limitations, as set forth in this
Prospectus and the Statement of Additional Information relating to the Fund, in
order to comply with applicable laws and regulations, including the provisions
and regulations under the Investment Company Act of 1940, as amended (the "1940
Act"). In particular the Fund will comply with the various requirements of Rule
2a-7 under the 1940 Act, which regulates money market mutual funds. In
accordance with Rule 2a-7, the Fund is subject to the 5% limitation contained
in Investment Limitation No. 3 above as to all of its assets; however in
accordance with such Rule, the Fund will be able to invest more than 5% (but no
more than 25%) of its total assets in the securities of a single issuer for a
period of up to three business days after the purchase thereof, provided that
the Fund may not hold more than one such investment at any one time. Subject to
Investment Limitation No. 2 above, the Fund will determine the effective
maturity of its investments, as well as its ability to consider a security as
having received the requisite short-term ratings by Rating Agencies, according
to Rule 2a-7. The Fund may change these operating policies to reflect changes
in the laws and regulations without the approval of the shareholders.

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. 5, Rule 144A securities will not be
considered to be 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.

9
<PAGE> 13
PRICING OF SHARES

Net asset value per share of the Fund is determined as of 11:00 a.m.
(Eastern Time) and 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 the Exchange is open. 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 assets in the Fund are valued based upon the amortized cost method.
Pursuant to this method, a security is valued by reference to a Fund's
acquisition cost as adjusted for amortization of premium or accretion of
discount, regardless of the impact of fluctuating interest rates on the market
value of the security. Although Galaxy seeks to maintain the net asset value
per share of the Fund at $1.00, there can be no assurance that the net asset
value per share will not vary.

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

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 the Fund'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.

10
<PAGE> 14
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. Investors should contact their Institution (or, in the case of
employee plans, their employers) 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
requirements 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 Fund may also be available for purchase through
different types of retirement plans offered by an Institution to its Customers.
Information pertaining to such plans is available directly from the
Institution. REDEMPTION OF SHARES

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Distributor. Payment for
redemption orders received by the Distributor on a Business Day will normally
be wired on the following Business Day to the Institution. Payment for
redemption orders 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 sixty days
written notice, if the account is less than $250 as a result of redemptions.

DIVIDENDS AND DISTRIBUTIONS

The net investment income of the Fund is declared daily as a dividend to the
persons who are shareholders of the Fund immediately after the 11:00 a.m.
pricing of Shares on the day of declaration. The Fund's net income for dividend
purposes consists of all accrued income, whether taxable or tax-exempt, plus
discount earned on the Fund's assets attributable to Trust Shares, less
amortization of premium on such assets and accrued expenses attributable to
Trust Shares of the Fund. 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. The Fund does not
expect to realize net capital gains. However, if any such gains are realized,
they will be paid out to shareholders no less frequently than annually.

11
<PAGE> 15
any revocation thereof, must be communicated in writing by an Institution on
behalf of its 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 relieves the Fund of
liability for Federal income taxes to the extent its 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 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. In general, the Fund's investment company taxable
income will be its taxable income (including interest) 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
Fund intends to distribute substantially all of its investment company taxable
income and net tax-exempt 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 income is received in cash or reinvested in
additional Trust Shares. Because all of the Fund's net investment income is
expected to be derived from earned interest, it is anticipated that no part of
any distribution will be eligible for the dividends received deduction for
corporations.

Dividends declared in October, November or December of any year that 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.

STATE AND LOCAL

Shareholders should consult their own tax advisers about the status of
distributions from the Fund in their own state.

MISCELLANEOUS

The foregoing summarizes some of the important 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 at least annually as to the Federal income tax
consequences of distributions made each year.

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.

12
<PAGE> 16
INVESTMENT ADVISER

Subject to the general supervision of Galaxy's Board of Trustees, 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.

For the services provided and expenses assumed, Fleet is entitled to receive
advisory fees, computed daily and paid monthly, at the annual rate of .40% of
the average daily net assets of the Fund. 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 has advised Galaxy that it intends to
waive advisory fees payable to it by the Fund in an amount equal to 0.05% of
the average daily net assets of the Fund to the extent that the Fund's net
assets exceed $750,000,000. For the fiscal year ended October 31, 1995, Fleet
received advisory fees (after fee waivers) at the effective annual rate of
0.38% of the Fund's average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

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 operations. It is not anticipated,
however, that any resulting change in the Fund's method of operations would
affect the Fund's net asset value per share or result in financial loss to any
shareholder.

ADMINISTRATOR

13
<PAGE> 17
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 be paid 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, the Fund paid FDISG
administration fees at the effective rate of .088% of its average daily net
assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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
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 without any sales charge 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, 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
fractional votes for fractional shares 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.

14
<PAGE> 18
SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which Galaxy
intends to enter into servicing agreements with Institutions (including Fleet
Bank and its affiliates). Pursuant to such servicing agreements, Institutions
will render certain administrative and support services to Customers who are
the beneficial owners of Retail A Shares in consideration for payment of up to
.25% (on an annualized basis) of the average daily net asset value of Retail A
Shares beneficially owned by such Customers. Services under the Shareholder
Services Plan may include aggregating and processing purchase and redemption
requests and placing net purchase and redemption orders with the Distributor;
processing dividend payments from the Fund; providing Customers with
information as to their positions in Retail A Shares; providing sub-accounting
with respect to Retail A Shares or the information necessary for
sub-accounting; and providing periodic mailings to Customers. Such services are
intended to supplement the services provided by FDISG as administrator and
transfer agent and are described more fully in the 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 no more
than .10% (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

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 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 Galaxy's 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 15108, 4400 Computer Drive, Westboro, Massachusetts
01581-5180.

<PAGE> 19
EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their advisory and administrative services for the Fund. The
Fund bears the expenses incurred in its 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 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; cost of independent pricing services; costs of shareholder reports
and meetings; and any extraordinary expenses. The Fund also pays for any
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
yield of the Fund, as a measure of its performance, may be quoted and compared
to those of other mutual funds with similar investment objectives and to other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, such data is reported in national financial publications
such as Donoghue's Money Fund Report(R), a widely recognized independent
publication that monitors the performance of mutual funds. Also, the Fund's
yield data may be 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 in publications of a local or regional nature. The
Fund's performance may also be compared to the average yields reported by the
Bank Rate Monitor for money market deposit accounts offered by the 50 leading
banks and thrift institutions in the top five standard metropolitan statistical
areas. The performance and yield data will be calculated separately for Trust
Shares and Retail A Shares of the Fund.

The yield of the Fund will refer to the income generated over a seven-day
period identified in the advertisement. This income is annualized, i.e., the
income during a particular week is assumed to be generated each week over a
52-week period, and is shown as a percentage of the investment. The Fund may
also advertise its "effective yield," which is calculated similarly but, when
annualized, the income from an investment in the Fund is assumed to be
reinvested. Consequently, the "effective yield" will be slightly higher because
of the compounding effect of the assumed reinvestment.

The Fund's yield will fluctuate and any quotation of yield should not be
considered as representative of future performance of the Fund. 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 is
generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses, and market conditions. Any
fees charged directly by Institutions to accounts of Customers that have
invested in Trust Shares of the Fund will not be included in calculations of
yield.

<PAGE> 20
may compare to various market indices; shareholder portfolio 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 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> 21

GALAXY
GOVERNMENT
FUND

February 29, 1996

P R O S P E C T U S
Trust Shares

FN-269 15020 (3/96) pkg. 50
<PAGE> 22
TRUST

THE GALAXY FUND

GOVERNMENT FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 23
===============================================================================

---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investments, Strategies and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Repurchase and Reverse Repurchase
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"When-Issued" Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 11
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
===============================================================================
<PAGE> 24
THE GALAXY FUND
4400 Computer Drive
Westboro, Massachusetts 01581-5108

For applications and information regarding
initial purchases and current performance,
call 1-800-628-0414. For additional
purchases, redemptions, exchanges and other
shareholder services, call 1-800-628-0413.

The Fund's investment objective is to seek as high a level of current
income as is consistent with liquidity and stability of principal. The Fund
invests in obligations with remaining maturities of one year or less which are
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
and repurchase agreements relating to such obligations.

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 an additional series of shares in the Fund
("Retail A Shares"), which are offered under a separate prospectus primarily to
individuals or corporations purchasing either for their own accounts or for the
accounts of others and to Fleet Brokerage Securities Corporation, Fleet
Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loan associations
and broker/dealers on behalf of their customers. Trust Shares and Retail A
Shares 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 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, 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AN
INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely the information about the Fund
that a prospective investor should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional information
about the Funds, 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 __, 1996
<PAGE> 25

EXPENSE SUMMARY

Set forth below is a summary of the operating expenses for Trust
Shares of the Fund. Examples based on the summary are also shown.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES GOVERNMENT
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FUND
- --------------------------------------- ----------
<S> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14%
Total Fund Operating Expenses .54%
</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>
Government Fund . . . . . . . . . . . . . . . . . . . . . . . . . . $5 $17 $30 $66
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in the Fund bears
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. 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
relating to the Fund. Any fees that may be 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> 26
FINANCIAL HIGHLIGHTS

Prior to November 1, 1994, the Fund offered a single series of shares.
As of such date, the existing series of shares was designated as Retail Shares
(now designated Retail A Shares), and the Fund began offering a new series of
shares designated as Trust Shares. This Prospectus describes the Trust Shares
of the Fund. Retail A Shares in the Fund are offered under a separate
prospectus. Trust Shares and Retail A 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 not to
exceed .10% of the average daily net asset value of the Fund's outstanding
Retail A Shares, and (ii) Trust Shares and Retail A Shares bear differing
transfer agency expenses. See "Management of the Fund" and "Description of
Galaxy and Its Shares."

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 for the fiscal year ended 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, 1995 reflects the investment results of Retail A Shares of
the Fund and is intended to provide investors with a longer term perspective of
the Fund's financial history. More information about the performance of the
Fund is 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> 27

GOVERNMENT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD ENDED
1995 YEARS ENDED OCTOBER 31,(1) OCTOBER 31,
------------ --------------------------------------------------------------------- ------------
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
------------ -------- -------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
Investment Operations:
Net Investment Income(3,4) 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
Net realized and
unrealized gain (loss)
on investments . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations: . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net
investment income . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
Dividends from net
realized capital
gains(5) . . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Dividends . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) )0.09) (0.07) (0.06)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in
net asset value . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Period . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ========

Total Return(6) . . . . . . . . 5.39% 3.49% 2.83% 4.19% 6.25% 8.10% 8.82% 6.91% 6.08%(7)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . $678,679 $759,106 $685,304 $636,338 $436,232 $335,443 $303,181 $141,545 $178,100

Ratios to average net
assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . 5.27% 3.36% 2.79% 3.67% 6.05% 7.80% 8.59% 6.73% 6.38%(8)
Operating expenses
including reimbursement/
reimbursement/waiver . . 0.53% 0.54% 0.55% 0.53% 0.56% 0.56% 0.60% 0.60% 0.53%(8)
Operating expenses excluding
reimbursement/waiver . . 0.54% 0.54% 0.55% 0.53% 0.56% 0.57% 0.61% 0.60% 0.57%(8)
</TABLE>

2 The Fund commenced operations on November 17, 1986.

3 Net investment income per share before reimbursement/waiver of fees
by the Investment Adviser and/or Administrator for the years ended
October 31, 1990 and October 31, 1989, and the period ended October
31, 1987 were $0.08, $0.09 and $0.06, respectively.

4 Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for Trust Shares for the
fiscal year ended October 31, 1995 was $0.05.

5 Represents less than $0.01 per share for years 1992, 1990, 1989, 1988
and 1987.

6 Total return for 1994 includes the effect of the voluntary capital
contribution of $2.3 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities
held by the Fund. Without this capital contribution, the total return
would have been 3.49%.

7 Not Annualized.

8 Annualized.

4
<PAGE> 28
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL

The Fund's investment objective is to seek as high a level of current
income as is consistent with liquidity and stability of principal. The Fund
seeks to achieve its objective by investing in obligations issued or guaranteed
as to payment of principal and interest by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements relating to such obligations.
These instruments have remaining maturities of one year or less (except for
certain variable and floating rate notes and securities underlying certain
repurchase agreements). See "Investments, Strategies and Risks" below.

Fleet Investment Advisors Inc., the Fund's investment adviser (the
"Investment Adviser" or "Fleet"), will use its best efforts to achieve the
investment objective of the Fund, although such 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. The Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less in an effort to maintain a stable net asset value
per share of $1.00. The value of the Fund's portfolio securities will generally
vary inversely with changes in prevailing interest rates.

INVESTMENTS, STRATEGIES AND RISKS

U.S. GOVERNMENT OBLIGATIONS

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 the Government National Mortgage Association, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of 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.

Securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities have historically involved little risk of loss of
principal. However, due to fluctuations in interest rates, the market value of
such securities may vary during the period a shareholder owns Trust Shares of
the Fund.

5
<PAGE> 29
be an active secondary market for these instruments, substantial holdings of
variable and floating rate instruments could reduce portfolio liquidity.

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. Income on repurchase agreements is
taxable.

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"). A reverse repurchase agreement involves 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 its investment limitations.
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, and 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.

"WHEN-ISSUED" SECURITIES

The Fund may purchase securities on a "when-issued" basis. When-issued
transactions, which involve a commitment by the Fund to purchase 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 intends to purchase, regardless of future changes in interest rates. When-
issued 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, absent
unusual market conditions, commitments by the Fund to

6
<PAGE> 30
purchase securities on a when-issued basis will not exceed 25% of the value of
its total assets. These transactions will not be entered into for speculative
purposes, but only in furtherance of the Fund's investment objective.

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) its may purchase or hold debt
instruments in accordance with its investment objective and
policies, (ii) its may enter into repurchase agreements with respect
to portfolio securities, and (iii) the Fund may lend portfolio
securities against collateral consisting of cash or securities that
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. Invest in obligations having remaining maturities in excess
of one year, except that certain variable and floating rate instruments
and securities subject to repurchase agreements may bear longer
maturities (provided certain provisions are met).

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

4. 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 its
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.

5. Invest more than 10% of the value of its total 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.

With respect to Investment Limitation No. 3 above, (a) in certain
circumstances, the guarantor of a guaranteed security may also be considered to
be an issuer in connection with such guarantee; and (b) securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
(including securities backed by the full faith and credit of the United States)
are deemed to be U.S. Government obligations.

With respect to Investment Limitation No. 4 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 the borrowing.

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.
The Fund may follow non- fundamental operating policies that are more
restrictive than its fundamental investment

7
<PAGE> 31
limitations, as set forth in this Prospectus and in the Statement of Additional
Information relating to the Fund, in order to comply with applicable laws and
regulations, including the provisions of and applicable regulations under the
Investment Company Act of 1940, as amended (the "1940 Act"). In particular, the
Fund will comply with the various requirements of Rule 2a-7 under the 1940 Act,
which regulates money market mutual funds. Subject to Investment Limitation No.
2 above, the Fund will determine the effective maturity of its investments
according to Rule 2a-7. The Fund may change these operating policies to reflect
changes in the laws and regulations without shareholder approval.

PRICING OF SHARES

Net asset value per share of the Fund is determined as of 11:00 a.m.
(Eastern Time) and 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 the Exchange is open. 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 shares of that series
of the Fund, by the number of outstanding shares of that series of the Fund.

The assets in the Fund are valued based upon the amortized cost
method. Pursuant to this method, a security is valued by reference to the
Fund's acquisition cost as adjusted for amortization of premium or accretion of
discount, regardless of the impact of fluctuating interest rates on the market
value of the security. Although Galaxy seeks to maintain the net asset value
per share of the Fund at $1.00, there can be no assurance that the net asset
value per share will not vary.

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

8
<PAGE> 32
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 the Fund'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. 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 requirements 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.

REDEMPTION OF SHARES

9
<PAGE> 33
sixty days written notice, if the value of the account is less than $250 as a
result of redemptions.

10
<PAGE> 34
DIVIDENDS AND DISTRIBUTIONS

The net investment income of the Fund is declared daily as a dividend
to the persons who are shareholders of the Fund immediately after the 11:00
a.m. pricing of Shares on the day of declaration. The Fund's net income for
dividend purposes consists of all accrued income, whether taxable or
tax-exempt, plus discount earned on the Fund's assets attributable to Trust
Shares, less amortization of premium on such assets and accrued expenses
attributable to Trust Shares of the Fund. 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.
The Fund does not expect to realize net capital gains. However, if any such
gains are realized, they will be paid out to shareholders no less frequently
than 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 its 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 its
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 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. In general, the Fund's investment company
taxable income will be its taxable income (including interest) 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 Fund intends to distribute substantially all of its investment
company taxable income and net tax-exempt 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 income is received in cash or
reinvested in additional Trust Shares. Because all of the Fund's net investment
income is expected to be derived from earned interest, it is anticipated that
no part of any distribution will be eligible for the dividends received
deduction for corporations.

Dividends declared in October, November or December of any year that
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.

STATE AND LOCAL

Shareholders should consult their own tax advisers about the status of
distributions from the Fund in their own state.

11
<PAGE> 35
MISCELLANEOUS

The foregoing summarizes some of the important 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 at least annually as to the federal
income tax consequences of distributions made each year.

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

Subject to the general supervision of Galaxy's Board of Trustees,
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.

For the services provided and expenses assumed, Fleet is entitled to
receive advisory fees, computed daily and paid monthly, at the annual rate of
.40% of the average daily net assets of the Fund. 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 has advised
Galaxy that it intends to waive advisory fees payable to it by the Fund in an
amount equal to 0.05% of the average daily net assets of the Fund to the extent
that the Fund's net assets exceed $750,000,000. For the fiscal year ended
October 31, 1995, Fleet received advisory fees (after fee waivers) at the
effective annual rate of 0.39% of the Fund's average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

12
<PAGE> 36
or affiliate 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 that are banks or bank affiliates are subject to such banking laws
and regulations. 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.

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 operations. It is not
anticipated, however, that any resulting change in the Fund's method of
operations would affect the Fund's net asset value per share or result in
financial loss to any shareholder.

ADMINISTRATOR

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 be paid 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, the Fund paid FDISG
administration fees at the effective rate of .088% of its average daily net
assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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
quotations are computed separately for each series of shares. The differences
in the expenses paid by the respective series will affect their performance.

13
<PAGE> 37
Retail A Shares of the Fund are sold without any sales charge 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, 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
Galaxy intends to enter into servicing agreements with Institutions (including
Fleet Bank and its affiliates). Pursuant to such servicing agreements,
Institutions will render certain administrative and support services enumerated
below to Customers who are the beneficial owners of Retail A Shares in
consideration for payment of up to .25% (on an annualized basis) of the average
daily net asset value of Retail A Shares beneficially owned by such Customers.
Services under the Shareholder Services Plan may include: aggregating and
processing purchase and redemption requests and placing net purchase and
redemption orders with the Distributor; processing dividend payments from the
Fund; providing Customers with information as to their positions in Retail A
Shares; providing sub-accounting with respect to Retail A Shares or the
information necessary for sub-accounting; and providing periodic mailing to
Customers. Such services are intended to supplement the services provided by
FDISG as administrator and transfer agent, and are described more fully in the
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 no more
than .10% (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

14
<PAGE> 38
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 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 Galaxy'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 15108, 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 advisory and administrative 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); Securities and Exchange Commission
fees; state securities qualification fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to 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; cost of independent
pricing services; costs of shareholder reports and meetings; and any
extraordinary expenses. The Fund also pays for any 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 yield of the Fund, as a measure of their performance, may be quoted and
compared to those of other mutual funds with similar investment objectives and
to other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, such data is reported in national financial publications
such as Donoghue's Money Fund Report(R), a widely recognized independent
publication that monitors the performance of mutual funds. Also, the Fund's
yield data may be 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 in publications of a local or regional nature. The
Fund's performance may also be compared to the average yields reported by the
Bank Rate Monitor for money market deposit accounts offered by the 50 leading
banks and thrift institutions in the top five standard metropolitan statistical
areas. The performance and yield data will be calculated separately for Trust
Shares and Retail A Shares of the Fund.

15
<PAGE> 39
The yield of the Fund will refer to the income generated over a
seven-day period identified in the advertisement. This income is annualized,
i.e., the income during a particular week is assumed to be generated each week
over a 52-week period, and is shown as a percentage of the investment. The Fund
may also advertise its "effective yield," which is calculated similarly but,
when annualized, the income from an investment in the Fund is assumed to be
reinvested. Consequently, the "effective yield" will be slightly higher because
of the compounding effect of the assumed reinvestment.

The Fund's yield will fluctuate and any quotation of yield should not
be considered as representative of future performance of the Fund. 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 is
generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses, and market conditions. Any
fees charged 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.

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 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.

16
<PAGE> 40

TRUST
THE GALAXY FUND

U.S. TREASURY FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 41
===============================================================================

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investments, Strategies and Risks . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 5
"When-Issued" Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . 7
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . 11
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . 11
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . 13
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
===============================================================================
<PAGE> 42

THE GALAXY FUND

The Fund's investment objective is to seek current income with
liquidity and stability of principal. The Fund invests in securities with
remaining maturities of one year or less which are issued or guaranteed as to
principal and interest by the U.S. Government or by agencies or
instrumentalities thereof, the interest income from which generally will not be
subject to state income tax by reason of current federal law. The Fund invests
at least 65% of its total assets in direct U.S. Government obligations.

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 an additional series of shares in Fund
("Retail A Shares"), which 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 loan associations
and broker/dealers on behalf of their customers. Trust Shares and Retail A
Shares 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 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely the information about the Fund
that a prospective investor 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 __, 1996

<PAGE> 43

EXPENSE SUMMARY

Set forth below is a summary of the operating expenses for Trust
Shares of the Fund. Examples based on the summary are also shown.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES U.S. TREASURY
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FUND
- --------------------------------------- -------------
<S> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14%
----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54%
====
</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>
U.S. Treasury Fund . . . . . . . . . . . . . . . . . . . . . . . . . $5 $17 $30 $66
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in the Fund bears
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. 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
relating to the Fund. Any fees that may be charged by affiliates of Fleet
Investment Advisors Inc. or other financial 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> 44
FINANCIAL HIGHLIGHTS

Prior to November 1, 1994, the Fund offered a single series of shares.
As of such date, the existing series of shares was designated as Retail Shares
(now designated Retail A Shares), and the Fund began offering a new series of
shares designated as Trust Shares. This Prospectus describes the Trust Shares
in the Fund. Retail A Shares in the Fund are offered under a separate
prospectus. Trust Shares and Retail A Shares in the Fund represent equal pro
rata interests in the Fund, except that (i) Retail A Shares in the Fund bear
the expenses incurred under Galaxy's Shareholder Services Plan at an annual
rate of up to .10% of the average daily net asset value of the Fund's
outstanding Retail A Shares, and (ii) Trust Shares and Retail A Shares bear
differing transfer agency expenses. See "Management of the Fund" and
"Description of Galaxy and Its Shares."

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 for the fiscal year ended 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, 1995 reflects the investment results of Retail A Shares of
the Fund and is intended to provide investors with a longer-term perspective of
the Fund's financial history. More information about the performance of the
Fund is 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> 45

U.S. TREASURY FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEARS ENDED
1995 OCTOBER 31,(2) PERIOD ENDED
------------- ------------------------------------- OCTOBER 31,
TRUST SHARES 1994 1993 1992 1991(1,2)
------------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income(3) . . . . . . . . 0.05 0.03 0.03 0.04 0.04
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . -- -- -- -- --

Total from Investment
Operations: . . . . . . . . 0.05 0.03 0.03 0.04 0.04
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income . (0.05) (0.03) (0.03) (0.04) (0.04)
on investments . . . . . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Total Dividends . . . . . . . . (0.05) (0.03) (0.03) (0.04) (0.04)
on investments . . . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of Period . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(4) . . . . . . . . . . . . . . 5.18% 3.30% 2.75% 3.69% 4.51%(5)

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $271,036 $466,993 $447,960 $482,416 $170,177
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . 5.06% 3.24% 2.71% 3.51% 4.26%(6)
Operating expenses including
reimbursement/waiver . . . . . . . 0.55% 0.56% 0.55% 0.49% 0.27%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . 0.55% 0.56% 0.55% 0.55% 0.65%(6)
</TABLE>
- ---------------
1 Prior to November 1, 1994, the Fund offered a single series of shares.
As of such date, the existing series of shares was designated as
Retail Shares (now designated Retail A Shares) and the Fund began
issuing a second series of shares designated as Trust Shares.

2 The Fund commenced operations on January 22, 1991.

3 Net investment income per share before waiver of fees by the
Investment Adviser and/or Administrator for the year ended October 31,
1992 and the period ended October 31, 1991 were $0.04 and $0.04,
respectively.

4 Total return for 1994 includes the effect of the voluntary capital
contribution of $1 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities
held by the Fund. Without this capital contribution, the total return
would have been 3.30%.

5 Not Annualized.

6 Annualized.

4
<PAGE> 46
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL

The Fund's investment objective is to seek current income with
liquidity and stability of principal. The Fund seeks to achieve its objective
by investing in securities with remaining maturities of one year or less which
are issued or guaranteed as to principal and interest by the U.S. Government or
by agencies or instrumentalities thereof, the interest income from which
generally will not be subject to state income tax by reason of current federal
law. Such instruments may include, but are not limited to, securities issued by
the U.S. Treasury and by certain U.S. Government agencies or instrumentalities
such as the Federal Home Loan Banks, Federal Farm Credit Banks and the Student
Loan Marketing Association. The Fund invests at least 65% of its total assets
in direct U.S. Government obligations. Shareholders residing in a particular
state that has an income tax law should determine through consultation with
their own tax advisers whether such interest income, when distributed by the
Fund, will be considered by the state to have retained exempt status and
whether the Fund's capital gain and other income, if any, when so distributed
will be subject to the state's income tax. See "Taxes." The Fund will maintain
a dollar-weighted average portfolio maturity of 90 days or less in an effort to
maintain a stable net asset value per share of $1.00. The value of the Fund's
portfolio securities will generally vary inversely with changes in prevailing
interest rates.

Due to state income tax considerations, the Fund will not invest in
other securities, such as repurchase agreements and reverse repurchase
agreements, except under extraordinary circumstances such as when appropriate
U.S. Government securities are unavailable.

The Fund may also invest in certain variable and floating rate
instruments as described under "Investments, Strategies and Risks -- U.S.
Government Obligations." For more information see "Investments, Strategies
and Risks" below.

INVESTMENTS, STRATEGIES AND RISKS

U.S. GOVERNMENT OBLIGATIONS

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 Bills generally have initial maturities of
more than ten years. Obligations of certain agencies and instrumentalities of
the U.S. Government, such as 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.

5
<PAGE> 47
Securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities have historically involved little risk of loss of
principal. However, due to fluctuations in interest rates, the market value of
such securities may vary during the period a shareholder owns Trust Shares of
the Fund.

Some U.S. Government obligations may be issued as variable or floating
rate instruments. 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.
Because there may not always be an active secondary market for these
instruments, substantial holdings of variable and floating rate instruments
could reduce portfolio liquidity.

"WHEN-ISSUED" SECURITIES

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 the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies.

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

4. 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; or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing and in amounts not in excess of lesser of the dollar amounts
borrowed or 10% of the value of its 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.

6
<PAGE> 48
With respect to Investment Limitation No 3. above, (a) in certain
circumstances, the guarantor of a guaranteed security may also be considered to
be an issuer in connection with such guarantee; and (b) securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
(including securities backed by the full faith and credit of the United States)
are deemed to be U.S. Government obligations.

The Fund may follow non-fundamental operating policies that are more
restrictive than its fundamental investment limitations, as set forth in this
Prospectus and in the Statement of Additional Information relating to the Fund,
in order to comply with applicable laws and regulations, including the
provisions of and applicable regulations under the Investment Company Act of
1940, as amended (the "1940 Act"). In particular, the Fund will comply with the
various requirements of Rule 2a-7 under the 1940 Act, which regulates money
market mutual funds. Subject to Investment Limitation No. 2 above, the Fund
will determine the effective maturity of its investments according to Rule
2a-7. The Fund may change these operating policies to reflect changes in the
laws and regulations without shareholder approval.

PRICING OF SHARES

Net asset value per share of the Fund is determined as of 11:00 a.m.
(Eastern Time) and 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 the Exchange is open. 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 shares of that series
of the Fund, by the number of outstanding shares of that series of the Fund.

The assets in the Fund are valued based upon the amortized cost
method. Pursuant to this method, a security is valued by reference to a Fund's
acquisition cost as adjusted for amortization of premium or accretion of
discount, regardless of the impact of fluctuating interest rates on the market
value of the security. Although Galaxy seeks to maintain the net asset value
per share of the Fund at $1.00, there can be no assurance that the net asset
value per share will not vary.

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

7
<PAGE> 49
defined contribution plans ("Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. Each
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 the Fund'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 any
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. 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 requirements 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.

REDEMPTION OF SHARES

8
<PAGE> 50
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 sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

The net investment income of the Fund is declared daily as a dividend
to the persons who are shareholders of the Fund immediately after the 11:00
a.m. pricing of Shares on the day of declaration. The Fund's net income for
dividend purposes consists of all accrued income, whether taxable or
tax-exempt, plus discount earned on the Fund's assets attributable to Trust
Shares, less amortization of premium on such assets and accrued expenses
attributable to Trust Shares of the Fund. 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.
The Fund does not expect to realize net capital gains. However, if any such
gains are realized, they will be paid out to shareholders no less frequently
than annually.

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 its
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 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. In general, the Fund's investment company
taxable income will be its taxable income (including interest) 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 Fund intends to distribute substantially all of its investment
company taxable income and net tax-exempt 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 income is received in cash or
reinvested in additional Trust Shares. Because all of the Fund's net investment
income is expected to be derived from earned interest, it is anticipated that
no part of any distribution will be eligible for the dividends received
deduction for corporations.

9
<PAGE> 51
Dividends declared in October, November or December of any year that
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.

STATE AND LOCAL

The Fund is structured to provide shareholders, to the extent
permissible by federal and state law, with income that is exempt or excluded
from taxation at the state and local level. Many states, by statute, judicial
decision or administrative action, have taken the position that dividends of a
regulated investment company, such as the Fund, that are attributable to
interest on direct U.S. Treasury obligations or obligations of certain U.S.
Government agencies, are the functional equivalent of interest from such
obligations and are, therefore, exempt from state and local income taxes.
Shareholders should consult their own tax adviser about the status of
distributions from the Fund in their own state.

MISCELLANEOUS

The foregoing summarizes some of the important 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, including the application of state and local tax laws. Shareholders
will be advised at least annually as to the federal income tax consequences of
distributions made each year.

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

Subject to the general supervision of Galaxy's Board of Trustees,
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.

For the services provided and expenses assumed, Fleet is entitled to
receive advisory fees, computed daily and paid monthly, at the annual rate of
.40% of the first $750,000,000 of the average daily net assets of the Fund
plus .35% of the average daily net assets of the Fund in excess of
$750,000,000. Fleet may from time to time, in

10
<PAGE> 52
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. For the fiscal year
under October 31, 1995, Fleet received advisory fees at the effective annual
rate of 0.40% of the Fund's average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

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 operations. It is not
anticipated, however, that any resulting change in the Fund's method of
operations would affect the Fund's net asset value per share or result in
financial loss to any shareholder.

ADMINISTRATOR

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 be paid 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, the Fund paid FDISG
administration fees at the effective rate of .088% of its average daily net
assets.

DESCRIPTION OF GALAXY AND ITS SHARES

11
<PAGE> 53
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 A 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
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 without a sales charge 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, 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
fractional votes for fractional Shares 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
Galaxy intends to enter into servicing agreements with Institutions (including
Fleet Bank and its affiliates). Pursuant to such servicing agreements,
Institutions will render certain administrative and support services to
Customers who are the beneficial owners of Retail A Shares in consideration
for payment of up to .25% (on an annualized basis) of the average daily net
asset value of Retail A Shares beneficially owned by such Customers. Services
under the Shareholder Services Plan may include: aggregating and processing
purchase and redemption request and placing net purchase and redemption orders
with the Distributor; processing dividend payments from the Fund; providing
Customers with information as to their positions in Retail A Shares; providing
sub-accounting with respect to Retail A Shares or the information necessary for
sub-accounting; and providing periodic mailings to Customers. Such services are
intended to supplement the services provided by FDISG as administrator and
transfer agent, and are described more fully in the 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 no more
than .10% (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.

12
<PAGE> 54
AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

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 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 Galaxy's 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 15108, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection
with the performance of their advisory and administrative services for the
Fund. The Fund 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); Securities and Exchange Commission
fees; state securities qualification fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to 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; cost of independent
pricing services; costs of shareholder reports and meetings; and any
extraordinary expenses. The Fund also pays for any brokerage fees and
commissions in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

13
<PAGE> 55
Times, or in publications of a local or regional nature. The Fund's performance
may also be compared to the average yields reported by the Bank Rate Monitor
for money market deposit accounts offered by the 50 leading bank and thirft
institutions in the top five standard metropolitan statistical areas. The
performance and yield data will be calculated separately for Trust Shares and
Retail A Shares of the Fund.

The yield of the Fund will refer to the income generated over a
seven-day period identified in the advertisement. This income is annualized,
i.e., the income during a particular week is assumed to be generated each week
over a 52-week period, and is shown as a percentage of the investment. The Fund
may also advertise its "effective yield" which is calculated similarly but,
when annualized, the income from an investment in the Fund is assumed to be
reinvested. Consequently, the "effective yield" will be slightly higher because
of the compounding effect of the assumed reinvestment.

In addition, the Fund may calculate a "state flow through yield" which
shows the level of taxable yield needed to produce an after-tax yield
equivalent to a particular state's tax-exempt yield achieved by the Fund. The
"state flow through yield" refers to that portion of income which is derived
from interest income on direct obligations of the U.S. Government, its agencies
or instrumentalities and which qualifies for exemption from state taxes. The
yield calculation assumes that 100% of the interest income is exempt from state
personal income tax. A "state flow through yield" will be computed by dividing
the tax-exempt portion of the Fund's yield by a denominator consisting of one
minus a stated income tax rate. For illustrative purposes, state flow through
yields assume the payment of state income tax rates of 3%, 7% or 11%.

The Fund's yield will fluctuate and any quotation of yield should not
be considered as representative of future performance of the Fund. 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 is
generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses, and market conditions. Any
fees charged directly by Institutions to accounts of Customers that have
invested in Trust Shares of the Fund will not be included in calculations of
yield.

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 markets indices; shareholder profits 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 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.

14
<PAGE> 56

GALAXY
INSTITUTIONAL TREASURY
MONEY MARKET
FUND

February 29, 1996

PROSPECTUS

FN-171 15037 (3/96) pkg. 50
<PAGE> 57

THE GALAXY FUND

INSTITUTIONAL TREASURY MONEY MARKET FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 58

===============================================================================

<TABLE>
<CAPTION>
PAGE
<S> <C>
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . 5
TYPES OF OBLIGATIONS AND OTHER
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 5
Treasury Obligations . . . . . . . . . . . . . . . . . . . . . . . . 5
"When-Issued" Securities . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . 6
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . 6
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase Procedures . . . . . . . . . . . . . . . . . . . . . . . . 7
Other Purchase Information . . . . . . . . . . . . . . . . . . . . . 7
Redemption Procedures . . . . . . . . . . . . . . . . . . . . . . . 8
Other Redemption Information . . . . . . . . . . . . . . . . . . . . 8
EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . 8
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 9
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . 10
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 11
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . 11
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . . . . . . 12
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . 12
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . . . . . 13
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

===============================================================================

<PAGE> 59
THE GALAXY FUND

4400 Computer Drive
Westboro, Massachusetts 01581-5108
For applications and information
regarding initial purchases
and current performance, call
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 the INSTITUTIONAL TREASURY MONEY MARKET FUND (the
"Fund") offered by Galaxy.

The Fund's investment objective is to seek current income with liquidity and
stability of principal. The Fund invests in obligations with remaining
maturities of 397 days or less which are issued or guaranteed by the U.S.
Treasury, the interest income from which generally will not be subject to state
income tax by reason of current federal law.

The Fund is advised by Fleet Investment Advisors Inc. and distributed and
sponsored by 440 Financial Distributors, Inc., which is unaffiliated with Fleet
Investment Advisors Inc. and its parent, Fleet Financial Group, Inc. and
affiliates. The shares described in this Prospectus ("Shares") are offered to
customers ("Customers") of Fleet Brokerage Securities, Inc., Fleet Securities,
Inc., Fleet Financial Group, Inc., its affiliates, their correspondent banks,
and other qualified banks, savings and loan associations and broker/dealers
("Institutions").

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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

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 _, 1996
<PAGE> 60
HIGHLIGHTS
Q: What is The Galaxy Fund?

A: Galaxy is an open-end management investment company (commonly known as a
mutual fund) that offers investors the opportunity to invest in different
investment portfolios having separate investment objectives and policies.
This Prospectus describes Galaxy's INSTITUTIONAL TREASURY MONEY MARKET
FUND. See "Investment Objective and Policies" and "Types of Obligations and
Other Investment Information." Galaxy also offers twenty-three other
investment portfolios, the MONEY MARKET, GOVERNMENT, TAX-EXEMPT, U.S.
TREASURY, 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,
SHORT-TERM BOND, 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. The Prospectuses for these Funds may be obtained by calling
1-800- 628-0414.

Q: Who advises the Fund?

A: The Fund is advised by Fleet Investment Advisors Inc. (the "Investment
Adviser" or "Fleet"), an indirect wholly-owned subsidiary of Fleet
Financial Group, Inc. Fleet Financial Group, Inc. is a financial services
company with total assets as of December 31, 1995 of approximately $84.8
billion. See "Management of the Fund -- Investment Adviser."

Q: What advantages does the Fund offer?

A: The Fund offers a professionally managed diversified investment portfolio
and the economic advantages of block trading in portfolio securities, and
provides detailed accounting and safekeeping for securities. The Fund also
offers the availability of a family of twenty-four mutual funds should your
investment goals change.

Q: How to buy and redeem shares?

A: The Fund is distributed by 440 Financial Distributors, Inc. Shares may be
purchased on behalf of Customers of Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loan
associations and broker/dealers ("Institutions"). Share purchase and
redemption information is provided below under "How to Purchase and Redeem
Shares." The minimum initial investment for Institutions purchasing on
behalf of their Customers is $2,000,000. There is no minimum investment for
subsequent purchases. Institutions may require Customers to maintain
certain minimum investments in Shares of the Fund.

Q: When are dividends paid?

A: The net investment income of the Fund is declared daily and paid monthly.
Net realized capital gains of the Fund, if any, are distributed at least
annually. See "Dividends and Distributions."

Q: What shareholder privileges are offered by the Fund?

A: Investors may exchange Shares of the Fund having a value of at least $100
for shares of any other portfolio offered by Galaxy or otherwise advised by
Fleet or its affiliates in which the investor has an existing account,
provided that such other shares may legally be sold in the state of the
investor's residence.

2
<PAGE> 61
EXPENSE SUMMARY

Set forth below is a summary of the Fund's operating expenses. Examples
based on the summary are also shown.

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
Advisory Fees (After Fee Waivers) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (After Expense Reimbursements) . . . . . . . . . . . . . . . . . . . . . . 0.10%
----
Total Fund Operating Expenses (After Fee Waivers and Expense Reimbursements) . . . . . . 0.20%
====
</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>
$2 $6 $11 $25
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in the Fund bears
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 the fund expects to incur during the current
fiscal year. Without voluntary fee waivers and expense reimbursements by the
Investment Adviser and/or Administrator, "Advisory Fees" would be .20%. Other
Expenses would be .14%, and Total Fund Operating Expenses would be .34%. For
more complete descriptions of these costs and expenses, see "Management of the
Fund" in this Prospectus and the financial statements and notes incorporated by
reference into the Statement of Additional Information relating to the Fund.
Any fees that are charged by affiliates of Fleet or any other institutions
directly to their customer accounts for services related to an investment in
Shares of the Fund are in addition to and not reflected in the fees and expenses
described above. 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 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.

3
<PAGE> 62

FINANCIAL HIGHLIGHTS

The financial highlights presented below set forth certain information
concerning the Fund's investment results for the periods presented. The
financial highlights have been audited by Coopers & Lybrand L.L.P., Galaxy's
independent accountants, whose report is contained in Galaxy's Annual Report to
Shareholders for the fiscal year ended 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. More information about the
performance of the Fund is contained in the Annual Report to Shareholders which
may be obtained without charge by contacting Galaxy at its telephone numbers or
address provided above.

INSTITUTIONAL TREASURY
MONEY MARKET FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1993(1)
---------------- ---------------- -------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income From Investment Operations:
Net investment income(2) . . . . . . . . 0.05 0.04 0.02
Net realized and unrealized gain(loss)
on investments . . . . . . . . . . . -- -- --
-------- -------- --------
Total From Investment Operations . 0.05 0.04 0.02
-------- -------- --------
Less Dividends:
Dividends from net investment income . . (0.05) (0.04) (0.02)
Dividends from net realized capital
gains . . . . . . . . . . . . . . . . -- -- --
-------- -------- --------
Total Dividends . . . . . . . . . (0.05) (0.04) (0.02)
-------- -------- --------
Net increase(decrease) in net asset value . -- -- --
-------- -------- --------
Net Asset Value, End of Period . . . . . . $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return . . . . . . . . . . . . . . . 5.53% 3.56% 1.59%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $506,692 $326,225 $158,890
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . 5.38% 3.63% 2.85%(4)
Operating expenses including
reimbursement/waiver . . . . . . . . 0.17% 0.17% 0.14%(4)
Operating expenses excluding
reimbursement/waiver . . . . . . . . 0.33% 0.39% 0.46%(4)
</TABLE>
- ---------------
1 The Fund commenced operations on April 15, 1993.
2 Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the years ended October 31, 1995
and October 31, 1994 and for the period ended October 31, 1993 were $0.05,
$0.04 and $0.01, respectively.
3 Not Annualized.
4 Annualized.

4
<PAGE> 63
INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek current income with liquidity and
stability of principal. The Fund seeks to achieve its objective by investing in
obligations issued or guaranteed as to payment of principal and interest by the
U.S. Treasury ("Treasury Obligations") with remaining maturities of 397 days or
less (except for certain variable and floating rate notes). The interest income
from these obligations generally will not be subject to state income tax by
reason of current federal law. See "Types of Obligations and Other Investment
Information."

TYPES OF OBLIGATIONS AND OTHER INVESTMENT INFORMATION

TREASURY OBLIGATIONS

Treasury Obligations include obligations of certain agencies and
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, which are supported by the full faith and credit of the
U.S. Treasury. Treasury Obligations have historically involved little risk of
loss of principal. However, due to fluctuations in interest rates, the market
value of Treasury Obligations may vary during the period a shareholder owns
Shares of the Fund.

Treasury Obligations may include variable and floating rate instruments.
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. Because
there may not always be an active secondary market for these instruments,
substantial holdings of variable and floating rate instruments could reduce
portfolio liquidity.

"WHEN-ISSUED" SECURITIES

The Fund may purchase Treasury Obligations on a "when-issued" basis.
"When-issued" securities are securities purchased at a stated price and yield
in which delivery and payment takes place at a later date. The Fund will
generally not pay for such securities or start earning interest on them until
they are received. Securities purchased on a "when-issued" basis are recorded
as an asset and are subject to changes in value based upon changes in the
general level of interest rates. It is expected that, absent unusual market
conditions, commitments by the Fund to purchase "when-issued" securities will
not exceed 25% of the value of its total assets. The Fund does not intend to
purchase "when-issued" securities for speculative purposes, but only in
furtherance of its investment objective.

5
<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 the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies.

2. Invest in obligations having remaining maturities in excess of 397
days, except that certain variable and floating rate instruments may bear
longer maturities (provided certain provisions are met).

3. 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 the Fund's 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
in excess of 5% of its total assets are outstanding.

4. Invest more than 10% of the value of the Fund's total assets in
illiquid securities.

With respect to Investment Limitation No. 3 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.

PRICING OF SHARES

Net asset value per share of the Fund is determined as of 11:00 a.m.
(Eastern Time) and 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 the Exchange is open. 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 by dividing the value of all securities and other
assets belonging to the Fund, less the liabilities charged to the Fund, by the
number of outstanding shares of the Fund.

The assets in the Fund are valued based upon the amortized cost method.
Pursuant to this method, a security is valued by reference to the Fund's
acquisition cost as adjusted for amortization of premium or accretion of
discount, regardless of the impact of fluctuating interest rates on the market
value of the security. Although Galaxy seeks to maintain the net asset value
per share of the Fund at $1.00, there can be no assurance that the net asset
value per share will not vary.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

6
<PAGE> 65
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

Shares may be purchased by Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, saving and loan associations and
broker/dealers ("Institutions") on behalf of their customers ("Customers").
Purchases may take place only on days on which the Distributor, Galaxy's
custodian and Galaxy's transfer agent are open for business ("Business Days").
If an Institution accepts a purchase order from a 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 Distributor's procedures.

PURCHASE PROCEDURES

Purchase orders for Shares are placed by Customers of Institutions through
their Institution. The Institution is responsible for transmitting Customer
purchase orders to the Distributor 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. Shares
purchased by Institutions on behalf of their Customers will normally be held of
record by the Institutions and beneficial ownership of Shares will be recorded
by the Institutions and reflected in the account statements provided to their
Customers. Depending on the terms of the arrangement between a particular
Institution and Galaxy's transfer agent, confirmations of Share purchases and
redemptions and pertinent account statements will either be sent by Galaxy's
transfer agent directly to a Customer with a copy to the Institution, or will
be furnished directly to the Customer by the Institution. Other procedures for
the purchase of Shares established by Institutions in connection with the
requirements of their Customer accounts may apply. Customers wishing to
purchase Shares through their Institution should contact such entity directly
for appropriate purchase instructions.

OTHER PURCHASE INFORMATION

The minimum initial aggregate investment by an Institution investing on
behalf of its Customers is $2,000,000. There is no minimum investment for
subsequent purchases. Customers may agree with a particular Institution to
varying minimum initial and minimum subsequent purchase requirements with
respect to their accounts.

Galaxy reserves the right to reject any purchase order, in whole or in part,
or to waive any minimum investment requirement. The issuance of Shares to
Institutions is recorded on the books of Galaxy and Share certificates will not
be issued.

A purchase order for Shares in the Fund received and accepted by the
Distributor by 11:00 a.m. (Eastern Time) on a Business Day will be executed at
the net asset value per Share next determined after receipt of the order and
will receive the dividend declared on the day of purchase if Galaxy's custodian
receives the purchase price in federal funds or other immediately available
funds by 11:00 a.m. (Eastern Time) that day. Purchase orders received after
11:00 a.m. (Eastern Time) and prior to 4:00 p.m. (Eastern Time) on a Business
Day for which such funds have been received by 4:00 p.m. will be effective as
of 4:00 p.m., and investors will begin receiving

7
<PAGE> 66
dividends the following day. In certain circumstances, Galaxy may not require
that amounts invested by Institutions on behalf of their Customers be converted
into federal funds. If an Institution accepts a purchase order from a 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 above
procedures.

REDEMPTION PROCEDURES

Customers of Institutions may redeem all or part of their Shares in
accordance with procedures governing their accounts at the Institution. It is
the responsibility of the Institutions to transmit redemption orders to the
Distributor and credit their Customers' accounts with the redemption proceeds
on a timely basis. No charge for wiring redemption payments to the Institution
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 Institutions.

OTHER REDEMPTION INFORMATION

Galaxy requires that an Institution maintain an average balance of $2
million in an account. If the balance in such account falls below that minimum,
the Institution may be obliged by Galaxy to redeem all of the Shares in the
account.

Redemption orders are effected at the net asset value per Share next
determined after receipt and acceptance of the order. 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 redeem Shares involuntarily or make payment for redemption in
securities if it appears appropriate to do so in light of Galaxy's
responsibilities under the Investment Company Act of 1940, as amended. See the
Statement of Additional Information under "Net Asset Value," for examples of
when such redemptions might be appropriate.

EXCHANGE PRIVILEGE

Customers of Institutions may, after appropriate prior authorization,
exchange Shares of the Fund having a value of at least $100 for Retail A Shares
or Shares, as the case may be, of any of the other portfolios offered by Galaxy
or otherwise advised by Fleet or its affiliates in which the Customer maintains
an existing account, provided that such other Shares may legally be sold in the
state of the Customer's residence. The minimum initial investment to establish
an account in another portfolio offered by Galaxy or otherwise advised by Fleet
or its affiliates by exchange is $2,500.

An exchange involves a redemption of all or a portion of the Shares of the
Fund and the investment of the redemption proceeds in shares of another
portfolio offered by Galaxy or otherwise advised by Fleet or its affiliates.
The redemption will be made at the per share net asset value next determined
after the exchange request is received. The Shares of the portfolio to be
acquired will be purchased at the net asset value per share next determined
after acceptance of the exchange request, plus any applicable sales charge.
Unless an exception applies, a front-end sales charge will be charged in
connection with an exchange of Shares of the Fund for Retail A Shares of
Galaxy's non-money market portfolios.

8
<PAGE> 67
Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in the Fund. For
further information regarding Galaxy's exchange privilege, Customers of
Institutions should call their Institution. Customers exercising the exchange
privilege with Galaxy's 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, High Quality Bond, Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond, Rhode Island
Municipal Bond, Money Market, Government, Tax-Exempt, U.S. Treasury,
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds should request and review the prospectuses for these Funds prior to
making an exchange (call 1-800-628- 0414 for a prospectus). Telephone all
exchanges to 1-800-628-0413.

In order to prevent abuse of this privilege to the disadvantage of other
shareholders, Galaxy reserves the right to terminate the exchange privilege of
any shareholder who requests more than three exchanges a year. Galaxy will
determine whether to do so based on a consideration of both the number of
exchanges that any particular shareholder or group of shareholders has
requested and the time period over which their exchange requests have been
made, together with the level of expense to Galaxy which will result from
effecting additional exchange requests. The exchange privilege may be modified
or terminated at any time. At least 60 days' notice of any material
modification or termination will be given to shareholders except where notice
is not required under the regulations of the Securities and Exchange Commission
("SEC").

Galaxy does not charge any exchange fee. Institutions may charge such fees
either with respect to all exchange requests or with respect to any request
which exceeds the permissible number of free exchanges during a particular
period. Customers of Institutions should contact their Institution for
applicable information.

For federal income tax purposes, an exchange of Shares is a taxable event
and, accordingly, a capital gain or loss may be realized by an investor. Before
making an exchange request, the investor should consult a tax or other
financial adviser to determine the tax consequences.

DIVIDENDS AND DISTRIBUTIONS

The net investment income of the Fund is declared daily as a dividend to the
persons who are shareholders of the Fund immediately after the 11:00 a.m.
pricing of Shares on the day of declaration. Net income for dividend purposes
consists of all accrued income plus discount earned on the Fund's assets, less
amortization of premium on such assets and accrued expenses attributable to the
Fund. The Fund does not expect to realize net capital gains. However, if any
such gains are realized, they will be paid out to shareholders no less
frequently than annually.

Dividends are paid monthly within five Business Days after the end of each
calendar month or within five Business Days after a shareholder's complete
redemption of Shares in a Fund. Institutions, unless they request otherwise,
will automatically receive dividends and distributions in cash. Institutions
may pay dividends to Customers in cash or reinvest such cash distributions in
additional Shares.

9
<PAGE> 68

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 its 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. In
general, the Fund's investment company taxable income will be its taxable
income (including interest) 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 Fund intends to distribute
substantially all of its investment company taxable 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 income is received
in cash or reinvested in additional Shares. Because all of the Fund's net
investment income is expected to be derived from earned interest, it is
anticipated that no part of any distribution will be eligible for the dividends
received deduction for corporations.

STATE AND LOCAL

The Fund is structured to provide shareholders, to the extent permissible by
federal and state law, with income that is exempt or excluded from taxation at
the state and local level. Many states, by statute, judicial decision or
administrative action, have taken the position that dividends of a regulated
investment company, such as the Fund, that are attributable to interest on
Treasury Obligations are the functional equivalent of interest from such
obligations and are, therefore, exempt from state and local income taxes.
Shareholders should consult their own tax advisers about the status of
distributions from the Fund in their own state.

MISCELLANEOUS

The foregoing summarizes some of the important 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 at least annually as to the federal income tax
consequences of distributions made that year.

MANAGEMENT OF THE FUND

10
<PAGE> 69

INVESTMENT ADVISER

For the services provided and expenses assumed, Fleet is entitled to receive
advisory fees from the Fund computed daily and paid monthly, at the annual rate
of .20% of the average daily net assets of the Fund. 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. For the fiscal year
ended October 31, 1995, Fleet received advisory fees (after fee waivers) at
the effective annual rate of .10% of the Fund's average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

11
<PAGE> 70

ADMINISTRATOR

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 be paid 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 (after fee waivers) at the effective annual rate of .032%
of the Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS 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.

CUSTODIAN AND TRANSFER AGENT

12
<PAGE> 71
Information. Communications to FDISG should be directed to FDISG at P.O. Box
15108, 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 advisory and administrative 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 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; cost of
independent pricing services; costs of shareholder reports and meetings; and
any extraordinary expenses. The Fund also pays for any brokerage fees and
commissions in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

In addition, the Fund may calculate a "state flow through yield" which shows
the level of taxable yield needed to produce an after-tax yield equivalent to a
particular state's tax-exempt yield achieved by the Fund. The "state flow
through yield" refers to that portion of income which is derived from interest
income on Treasury Obligations and which qualifies for exemption from state
taxes. The yield calculation assumes that 100% of the interest income is exempt
from state personal income tax. A "state flow through yield" will be computed
by dividing the tax-exempt portion of the Fund's yield by a denominator
consisting of one minus a stated income tax rate. For illustrative purposes,
state flow through yields assume the payment of state income tax rates of 3%,
7% or 11%.

The Fund's yield will fluctuate and any quotation of yield should not be
considered as representative of future

13
<PAGE> 72
performance of the Fund. 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 yield is generally a function of the kind and quality of
the instruments held in a portfolio, portfolio maturity, operating expenses,
and market conditions. Any fees charged by Institutions with respect to
accounts of Customers that have invested in Shares of the Fund will not be
included in calculations of yield.

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 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.

14
<PAGE> 73
GALAXY FUNDS

MONEY MARKET FUND

GOVERNMENT FUND

TAX-EXEMPT FUND

U.S. TREASURY FUND

February 29, 1996
<PAGE> 74

TRUST

THE GALAXY FUND

MONEY MARKET FUND

GOVERNMENT FUND

U.S. TREASURY FUND

TAX-EXEMPT 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>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . 9
In General . . . . . . . . . . . . . . . . . . . . . . . . . 9
Quality Requirements . . . . . . . . . . . . . . . . . . . . 9
Money Market Fund . . . . . . . . . . . . . . . . . . . . . 9
Government Fund . . . . . . . . . . . . . . . . . . . . . . 10
U.S. Treasury Fund . . . . . . . . . . . . . . . . . . . . . 10
Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . . . . 10
INVESTMENTS, STRATEGIES AND RISKS . . . . . . . . . . . . . . . 11
U.S. Government Obligations . . . . . . . . . . . . . . . . 11
Money Market Instruments . . . . . . . . . . . . . . . . . . 11
Municipal Securities . . . . . . . . . . . . . . . . . . . . 12
Tender Option Bonds . . . . . . . . . . . . . . . . . . . . . 13
Repurchase and Reverse Repurchase
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 13
Securities Lending--Money Market
and Government Funds . . . . . . . . . . . . . . . . . . . . 14
Guaranteed Investment Contracts--
Money Market Fund . . . . . . . . . . . . . . . . . . . . . 14
Asset-Backed Securities--Money
Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 15
Investment Company Securities--
Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . . . . 15
Other Investment Policies of the
Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . . . . 15
Certain Investment Policies of the
U.S. Treasury and Government Funds . . . . . . . . . . . . . 16
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . 16
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . 18
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . 18
Distributor . . . . . . . . . . . . . . . . . . . . . . . . 18
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . 18
Redemption of Shares . . . . . . . . . . . . . . . . . . . . 19
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . 20
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . 20
State and Local . . . . . . . . . . . . . . . . . . . . . . 21
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 21
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . 22
Investment Adviser . . . . . . . . . . . . . . . . . . . . . 22
Authority to Act as Investment Adviser . . . . . . . . . . . 22
Administrator . . . . . . . . . . . . . . . . . . . . . . . 23
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . . . 23
Shareholder Services Plan . . . . . . . . . . . . . . . . . 24
Affiliate Agreement for
Sub-Account Services . . . . . . . . . . . . . . . . . . . . 25
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . 25
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . . 25
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>

================================================================================
<PAGE> 76

THE GALAXY FUND

4400 Computer Drive For applications and information
Westboro, Massachusetts 01581-5108 initial purchases and current
performance, call 1-800-628-0414.
For additional purchases, redemptions,
exchanges and other shareholder
services, call 1-800-628-0143.

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

The MONEY MARKET FUND'S investment objective is to seek as high a
level of current income as is consistent with liquidity and stability of
principal. The Fund invests in "money market" instruments with remaining
maturities of one year or less, such as domestic and foreign bank certificates
of deposit, bankers' acceptances and commercial paper (including variable and
floating rate obligations) in addition to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, and repurchase
agreements relating to such obligations.

The GOVERNMENT FUND'S investment objective is to seek as high a level
of current income as is consistent with liquidity and stability of principal.
The Fund invests in obligations with remaining maturities of one year or less
which are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements relating to such obligations.

The U.S. TREASURY FUND'S investment objective is to seek current
income with liquidity and stability of principal. The Fund invests in
securities with remaining maturities of one year or less which are issued or
guaranteed as to principal and interest by the U.S. Government or by agencies
or instrumentalities thereof, the interest income from which generally will not
be subject to state income tax by reason of current federal law. The Fund
invests at least 65% of its total assets in direct U.S. Government obligations.

The TAX-EXEMPT FUND'S investment objective is to seek as high a level
of current interest income exempt from federal income tax as is consistent
with stability of principal. The Fund invests substantially all of its assets
in high quality debt obligations issued by or on behalf of states, territories,
and possessions of the United States, the District of Columbia, and their
authorities, agencies, instrumentalities, and political subdivisions, the
interest on which, in the opinion of bond counsel or counsel to the issuer, is
exempt from federal income tax ("Municipal Securities"). The Fund's portfolio
securities will generally have remaining maturities of not more than one year.

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 with respect to each Fund except the Tax-Exempt Fund, to participants
in employer-sponsored defined contribution plans. Galaxy is also authorized to
issue an additional series of shares in each Fund ("Retail A Shares"), which
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 loan associations and broker/dealers on
behalf of their customers. Trust Shares and Retail A 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."

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 THE PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT THE
FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely the information about the Funds
that a prospective investor should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional information
about the Funds, contained in the Statement of Additional Information relating
to the Funds 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

2
<PAGE> 78
EXPENSE SUMMARY

Set forth below is a summary of the operating expenses for Trust
Shares of each Fund. Examples based on the summary are also shown.
<TABLE>
<CAPTION>
MONEY GOVERN- TAX- U.S.
ANNUAL FUND OPERATING EXPENSES MARKET MENT EXEMPT TREASURY
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FUND FUND FUND FUND
- --------------------------------------- ------ ------- ------ --------
<S> <C> <C> <C> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . .40% .40% .40% .40%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . None None None None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . .18% .14% .14% .14%
------ ------- ------ --------
Total Fund Operating Expenses . . . . . . . . . . . . . . . .58% .54% .54% .54%
====== ======= ====== ========
</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>
Money Market Fund . . . . . . . . . . . . . . . . . . . . . . $6 $18 $32 $71
Government Fund . . . . . . . . . . . . . . . . . . . . . . . $5 $17 $30 $66
U.S. Treasury Fund . . . . . . . . . . . . . . . . . . . . . $5 $17 $30 $66
Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . . . . . $5 $17 $30 $66
</TABLE>

The Expense Summary and Example are intended to assist the investor
in understanding the costs and expenses that an investor in the Funds bears
directly or indirectly. The information contained in the Expense Summary and
Example is based on expenses incurred by the Funds 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. 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
relating to the Funds. Any fees that are charged by affiliates of Fleet
Investment Advisors Inc. or any other institution 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.

3
<PAGE> 79
FINANCIAL HIGHLIGHTS

Prior to November 1, 1994, each Fund offered a single series of
shares. As of such date, the existing series of shares was designated as Retail
Shares (now designated Retail A Shares), and each Fund began offering a new
series of shares designated as Trust Shares. This Prospectus describes the
Trust Shares in the Funds. Retail A Shares in the Funds are offered under a
separate prospectus. Trust Shares and Retail A Shares in a Fund 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 .10% of the average daily net asset value of the Fund's
outstanding Retail A Shares, and (ii) Trust Shares and Retail A Shares bear
differing transfer agency expenses.

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 for the fiscal year ended 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, 1995 reflects the investment results of Retail A Shares of
the Funds and is intended to provide investors with a long-term perspective of
the Funds' financial history. More information about the performance of the
Funds 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.

4
<PAGE> 80
MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD ENDED
1995 YEARS ENDED OCTOBER 31,(1) OCTOBER 31,
------------ ------------------------------------------------------------------ --------------
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
------------ ------ ------ ------ ------ ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
Investment Operations:
Net Investment Income(3,4) . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
Net realized and unrealized
gain (loss) on
investments . . . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations: . . . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net
investment income . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
Dividends from net realized
capital gains(5) . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Dividends: . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in
net asset value . . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Period . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return(6) . . . . . . . . . 5.43% 3.35% 2.78% 4.07% 6.40% 8.11% 9.09% 7.08% 6.09%(7)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . $334,054 $797,399 $577,558 $590,911 $415,541 $444,303 $410,121 $210,712 $192,400
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . 5.30% 3.38% 2.74% 3.74% 6.24% 7.82% 8.73% 6.92% 6.27%(8)
Operating expenses including
reimbursement/waiver . . 0.55% 0.64% 0.63% 0.58% 0.59% 0.59% 0.58% 0.59% 0.52%(8)
Operating expenses excluding
reimbursement/waiver . . 0.56% 0.64% 0.63% 0.58% 0.59% 0.59% 0.59% 0.59% 0.57%(8)
</TABLE>

- -----------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail Shares
(now designated Retail A Shares) and the Fund began issuing a second series
of shares designated as Trust Shares.

(2) The Fund commenced operations on November 17, 1986.

(3) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the year ended October 31, 1989
and the period ended October 31, 1987 were $0.09 and $0.06, respectively.

(4) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for Trust Shares for the year ended
October 31, 1995 was $0.05.

(5) Represents less than $0.01 per share for year 1992 and 1987.

(6) Total return for 1994 includes the effect of the voluntary capital
contribution of $1.6 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.35%.

(7) Not Annualized.

(8) Annualized.

5
<PAGE> 81
GOVERNMENT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD ENDED
1995 YEARS ENDED OCTOBER 31,(1) OCTOBER 31,
------------ ------------------------------------------------------------------ ------------
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
------------ ------ ------ ------ ------ ------ ------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ------- -------- --------- -------- --------
Income from
Investment Operations:
Net Investment Income(3,4) . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
Net realized and unrealized
gain (loss) on
investments . . . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- ------- -------- -------- -------- --------
Total from Investment
Operations: . . . . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
-------- -------- -------- -------- ------- -------- -------- -------- --------
Less Dividends:
Dividends from net
investment income . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
Dividends from net realized
capital gains(5) . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- ------- -------- -------- -------- --------
Total Dividends: . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in
net asset value . . . . . . . -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Period . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return(6) . . . . . . . . . 5.39% 3.49% 2.83% 4.19% 6.25% 8.10% 8.82% 6.91% 6.08%(7)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . $678,679 $759,106 $685,304 $636,338 $436,232 $335,443 $303,181 $141,545 $178,100
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . 5.27% 3.36% 2.79% 3.67% 6.05% 7.80% 8.59% 6.73% 6.38%(8)
Operating expenses including
reimbursement/waiver . . . . 0.53% 0.54% 0.55% 0.53% 0.56% 0.56% 0.60% 0.60% 0.53%(8)
Operating expenses excluding
reimbursement/waiver . . . . 0.54% 0.54% 0.55% 0.53% 0.56% 0.57% 0.61% 0.60% 0.57%(8)
- ----------------------
</TABLE>
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail Shares
(now designated Retail A Shares) and the Fund began issuing a second series
of shares designated as Trust Shares.

(2) The Fund commenced operations on November 17, 1986.

(3) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the years ended October 31,
1990 and 1989 and the period ended October 31, 1987 were $0.08, $0.09 and
$0.06, respectively.

(4) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for Trust Shares for the fiscal
year ended October 31, 1995 was $0.05.

(5) Represents less than $0.01 per share for years 1992, 1990, 1989, 1988 and
1987.

(6) Total return for 1994 includes the effect of the voluntary capital
contribution of $2.3 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
3.49%

(7) Not Annualized.

(8) Annualized.

6
<PAGE> 82
U.S. TREASURY FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEARS ENDED PERIOD ENDED
1995 OCTOBER 31,(1) OCTOBER 31,
------------ ----------------------------------------- -----------
TRUST SHARES 1994 1993 1992 1991(1,2)
------------ -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income(3) . . . . . . . . . 0.05 0.03 0.03 0.04 0.04
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Total from Investment Operations . . 0.05 0.03 0.03 0.04 0.04
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income . . . (0.05) (0.03) (0.03) (0.04) (0.04)
Dividends from net realized
capital gains . . . . . . . . . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Total Dividends: . . . . . . . . . . (0.05) (0.03) (0.03) (0.04) (0.04)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value . -- -- -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(4) . . . . . . . . . . . 5.18% 3.30% 2.75% 3.69% 4.51%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $271,036 $466,993 $447,960 $482,416 $170,177
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . 5.06% 3.24% 2.71% 3.51% 4.26%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . 0.55% 0.56% 0.55% 0.49% 0.27%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . 0.55% 0.56% 0.55% 0.55% 0.65%(6)
</TABLE>

- -------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail Shares
(now designated Retail A Shares) and the Fund began issuing a second series
of shares designated as Trust Shares.

(2) The Fund commenced operations on January 22, 1991.

(3) Net investment income before waiver of fees by the Investment Adviser
and/or Administrator for the year ended October 31, 1992 and the period
ended October 31, 1991 were $0.04 and $0.04, respectively.

(4) Total return for 1994 includes the effect of the voluntary capital
contribution of $1 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.30%.

(5) Not Annualized.

(6) Annualized.

7
<PAGE> 83
TAX-EXEMPT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 YEARS ENDED OCTOBER 31,(1) PERIOD ENDED
------------ --------------------------------------------------------------- OCTOBER 31,
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988(1,2)
------------ -------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------
Income from Investment Operations:
Net investment income(3) . . . . 0.03 0.02 0.02 0.03 0.04 0.05 0.06 0.02
Net realized and unrealized
gain (loss) on
investments . . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
Total from Investment
Operations: . . . . . . 0.03 0.02 0.02 0.03 0.04 0.05 0.06 0.02
-------- -------- -------- -------- -------- -------- -------- -------
Less Dividends:
Dividends from net
investment income . . . . . . (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.02)
Dividends from net realized
capital gains . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
Total Dividends: . . . . . (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.02)

Net increase (decrease) in net
asset value . . . . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
Net Asset Value, End
of Period . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== =======
Total Return . . . . . . . . . . . . 3.29% 2.24% 1.93% 2.71% 4.51% 5.51% 5.96% 1.90%(4)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . . $180,706 $271,050 $301,399 $223,173 $194,098 $119,377 $131,358 $41,319
Ratios to average net assets: . . .
Net investment income including
reimbursement/waiver . . . . 3.24% 2.12% 1.92% 2.64% 4.37% 5.37% 5.82% 5.42%(5)
Operating expenses including
reimbursement/waiver . . . . 0.55% 0.58% 0.59% 0.57% 0.60% 0.60% 0.58% 0.32%(5)
Operating expenses excluding
reimbursement/waiver . . . . 0.56% 0.58% 0.59% 0.57% 0.60% 0.61% 0.61% 0.72%(5)
</TABLE>
- ----------------------

(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail Shares
(now designated Retail A Shares) and the Fund began issuing a second series
of shares designated as Trust Shares.

(2) The Fund commenced operations on June 23, 1988.

(3) Net investment income before reimbursement/waiver of fees by the Investment
Adviser and/or Administrator for the years ended October 31, 1990 and 1989
and the period ended October 31, 1988 were $0.05, $0.06 and $0.02,
respectively.

(4) Not Annualized.

(5) Annualized.

8
<PAGE> 84
INVESTMENT OBJECTIVES AND POLICIES

IN GENERAL

Fleet Investment Advisors Inc., the Funds' investment adviser (the
"Investment Adviser" or "Fleet"), will use its best efforts to achieve each
Fund's investment objective, although such 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. Each Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less in an effort to maintain a stable net asset value
per share of $1.00. The value of the Funds' portfolio securities will
generally vary inversely with changes in prevailing interest rates.

QUALITY REQUIREMENTS

Each Fund will purchase only those instruments which meet the applicable
quality requirements described below. The Money Market Fund will not purchase a
security (other than a U.S. Government security) unless the security or the
issuer with respect to comparable securities (i) is rated by at least two
nationally recognized statistical rating organizations ("Rating Agencies")
(such as Standard & Poor's Ratings Group ("S&P") , Moody's Investors Service,
Inc. ("Moody's") or Fitch Investors Services, L.P. ("Fitch")) in the highest
category for short-term debt securities, (ii) is rated by only one Rating
Agency that has issued a rating in such Rating Agency's highest category for
short-term debt, or (iii) if not rated, the security is determined to be of
comparable quality. The Tax-Exempt Fund will not purchase a security (other
than a U.S. Government security) unless the security (i) is rated by at least
two such Rating Agencies in one of the two highest categories for short-term
debt securities, (ii) is rated by the only Rating Agency that has assigned a
rating in one of such Rating Agency's two highest categories for short-term
debt, or (iii) if not rated, the security is determined to be of comparable
quality. These rating categories are determined without regard to
sub-categories and gradations. The Funds will follow applicable regulations in
determining whether a security rated by more than one Rating Agency can be
treated as being in the highest or, with respect to the Tax-Exempt Fund one of
the two highest, short-term rating categories. See "Investment Limitations"
below.

MONEY MARKET FUND

The Money Market Fund's investment objective is to seek as high a level
of current income as is consistent with liquidity and stability of principal.
The Fund seeks to achieve its objective by investing in "money market"
instruments that are determined by the Investment Adviser to present minimal
credit risk and meet certain rating criteria. Instruments that may be purchased
by the Money Market Fund include obligations of domestic and foreign banks
(including negotiable certificates of deposit, non-negotiable time deposits,
savings deposits, and bankers' acceptances); commercial paper (including
variable and floating rate notes); obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; and repurchase agreements issued
by financial institutions such as banks and broker/dealers. These instruments
have remaining maturities of one year

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or less (except for certain variable and floating rate notes and securities
underlying certain repurchase agreements). For more information, including
applicable quality requirements, see "Quality Requirements" above and
"Investments, Strategies and Risks" below.

GOVERNMENT FUND

The Government Fund's investment objective is to seek as high a level of
current income as is consistent with liquidity and stability of principal. The
Fund seeks to achieve its objective by investing in obligations issued or
guaranteed as to payment of principal and interest by the U.S. Government, its
agencies or instrumentalities, and repurchase agreements relating to such
obligations. These instruments have remaining maturities of one year or less
(except for certain variable and floating rate notes and securities underlying
certain repurchase agreements). See "Investments, Strategies and Risks" below.

U.S. TREASURY FUND

The U.S. Treasury Fund's investment objective is to seek current income
with liquidity and stability of principal. The Fund seeks to achieve its
objective by investing in those securities issued or guaranteed as to principal
and interest by the U.S. Government or by agencies or instrumentalities
thereof, the interest income from which generally will not be subject to state
income tax by reason of current federal law. Such instruments may include, but
are not limited to, securities issued by the U.S. Treasury and by certain
government agencies or instrumentalities such as the Federal Home Loan Banks,
Federal Farm Credit Banks and the Student Loan Marketing Association. The Fund
invests at least 65% of its total assets in direct U.S. Government obligations.
Shareholders residing in a particular state that has an income tax law should
determine through consultation with their own tax advisers whether such
interest income, when distributed by the Fund, will be considered by the state
to have retained exempt status and whether the Fund's capital gain and other
income, if any, when so distributed will be subject to the state's income tax.
See "Taxes."

Portfolio securities held by the Fund have remaining maturities of one
year or less (with certain exceptions). The Fund may also invest in certain
variable and floating rate instruments as described under "Investments,
Strategies and Risks--Money Market Instruments." For more information,
including applicable quality requirements, see "Quality Requirements" above and
"Investments, Strategies and Risks" below.

TAX-EXEMPT FUND

The Tax-Exempt Fund's investment objective is to seek as high a level of
current interest income exempt from federal income tax as is consistent with
stability of principal by investing substantially all of its assets in
Municipal Securities that present minimal credit risk and meet the rating
criteria described above under "Quality Requirements." The Fund is designed
for investors in higher tax brackets who are seeking a relatively high amount
of tax-free income with stability of principal and less price volatility than
would normally be associated with intermediate-term and longer-term Municipal
Securities.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in Municipal
Securities. However, the Fund may from time to time, during temporary defensive
periods, hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment

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Adviser, prevailing market or economic conditions warrant. Uninvested cash
reserves will not earn income. Such taxable instruments may include (i)
obligations of the U.S. Treasury; (ii) obligations of agencies or
instrumentalities of the U.S. Government; (iii) "money market" instruments such
as certificates of deposit, commercial paper, or bankers' acceptances; (iv)
repurchase agreements collateralized by U.S. Government obligations or other
"money market" instruments; or (v) securities issued by other investment
companies that invest in high quality, short-term Municipal Securities. For
more information, including applicable quality requirements, see "Quality
Requirements" above and "Investments, Strategies and Risks" below.

In seeking to achieve its investment objective, the Tax-Exempt Fund may
invest in "private activity bonds" (see "Investments, Strategies and
Risks--Municipal Securities"), the interest on which may be subject to the
federal alternative minimum tax. Investments in such securities, however, will
not be treated as investments in Municipal Securities for purposes of the 80%
requirement mentioned above and, under normal market conditions, will not
exceed 20% of the Fund's total assets when added together with any taxable
investments held by the Fund.

INVESTMENTS, STRATEGIES AND RISKS

U.S. GOVERNMENT OBLIGATIONS

Obligations issued or guaranteed by the U.S. Government, or 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 the Government National Mortgage Association, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of 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 U.S. Government obligations may be
issued as variable or floating rate instruments.

MONEY MARKET INSTRUMENTS

"Money Market" instruments include bank obligations and commercial
paper.

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 that 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 that 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. Investments in bank obligations are limited to the obligations of
financial institutions having more than $1 billion in total assets at the time
of purchase. Investments in non-negotiable time deposits are limited to no
more than 5% of the Money Market Fund's total assets at the time of purchase.

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Domestic and foreign banks are subject to extensive but different
government regulations 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.

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 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. Variable or floating rate instruments
acquired by the Government and U.S. Treasury Funds are similar in form, but,
because they would be issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, may have a more active secondary market.
Substantial holdings of variable and floating rate instruments could reduce
portfolio liquidity. The Money Market and Tax-Exempt Funds may also purchase
Rule 144A securities. See "Investment Limitations."

MUNICIPAL SECURITIES

Municipal Securities are generally issued to finance public works, such
as airports, bridges, highways, housing, health-related entities,
transportation-related projects, educational programs, water and pollution
control, and sewer works. They are also issued to repay outstanding
obligations, to raise funds for general operating expenses, and to make loans
to other public institutions and for other facilities. Municipal Securities
include private activity bonds issued by or on behalf of public authorities to
provide financing aid to acquire sites or construct and equip facilities for
privately or publicly owned corporations. The availability of this financing
encourages these corporations to locate within the sponsoring communities and
thereby increases local employment.

The two principal classifications of Municipal Securities that may be
held by the Tax-Exempt 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 are in most cases revenue
securities and are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of private activity revenue bonds is usually
directly related to the credit standing of the corporate user of the facility
involved.

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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. There is no limitation on the amount of moral
obligation securities that may be held by the Fund.

Municipal Securities may include variable rate demand notes, which are
long-term Municipal Securities that have variable or floating interest rates
and provide the Fund with the right to tender the security for repurchase at
its stated principal amount plus accrued interest. Such securities typically
bear interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals (ranging
from daily to annually), and is normally based on an applicable interest index
or another published interest rate or interest rate index. Most variable rate
demand notes allow the Fund to demand the repurchase of the security on not
more than seven days prior notice. Other notes only permit the Fund to tender
the security at the time of each interest rate adjustment or at other fixed
intervals. The Fund treats variable rate demand notes as maturing on the later
of the date of the next interest rate adjustment or the date on which the Fund
may next tender the security for repurchase.

Certain Municipal Securities eligible for purchase by the Tax-Exempt
Fund may have been credit enhanced by a guaranty, letter of credit, or
insurance. The Investment Adviser typically evaluates the credit quality and
ratings of credit enhanced Municipal Securities based upon the financial
condition and ratings of the party providing the credit enhancement (the
"credit enhancer") rather than the issuer. The Fund will not treat credit
enhanced Municipal Securities as having been issued by the credit enhancer for
diversification purposes, unless the Fund has invested more than 10% of its
assets in Municipal Securities issued, guaranteed, or otherwise credit enhanced
by the credit enhancer, in which case the Municipal Securities will be treated
as having been issued both by the issuer and the credit enhancer. The
bankruptcy, receivership, or default of the credit enhancer may adversely
affect the quality and marketability of the underlying Municipal Security. The
Tax-Exempt Fund may have more than 25% of its total assets invested in
Municipal Securities the credit for which has been enhanced by banks or
insurance companies.

TENDER OPTION BONDS

The Tax-Exempt Fund may purchase tender option bonds and similar
securities. A tender option bond generally has a long maturity and bears
interest at a fixed rate substantially higher than prevailing short-term
tax-exempt rates, and is coupled with an agreement by a third party, such as a
bank, broker-dealer, or other financial institution, pursuant to which such
institution grants the security holders the option, usually upon not more than
seven days notice or at periodic intervals, to tender their securities to the
institution and receive the face value of the securities. In providing the
option, the financial institution receives a fee that reduces the fixed rate of
the underlying bond and results in the Fund effectively receiving a demand
obligation that bears interest at the prevailing short-term tax-exempt rate.
The Investment Adviser will monitor, on an ongoing basis, the creditworthiness
of the issuer of the tender option bond, the financial institution providing
the option, and any custodian holding the underlying long-term bond. The
bankruptcy, receivership, or default of any of the parties to the tender option
bond will adversely affect the quality and marketability of the security.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

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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 upon 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 Limitations Nos. 5 and 8 under
"Investment Limitations" below.

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 a Fund might be delayed pending court action. Income on
repurchase agreements is taxable. The Tax-Exempt Fund's investment in
repurchase agreements will be, under normal market conditions, subject to the
20% overall limit on taxable obligations.

The Money Market and Government Funds 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"). A reverse
repurchase agreement involves 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--MONEY MARKET AND GOVERNMENT FUNDS

The Money Market and Government Funds may lend their portfolio
securities to financial institutions such as banks and broker/dealers in
accordance with their investment limitations. 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,
and 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.

GUARANTEED INVESTMENT CONTRACTS--MONEY MARKET FUND

The Money Market Fund may invest in guaranteed investment contracts
("GICs") issued by United States insurance companies. Pursuant to such
contracts, 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 in accordance with the
applicable quality requirements described above under "Quality Requirements."
GICs are considered illiquid securities and will be subject to the Fund's 10%
limitation on illiquid investments, unless there is an active and substantial
secondary market for the particular instrument and market quotations are
readily available.

<PAGE> 90
ASSET-BACKED SECURITIES--MONEY MARKET FUND

The Money Market 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, such as motor vehicle receivables and credit card receivables. The
Fund will only purchase asset-backed securities that meet the applicable
quality requirements described above under "Quality Requirements." See
"Asset-Backed Securities" in the Statement of Additional Information.

INVESTMENT COMPANY SECURITIES--TAX-EXEMPT FUND

The Tax-Exempt Fund may invest in securities issued by other open-end
investment companies that invest in high quality, short-term Municipal
Securities and that meet the applicable quality requirements described above
under "Quality Requirements" and that 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. Such securities may 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 in other
investment companies 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 investment companies as a group; and (c) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Fund. The Fund will invest in other investment companies primarily for the
purpose of investing its short-term cash which has not as yet been invested in
other portfolio instruments.

OTHER INVESTMENT POLICIES OF THE TAX-EXEMPT FUND

The Tax-Exempt Fund may purchase Municipal Securities on a "when-issued"
basis. When-issued transactions, which involve a commitment by the Fund to
purchase particular securities with payment and delivery taking place at a
future date (perhaps one or two months later) permits the Fund to lock in a
price or yield on a security it intends to purchase, regardless of future
changes in interest rates. When-issued 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, absent unusual market conditions, commitments by
the Fund to purchase when-issued securities will not exceed 25% of the value
of its total assets. These transactions will not be entered into for
speculative purposes, but only in furtherance of the Fund's investment
objective.

In addition, the Fund may acquire "stand-by commitments" with respect to
Municipal Securities held by it. 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. Stand-by commitments acquired by the Fund would be valued at
zero in determining the Fund's net asset value. The default or bankruptcy of a
securities dealer giving such a commitment would not affect the quality of the
Municipal Securities purchased by the Fund. However, without a stand-by
commitment, these securities could be more difficult to sell. The Fund will
enter into stand-by commitments only with those dealers whose credit the
Investment Adviser believes to be of high quality.

Although the Fund does not presently intend to do so on a regular basis,
it may invest more than 25% of its assets in Municipal Securities the interest
on which is paid solely from revenues of similar projects. To the extent that
the Fund's assets are concentrated in Municipal Securities payable from
revenues on similar projects, the Fund will be subject to the peculiar risks
presented by such projects to a greater extent than it would be if its assets
were not so invested.

<PAGE> 91
CERTAIN INVESTMENT POLICIES OF THE U.S. TREASURY AND GOVERNMENT FUNDS

The U.S. Treasury and Government Funds may purchase securities on a
"when-issued" basis, as described under "Other Investment Policies of the
Tax-Exempt Fund."

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy
and may not be changed with respect to a 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,
(ii) each Fund, except the U.S. Treasury Fund, may enter into repurchase
agreements with respect to portfolio securities, and (iii) the Money
Market and Government Funds may lend portfolio securities against
collateral consisting of cash or securities that 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. Invest in obligations having remaining maturities in excess of
one year, except that certain variable and floating rate instruments and
securities subject to repurchase agreements may bear longer maturities
(provided certain provisions are met).

3. Purchase securities of any one issuer, other than U.S.
Government obligations, if immediately after such purchase more than 5%
of the value of its total assets would be invested in the securities of
such issuer (the "5% Limitation"), except that up to 25% of the value of
its total assets may be invested without regard to this limitation.

In addition, the Tax-Exempt Fund may not:

4. Borrow money or issue senior securities, except from 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; 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 its total assets at the time of
such borrowing. The Fund will not purchase any portfolio securities
while borrowings in excess of 5% of its total assets are outstanding.

5. Knowingly invest more than 10% of the value of its total assets
in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days and other securities which are not
readily marketable.

6. Purchase any securities that would cause 25% or more of the
value of its 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 there is no
limitation with respect to securities issued or guaranteed by the United
States, any state or territory, any possession of the U.S. Government,
the District of Columbia, or any of their authorities, agencies,
instrumentalities, or political subdivisions.

In addition, the Money Market, Government and U.S. Treasury Funds may
not:

<PAGE> 92
accordance with their investment policies and in amounts not in excess
of 10% of the value of their respective 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 a Fund's
total assets at the time of such borrowing. A Fund will not purchase
securities while borrowings (including reverse repurchase agreements) in
excess of 5% of its total assets are outstanding.

8. Invest more than 10% of the value of a Fund's total 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.

In addition to the foregoing limitations, the Money Market Fund may not
purchase securities that would cause 25% or more of the value of a Fund's total
assets at the time of purchase to be invested in the securities of one or more
issuers conducting their principal business activities in the same industry;
provided, however, that (a) there is no limitation with respect to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
or by domestic banks or U.S. branches of foreign banks; (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 3. above, (a) a security is
considered to be issued by the governmental entity or entities whose assets and
revenues back the security, or, with respect to a private activity bond that is
backed only by the assets and revenues of a non-governmental user, such
non-governmental user; (b) in certain circumstances, the guarantor of a
guaranteed security may also be considered to be an issuer in connection with
such guarantee; and (c) securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities (including securities backed by the full
faith and credit of the United States) are deemed to be U.S. Government
obligations.

With respect to Investment Limitation No. 7 above, each of the Money
Market and Government Funds 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.

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.

Each Fund may follow non-fundamental operating policies that are more
restrictive than its fundamental investment limitations, as set forth in this
Prospectus and the Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the 1940 Act. In particular, each Fund will comply with the various
requirements of Rule 2a-7 under the 1940 Act, which regulates money market
mutual funds. In accordance with Rule 2a-7, the Money Market Fund is subject to
the 5% limitation contained in Investment Limitation No. 3 above as to all of
its assets; however in accordance with such Rule, the Money Market Fund will be
able to invest more than 5% (but no more than 25%) of its total assets in the
securities of a single issuer for a period of up to three business days after
the purchase thereof, provided that the Fund may not hold more than one such
investment at any one time. Subject to Investment Limitation No. 2 above, each
Fund will determine the effective maturity of its respective investments, as
well as its ability to consider a security as having received the requisite
short-term ratings by Rating Agencies, according to Rule 2a-7. A Fund may
change these operating policies to reflect changes in the laws and regulations
without the approval of its shareholders.

<PAGE> 93
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 10% limitation on purchases of illiquid
instruments described under Investment Limitations Nos. 5 and 8 above, Rule
144A securities will not be considered to be 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.

PRICING OF SHARES

Net asset value per share of each Fund is determined as of 11:00 a.m.
(Eastern Time) and 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 the Exchange is open. 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 of a Fund 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
shares of that series of the Fund, by the number of outstanding shares of the
Fund.

The assets in each Fund are valued based upon the amortized cost method.
Pursuant to this method, a security is valued by reference to a Fund's
acquisition cost as adjusted for amortization of premium or accretion of
discount, regardless of the impact of fluctuating interest rates on the market
value of the security. Although Galaxy seeks to maintain the net asset value
per share of each Fund at $1.00, there can be no assurance that the net asset
value per share will not vary.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Funds 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, with respect to each Fund
other than the Tax-Exempt Fund, 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

<PAGE> 94
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 the Fund'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 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 requirements 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 (other than the Tax-Exempt Fund) may also be
available for purchase through different types of retirement plans offered by
an Institution to its Customers. Information pertaining to such plans is
available directly from the Institution.

REDEMPTION OF SHARES

<PAGE> 95
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 sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

The net investment income of each Fund is declared daily as a dividend
to the persons who are shareholders of the respective Funds immediately after
the 11:00 a.m. pricing of Shares on the day of declaration. A Fund's net income
for dividend purposes consists of all accrued income, whether taxable or
tax-exempt, plus discount earned on the Fund's assets attributable to Trust
Shares, less amortization of premium on such assets and accrued expenses
attributable to Trust Shares of the Fund. Dividends on each Share of the Funds
are determined in the same manner, irrespective of series, but may differ in
the amount because of the difference in the expenses paid by the respective
series. None of the Funds expect to realize net capital gains. However, if any
such gains are realized, they will be paid out to shareholders no less
frequently than 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 ex-dividend date. Such election, or any
revocation thereof, must be communicated in writing by an Institution on behalf
of its 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 of the Funds 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
relieves each Fund of liability for federal income taxes to the extent its
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 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. In general, a Fund's investment company
taxable income will be its taxable income (including interest), 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 Money Market, Government and U.S. Treasury Funds intend to
distribute substantially all of their respective investment company taxable
income and net tax-exempt 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 income is received in cash or reinvested in
additional Trust Shares. (Federal income taxes for distributions to an IRA or a
qualified retirement plan are deferred under the Code.) Because all of each
Fund's net investment income is expected to be derived from earned interest, it
is anticipated that no part of any distribution will be eligible for the
dividends received deduction for corporations.

Dividends declared in October, November or December of any year that 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.

<PAGE> 96
The Tax-Exempt Fund. The Tax-Exempt Fund's policy is to pay dividends
with respect to each taxable year equal to at least the sum of 90% of its net
exempt-interest income and 90% of its investment company taxable income, if
any. Dividends derived from exempt-interest income ("exempt-interest
dividends") may be treated by the Fund's shareholders as items of interest
excludable from their gross income under Section 103(a) of the Code, unless,
under the circumstances applicable to a particular shareholder, exclusion would
be disallowed. (See the Statement of Additional Information under "Additional
Information Concerning Taxes.")

If the Tax-Exempt Fund should hold certain "private activity bonds"
issued after August 7, 1986, shareholders must include, as an item of tax
preference, the portion of dividends paid by the Fund that is attributable to
interest on such bonds in their federal alternative minimum taxable income for
purposes of determining liability (if any) for the 26% to 28% alternative
minimum tax for individuals and the 20% alternative minimum tax and the
environmental tax applicable to corporations. Corporate shareholders must also
take all exempt-interest dividends into account in determining certain
adjustments for Federal alternative minimum and environmental tax purposes.
Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.

Dividends from the Tax-Exempt Fund which are derived from taxable income
or from long-term or short-term capital gains will be subject to federal income
tax, whether such dividends are paid in the form of cash or additional Trust
Shares of the Fund.

STATE AND LOCAL

Exempt-interest dividends and other distributions paid by the Tax-Exempt
Fund may be taxable to shareholders under state or local law as dividend
income, even though all or a portion of such distributions may be derived from
interest on tax-exempt obligations which, if realized directly, would be exempt
from such income taxes.

The U.S. Treasury Fund is structured to provide shareholders, to the
extent permissible by federal and state law, with income that is exempt or
excluded from taxation at the state and local level. Many states, by statute,
judicial decision or administrative action, have taken the position that
dividends of a regulated investment company, such as the U.S. Treasury Fund,
that are attributable to interest on direct U.S. Treasury obligations or
obligations of certain U.S. Government agencies, are the functional equivalent
of interest from such obligations and are, therefore, exempt from state and
local income taxes.

Shareholders should consult their own tax advisers about the status of
distributions from the Funds in their own state.

MISCELLANEOUS

<PAGE> 97
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.

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 at December 31, 1995 of $84.8
billion. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and institutional clients, and
manages the other portfolios of Galaxy: the 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, 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, Fleet
manages the Funds, makes decisions with respect to and places orders for all
purchases and sales of their portfolio securities and maintains related
records.

For the services provided and expenses assumed, Fleet is entitled to
receive advisory fees, computed daily and paid monthly, at the following annual
rates: with respect to the Money Market, Government and Tax-Exempt Funds, .40%
of the average daily net assets of each Fund, and with respect to the U.S.
Treasury Fund, .40% of the first $750,000,000 of the average daily net assets
of the Fund plus .35% of the average daily net assets of the Fund in excess of
$750,000,000. 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 has advised Galaxy that, with respect to the
Money Market, Government and Tax-Exempt Funds, Fleet intends to waive advisory
fees payable to it by each Fund in an amount equal to 0.05% of the average
daily net assets of each Fund to the extent that a Fund's net assets exceed
$750,000,000. For the fiscal year ended October 31, 1995, Fleet received
advisory fees (after waivers) at the effective annual rates of .38%, .39%,
.39%, and .40% of the average daily net assets of the Money Market Fund,
Government Fund, Tax-Exempt Fund and U.S. Treasury Fund, respectively.

AUTHORITY TO ACT AS INVESTMENT ADVISER

<PAGE> 98
Investment Adviser, custodian and Institutions that are banks or bank
affiliates are subject to such banking laws and regulations. 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.

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 operations. It is not
anticipated, however, that any resulting change in the Funds' method of
operations would affect a Fund's net asset value per share or result in
financial loss to any shareholder.

ADMINISTRATOR

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 be paid 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, the Money Market,
Government, Tax-Exempt and U.S. Treasury Funds paid FDISG administration fees
at the effective annual rate of .088% of each Fund's average daily net assets.

DESCRIPTION OF GALAXYAND ITS SHARES

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

<PAGE> 99
Shareholder Services Plan described below. 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
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 Funds are sold without a sales charge 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, 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 Galaxy
intends to enter into servicing agreements with Institutions (including Fleet
Bank and its affiliates). Pursuant to such servicing agreements, Institutions
will render certain administrative and support services to Customers who are
the beneficial owners of Retail A Shares in consideration for payment of up to
.25% (on an annualized basis) of the average daily net asset value of Retail A
Shares beneficially owned by such Customers. Services under the Shareholder
Services Plan may include aggregating and processing purchase and redemption
requests and placing net purchase and redemption orders with the Distributor;
processing dividend payments from a Fund; providing Customers with information
as to their positions in Retail A Shares; providing sub-accounting with respect
to Retail A Shares or the information necessary for sub-accounting; and
providing periodic mailings to Customers. Such services are intended to
supplement the services provided by FDISG as administrator and transfer agent
and are described more fully in the 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 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 service agreements for each Fund to no
more than .10% (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> 100
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
(other than the Tax-Exempt 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 Money Market, Government and U.S. Treasury
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 custodian of the Funds' 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 Galaxy's 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 15108, 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 advisory and administrative 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 securities
qualification fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to 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; cost of independent pricing services;
costs of shareholder reports and meetings; and any extraordinary expenses. The
Funds also pay for any brokerage fees and commissions in connection with the
purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

<PAGE> 101
the performance of mutual funds. Also, the Funds' yield data may be 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 in
publications of a local or regional nature. The taxable money market Funds'
performance may also be compared to the average yields reported by the Bank
Rate Monitor for money market deposit accounts offered by the 50 leading banks
and thrift institutions in the top five standard metropolitan statistical
areas. The performance and yield data will be calculated separately for Trust
Shares and Retail A Shares of the Funds.

The yields of the Funds will refer to the income generated over a
seven-day period identified in the advertisement. This income is annualized,
i.e., the income during a particular week is assumed to be generated each week
over a 52-week period, and is shown as a percentage of the investment. Each
Fund may also advertise its "effective yield" which is calculated similarly
but, when annualized, the income from an investment in the Funds is assumed to
be reinvested. Consequently, the "effective yield" will be slightly higher
because of the compounding effect of the assumed reinvestment. Also, the
Tax-Exempt Fund may from time to time advertise a "tax-equivalent yield" to
demonstrate the level of taxable yield necessary to produce an after-tax yield
equivalent to that achieved by the Fund. The "tax-equivalent yield" will be
computed by dividing the tax-exempt portion of the Fund's yield by a
denominator consisting of one minus a stated federal income tax rate and adding
the product to that portion, if any, of the Fund's yield which is not
tax-exempt.

In addition, the U.S. Treasury Fund may calculate a "state flow through
yield" which shows the level of taxable yield needed to produce an after-tax
yield equivalent to a particular state's tax-exempt yield achieved by the Fund.
The "state flow through yield" refers to that portion of income which is
derived from interest income on direct obligations of the U.S. Government, its
agencies or instrumentalities and which qualifies for exemption from state
taxes. The yield calculation assumes that 100% of the interest income is exempt
from state personal income tax. A "state flow through yield" will be computed
by dividing the tax-exempt portion of the Fund's yield by a denominator
consisting of one minus a stated income tax rate. For illustrative purposes,
state flow through yields assume the payment of state income tax rates of 3%,
7% or 11%.

The Funds' yields will fluctuate and any quotation of yield should not
be considered as representative of future performance of the Funds. 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 is
generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses, and market conditions. Any
fees charged directly by Institutions to accounts of Customers that have
invested in Trust Shares of a Fund will not be included in calculations of
yield.

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 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.

<PAGE> 102
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 either 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 lesser of (a) more than 50% of the outstanding shares of Galaxy or a Fund,
or (b) 67% or more of the shares of Galaxy or a Fund present at a meeting if
more than 50% of the outstanding shares of Galaxy or a Fund are represented at
the meeting in person or by proxy.

27
<PAGE> 103
THE GALAXY FUND

For applications and information regarding initial purchases and current
performance, call 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 six series of Galaxy shares, which represent
interests in six separate money market portfolios (individually, a "Fund,"
collectively, the "Funds") offered to investors by Galaxy, each having its own
investment objective and policies:

The MONEY MARKET FUND'S investment objective is to seek as high a level of
current income as is consistent with liquidity and stability of principal. The
Fund invests in "money market" instruments with remaining maturities of one
year or less, such as domestic and foreign bank certificates of deposit,
bankers' acceptances and commercial paper (including variable and floating rate
obligations) in addition to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and repurchase agreements
relating to such obligations.

The GOVERNMENT FUND'S investment objective is to seek as high a level of
current income as is consistent with liquidity and stability of principal. The
Fund invests in obligations with remaining maturities of one year or less which
are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements relating to such obligations.

The U.S. TREASURY FUND'S investment objective is to seek current income
with liquidity and stability of principal. The Fund invests in securities with
remaining maturities of one year or less which are issued or guaranteed as to
principal and interest by the U.S. Government or by agencies or
instrumentalities thereof, the interest income from which generally will not be
subject to state income tax by reason of current Federal law. The Fund invests
at least 65% of its total assets in direct U.S. Government obligations.

The TAX-EXEMPT FUND's investment objective is to seek as high a level of
current interest income exempt from Federal income tax as is consistent with
stability of principal. The Fund invests substantially all of its assets in
high quality debt obligations issued by or on behalf of states, territories,
and possessions of the United States, the District of Columbia, and their
authorities, agencies, instrumentalities, and political subdivisions, the
interest on which, in the opinion of bond counsel or counsel to the issuer, is
exempt from Federal income tax ("Municipal Securities"). The Fund's portfolio
securities will generally have remaining maturities of not more than one year.

The CONNECTICUT MUNICIPAL MONEY MARKET FUND'S investment objective is to
provide current income exempt from Federal regular income tax and the
Connecticut state income tax on individuals, trusts and estates, consistent
with relative stability of principal and liquidity. The Fund invests primarily
in short-term Connecticut Municipal Securities (as defined below), including
securities of states, territories and possessions of the United States which
are not issued by or on behalf of Connecticut or its political subdivisions and
financing authorities, but which are exempt from the Connecticut state income
tax on individuals, trusts and estates (the "CSIT"). The Fund is a
non-diversified investment portfolio under the Investment Company Act of 1940,
as amended (the "1940 Act").

The MASSACHUSETTS MUNICIPAL MONEY MARKET FUND'S investment objective is to
provide current income exempt from Federal regular income tax and the income
taxes imposed by the Commonwealth of Massachusetts, consistent with relative
stability of principal and liquidity. The Fund invests primarily in short-term
Massachusetts Municipal Securities (as defined below), including securities of
states, territories and possessions of the United States which are not issued
by or on behalf of Massachusetts or its political subdivisions and financing
authorities, but which are exempt from income taxes imposed by the Commonwealth
of Massachusetts. The Fund is a non-diversified investment portfolio under the
1940 Act.

This Prospectus describes (i) Retail A Shares in the Money Market,
Government, U.S. Treasury and Tax-Exempt Funds, and (ii) Shares in the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds (such Retail A Shares and Shares are referred to herein collectively as
"Retail Shares"). Retail Shares are offered to customers ("Customers") of Fleet
Brokerage Securities, Inc. Fleet Securities, Inc., Fleet Financial Group,
Inc., its affiliates, their correspondent banks, and other qualified banks,
savings and loan associations and broker/dealers ("Institutions"). Retail
Shares may also be purchased directly by individuals, corporations or other
entities, who submit a purchase application to Galaxy, purchasing either for
their own accounts or for the accounts of others ("Direct Investors"). Galaxy
is also authorized to issue an additional series of shares ("Trust Shares") in
the Money Market, Government, U.S. Treasury and Tax-Exempt Funds, which are
offered under a separate prospectus primarily to investors maintaining
qualified accounts at bank and trust institutions, including institutions
affiliated with Fleet Financial Group, Inc., and with respect to each Fund
except the Tax-Exempt Fund, to participants in employer-sponsored defined
contribution plans. Retail A Shares and Trust 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 Finanical Distributors, Inc., which is
unaffiliated with Fleet Investment Advisors Inc. and its parent, Fleet
Financial Group, Inc., and affiliates.

<PAGE> 104
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
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT THE
FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely the information about the Funds that
a prospective investor should consider before investing. Investors should read
this Prospectus and retain it for future reference. Additional information
about the Funds, contained in the respective Statements of Additional
Information relating to the Funds and bearing the same date, has been filed
with the Securities and Exchange Commission. The current Statements of
Additional Information are available upon request without charge by contacting
Galaxy at its telephone numbers or address shown above. The Statements of
Additional Information, as they may be amended from time to time, are
incorporated by reference in their entireties 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> 105

HIGHLIGHTS

Q: What is The Galaxy Fund?

A: Galaxy is an open-end management investment company (commonly known as
a mutual fund) that offers investors the opportunity to invest in different
investment portfolios having separate investment objectives and policies. This
Prospectus describes six of Galaxy's money market funds: THE MONEY MARKET
FUND, THE GOVERNMENT FUND, THE U.S. TREASURY FUND, THE TAX-EXEMPT FUND, THE
CONNECTICUT MUNICIPAL MONEY MARKET FUND AND THE MASSACHUSETTS MUNICIPAL MONEY
MARKET FUND. See "Investment Objectives and Policies" and "Investments,
Strategies and Risks." Prospectuses for Galaxy's 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, HIGH QUALITY
BOND, TAX-EXEMPT BOND, NEW YORK MUNICIPAL BOND, CONNECTICUT MUNICIPAL BOND,
MASSACHUSETTS MUNICIPAL BOND AND RHODE ISLAND MUNICIPAL BOND FUNDS may be
obtained by calling 1-800-628-0414.

Q: Who advises the Funds?

A: The Funds are advised by Fleet Investment Advisors Inc. (the
"Investment Adviser" or "Fleet"), an indirect wholly-owned subsidiary of Fleet
Financial Group, Inc. Fleet Financial Group, Inc. is a financial services
company with total assets as of December 31, 1995 of approximately $84.8
billion. See "Management of the Funds--Investment Adviser."

Q: What advantages do the Funds offer?

A: The Funds offer investors the opportunity to invest in a variety of
professionally managed investment portfolios without having to become involved
with the detailed accounting and safekeeping procedures normally associated
with direct investments in securities. The Funds also offer the economic
advantages of block trading in portfolio securities and the availability of a
family of twenty-four mutual funds should your investment goals change.

Q: How to buy and redeem shares?

A: The Funds are distributed by 440 Financial Distributors, Inc. Retail
Shares may be purchased on behalf of customers ("Customers") of Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Financial Group, Inc., its
affiliates, their correspondent banks and other qualified banks, savings and
loan associations and broker/dealers ("Institutions"). Retail Shares of the
Funds may also be sold to individuals, corporations or other entities, who
submit a purchase application to Galaxy, purchasing either for their own
accounts or for the accounts of others ("Direct Investors"). Purchase and
redemption information for both Direct Investors and Customers is provided
below under "How to Purchase and Redeem Shares." Except as provided below under
"Investor Programs," the minimum initial investment for Direct Investors and
the minimum initial aggregate investment for Institutions purchasing on behalf
of their Customers is $2,500. The minimum investment for subsequent purchases
is $100. There are no minimum investment requirements for investors
participating in the Automatic Investment Program described below. Institutions
may require Customers to maintain certain minimum investments in Retail Shares
of the Funds.

Q: When are dividends paid?

A: The net investment income of each Fund is declared daily and paid
monthly. Net realized capital gains of each Fund, if any, are distributed at
least annually. See "Dividends and Distributions."

Q: What potential risks are presented by the Funds' investment practices?

A: The Tax-Exempt Fund, Connecticut Municipal Money Market Fund and
Massachusetts Municipal Money Market Fund invest primarily in Municipal
Securities, Connecticut Municipal Securities and Massachusetts Municipal
Securities, respectively. The achievement of the investment objective of each
of these Funds is dependent upon the ability of the issuers of such Municipal
Securities to meet their continuing obligations for the payment of principal
and interest. In addition, because the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds are non-diversified, their
investment returns may be dependent upon the performance of a smaller number or
particular type of securities relative to a diversified portfolio. Each Fund
(other than the Money Market Fund) may purchase eligible securities on a
"when-issued" basis and the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds may purchase eligible securities on
a "delayed settlement" basis. In addition, the Tax-Exempt, Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds may
acquire "stand-by commitments" with respect to Municipal Securities held in
their portfolios. The value of a Fund's portfolio securities will generally
vary inversely with changes in prevailing interest rates. See "Investment
Objectives and Policies" and "Investments, Strategies and Risks."

Q: What shareholder privileges are offered by the Funds?

A: Investors may exchange Retail Shares of any Fund having a value of at
least $100 for Retail Shares of any other portfolio offered by Galaxy or
otherwise advised by Fleet or its affiliates in which the investor has an
existing account. Galaxy offers Individual Retirement Accounts ("IRAs"), which
can be established by contacting Galaxy's distributor. Retail Shares are also
available for purchase through Simplified Employee Pension Plan ("SEP"),
Multi-Employee Retirement Plan ("MERP") and Keogh Plan accounts, which can be
established directly with Fleet Brokerage Securities Corporation or its
affiliates. Galaxy also offers an Automatic Investment Program which allows
Direct Investors to automatically invest in Retail Shares of the Funds on a
monthly or quarterly basis as well as other shareholder privileges. See
"Investor Programs."

1
<PAGE> 106
EXPENSE SUMMARY

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

<TABLE>
<CAPTION>
MONEY GOVERN- U.S. TAX- CONNECTICUT MASSACHUSETTS
MARKET MENT TREASURY EXEMPT MUNICIPAL MUNICIPAL
FUND FUND FUND FUND MONEY MARKET MONEY MARKET
(RETAIL A (RETAIL A (RETAIL A (RETAIL A FUND FUND
SHAREHOLDER TRANSACTION EXPENSES SHARES) SHARES) SHARES) SHARES) (SHARES) (SHARES)
- -------------------------------- -------- -------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Sales Load .......................... None None None None None None
Sales Load on Reinvested Dividends .. None None None None None None
Deferred Sales Load ................. None None None None None None
Redemption Fees(1) .................. None None None None None None
Exchange Fees ....................... None None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------
Advisory Fees ........................ .40% .40% .40% .40% .40% .40%
12b-1 Fees ........................... None None None None None None
Other Expenses (After Expense
Reimbursements) ..................... .39% .36% .31% .28% .22% .22%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses
(After Expense Reimbursements) ...... .79% .76% .71% .68% .62% .62%
==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) Direct Investors are charged a $5.00 fee if redemption proceeds are paid
by wire.

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>

Money Market Fund (Retail A Shares) ... $8 $25 $43 $96
Government Fund (Retail A Shares) ..... $8 $24 $41 $92
U.S. Treasury Fund (Retail A Shares) .. $7 $22 $39 $86
Tax-Exempt Fund (Retail A Shares) ..... $7 $21 $37 $83
Connecticut Municipal Money Market
Fund (Shares) ....................... $6 $19 $34 $76
Massachusetts Municipal Money Market
Fund (Shares) ....................... $6 $19 $34 $76
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in the Funds bears
directly or indirectly. The information contained in the Expense Summary and
Example is based on expenses incurred by the Funds during the last fiscal year,
restated to reflect the expenses which each Fund expects to incur during the
current fiscal year on its Retail Shares. Without voluntary expense
reimbursements by the Investment Adviser, Other Expenses would be .27% and .37%
and Total Fund Operating Expenses would be .67% and .77% for Retail Shares of
the Connecticut Municipal Money Market Fund and Massachusetts Municipal Money
Market Fund, 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, the financial statements and notes incorporated by
reference into the respective Statements of Additional Information relating to
the Funds. Any fees that are changed by affiliates of Fleet or any other
Institution directly to their Customer account for services related to an
investment in Retail 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.

2
<PAGE> 107
FINANCIAL HIGHLIGHTS

Prior to November 1, 1994, each of the Money Market, Government, U.S.
Treasury and Tax-Exempt Funds offered a single series of shares. As of such
date, the existing series of shares was designated as Retail Shares (now
designated Retail A Shares), and each of these Funds began offering a new
series of shares designated as Trust Shares. This Prospectus describes the
Retail A Shares of these Funds. Trust Shares in these Funds are offered under a
separate prospectus. Retail A Shares and Trust Shares in a Fund represent equal
pro rata interests in the Fund, except that (i) Retail A Shares of a Fund bear
the expenses incurred under Galaxy's Shareholder Services Plan at an annual
rate of up to .10% of the average daily net asset value of the Fund's
outstanding Retail A Shares, and (ii) Retail A Shares and Trust Shares bear
differing transfer agency expenses. See "Management of the Funds" and
"Description of Galaxy and Its Shares."

The financial highlights presented below for the Money Market, Government,
U.S. Treasury and Tax-Exempt 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 for the fiscal year ended 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 relating to these Funds.
More information about the performance of each of these Funds 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> 108
MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
PERIOD
1995 YEARS ENDED OCTOBER 31,(1) ENDED
RETAIL ---------------------------------------------------------------- OCTOBER 31,
SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
-------- ---- ---- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net Investment Income(3,4) . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
Net realized and unrealized gain
(loss) on investments . . . . . -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Total from Investment
Operations: . . . . . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
----- ----- ----- ----- ----- ----- ----- ----- -----
Less Dividends:
Dividends from net
investment income . . . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)

Dividends from net realized
capital gains(5) . . . . . . . . -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Dividends . . . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in net asset
value . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return(6) . . . . . . . . . . . 5.23% 3.35% 2.78% 4.07% 6.40% 8.11% 9.09% 7.08% 6.09%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . $580,762 $797,399 $577,558 $590,911 $415,541 $444,303 $410,121 $210,712 $192,400
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . 5.12% 3.38% 2.74% 3.74% 6.24% 7.82% 8.73% 6.92% 6.27%(8)
Operating expenses including
reimbursement/waiver . . . . . . 0.74% 0.64% 0.63% 0.58% 0.59% 0.59% 0.58% 0.59% 0.52%(8)
Operating expenses including
reimbursement/waiver . . . . . . 0.76% 0.64% 0.63% 0.58% 0.59% 0.59% 0.59% 0.59% 0.57%(8)
</TABLE>
- ---------------
1 Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail
Shares (now designated Retail A Shares) and the Fund began issuing a
second series of shares designated as Trust Shares.
2 The Fund commenced operations on November 17, 1986.
3 Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the year ended October 31,
1989 and the period ended October 31, 1987, was $0.09 and $0.06,
respectively.
4 Net investment income per share for Retail Shares before
reimbursement/waiver of fees by the Investment Adviser and/or
Administrator for the fiscal year ended October 31, 1995 was $0.05.
5 Represents less than $0.01 per share for the years 1992 and 1987.
6 Total return for 1994 includes the effect of the voluntary capital
contribution of $1.6 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.35%.
7 Not Annualized.
8 Annualized.

4
<PAGE> 109
GOVERNMENT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
PERIOD
1995 YEARS ENDED OCTOBER 31,(1) ENDED
RETAIL ------------------------------------------------------------------ OCTOBER 31,
SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
-------- ------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- -------- -------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income(4) . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
Net realized and unrealized gain
(loss) on Investments . . . . . -- -- -- -- -- -- -- -- --
-------- ------- -------- -------- -------- -------- -------- -------- --------
Total from investment
Operations . . . . . . . . 0.05 0.03 0.03 0.04 0.06 0.08 0.09 0.07 0.06
-------- ------- -------- -------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net
investment income . . . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.0)8 (0.09) (0.07) (0.06)
Dividends from net realized
capital gains(5) . . . . . . . -- -- -- -- -- -- -- -- --
-------- ------- -------- -------- -------- -------- -------- -------- --------
Total Dividends . . . . . . . (0.05) (0.03) (0.03) (0.04) (0.06) (0.0)8 (0.09) (0.07) (0.06)
-------- ------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset
value . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- --
-------- ------- -------- -------- -------- -------- -------- -------- --------
Net asset Value, End of Period . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return(6) . . . . . . . . . . 5.20% 3.49% 2.83% 4.19% 6.25% 8.10% 8.82% 6.91% 6.08%(7)
Ratios/Supplemental Data:
Net Assets, End of Period(000's) . $320,795 $759,106 $685,338 $636,338 $436,232 $335,443 $303,181 $141,545 $178,100
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . 5.11% 3.36% 2.79% 3.67% 6.05% 7.80% 8.59% 6.73% 6.38%(8)
Operating expenses including
reimbursement/waiver . . . . . 0.73% 0.54% 0.55% 0.53% 0.56% 0.56% 0.60% 0.60% 0.53%(8)
Operating expenses including
reimbursement/waiver . . . . . 0.74% 0.54% 0.55% 0.53% 0.56% 0.57% 0.61% 0.60% 0.57%(8)
</TABLE>

- ------------------
1 Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail
Shares (now designated Retail A Shares) and the Fund began issuing a
second series of shares designated as Trust Shares.
2 The Fund commenced operations on November 17, 1986.
3 Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the fiscal years ended
October 31, 1990 and 1989 and the period ended October 31, 1987 was $0.08,
$0.09 and $0.06, respectively.
4 Net investment income per share for Retail Shares before
reimbursement/waiver of fees by the Investment Adviser and/or
Administrator for the fiscal year ended October 31, 1995 was $0.05.
5 Represents less than $0.01 per share for years 1992, 1990, 1989, 1988 and
1987.
6 Total return for 1994 includes the effect of the voluntary capital
contribution of $2.3 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.49%.
7 Not Annualized.
8 Annualized.

5
<PAGE> 110
U.S. TREASURY FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
1995 OCTOBER 31, PERIOD ENDED
RETAIL --------------------------------------- OCTOBER 31,
SHARES 1994 1993 1992 1991
--------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income(3) .................. 0.05 0.03 0.03 0.04 0.04
Net realized and unrealized gain (loss)
on investments .......................... -- -- -- -- --
--------- --------- --------- --------- ---------
Total from Investment Operations: .... 0.05 0.03 0.03 0.04 0.04
--------- --------- --------- --------- ---------
Less Dividends:
Dividends from net investment income ...... (0.05) (0.03) (0.03) (0.04) (0.04)
Dividends from net realized capital gains . -- -- -- -- --
--------- --------- --------- --------- ---------
Total Dividends ...................... (0.05) (0.03) (0.03) (0.04) (0.04)
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value .. -- -- -- -- --
--------- --------- --------- --------- ---------
Net Asset Value, End of Period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return(4) ............................. 4.99% 3.30% 2.75% 3.69% 4.51%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ........... $ 318,621 $ 466,993 $ 447,960 $ 482,416 $ 170,177
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................... 4.90% 3.24% 2.71% 3.51% 4.26%
Operating expenses including
reimbursement/waiver .................... 0.73% 0.56% 0.55% 0.49% 0.27%
Operating expenses excluding
reimbursement/waiver .................... 0.73% 0.56% 0.55% 0.55% 0.65%
</TABLE>

- -----------------
1 Prior to November 1, 1994, the Fund offered a single series of shares.
As of such date, the existing series of shares was designated Retail
Shares (now designated Retail A Shares) and the Fund began issuing a
second series of shares designated as Trust Shares.
2 The Fund commenced operations on January 22, 1991.
3 Net investment income per share before waiver of fees by the Investment
Adviser and/or Administrator for the year ended October 31, 1992 and the
period ended October 31, 1991 was $0.04 and $0.04, respectively.
4 Total return for 1994 includes the effect of the voluntary capital
contribution of $1 million from the Investment Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.30%.
5 Not Annualized.
6 Annualized.

6
<PAGE> 111
TAX-EXEMPT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
PERIOD
1995 YEARS ENDED OCTOBER 31,(1) ENDED
RETAIL ---------------------------------------------------------- OCTOBER 31,
SHARES 1994 1993 1992 1991 1990 1989 1988(1,2)
-------- ------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period . . . . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income(3,4) . . . . . . . 0.03 0.02 0.02 0.03 0.04 0.05 0.06 0.02
Net realized and unrealized gain
(loss) on investments. . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations . . . . . . . . . . . . 0.03 0.02 0.02 0.03 0.04 0.05 0.06 0.02
-------- -------- -------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net
investment income. . . . . . . . . . . (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.02)
Dividends from net realized
capital gains . . . . . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total Dividends. . . . . . . . . . . (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.02)
-------- -------- -------- -------- -------- -------- -------- --------
Net increae (decrease) in net asset
value . . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- --
-------- ------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========
Total Return . . . . . . . . . . . . . . . 3.16% 2.24% 1.93% 2.71% 4.51% 5.51% 5.96% % 1.90%(5)
Ratios/Supplemental Data:
Net Assets, End of Period(000's) . . . . . $127,056 $271,050 $301,399 $223,173 $194,098 $119,377 $131,358 $ 41,319
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . 3.12% 2.12% 1.92% 2.64% 4.37% 5.37% 5.82% % 5.42%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . 0.68% 0.58% 0.59% 0.57% 0.60% 0.60% 0.58% % 0.32%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . 0.71% 0.58% 0.59% 0.57% 0.60% 0.61% 0.61% % 0.72%(6)
</TABLE>

- ---------------------
1 Prior to November 1, 1994, the Fund offered a single series of shares.
As of such date, the existing series of shares was designated as Retail
Shares (now designated Retail A Shares) and the Fund began issuing a
second series of shares designated as Trust Shares.
2 The Fund commenced operations on June 23, 1988.
3 Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the fiscal years ended
October 31, 1990 and 1989 and the period ended October 31, 1988 was $0.05,
$0.06 and $0.02, respectively.
4 Net investment income per share for Retail Shares before
reimbursement/waiver of fees by the Investment Adviser and/or
Administrator for the fiscal year ended October 31, 1995 was $0.03.
5 Not Annualized.
6 Annualized.

7
<PAGE> 112
The Connecticut Municipal Money Market Fund and Massachusetts Municipal
Money Market Fund commenced operations on October 4, 1993 and October 5, 1993,
respectively, as separate investment portfolios (the "Predecessor Connecticut
Fund" and the "Predecessor Massachusetts Fund," respectively, and collectively,
the "Predecessor Funds") of The Shawmut Funds, which was organized as a
Massachusetts business trust. On December 4, 1995, these Predecessor Funds were
reorganized as new investment portfolios of Galaxy. Prior to the
reorganization, the Predecessor Connecticut Fund offered and sold two series of
shares of beneficial interest, Investment Shares and Trust Shares. The
shareholders of both series received the same series of shares in the
Connecticut Municipal Money Market Fund in connection with the reorganization.
Unlike the Trust Shares, the Investment Shares of the Predecessor Connecticut
Fund were similar to the Shares of the Connecticut Municipal Money Market Fund.
Accordingly, the Trust Shares of the Predecessor Connecticut Fund have been
excluded from the financial highlights. Prior to the reorganization, the
Predecessor Massachusetts Fund offered and sold shares of beneficial interest
that were similar to Shares of the Massachusetts Municipal Money Market Fund.

The financial highlights presented below set forth certain information
concerning the investment results of Investment Shares of the Predecessor Funds
(the series that is similar to the Shares of the Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds) for the fiscal years
ended October 31, 1995 and October 31, 1994 and the fiscal period ended October
31, 1993. The information was audited by Price Waterhouse LLP, independent
accountants for the Predecessor Funds, whose report thereon is contained in The
Shawmut Funds' Annual Report to Shareholders for the fiscal year ended October
31, 1995. Such financial highlights should be read in conjunction with the
financial statements and notes thereto contained in The Shawmut Funds' Annual
Report to Shareholders and incorporated by reference into the Statement of
Additional Information relating to the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds. Additional information about the
performance of the Predecessor Funds is contained in The Shawmut Funds' Annual
Report to Shareholders, which may be obtained without charge by contacting
Galaxy at its telephone numbers or address provided above.

8
<PAGE> 113
PREDECESSOR CONNECTICUT MUNICIPAL MONEY MARKET FUND
(FOR AN INVESTMENT SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993
----------- ----------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ........................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from Investment Operations
Net investment income(2) ..................................... 0.03 0.02 --
Net realized gain (loss) on investments ...................... -- -- --
------- ------- -------
Total from Investment Operations(2): ................... 0.03 0.02 --
------- ------- -------
Less Dividends:
Dividends from net investment income(2) ...................... (0.03) (0.02) --
Dividends from net realized gains ............................ -- -- --
------- ------- -------
Total Dividends(2): .................................... (0.03) (0.02) --
------- ------- -------
Net increase (decrease) in net asset value ..................... -- -- --
------- ------- -------
Net Asset Value, End of Period ................................. $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total Return(3) ................................................ 2.94% 1.83% 0.14%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ............................ $71,472 $80,663 $ 6,582
Ratios to average net assets:
Net investment income including reimbursement/waiver ...... 2.88% 1.99% 2.12%(5)
Operating expenses including reimbursement/waiver ......... 0.82% 0.78% 0.36%(5)
Operating expenses excluding reimbursement/waiver ......... 1.29% 1.50% 5.82%(5)
</TABLE>

- -----------------
1 The Fund commenced operations on October 4, 1993.
2 Represents less than $0.01 per share for year 1993.
3 Calculation does not include sales charge.
4 Not Annualized.
5 Annualized.

9
<PAGE> 114
PREDECESSOR MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993(2)
----------- ----------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $1.00 $1.00 $1.00
----- ----- -----
Income from Investment Operations
Net investment income(3) .................. 0.03 0.02 --
Net realized gain (loss) on investments ... -- -- --
----- ----- -----
Total from Investment Operations:(3) ... 0.03 0.02 --
----- ----- -----
Less Dividends:
Dividends from net investment income(3) ... (0.03) (0.02) --
Dividends from net realized gains ......... -- -- --
----- ----- -----
Total Dividends:(2) .................... (0.03) (0.02) --
----- ----- -----
Net increase (decrease) in net asset value .. -- -- --
----- ----- -----
Net Asset Value, End of Period .............. $1.00 $1.00 $1.00
===== ===== =====
Total Return(3) ............................. 3.21% 1.99% 0.12%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......... $40,326 $31,516 $1,237
Ratios to average net assets:
Net investment income including
reimbursement/waiver ................... 3.16% 2.00% 2.75%(5)
Operating expenses including
reimbursement/waiver ................... 0.57% 0.53% 0.11%(5)
Operating expenses excluding
reimbursement/waiver ................... 1.06% 1.21% 35.42%(5)
</TABLE>
- ---------------
(1) The Fund sold its shares without class designation.
(2) The Fund commenced operations on October 5, 1993.
(3) Represents less than $0.01 per share for year 1993.
(4) Not Annualized.
(5) Annualized.

10
<PAGE> 115
INVESTMENT OBJECTIVES AND POLICIES

IN GENERAL

The Investment Adviser will use its best efforts to achieve each Fund's
investment objective, although such 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 herein under "Tax-Exempt Fund," "Connecticut
Municipal Money Market Fund" and "Massachusetts Municipal Money Market Fund"
and 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. Each Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less in an
effort to maintain a stable net asset value per share of $1.00. The value of
the Funds' portfolio securities will generally vary inversely with changes in
prevailing interest rates.

QUALITY REQUIREMENTS

Each Fund will purchase only those instruments which meet the applicable
quality requirements described below. The Money Market Fund will not purchase a
security (other than a U.S. Government security) unless the security or the
issuer with respect to comparable securities (i) is rated by at least two
nationally recognized statistical rating organizations ("Rating Agencies")
(such as Standard & Poor's Ratings Group ("S&P"), Moody's Investors Service,
Inc. ("Moody's") or Fitch Investors Services, L.P. ("Fitch")) in the highest
category for short-term debt securities, (ii) is rated by only one Rating
Agency that has issued a rating in such Rating Agency's highest category for
short-term debt, or (iii) if not rated, the security is determined to be of
comparable quality. The Tax-Exempt Fund, Connecticut Municipal Money Market
Fund and Massachusetts Municipal Money Market Fund (collectively, the
"Tax-Exempt Money Market Funds") will not purchase a security (other than a
U.S. Government security) unless the security (i) is rated by at least two such
Rating Agencies in one of the two highest categories for short-term debt
securities, (ii) is rated by the only Rating Agency that has assigned a rating
in one of such Rating Agency's two highest categories for short-term debt, or
(iii) if not rated, the security is determined to be of comparable quality.
These rating categories are determined without regard to sub-categories and
gradations. The Funds will follow applicable regulations in determining whether
a security rated by more than one Rating Agency can be treated as being in the
highest or, with respect to the Tax-Exempt Money Market Funds one of the two
highest, short-term rating categories. See "Investment Limitations" below.

Determinations of comparable quality shall be made in accordance with
procedures established by the Board of Trustees. Generally, if a security has
not been rated by a Rating Agency, the Investment Adviser will acquire the
security if it determines that the security is of comparable quality to
securities that have received the requisite ratings. For example, with respect
to the Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds, the Investment Adviser will generally treat Connecticut Municipal
Securities or Massachusetts Municipal Securities, as the case may be, as
eligible portfolio securities if the issuer has received long-term bond ratings
within the two highest rating categories by a Rating Agency with respect to
other bond issues. The Investment Adviser also considers other relevant
information in its evaluation of unrated short-term securities.

MONEY MARKET FUND

The Money Market Fund's investment objective is to seek as high a level of
current income as is consistent with liquidity and stability of principal. The
Fund seeks to achieve its objective by investing in "money market" instruments
that are determined by the Investment Adviser to present minimal credit risk
and meet certain rating criteria. Instruments that may be purchased by the
Money Market Fund include obligations of domestic and foreign banks (including
negotiable certificates of deposit, non-negotiable time deposits, savings
deposits, and bankers' acceptances); commercial paper (including variable and
floating rate notes); obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities; and repurchase agreements issued by
financial institutions such as banks and broker/dealers. These instruments have
remaining maturities of one year or less (except for certain variable and
floating rate notes and securities underlying certain repurchase agreements).
For more information, including applicable quality requirements, see "Quality
Requirements" above and "Investments, Strategies and Risks" below.

GOVERNMENT FUND

11
<PAGE> 116
U.S. TREASURY FUND

The U.S. Treasury Fund's investment objective is to seek current income
with liquidity and stability of principal. The Fund seeks to achieve its
objective by investing in those securities issued or guaranteed as to principal
and interest by the U.S. Government or by agencies or instrumentalities
thereof, the interest income from which generally will not be subject to state
income tax by reason of current Federal law. Such instruments may include, but
are not limited to, securities issued by the U.S. Treasury and by certain
government agencies or instrumentalities such as the Federal Home Loan Banks,
Federal Farm Credit Banks and the Student Loan Marketing Association. The Fund
invests at least 65% of its total assets in direct U.S. Government obligations.
Shareholders residing in a particular state that has an income tax law should
determine through consultation with their own tax advisers whether such
interest income, when distributed by the Fund, will be considered by the state
to have retained exempt status and whether the Fund's capital gain and other
income, if any, when so distributed will be subject to the state's income tax.
See "Taxes."

Due to state income tax considerations, the Fund will not invest in other
securities, such as repurchase agreements and reverse repurchase agreements,
except under extraordinary circumstances such as when appropriate U.S.
Government obligations are unavailable.

TAX-EXEMPT FUND

The Tax-Exempt Fund's investment objective is to seek as high a level of
current interest income exempt from Federal income tax as is consistent with
stability of principal by investing substantially all of its assets in
Municipal Securities that present minimal credit risk and meet the rating
criteria described above under "Quality Requirements." The Fund is designed for
investors in higher tax brackets who are seeking a relatively high amount of
tax-free income with stability of principal and less price volatility than
would normally be associated with intermediate-term and longer-term Municipal
Securities.

In seeking to achieve its investment objective, the Tax-Exempt Fund may
invest in "private activity bonds" (see "Investments, Strategies and
Risks--Municipal Securities"), the interest on which may be subject to the
Federal alternative minimum tax. Investments in such securities, however, will
not be treated as investments in Municipal Securities for purposes of the 80%
requirement mentioned above and, under normal market conditions, will not
exceed 20% of the Fund's total assets when added together with any taxable
investments held by the Fund.

CONNECTICUT MUNICIPAL MONEY MARKET FUND

The Connecticut Municipal Money Market Fund's investment objective is to
provide current income exempt from Federal regular income tax and the CSIT,
consistent with stability of principal and liquidity. The Fund attempts to
achieve this objective by investing in a portfolio of Connecticut Municipal
Securities (as defined below) with remaining maturities of thirteen months or
less at the time of purchase. As a matter of fundamental policy that cannot be
changed without shareholder approval, the Fund invests its assets so that at
least 80% of its annual interest income is exempt from Federal regular income
tax or at least 80% of the total value of its assets is invested in obligations
the interest income from which is exempt from Federal regular income tax.

Under normal circumstances, at least 65% of the value of the Fund's assets
will be invested in debt obligations issued by or on behalf of the State of
Connecticut and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political sub-division or financing
authority of any of these, the interest income from which is, in the opinion of

12
<PAGE> 117
qualified legal counsel, exempt from federal regular income tax and the
CSIT ("Connecticut Municipal Securities"). Examples of Connecticut Municipal
Securities include, but are not limited to, municipal commercial paper and
other short-term notes; variable rate demand notes; municipal bonds (including
bonds having remaining maturities of less than thirteen months without demand
features); and tender option bonds. See "Investments, Strategies and Risks"
below.

From time to time on a temporary basis, when the Investment Adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in short-term non-Connecticut municipal tax-exempt obligations
or other taxable, temporary investments. All temporary investments will satisfy
the same credit quality standards as Connecticut Municipal Securities. See
"Quality Requirements" above. Temporary investments include: investments in
other mutual funds; notes issued by or on behalf of municipal or corporate
issuers; marketable obligations issued or guaranteed by the U.S. Government,
its agencies, or instrumentalities; other debt securities; commercial paper;
certificates of deposit of banks; and repurchase agreements. Although the Fund
is permitted to make taxable, temporary investments, there is no current
intention of generating income subject to Federal regular income tax or the
CSIT.

MASSACHUSETTS MUNICIPAL MONEY MARKET FUND

The Massachusetts Municipal Money Market Fund's investment objective is to
provide current income exempt from Federal regular income tax and the income
taxes imposed by the Commonwealth of Massachusetts, consistent with stability
of principal and liquidity. The Fund attempts to achieve this objective by
investing in a portfolio of Massachusetts Municipal Securities (as defined
below) with remaining maturities of thirteen months or less at the time of
purchase. As a matter of fundamental policy that cannot be changed without
shareholder approval, the Fund invests its assets so that at least 80% of its
annual interest income is exempt from federal regular income tax or at least
80% of the total value of its assets are invested in obligations the interest
income from which is exempt from federal regular income tax.

Under normal circumstances, at least 65% of the value of the Fund's assets
will be invested in debt obligations issued by or on behalf of the Commonwealth
of Massachusetts and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political sub-division or financing
authority of any of these, the interest income from which is, in the opinion of
qualified legal counsel, exempt from Federal regular income tax and the income
taxes imposed by the Commonwealth of Massachusetts upon non-corporate
taxpayers. ("Massachusetts Municipal Securities"). Examples of Massachusetts
Municipal Securities include, but are not limited to, municipal commercial
paper and other short-term notes; variable rate demand notes; municipal bonds
(including bonds having remaining maturities of less than thirteen months
without demand features); and tender option bonds. See "Investments, Strategies
and Risks" below.

From time to time on a temporary basis, when the Investment Adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in short-term non-Massachusetts municipal tax-exempt
obligations or other taxable, temporary investments. All temporary investments
will satisfy the same credit quality standards as Massachusetts Municipal
Securities. See "Quality Requirements" above. For a description of the types of
temporary investments permitted to be made by the Fund, see "Connecticut
Municipal Money Market Fund" above. Although the Fund is permitted to make
taxable, temporary investments, there is no current intention of generating
income subject to Federal regular income tax or the income taxes imposed by the
Commonwealth of Massachusetts.

INVESTMENTS, STRATEGIES AND RISKS

U.S. GOVERNMENT OBLIGATIONS

13
<PAGE> 118
MONEY MARKET INSTRUMENTS

"Money Market" instruments include bank obligations and commercial paper.

Domestic and foreign banks are subject to extensive but different
government regulations 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.

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 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. Variable or floating rate instruments
acquired by the Government and U.S. Treasury Funds are similar in form, but,
because they are issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, may have a more active secondary market. Substantial
holdings of variable and floating rate instruments could reduce portfolio
liquidity. The Money Market Fund and each Tax-Exempt Money Market Fund may also
purchase Rule 144A securities. See "Investment Limitations" below.

MUNICIPAL SECURITIES

Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, health-related entities,
transportation-related projects, educational programs, water and pollution
control, and sewer works. They are also issued to repay outstanding
obligations, to raise funds for general operating expenses, and to make loans
to other public institutions and for other facilities. Municipal Securities
include private activity bonds issued by or on behalf of public authorities to
provide financing aid to acquire sites or construct and equip facilities for
privately or publicly owned corporations. The availability of this financing
encourages these corporations to locate within the sponsoring communities and
thereby increases local employment.

The two principal classifications of Municipal Securities that may be held
by the Tax-Exempt Money Market 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 are in most cases
revenue securities and are not payable from the unrestricted revenues of the
issuer. Consequently, the credit quality of private activity revenue bonds is
usually directly related to the credit standing of the corporate user of the
facility involved.

The Funds' portfolios 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

14
<PAGE> 119
draw on a reserve fund, the restoration of which is a moral commitment,
but not a legal obligation, of the state or municipality which created the
issuer. There is no limitation on the amount of moral obligation securities
that may be held by the Funds.

Municipal Securities may include variable rate demand notes, which are
long-term Municipal Securities that have variable or floating interest rates
and provide a Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par.
The interest rate may float or be adjusted at regular intervals (ranging from
daily to annually), and is normally based on an applicable interest index or
another published interest rate or interest rate index. Most variable rate
demand notes allow a Fund to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit a Fund to tender the
security at the time of each interest rate adjustment or at other fixed
intervals. The Tax-Exempt Money Market Funds treat variable rate demand notes
as maturing on the later of the date of the next interest rate adjustment or
the date on which a Fund may next tender the security for repurchase.

Certain Municipal Securities eligible for purchase by the Tax-Exempt Money
Market Funds may have been credit enhanced by a guaranty, letter of credit, or
insurance. The Investment Adviser typically evaluates the credit quality and
ratings of credit enhanced Municipal Securities based upon the financial
condition and ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. The Funds will not treat credit enhanced
Municipal Securities as having been issued by the credit enhancer for
diversification purposes, unless a Fund has invested more than 10% of its assets
in Municipal Securities issued, guaranteed, or otherwise credit enhanced by the
credit enhancer, in which case the Municipal Securities will be treated as
having been issued both by the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer may adversely affect the quality
and marketability of the underlying Municipal Security. The Tax-Exempt Money
Market Funds may have more than 25% of their respective total assets invested in
Municipal Securities the credit for which has been enhanced by banks or
insurance companies.

TENDER OPTION BONDS

The Tax-Exempt Money Market Funds may purchase tender option bonds and
similar securities. A tender option bond generally has a long maturity and
bears interest at a fixed rate substantially higher than prevailing short-term
tax-exempt rates, and is coupled with an agreement by a third party, such as a
bank, broker-dealer, or other financial institution, pursuant to which such
institution grants the security holders the option, usually upon not more than
seven days notice or at periodic intervals, to tender their securities to the
institution and receive the face value of the securities. In providing the
option, the financial institution receives a fee that reduces the fixed rate of
the underlying bond and results in a Fund effectively receiving a demand
obligation that bears interest at the prevailing short-term tax-exempt rate.
The Investment Adviser will monitor, on an ongoing basis, the creditworthiness
of the issuer of the tender option bond, the financial institution providing
the option, and any custodian holding the underlying long-term bond. The
bankruptcy, receivership, or default of any of the parties to the tender option
bond will adversely affect the quality and marketability of the security.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

Each Fund, except the U.S. Treasury 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
only be entered into with financial institutions such as banks and
broker/dealers that 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 upon 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 Limitations Nos. 5 and 8 under "Investment
Limitations" below with respect to the Money Market, Government, U.S. Treasury
and Tax-Exempt Funds, and to the 10% limit described under "Investment
Limitations" below with respect to the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds.

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 a Fund might be delayed pending court action. Income on repurchase
agreements is taxable. The Tax-Exempt Fund's investments in repurchase
agreements will be, under normal market conditions, subject to such Fund's 20%
overall limit on taxable obligations.

The Money Market and Government Funds may also borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as
banks and broker/dealers and agree-

15
<PAGE> 120
ing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). A reverse repurchase agreement involves 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 -- MONEY MARKET AND GOVERNMENT FUNDS

The Money Market and Government Funds may lend their portfolio securities
to financial institutions such as banks and broker/dealers in accordance with
their investment limitations. 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, and
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.

GUARANTEED INVESTMENT CONTRACTS -- MONEY MARKET FUND

ASSET-BACKED SECURITIES -- MONEY MARKET FUND

The Money Market 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, such as motor vehicle receivables and credit card receivables. The
Fund will only purchase asset-backed securities that meet the applicable
quality requirements described above under "Quality Requirements." See
"Asset-Backed Securities" in the Statement of Additional Information.

INVESTMENT COMPANY SECURITIES -- TAX-EXEMPT MONEY MARKET FUNDS

The Tax-Exempt Money Market Funds may invest in securities issued by other
investment companies limited, with respect to the Tax-Exempt Fund, to open-end
investment companies that invest in high quality, short-term Municipal
Securities, that meet the applicable quality requirements described above under
"Quality Requirements" and that 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. Such securities may be acquired by a Fund within the limits
prescribed by the 1940 Act. Each Fund currently intends to limit its
investments in other investment companies 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 investment companies as a group; and (c) not more
than 3% of the outstanding voting stock of any one investment company will be
owned by the Fund. A Fund will invest in other investment companies primarily
for the purpose of investing its short-term cash which has not as yet been
invested in other portfolio instruments. However, from time to time, on a
temporary basis, the Connecticut Municipal Money Market Fund and Massachusetts
Municipal Money Market Fund may invest exclusively in one other investment
company managed similarly to the particular Fund.

16
<PAGE> 121
OTHER INVESTMENT POLICIES OF THE TAX-EXEMPT MONEY MARKET FUNDS

Each of the Tax-Exempt Money Market Funds may purchase Municipal
Securities on a "when-issued" basis. The Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds may also purchase Municipal
Securities on a "delayed settlement" basis. When-issued transactions, which
involve a commitment by a Fund to purchase 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 intends to
purchase, regardless of future changes in interest rates. Delayed settlement
describes settlement of a securities transaction in the secondary market
sometime in the future. When-issued 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, absent unusual market
conditions, commitments by a Fund to purchase securities on a when-issued or
delayed settlement basis will not exceed 25% of the value of its total assets.
These transactions will not be entered into for speculative purposes, but only
in furtherance of a Fund's investment objective.

In addition, each of the Tax-Exempt Money Market Funds may acquire
"stand-by commitments" with respect to Municipal Securities held by it. Under a
stand-by commitment, a dealer agrees to purchase at a Fund's option specified
Municipal Securities at a specified price. Each Fund will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. Stand-by commitments
acquired by a Fund would be valued at zero in determining the Fund's net asset
value. The default or bankruptcy of a securities dealer giving such a
commitment would not affect the quality of the Municipal Securities purchased
by a Fund. However, without a stand-by commitment, these securities could be
more difficult to sell. A Fund will enter into stand-by commitments only with
those dealers whose credit the Investment Adviser believes to be of high
quality.

Although the Tax-Exempt Fund does not presently intend to do so on a
regular basis, it may invest more than 25% of its assets in Municipal
Securities the interest on which is paid solely from revenues of similar
projects. To the extent that the Fund's assets are concentrated in Municipal
Securities payable from revenues on similar projects, the Fund will be subject
to the peculiar risks presented by such projects to a greater extent than it
would be if its assets were not so invested.

The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds are non-diversified investment portfolios. As such, there is no
limit on the percentage of assets which can be invested in any single issuer.
An investment in one of these Funds, therefore, will entail greater risk than
would exist in a diversified investment portfolio because the higher percentage
of investments among fewer issuers may result in greater fluctuation in the
total market value of the Fund's portfolio. Any economic, political, or
regulatory developments affecting the value of the securities in a Fund's
portfolio will have a greater impact on the total value of the portfolio than
would be the case if the portfolio was diversified among more issuers. The
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds intend to comply with Subchapter M of the Internal Revenue Code. This
undertaking requires that at the end of each quarter of a Fund's taxable year,
with regard to at least 50% of its total assets, no more than 5% of its total
assets are invested in the securities of a single issuer; beyond that, no more
than 25% of its total assets are invested in the securities of a single issuer.

CERTAIN INVESTMENT POLICIES OF THE U.S. TREASURY AND GOVERNMENT FUNDS

The U.S. Treasury and Government Funds may purchase securities on a
"when-issued" basis, as described under "Other Investment Policies of the
Tax-Exempt Money Market Funds."

CONNECTICUT INVESTMENT RISKS

Yields on Connecticut Municipal Securities that may be purchased by the
Connecticut Municipal Money Market Fund depend on a variety of factors,
including: the general conditions of the short-term municipal note market and
of the municipal bond market; the size and maturity of the particular offering;
the maturity of the obligations; and the rating of the issue. Further, any
adverse economic conditions or developments affecting the State of Connecticut
or its municipalities could impact the Fund's portfolio. The ability of the
Connecticut Municipal Money Market Fund to achieve its investment objective
also depends on the continuing ability of the issuers of Connecticut Municipal
Securities and demand features, or the credit enhancers of either, to meet
their obligations for the payment of interest and principal when due.

Investing in Connecticut Municipal Securities which meet the Connecticut
Municipal Money Market Fund's quality standards may not be possible if the
State of Connecticut or its municipalities do not maintain their current credit
ratings. An expanded discussion of the current economic risks associated with
the purchase of Connecticut Municipal Securities is contained in the Statement
of Additional Information.

Fiscal stress is reflected in the State's economic and revenue forecasts,
a rising debt burden that reflects a significant increase

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in bond activity since fiscal 1987-88, a cumulative general fund deficit
for fiscal 1990-91 of over $965 million, and uncertainty concerning the
solutions for these imbalances. Accumulated surpluses in a budget stabilization
fund created in 1983 to protect against future deficit problems were exhausted
in 1990. The lack of a contingency fund balance, combined with reduced
revenue-raising flexibility in the near term, places additional constraints on
managing these financial problems and any others that may arise. As a result of
the recent recurring budgetary problems, Connecticut's general obligation bonds
were downgraded by S&P from AA+ to AA in April 1990 and, in September 1991, to
AA-; by Moody's from Aa1 to Aa in April 1990; and by Fitch from AA+ to AA in
March 1995.

Certain Connecticut municipalities have experienced severe fiscal
difficulties and have reported operating and accumulated deficits in recent
years. The most notable of them is the City of Bridgeport, which filed a
bankruptcy petition on June 7, 1991. The State opposed the petition. The United
States Bankruptcy Court for the District of Connecticut held that Bridgeport
had authority to file such a petition but that its petition should be dismissed
on the grounds that Bridgeport was not insolvent when the petition was filed.
Regional economic difficulties, reductions in revenues, and increased expenses
could lead to further fiscal problems for the State and its political
subdivisions, authorities, and agencies. This could result in declines in the
value of their outstanding obligations, increases in their future borrowing
costs, and impairment of their ability to pay debt service on their
obligations.

MASSACHUSETTS INVESTMENT RISKS

The Massachusetts Municipal Money Market Fund's ability to achieve its
investment objective depends on the ability of issuers of Massachusetts
Municipal Securities to meet their continuing obligations to pay principal and
interest. Since the Fund invests primarily in Massachusetts Municipal
Securities, the value of the Fund's Shares may be especially affected by
factors pertaining to the economy of Massachusetts and other factors
specifically affecting the ability of issuers of Massachusetts Municipal
Securities to meet their obligations. As a result, the value of the Fund's
Shares may fluctuate more widely than the value of shares of a portfolio
investing in securities of issuers in a number of different states. The ability
of Massachusetts and its political subdivisions to meet their obligations will
depend primarily on the availability of tax and other revenues to those
governments and on their fiscal conditions generally. The amount of tax and
other revenues available to governmental issuers of Massachusetts Municipal
Securities may be affected from time to time by economic, political and
demographic conditions within Massachusetts. In addition, constitutional or
statutory restrictions may limit a government's power to raise revenues or
increase taxes. The availability of federal, state and local aid to an issuer
of Massachusetts Municipal Securities may also affect that issuer's ability to
meet it obligations. Payments of principal and interest on limited obligation
bonds will depend on the economic condition of the facility or specific revenue
source from whose revenues the payments will be made, which in turn could be
affected by economic, political and demographic conditions in Massachusetts or
a particular locality. Any reduction in the actual or perceived ability of an
issuer of Massachusetts Municipal Securities to meet its obligations (including
a reduction in the rating of its outstanding securities) would likely affect
adversely the market value and marketability of its obligations and could
affect adversely the values of other Massachusetts Municipal Securities as
well.

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy and
may not be changed with respect to a 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 respective Statements
of Additional Information under "Investment Objectives and Policies."

The Money Market, Government, U.S. Treasury and Tax-Exempt Funds may not:

1. Make loans, except that (i) each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, (ii)
each Fund, except the U.S. Treasury Fund, may enter into repurchase
agreements with respect to portfolio securities, and (iii) the Money Market
and Government Funds may lend portfolio securities against collateral
consisting of cash or securities that 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.

3. Purchase securities of any one issuer, other than U.S. Government
obligations, if immediately after such purchase more than 5% of the value of
its total assets would be invested in the securities of such issuer (the "5%
limitation"), except that up to 25% of the value of its total assets may be
invested without regard to this limitation.

In addition, the Tax-Exempt Fund may not:

4. Borrow money or issue senior securities, except from banks for
temporary purposes, and then in amounts not in

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<PAGE> 123

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 its total assets at the
time of such borrowing. The Fund will not purchase any portfolio securities
while borrowings in excess of 5% of its total assets are outstanding.

5. Knowingly invest more than 10% of the value of its total assets in
illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days and other securities which are not readily
marketable.

6. Purchase any securities that would cause 25% or more of the value of
its 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 there is no limitation with respect to
securities issued or guaranteed by the United States, any state or territory,
any possession of the U.S. Government, the District of Columbia, or any of
their authorities, agencies, instrumentalities, or political subdivisions.

In addition, the Money Market, Government and U.S. Treasury Funds may not:

7. 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 a Fund's total assets at the time of such borrowing (provided that the
Money Market and Government Funds may borrow pursuant to reverse repurchase
agreements in accordance with their investment policies and in amounts not in
excess of 10% of the value of their respective 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 a Fund's total assets
at the time of such borrowing. A Fund will not purchase securities while
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.

8. Invest more than 10% of the value of a Fund's total 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.

In addition, the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds may not:

9. Borrow money directly or pledge securities except, under certain
circumstances, each Fund may borrow up to one-third of the value of its total
assets and pledge up to 10% of the value of its total assets to secure such
borrowings.

The following investment limitation with respect to the Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds may be
changed by Galaxy's Board of Trustees without shareholder approval
(shareholders will be notified before any material change in this limitation
becomes effective):

10. The Connecticut Municipal Money Market and Massachusetts Municipal
Money Market Funds will not invest more than 5% of their respective total
assets in industrial development bonds or other Municipal Securities when the
payment of principal and interest is the responsibility of companies (or
guarantors, where applicable) with less than three years of continuous
operations, including the operation of any predecessor.

The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds may purchase restricted securities, which are any securities in
which a Fund may otherwise invest pursuant to its investment objective and
policies but which are subject to restrictions on resale under Federal
securities laws. Certain restricted securities may be considered liquid
pursuant to guidelines established by the Board of Trustees. To the extent
restricted securities are deemed illiquid, each Fund will limit their purchase,
together with other securities considered to be illiquid, to 10% of its net
assets.

With respect to Investment Limitation No. 3 above, (a) a security is
considered to be issued by the governmental entity or entities whose assets and
revenues back the security, or, with respect to a private activity bond that is
backed only by the assets and revenues of a non-governmental user, such
non-governmental user; (b) in certain circumstances, the guarantor of a
guaranteed security may also be considered to be an issuer in connection with
such guarantee; and (c) securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities (including securities backed by the full
faith and credit of the United States) are deemed to be U.S. Government
obligations.

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.

Each Fund may follow non-fundamental operating policies that are more
restrictive than its fundamental investment limitations, as set forth in this
Prospectus and the respective Statements of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under

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the 1940 Act. In particular, each Fund will comply with the various
requirements of Rule 2a-7 under the 1940 Act which regulates money market
mutual funds. In accordance with Rule 2a-7, the Money Market Fund is subject to
the 5% limitation contained in Investment Limitation No. 3 above as to all of
its assets; however in accordance with such Rule, the Money Market Fund will be
able to invest more than 5% (but no more than 25%) of its total assets in the
securities of a single issuer for a period of up to three business days after
the purchase thereof, provided that the Fund may not hold more than one such
investment at any one time. Subject to Investment Limitation No. 2 above, each
Fund will determine the effective maturity of its respective investments, as
well as its ability to consider a security as having received the requisite
short-term ratings by Rating Agencies, according to Rule 2a-7. A Fund may
change these operational policies to reflect changes in the laws and
regulations without the approval of its shareholders.

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 each Fund's 10% limitation on purchases of illiquid instruments
described above, Rule 144A securities will not be considered to be 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.

PRICING OF SHARES

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Funds 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 Distributor has established several procedures to enable different
types of investors to purchase Retail Shares of the Funds. Retail Shares may be
purchased by Fleet Brokerage Securities Corporation, Fleet Securities, Inc.,
Fleet Financial Group, Inc., its affiliates, their correspondent banks and
other qualified banks, saving and loan associations and broker/dealers
("Institutions") on behalf of their customers ("Customers"). Retail Shares may
also be purchased by individuals, corporations or other entities, who submit a
purchase application to Galaxy, purchasing directly for their own accounts or
for the accounts of others ("Direct Investors"). Purchases may take place only
on days on which the Distributor, Galaxy's custodian and Galaxy's transfer
agent are open for business ("Business Days"). If an Institution accepts a
purchase order from a 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 Distributor's procedures. Retail Shares of the Funds
will be issued only in exchange for monetary consideration as described below.

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PURCHASE PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Purchase orders for Retail Shares are placed by Customers of Institutions
through their Institution. The Institution is responsible for transmitting
Customer purchase orders to the Distributor 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. Retail
Shares purchased by Institutions on behalf of their Customers will normally be
held of record by the Institutions and beneficial ownership of Retail Shares
will be recorded by the Institutions and reflected in the account statements
provided to their Customers. Galaxy's transfer agent may establish an account
of record for each Customer of an Institution reflecting beneficial ownership
of Retail Shares. Depending on the terms of the arrangement between a
particular Institution and Galaxy's transfer agent, confirmations of Retail
Share purchases and redemptions and pertinent account statements will either be
sent by Galaxy's transfer agent directly to a Customer with a copy to the
Institution, or will be furnished directly to the Customer by the Institution.
Other procedures for the purchase of Retail Shares established by Institutions
in connection with the requirements of their Customer accounts may apply.
Customers wishing to purchase Retail Shares through their Institution should
contact such entity directly for appropriate purchase instructions.

PURCHASE PROCEDURES -- DIRECT INVESTORS

Purchases by Mail. Retail Shares may be purchased by completing a
purchase application and mailing it, together with a check payable to each Fund
in which a Direct Investor wishes to invest, to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling the Distributor at
1-800-628-0414.

Subsequent investments in an existing account in any Fund may be made at
any time by sending a check for a minimum of $100 payable to the Fund in which
the additional investment is being made to Galaxy at the address above along
with either (a) the detachable form that regularly accompanies confirmation of
a prior transaction, (b) a subsequent order form that may be obtained from the
Distributor, or (c) a letter stating the amount of the investment, the name of
the Fund and the account number in which the investment is to be made. If a
Direct Investor's check does not clear, the purchase will be cancelled.

Purchases by Wire. Direct Investors may also purchase Retail Shares by
arranging to transmit federal funds by wire to Fleet Bank of Massachusetts,
N.A. as agent for First Data Investor Services Group, Inc. (formerly known as
The Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, a Direct Investor must
telephone the Distributor at 1-800-628-0413 to place an order and to obtain
instructions. Federal funds and registration instructions should be wired
through the Federal Reserve System to:

Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
[Shareholder Name]
[Shareholder Account Number]

Direct Investors making initial investments by wire must promptly complete
a purchase application and forward it to The Galaxy Fund, P.O. Box 15108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108. Applications may be
obtained by calling the Distributor at 1-800-628-0414. Redemptions will not be
processed until the application in proper form has been received by the
Distributor. Direct Investors making subsequent investments by wire should
follow the instructions above.

OTHER PURCHASE INFORMATION

Investment Minimums. Except as provided in "Investor Programs" below, the
minimum initial investment by a Direct Investor, or initial aggregate
investment by an Institution investing on behalf of its Customers, is $2,500.
The minimum investment for subsequent purchases is $100. The minimum investment
requirement with respect to IRAs, SEPs, MERPs and Keogh Plans (see below under
"Retirement Plans") is $500 ($250 for spousal IRA accounts). There are no
minimum investment requirements for Direct Investors participating in the
Automatic Investment Program described below. Customers may agree with a
particular Institution to varying minimum initial and minimum subsequent
purchase requirements with respect to their accounts.

Galaxy reserves the right to reject any purchase order, in whole or in
part, or to waive any minimum investment requirement. The issuance of Retail
Shares to Direct Investors and

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Institutions is recorded on the books of Galaxy and share certificates
will not be issued.

Effective Time of Purchases. A purchase order for Retail Shares in a Fund
received and accepted by the Distributor by 11:00 a.m. (Eastern Time) on a
Business Day will be executed at the net asset value per share next determined
after receipt of the order and will receive the dividend declared on the day of
purchase if Galaxy's custodian receives the purchase price in federal funds or
other immediately available funds by 11:00 a.m. (Eastern Time) that day.
Purchase orders received after 11:00 a.m. (Eastern Time) and prior to 4:00 p.m.
(Eastern Time) on a Business Day for which such funds have been received by
4:00 p.m. will be effective as of 4:00 p.m., and investors will begin receiving
dividends the following day. Purchase orders made by Direct Investors are not
effective until the amount to be invested has been converted to federal funds.
In those cases in which a Direct Investor pays for Retail Shares by check,
federal funds will generally become available two Business Days after a
purchase order is received. In certain circumstances, Galaxy may not require
that amounts invested by Institutions on behalf of their Customers be converted
into federal funds. If an Institution accepts a purchase order from a 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 above
procedures.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

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

Direct Investors may redeem all or part of their Retail Shares in
accordance with any of the procedures described below.

REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Retail Shares may be redeemed by a Direct Investor by
submitting a written request for redemption to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the number of Retail Shares to
be redeemed, (ii) identify the shareholder account number and tax
identification number, and (iii) be signed by each registered owner exactly as
the shares are registered. A redemption request for an amount in excess of
$50,000, or for any amount where (i) the proceeds are to be sent elsewhere than
the address of record (excluding the transfer of assets to a successor
custodian), (ii) the proceeds are to be sent to an address of record which has
changed in the preceding 90 days, or (iii) the check is to be made payable to
someone other than the registered owner(s), must be accompanied by signature
guarantees. The guarantor of a signature must be a bank which is a member of
the FDIC, a trust company, a member firm of a national securities exchange or
any other eligible guarantor institution. The Distributor will not accept
guarantees from notaries public. The Distributor may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians. A redemption request will not be deemed
to be properly received until the Distributor receives all required documents
in proper form. The Funds ordinarily will make payment for Retail Shares
redeemed by mail within five Business Days after proper receipt by the
Distributor of the redemption request. Questions with respect to the proper
form for redemption requests should be directed to the Distributor at
1-800-628-0413.

Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling (800) 628-0413 and instructing the Distributor to mail a check for
redemption proceeds of up to $50,000 to the address of record. A redemption
request for an amount in excess of $50,000 or for any amount where (i) the
proceeds are to be sent elsewhere than the address of record (excluding the
transfer of assets to a successor custodian), (ii) the proceeds are to be sent
to an address of record which has changed in the preceding 90 days, or (iii)
the check is to be made payable to someone other than the registered owner(s),
must be accompanied by signature guarantees. See "Redemption by Mail."

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem
Retail Shares by instructing the Distributor by wire or telephone to wire
redemption proceeds of $1,000 or more directly to a Direct Investor's account
at any commercial bank in the United States. The Distributor charges a $5.00
fee for each wire redemption and the fee is deducted from the redemption
proceeds. The redemption proceeds must be paid to the same bank and account as
designated on the application or in written instructions subsequently received
by the Distributor.

Direct Investors may request that Retail Shares be redeemed and redemption
proceeds be wired on the same day if telephone redemption instructions are
received by the Distributor by 11:00 a.m. (Eastern Time) on the day of
redemption. Retail Shares

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redeemed and wired on the same day will not receive the dividend declared
on the day of redemption. Redemption requests made after 11:00 a.m. (Eastern
Time) will receive the dividend declared on the day of redemption, and
redemption proceeds will be wired the following Business Day. To request
redemption of Retail Shares by wire, Direct Investors should call the
Distributor at (800) 628-0413.

In order to arrange for redemption by wire or telephone after an account
has been opened or to change the bank or account designated to receive
redemption proceeds, a written request must be sent to Galaxy at the address
listed above under "Redemption by Mail." Such requests must be signed by the
investor and accompanied by a signature guarantee (see "Redemption by Mail"
above for details regarding signature guarantees). Further documentation may be
requested from corporations, executors, administrators, trustees, or guardians.
If, due to temporary adverse conditions, Direct Investors are unable to effect
telephone transactions, Direct Investors are encouraged to follow the
procedures for transactions by wire or mail which are described above.

Galaxy reserves the right to refuse a wire or telephone redemption if it
believes it is advisable to do so. Procedures for redeeming Retail Shares by
wire or telephone may be modified or terminated at any time by Galaxy or the
Distributor. In attempting to confirm that telephone instructions are genuine,
Galaxy will use such procedures as are considered reasonable, including
recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security number, address and/or bank). If Galaxy fails to follow established
procedures for the authenticity of telephone instructions, it may be liable for
losses due to unauthorized or fraudulent telephone transactions.

No redemption by a Direct Investor in any Fund will be processed until
Galaxy has received a completed application with respect to the Direct
Investor's account.

If any portion of the Retail Shares to be redeemed represents an
investment made by personal check, Galaxy reserves the right to delay payment
of proceeds until the Distributor is reasonably satisfied that the check has
been collected, which could take up to 15 days from the purchase date. A Direct
Investor who anticipates the need for more immediate access to his or her
investment should purchase Retail Shares by federal funds or bank wire or by
certified or cashier's check. Banks normally impose a charge in connection with
the use of bank wires, as well as certified checks, cashier's checks and
federal funds.

OTHER REDEMPTION INFORMATION

Galaxy reserves the right to redeem accounts (other than retirement plan
accounts) involuntarily, upon 60 days' written notice, if the account's net
asset value falls below $250 as a result of redemptions. In addition, if an
investor has agreed with a particular Institution to maintain a minimum balance
in his or her account at the Institution with respect to Retail Shares of a
Fund, and the balance in such account falls below that minimum, the Customer
may be obliged by the Institution to redeem all of his or her Retail Shares.

Redemption orders are effected at the net asset value per share next
determined after receipt of the order. 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 a Fund.

Galaxy may redeem Retail Shares involuntarily or make payment for
redemption in securities if it appears appropriate to do so in light of
Galaxy's responsibilities under the 1940 Act. See the respective Statements of
Additional Information under "Net Asset Value" or "Net Asset Value--Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds" for
examples of when such redemptions might be appropriate.

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

Direct Investors and Customers of Institutions may, after appropriate
prior authorization, exchange Retail Shares of a Fund having a value of at
least $100 for Retail Shares of any of the other Funds or portfolios offered by
Galaxy or otherwise advised by Fleet or its affiliates in which the Direct
Investor or Customer maintains an existing account, provided that such other
shares may legally be sold in the state of the investor's residence. The
minimum initial investment to establish a new account by exchange in another
Fund offered by Galaxy or otherwise advised by Fleet or its affiliates, except
for the Institutional Treasury Money Market Fund, is $2,500 unless, with
respect to Direct Investors, at the time of the exchange the Direct Investor
elects, with respect to the Fund into which the exchange is being made, to
participate in the Automatic Investment Program described below, in which event
there is no minimum initial investment requirement, or in the College
Investment Program described below, in which event the minimum initial
investment is generally $100. The minimum initial investment to establish an
account by exchange in the Institutional Treasury Money Market Fund is $2
million.

An exchange involves a redemption of all or a portion of the Retail Shares
of a Fund and the investment of the redemption proceeds in Retail Shares of
another Fund or portfolio offered by

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Galaxy or otherwise advised by Fleet or its affiliates. The redemption
will be made at the per share net asset value next determined after the
exchange request is received. The Retail Shares of a Fund or portfolio to be
acquired will be purchased at the net asset value per share next determined
after acceptance of the exchange request, plus any applicable sales charge.
Unless an exception applies, a front-end sales charge will be charged in
connection with exchanges of Retail Shares of a Fund for Retail A Shares of
Galaxy's non-money market portfolios.

Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in any of the
Funds. For further information regarding Galaxy's exchange privilege, Direct
Investors should call the Distributor at 1-800-628-0413. Customers of
Institutions should call their Institution for such information. Customers
exercising the exchange privilege with the Institutional Treasury Money Market
Fund, 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, High Quality Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds should request and review
the prospectuses for these Funds prior to making an exchange (call
1-800-628-0414 for a prospectus). Telephone all exchanges to 1-800-628-0413.
See "How to Purchase and Redeem Shares--Redemption Procedures--Direct
Investors--Redemption by Wire" above for a description of Galaxy's policy
regarding telephone instructions.

Galaxy does not charge any exchange fee. Institutions may charge such fees
with respect to either all exchange requests or with respect to any request
which exceeds the permissible number of free exchanges during a particular
period. Customers of Institutions should contact their Institution for
applicable information.

For Federal income tax purposes, an exchange of Retail Shares is a taxable
event and, accordingly, a capital gain or loss may be realized by an investor.
Before making an exchange request, the investor should consult a tax or other
financial adviser to determine the tax consequences.

RETIREMENT PLANS

Retail Shares of the Funds, other than the Tax-Exempt Money Market Funds,
are available for purchase in connection with the following tax-deferred
prototype retirement plans:

Individual Retirement Accounts ("IRAs") (including "rollovers" from
existing retirement plans), a retirement-savings vehicle for qualifying
individuals. The minimum initial investment for an IRA account is $500 ($250
for a spousal account).

Simplified Employee Pension Plans ("SEPs"), a form of retirement plan for
sole proprietors, partnerships and corporations. The minimum initial investment
for a SEP account is $500.

Multi-Employee Retirement Plans ("MERPs"), a retirement vehicle
established by employers for their employees which is qualified under Sections
401(k) and 403(b) of the Internal Revenue Code. The minimum initial investment
for a MERP is $500.

Keogh Plans, a retirement vehicle for self-employed individuals. The
minimum initial investment for a Keogh Plan is $500.

Investors purchasing Retail Shares pursuant to a retirement plan are not
subject to the minimum investment provisions described above under "How to
Purchase and Redeem Shares - Other Purchase Information." Detailed information
concerning eligibility, service fees and other matters related to these plans,
and the form of application, is available from Galaxy's Distributor (call
1-800-628-0413) with respect to IRAs, SEPs and Keogh Plans and from Fleet
Brokerage Securities Corporation (call 1-800-221-8210) with respect to MERPs.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Automatic Investment Program permits a Direct Investor to purchase
Retail Shares (minimum of $50 per transaction) each month or each quarter.
Provided a Direct Investor's financial institution allows automatic
withdrawals, Retail Shares are purchased by transferring funds from a Direct
Investor's checking, bank money market, NOW or savings account designated by
the Direct Investor. The account designated will be debited in the specified
amount and Retail Shares will be purchased on a monthly or quarterly basis, on
any Business Day designated by a Direct Investor. If the designated day falls
on a weekend or holiday, the purchase will be made on the Business Day closest
to the designated day. Only an account maintained at a domestic financial
institution which is an

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Automated Clearing House member may be so designated.

The Systematic Withdrawal Plan permits a Direct Investor to automatically
redeem Retail Shares on a monthly, quarterly, semi-annual, or annual basis on
any Business Day designated by a Direct Investor, if the account has a starting
value of at least $10,000. If the designated day falls on a weekend or holiday,
the redemption will be made on the Business Day closest to the designated day.
Proceeds of the redemption will be sent to the shareholder's address of record
or financial institution within five Business Days of the redemption. If
redemptions exceed purchases and dividends, the number of shares in the account
will be reduced. Investors may terminate the Systematic Withdrawal Plan at any
time upon written notice to the Transfer Agent (but not less than five days
before a payment date). There is no charge for this service.

PAYROLL DEDUCTION PROGRAM

The Payroll Deduction Program provides Direct Investors with a convenient,
systematic way to purchase Fund shares by deducting a minimum amount of $25 per
pay period from their paycheck. To be eligible for the Program, the payroll
department of a Direct Investor's employer must have the capability to forward
transactions directly through the Automated Clearing House (ACH), or indirectly
through a third party payroll processing company that has access to the ACH. A
Direct Investor must complete and submit a Galaxy Payroll Deduction Application
to his or her employer's payroll department, which will arrange for the
specified amount to be debited from the Direct Investor's paycheck each pay
period. Retail shares of Galaxy will be purchased within three days after the
debit occurred. If the designated day falls on a weekend or non-Business Day,
the purchase will be made on the Business Day closest to the designated day. A
Direct Investor should allow between two to four weeks for the Payroll
Deduction Program to be established after submitting an application to the
employer's payroll department.

COLLEGE INVESTMENT PROGRAM

The College Investment Program (the "College Program") permits a Direct
Investor to open an account with Galaxy and purchase Retail Shares of a Fund
with a minimum amount of $100 for initial or subsequent investments, except
that if the Direct Investor purchases Retail Shares through the Automatic
Investment Program, the minimum per transaction is $50. The College Program is
designed to assist Direct Investors who want to finance a college savings plan.
See "Investor Programs--Automatic Investment Program and Systematic Withdrawal
Plan" for information on the Automatic Investment Program. Galaxy reserves the
right to redeem accounts participating in the College Program involuntarily,
upon 60 days' written notice, if the account's net asset value falls below the
applicable minimum initial investment as a result of redemptions. See "How to
Purchase and Redeem Shares--Other Redemption Information" above for further
information.

Direct Investors in the College Program will receive consolidated monthly
statements of their accounts. Detailed information concerning College Program
accounts and applications may be obtained from Galaxy's Distributor (call
1-800-628-0413).

CHECKWRITING

Checkwriting is available for Direct Investors. A charge for use of the
checkwriting privilege may be imposed by Galaxy. There is no limit to the
number of checks a Direct Investor may write per month in an amount per check
of $250 or more. To obtain checks, a Direct Investor must complete the
signature card that accompanies the account application. To establish this
checkwriting service after opening an account in a Fund, Direct Investors must
contact the Distributor by telephone (1-800-628-0414) or mail to obtain a
signature card. A signature guarantee may be required. A DIRECT INVESTOR WILL
RECEIVE THE DAILY DIVIDENDS DECLARED ON THE RETAIL SHARES TO BE REDEEMED UP TO
THE DAY THAT A CHECK IS PRESENTED TO THE CUSTODIAN FOR PAYMENT. Upon 30 days'
written notice to Direct Investors, the checkwriting privilege may be modified
or terminated. An account in a Fund may not be closed by writing a check.

DIRECT DEPOSIT PROGRAM

Direct Investors receiving social security benefits are eligible for the
Direct Deposit Program. This Program enables a Direct Investor to purchase
Retail Shares of a Fund by having social security payments automatically
deposited into his or her Fund account. There is no minimum deposit
requirement. For instructions on how to enroll in the Direct Deposit Program,
Direct Investors should call the Distributor at 1-800-628-0413. Death or legal
incapacity will terminate a Direct Investor's participation in the Program. A
Direct Investor may elect at any time to terminate his or her participation by
notifying in writing the Social Security Administration. Further, Galaxy may
terminate a Direct Investor's participation upon 30 days' notice to the Direct
Investor.

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INFORMATION SERVICES

GALAXY INFORMATION CENTER--24 HOUR INFORMATION SERVICE--The Galaxy
Information Center provides Fund performance and investment information 24
hours a day, seven days a week. To access the Galaxy Information Center just
call 1-800-628-0414.

VOICE RESPONSE SYSTEM--The Voice Response System provides Direct Investors
automated access to Fund and account information as well as the ability to make
telephone exchanges and redemptions. These transactions are subject to the
terms and conditions described under Investor Programs. To access the Voice
Response System, just call 1-800-FOR-GLXY (367-4599) from any touch-tone
telephone and follow the recorded instructions.

GALAXY SHAREHOLDER SERVICES--For account information and recent exchange
transactions, Direct Investors can call Galaxy Shareholder Services Monday
through Friday, between the hours of 9:00 a.m. to 5:00 p.m. (Eastern Time) at
1-800-628-0413.

Galaxy also offers a TDD service for the hearing impaired. Just call
1-800-696-6515, 24 hours a day, seven days a week.

Direct Investors residing outside the United States can contact Galaxy by
calling 1-508-855-5237.

The Funds' yields reflect any fee waivers in effect, represent past
performance and will vary. If fee waivers are in effect and fees are not
waived, yields would be reduced. Past performance is no guarantee of future
results. Current yield refers to income earned by a Fund's investments over a
7-day period. It is then annualized and stated as a percentage of the
investment. Effective yield is the same as current yield except that it assumes
the income earned by an investment in a Fund will be reinvested. An investment
in any one of the Funds is neither insured nor guaranteed by the U.S.
Government nor is there any assurance the Funds will be able to maintain a
stable net asset value of $1.00 per share.

DIVIDENDS AND DISTRIBUTIONS

The net investment income of each Fund is declared daily as a dividend to
the persons who are shareholders of the respective Funds immediately after the
11:00 a.m. pricing of shares on the day of declaration. A Fund's net income for
dividend purposes consists of all accrued income, whether taxable or
tax-exempt, plus discount earned on the Fund's assets attributable to Retail
Shares, less amortization of premium on such assets and accrued expenses
attributable to Retail Shares of the Fund. Dividends on each Share of the Money
Market, Government, U.S. Treasury and Tax-Exempt 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. None of the Funds
expect to realize net capital gains. However, if any such gains are realized,
they will be paid out to shareholders no less frequently than annually.

Dividends are paid monthly within five Business Days after the end of each
calendar month or within five Business Days after a shareholder's complete
redemption of Retail Shares in a Fund. Institutions, unless they request
otherwise, will automatically receive dividends and distributions in cash.
Institutions may pay dividends to Customers in cash or reinvest such cash
distributions in additional Retail Shares. Direct Investors will have the
option as provided on the application of electing to (a) automatically receive
dividends and distributions in additional Retail Shares of a Fund at the net
asset value of such Retail Shares on the payment date or (b) receive dividends
and distributions in cash. Any revocation of such election must be made in
writing to Galaxy's transfer agent (see "Custodian and Transfer Agent" below)
and will become effective with respect to dividends paid after its receipt.

TAXES

FEDERAL

In General. Each of the Funds 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
relieves each Fund of liability for Federal income taxes to the extent its
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 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. In general, a Fund's investment company
taxable income will be its taxable income (including interest) 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 Money Market, Government and U.S. Treasury Funds intend to distribute
substantially all of their respective investment company taxable income and net
tax-exempt 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 income is received in cash or reinvested in additional
Retail Shares. (Federal income taxes for distributions to an IRA or a qualified
retirement plan are deferred under the Code.) Because all of each Fund's net
investment income is expected to be derived from earned interest, it is

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anticipated that no part of any distribution will be eligible for the
dividends received deduction for corporations.

Dividends declared in October, November or December of any year that 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.

The Tax-Exempt Money Market Funds. It is the policy of each Tax-Exempt
Money Market Fund to pay dividends with respect to each taxable year equal to
at least the sum of 90% of its net exempt-interest income and 90% of its
investment company taxable income, if any. Dividends derived from
exempt-interest income ("exempt-interest dividends") may be treated by a Fund's
shareholders as items of interest excludable from their gross income under
Section 103(a) of the Code, unless, under the circumstances applicable to a
particular shareholder, exclusion would be disallowed. (See the respective
Statements of Additional Information under "Additional Information Concerning
Taxes.")

If a Tax-Exempt Money Market Fund should hold certain "private activity
bonds" issued after August 7, 1986, shareholders must include, as an item of
tax preference, the portion of dividends paid by the Fund that is attributable
to interest on such bonds in their Federal alternative minimum taxable income
for purposes of determining liability (if any) for the 26% to 28% alternative
minimum tax for individuals and the 20% alternative minimum tax and the
environmental tax applicable to corporations. Corporate shareholders must also
take all exempt-interest dividends into account in determining certain
adjustments for Federal alternative minimum and environmental tax purposes.
Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.

Dividends from a Tax-Exempt Money Market Fund which are derived from
taxable income or from long-term or short-term capital gains will be subject to
Federal income tax, whether such dividends are paid in the form of cash or
additional Retail Shares of the Fund.

STATE AND LOCAL

Exempt-interest dividends and other distributions paid by the Tax-Exempt
Money Market Funds may be taxable to shareholders under state or local law as
dividend income, even though all or a portion of such distributions may be
derived from interest on tax-exempt obligations which, if realized directly,
would be exempt from such income taxes.

Dividends paid by the Connecticut Municipal Money Market Fund that qualify
as exempt-interest dividends for Federal income tax purposes will not be
subject to the Connecticut personal income tax, on individuals, trusts and
estates, to the extent that they are derived from Connecticut Municipal
Securities. Other Fund dividends and distributions, whether received in cash or
additional shares, are subject to this tax, except that capital gain dividends
derived from obligations issued by or on behalf of the State of Connecticut or
its political subdivisions are not subject to the tax. Dividends and
distributions paid by the Fund that constitute items of tax preference for
purposes of the Federal alternative minimum tax, other than any derived from
Connecticut Municipal Securities, could cause liability for the net Connecticut
minimum tax, applicable to investors subject to the Connecticut personal income
tax who are required to pay the Federal alternative minimum tax.

Dividends paid by the Connecticut Municipal Money Market Fund, including
those that qualify as exempt-interest dividends for Federal income tax
purposes, are taxable for purposes of the Connecticut Corporation Business Tax;
however, 70% (100% if the investor owns at least 20% of the total voting power
and value of the Fund's shares) of amounts that are treated as dividends and
not as exempt-interest dividends or capital gain dividends for Federal income
tax purposes are deductible for purposes of this tax, but no deduction is
allowed for expenses related thereto. Shares of the Fund are not subject to
property tax by the State of Connecticut or its political subdivisions.

Distributions by the Massachusetts Municipal Money Market Fund to its
shareholders are exempt from Massachusetts personal income taxation to the
extent they are derived from (and designated by the Fund as being derived from)
(i) interest on Massachusetts Municipal Securities, or (ii) capital gains
realized by the Fund from the sale of certain Massachusetts Municipal
Securities. Distributions from the Fund's other net investment income and
short-term capital gains will be taxable as ordinary income. Distributions from
the Fund's net long-term capital gains will be taxable as long-term capital
gains regardless of how long the shareholder has owned Fund shares. The tax
treatment of distributions is the same whether distributions are paid in cash
or in additional Shares of the Fund. Distributions by the Fund to corporate
shareholders, including exempt-interest dividends, may be subject to
Massachusetts corporate excise tax.

The U.S. Treasury Fund is structured to provide shareholders, to the
extent permissible by Federal and state law, with income that is exempt or
excluded from taxation at the state and local level. Many states, by statute,
judicial decision or administrative action, have taken the position that
dividends of a regulated investment company, such as the Fund, that are
attributable to interest on direct U.S. Treasury obligations or obligations of
certain U.S. Government agencies, are the functional equivalent of interest
from such obligations and are, therefore, exempt from state and local income
taxes. Shareholders should consult their own tax advisers about the status of
distributions from the Fund in their own state.

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MISCELLANEOUS

MANAGEMENT OF THE FUNDS

The business and affairs of the Funds are managed under the direction of
Galaxy's Board of Trustees. The Funds' respective Statements of Additional
Information contain 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 at December 31, 1995 of $84.8 billion.
Fleet, which commenced operations in 1984, also provides investment management
and advisory services to individual and institutional clients and manages the
other portfolios of Galaxy: the 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, High Quality Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds.

For the services provided and expenses assumed, Fleet is entitled to
receive advisory fees, computed daily and paid monthly, at the following annual
rates: with respect to the Money Market, Government and Tax-Exempt Funds, .40%
of the average daily net assets of each Fund, and with respect to the U.S.
Treasury, Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds, .40% of the first $750,000,000 of average daily net assets of
each Fund plus .35% of the average daily net assets of each Fund in excess of
$750,000,000. Fleet may from time to time, in its discretion, waive advisory
fees payable by the Funds in order to help maintain a competitive expense
ratios, 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 has advised Galaxy that, with respect to the
Money Market, Government and Tax-Exempt Funds, Fleet intends to waive advisory
fees payable to it by each Fund in an amount equal to 0.05% of the average
daily net assets of each Fund to the extent that a Fund's net assets exceed
$750,000,000. For the fiscal year ended October 31, 1995, Fleet received
advisory fees (after fee waivers) at the effective annual rates of .38%, .39%,
.39% and .40% of the average daily net assets of the Money Market Fund,
Government Fund, Tax-Exempt Fund and U.S. Treasury Fund, respectively.

The Predecessor Connecticut Municipal Money Market and Predecessor
Massachusetts Municipal Money Market Funds bore advisory fees during the most
recent fiscal year pursuant to the investment advisory agreement then in effect
with Shawmut Bank, N.A., their former adviser, at the effective annual rates of
.30% and .04%, respectively, of average daily net assets after fee waivers.
Without fee waivers, each Predecessor Fund would have borne advisory fees at
the annual rate of .50 of 1% of its average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their

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services to the Funds, Galaxy might be required to alter materially or
discontinue its arrangements with such companies and change its method of
operations. It is not anticipated, however, that any resulting change in the
Funds' method of operations would affect a Fund's net asset value per share or
result in financial loss to any shareholder.

ADMINISTRATOR

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 be paid 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, the Money Market,
Government, Tax-Exempt and U.S. Treasury Funds paid FDISG administration fees
at the effective rate of .088% of each Fund's average daily net assets.

The Predecessor Connecticut Municipal Money Market and Predecessor
Massachusetts Municipal Money Market Funds bore administration fees during
their most recent fiscal year pursuant to the administration agreement then in
effect with Federated Administrative Services, their prior administrator, at
the effective annual rates of .10% and .148%, respectively, of average daily
net assets after fee waivers.

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 two series in the Money Market,
Government, U.S. Treasury and Tax-Exempt Funds and an unlimited number of
shares in the Connecticut Municipal Money Market and Massachusetts Municipal
Money Market Funds as follows: Class A Shares (Retail A Shares) and Class
A--Special Series 1 Shares (Trust Shares), both series representing interests
in the Money Market Fund; Class B Shares (Retail A Shares) and Class B--Special
Series 1 Shares (Trust Shares), both series representing interests in the
Government Fund; Class E Shares (Retail A Shares) and Class E--Special Series 1
Shares (Trust Shares), both series representing interests in the Tax-Exempt
Fund; Class F Shares (Retail A Shares) and Class F--Special Series 1 Shares
(Trust Shares), both series representing interests in the U.S. Treasury Fund;
Class V Shares, representing interests in the Connecticut Municipal Money
Market Fund; and Class W Shares, representing interests in the Massachusetts
Municipal Money Market Fund. Each Fund (other than the Connecticut Municipal
Money Market and Massachusetts Municipal Money Market Funds) 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 Trust Shares
of the Money Market, Government, U.S. Treasury and Tax-Exempt Funds and these
other portfolios, which are offered through separate prospectuses, contact the
Distributor at 1-800-628-0414.

Shares of each series in the Money Market, Government, U.S. Treasury and
Tax-Exempt Funds bear their pro rata portion of all operating expenses paid by
a particular 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. 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 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 Money Market, Government, U.S. Treasury and
Tax-Exempt Funds have certain exchange and other privileges which are not
available with respect to Trust Shares. Trust Shares of these Funds are sold
without any sales load.

Each share of Galaxy (irrespective of series designation) has a par value
of $.001, 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.

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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 Galaxy
intends to enter into servicing agreements with Institutions (including Fleet
Bank and its affiliates). Pursuant to such servicing agreements, Institutions
will render certain administrative and support services to Customers who are
the beneficial owners of Retail Shares in consideration for payment of up to
.25% (on an annualized basis) of the average daily net asset value of Retail
Shares of a Fund beneficially owned by such Customers. Services under the
Shareholder Services Plan may include: aggregating and processing purchase and
redemption requests and placing net purchase and redemption orders with the
Distributor; processing dividend payments from a Fund; providing Customers with
information as to their positions in shares; providing sub-accounting with
respect to shares or the information necessary for sub-accounting; and
providing periodic mailings to Customers. Such services are intended to
supplement the services provided by FDISG as administrator and transfer agent,
and are described more fully in the Statement of Additional Information under
"Shareholder Services Plan."

Although the Shareholder Services Plan has been approved with respect to
Retail Shares of the Funds and Trust Shares of the Money Market, Government,
U.S. Treasury and Tax-Exempt Funds, as of the date of this Prospectus, Galaxy
intends to enter servicing agreements under these Shareholder Services Plans
only with respect to Retail Shares of each Fund, and to limit the payment under
these servicing agreements for each Fund to no more than .10% (on an annualized
basis) of the average daily net asset value of the Retail 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 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 a schedule of any fees that they may charge in
connection with Customer investments in Retail Shares.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Trust, an affiliate of the
Investment Adviser, pursuant to which Fleet Trust Company will perform certain
sub-account and administrative functions ("Sub-Account Services") on a
per-account basis with respect to Trust Shares of the Money Market, Government
and U.S. Treasury Funds 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 Money Market, Government and U.S. Treasury 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 custodian of the Funds' 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 Galaxy's transfer and dividend disbursing agent.
Services performed by both entities for the Funds are described in the
respective Statements of Additional Information. Communications to FDISG should
be directed to FDISG at P.O. Box 15108, 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

EXPENSES

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PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
yields of the Funds, as a measure of their performance, may be quoted and
compared to those of other mutual funds with similar investment objectives and
to other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, such data is reported in national financial publications
such as Donoghue's Money Fund Report, a widely recognized independent
publication that monitors the performance of mutual funds. Also, the Funds'
yield data may be 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 in publications of a local or regional nature. The
taxable money market Funds' performance may also be compared to the average
yields reported by the Bank Rate Monitor for money market deposit accounts
offered by the 50 leading banks and thrift institutions in the top five
standard metropolitan statistical areas. The performance for Retail Shares of
the Money Market, Government, U.S. Treasury and Tax-Exempt Funds will be
calculated separately from the performance of the particular Fund's Trust
Shares. Because of the shareholder servicing fees currently borne only by
Retail Shares of these Funds, the net yields on a Fund's Retail Shares can
generally be expected, at any given time, to be lower than the net yields on
the Fund's Trust Shares.

The yields of the Funds will refer to the income generated over a
seven-day period identified in the advertisement. This income is annualized,
i.e., the income during a particular week is assumed to be generated each week
over a 52-week period, and is shown as a percentage of the investment. Each
Fund may also advertise its "effective yield" which is calculated similarly
but, when annualized, the income from an investment in the Fund is assumed to
be reinvested. Consequently, the "effective yield" will be slightly higher
because of the compounding effect of the assumed reinvestment. Also, each of
the Tax-Exempt Money Market Funds may from time to time advertise a
"tax-equivalent yield" to demonstrate the level of taxable yield necessary to
produce an after-tax yield equivalent to that achieved by the Fund. The
"tax-equivalent yield" will be computed by dividing the tax-exempt portion of a
Fund's yield by a denominator consisting of one minus a stated Federal income
tax rate and adding the product to that portion, if any, of the Fund's yield
which is not tax-exempt.

The Funds' yields will fluctuate and any quotation of yield should not be
considered as representative of future performance of the Funds. 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 is
generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses, and market conditions. Any
fees charged directly by Institutions to accounts of Customers that have
invested in Retail Shares of a Fund will not be included in calculations of
yield.

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 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
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 either 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 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.

31
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Quality Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Money Mark Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Government Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
U.S. Treasury Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Connecticut Municipal Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . 12
Massachusetts Municipal Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 13
Investments, Strategies and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Tender Option Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Repurchase and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . 15
Securities Lending-Money Market and
Government Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Guaranteed Investment Contracts-
Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Asset-Backed Securities-Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Company Securities-Tax Exempt
Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Investment Policies of the Tax-Exempt Money
Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Certain Investment Policies of the U.S. Treasury and
Government Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Connecticut Investment Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Massachusetts Investment Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Purchase Procedures - Customers of
Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Purchase Procedures - Direct Investors . . . . . . . . . . . . . . . . . . . . . . . . . 21
Other Purchase Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Redemption Procedures - Customers of Institutions . . . . . . . . . . . . . . . . . . . . 22
Redemption Procedures - Direct Investors . . . . . . . . . . . . . . . . . . . . . . . . 22
Other Redemption Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Investor Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Automatic Investment Program and
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Payroll Deduction Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
College Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Checkwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Direct Deposit Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Information Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Galaxy Information Center-24 Hour
Information Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Voice Response System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Galaxy Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 28
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<PAGE> 137

THE GALAXY FUND

Statement of Additional Information

Money Market Fund

Government Fund

Tax-Exempt Fund

U.S. Treasury Fund

Institutional Treasury Money Market Fund

February 29, 1996

<PAGE> 138

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectuses (the "Prospectuses") for (i) the
Money Market, Government, Tax-Exempt, U.S. Treasury and Institutional Treasury
Money Market 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 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. (formerly, The
Shareholder Services Group, Inc. d/b/a 440 Financial), 4400 Computer Drive,
Westboro, Massachusetts 01581-5180 or by calling Galaxy at (800) 628-0414.

<PAGE> 139

TABLE OF CONTENTS

<TABLE>
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THE GALAXY FUND 1

INVESTMENT OBJECTIVES AND POLICIES 1
Variable and Floating Rate Obligations 1
Bank Obligations 1
Asset-Backed Securities 2
Municipal Securities 2
When-Issued Securities 5
Stand-By Commitments 5
Repurchase Agreements; Reverse Repurchase Agreements;
Loans of Portfolio Securities 6
Government Securities 6
Portfolio Securities Generally 7
Additional Investment Limitations 7

NET ASSET VALUE 9

DIVIDENDS 10

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 11

DESCRIPTION OF SHARES 12

ADDITIONAL INFORMATION CONCERNING TAXES 14
In General 14
Tax-Exempt Fund 16
State Taxation 17

TRUSTEES AND OFFICERS 17
Shareholder and Trustee Liability 21

ADVISORY, ADMINISTRATION, CUSTODIAN AND TRANSFER
AGENCY AGREEMENTS 22
Custodian and Transfer Agent 25

PORTFOLIO TRANSACTIONS 25

SHAREHOLDER SERVICES PLAN 27

EXPENSES 28

DISTRIBUTOR 29

AUDITORS 29

COUNSEL 30

PERFORMANCE AND YIELD INFORMATION 30
</TABLE>
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<TABLE>
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MISCELLANEOUS 31

FINANCIAL STATEMENTS FS-1

APPENDIX A A-1
</TABLE>

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<PAGE> 141

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 five of those investment
portfolios: the Money Market Fund, Government Fund, Tax-Exempt Fund, U.S.
Treasury Fund and Institutional Treasury Money Market Fund (the "Funds"). This
Statement of Additional Information provides additional investment information
with respect to the 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 the Funds and will consider the earning
power, cash flows and other liquidity ratios of the issuers and guarantors of
such notes 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 held by the Funds may have maturities
of more than one year, provided the Funds are entitled to payment of principal
upon not more than 30 days' notice or at specified intervals not exceeding one
year (upon not more than 30 days' notice).

Variable and floating rate obligations with a demand feature held by the
Funds 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

For purposes of the Money Market Fund's investment policy with respect to bank
obligations, the assets of a bank or savings

<PAGE> 142

institution will be deemed to include the assets of its U.S. and foreign
branches.

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 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

Municipal Securities acquired by the Tax-ExemptFund include debt obligations
issued by governmental entities to
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<PAGE> 143
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 Tax-Exempt Fund's portfolio 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 ("Rating Agency"), such
as Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings
Group ("S&P") and Fitch Investors Service, L.P. ("Fitch"), described in the
Prospectuses for the 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 the Tax-Exempt 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 securities purchased by the
Tax-Exempt Fund 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 Tax-Exempt Fund's
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
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<PAGE> 144
the time for payment of principal or interest, or both, or imposing other
constraints 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 Tax-Exempt Fund 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 Tax-Exempt Fund 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
Prospectuses for the Fund includingapplicable maturity restrictions.

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. Such proposals, while pending or if
enacted, might materially and adversely affect the availability of Municipal
Securities for investment by the Tax-Exempt Fund and the liquidity and value
of their respective portfolios. In such an event, the Fund would re-evaluate
its investment objective and policies and consider possible changes in its
structure or possible dissolution.
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<PAGE> 145
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 Tax- Exempt Fund nor
Fleet will review the proceedings relating to the issuance of Municipal
Securities or the bases for such opinions.

WHEN-ISSUED SECURITIES

When a Fund agrees to purchase securities on a "when-issued" 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 the 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
"when-issued" securities exceeded 25% of the value of its assets.

When a Fund engages in "when-issued" 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 the 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, the Fund may pay
for a "stand-by commitment" either separately in cash or by paying a higher
price for securities 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
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<PAGE> 146
depreciation for the period during which the commitment is held by the Fund.

The Tax-ExemptFund will enter into "stand-by commitments" only with banks
and broker/dealers that present minimal credit risks. In 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 Tax-Exempt Fund will acquire "stand-by commitments" solely to facilitate
liquidity and does not intend to exercise their rights thereunder for trading
purposes. "Stand-by commitments" will be valued at zero in determining the
Fund's net asset value.

REPURCHASE AGREEMENTS; REVERSE REPURCHASE AGREEMENTS; LOANS OF
PORTFOLIO SECURITIES

All Funds, except the U.S. Treasury and Institutional Treasury Money Market
Funds, 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 agreements).
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").

All Funds, except the U.S. Treasury and Institutional Treasury Money Market
Funds, may enter into reverse repurchase agreements. Whenever a Fund enters into
reverse repurchase agreements, the Funds will place in segregated
custodial accounts liquid assets such as cash or liquid securities equal to
the repurchase price (including accrued interest). The Fund will monitor the
accounts to ensure such equivalent values are 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 Government Fund in connection with such loans would
be invested in short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; cash collateral received by the
other Funds would be invested in high quality, short-term "money market"
instruments.

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<PAGE> 147

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

The U.S. Treasury and Institutional Treasury Money Market Funds will invest in
those securities issued or guaranteed as to principal and interest by the U.S.
Government or by agencies or instrumentalities thereof, the interest income from
which, under current law, generally will not be subject to state income tax by
reason of federal law.

PORTFOLIO SECURITIES GENERALLY

Subsequent to its purchase by a Fund, an issue of securities may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Funds. The Board of Trustees or the Investment Adviser,
pursuant to guidelines established by the Board, will promptly consider such an
event in determining whether the Fund involved should continue to hold the
obligation. The Board of Trustees or the Investment Adviser may continue to hold
the obligation if retention is in accordance with the interests of the Fund and
applicable regulations of the Securities and Exchange Commission.

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:

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<PAGE> 148

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 taxable Fund may purchase
securities that are secured by real estate, and the Money MarketFund may
purchase securities of issuers which deal in real estate or interests
therein; and except that the Tax-ExemptFund may invest in Municipal
Securities secured by real estate or interests therein; howeverthe Funds
will not purchase or sell interests in real estate limited partnerships.

4. Purchase or sell commodities or commodity contracts or invest in oil, gas
or other mineral exploration or development programs or mineral leases.

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

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, reorganizationor acquisition of assets;
provided, however, that the Tax-Exemptand Institutional Treasury Money
Market Funds may acquire such securities in accordance with the 1940 Act ;
and provided, further, that the Institutional Treasury Money Market Fund
may only invest up to 5% of its total assets in shares of other investment
companies, which are registered under the 1940 Act and which invest only in
securities that the Fund could acquire directly.

In addition to the above limitations:

1. The Money Market Fund may not purchase any securities other than
"money-market" instruments, some of which may be subject to repurchase
agreements, but the Fund may make interest-bearing savings deposits not in

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<PAGE> 149

excess of 5% of the value of its total assets at the time of deposit and
may make time deposits.

2. The Government Fund may not purchase securities other than obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, some of which may be subject to repurchase agreements.

3. The Tax-ExemptFund may not invest in industrial revenue bonds where the
payment of principal and interest are the responsibility of a company
(including its predecessors) with less than three years of continuous
operation.

4. The Fundsmay not purchase foreign securities, except that the Money
MarketFund 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.

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.

NET ASSET VALUE

Galaxy uses the amortized cost method of valuation to value shares of the
Funds. In order to use the amortized cost method, the Funds comply with the
various quality and maturity restrictions specified in Rule 2a-7 ("Rule 2a-7")
promulgated under the 1940 Act. Pursuant to this method, a security is valued at
its initial acquisition cost, as adjusted for

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<PAGE> 150

amortization of premium or accretion of discount, regardless of the impact of
fluctuating interest rates on the market value of the security. Where it is not
appropriate to value a security by the amortized cost method, the security will
be valued either by market quotations or by fair value as determined by or under
the direction of Galaxy's Board of Trustees. This method may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price a Fund would receive if it sold the security. The value of securities in
each of these Funds can be expected to vary inversely with changes in prevailing
interest rates. Thus, if interest rates have increased from the time a security
was purchased, such security, if sold, might be sold at a price less than its
cost. Similarly, if interest rates have declined from the time a security was
purchased, such security, if sold, might be sold at a price greater than its
purchase cost. In either instance, if the security is held to maturity, no gain
or loss will be realized.

The Funds invest only in instruments that meet the applicable quality
requirements of Rule 2a-7 and maintain a dollar-weighted average portfolio
maturity appropriate to their objective of maintaining a stable net asset value
per share, provided that none of the Funds will purchase any security deemed
to have a remaining maturity (as defined in the 1940 Act) of more than one year
(397 days with respect to the Institutional Treasury Money Market Fund) nor
maintain a dollar-weighted average portfolio maturity which exceeds 90 days.
Galaxy's Board of Trustees has established procedures reasonably designed,
taking into account current market conditions and each Fund's investment
objective, to stabilize the net asset value per share of each Fund for
purposes of sales and redemptions at $1.00. These procedures include review by
the Board of Trustees, at such intervals as it deems appropriate, to determine
the extent, if any, to which the net asset value per share of each Fund,
calculated by using available market quotations, deviates from $1.00 per share.
In the event such deviation exceeds one-half of one percent, the Board of
Trustees will promptly consider what action, if any, should be initiated. If the
Board of Trustees believes that the extent of any deviation from a Fund's $1.00
amortized cost price per share may result in material dilution or other unfair
results to new or existing investors, it has agreed to take such steps as it
considers appropriate to eliminate or reduce, to the extent reasonably
practicable, any such dilution or unfair results. These steps may include
selling portfolio instruments prior to maturity; shortening the average
portfolio maturity; withholding or reducing dividends; redeeming shares in kind;
reducing the number of a Fund's outstanding shares without monetary
consideration; or utilizing a net asset value per share determined by using
available market quotations.

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<PAGE> 151

DIVIDENDS

As stated, Galaxy uses its best efforts to maintain the net asset value per
share of each Fund at $1.00. As a result of a significant expense or realized
or unrealized loss incurred by any of the Funds, it is possible that a Fund's
net asset value per share may fall below $1.00. Should Galaxy incur or
anticipate any unusual or unexpected significant expense or loss which would
affect disproportionately the income of a Fund for a particular period, the
Board of Trustees would at that time consider whether to adhere to the present
dividend policy with respect to the Funds or to revise it in order to
ameliorate to the extent possible the disproportionate effect of such expense or
loss on the income of the Fund experiencing such effect. Such expense or loss
may result in a shareholder's receiving no dividends for the period in which it
holds shares of a Fund and in its receiving upon redemption a price per share
lower than that which it paid.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

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. As described in the
respective Prospectuses, Retail A Shares of the Money Market, Government,
Tax-Exempt and U.S. Treasury Funds, and shares of the Institutional Treasury
Money Market Fund, are sold to customers ("Customers") of Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Financial Group, Inc. ("Fleet
Group"), its affiliates, their correspondent banks, and other qualified banks,
savings and loan associations and broker/dealers ("Institutions"). As described
in the applicable Prospectuses, Retail A Shares of the Money Market,
Government, Tax-Exempt and U.S. Treasury Funds may also be sold to individuals
or corporations, who submit a purchase application to Galaxy, purchasing either
for their own accounts or for the accounts of others ("Direct Investors"). In
addition, Trust Shares in the Money Market, Government, Tax- Exempt and U.S.
Treasury Funds are offered to investors maintaining qualified accounts at bank
and trust institutions, including institutions affiliated with Fleet Financial
Group, Inc.

Galaxy has entered into servicing agreements with various financial
institutions pursuant to which such institutions will agree with Galaxy to
provide their Customers who are the beneficial owners of Retail A Shares of the
Money Market, Government, Tax-Exempt and U.S. Treasury Funds with certain
additional shareholder administrative services. Such services are described
below under "Shareholder Services Plan."

Galaxy may suspend the right of redemption or postpone the date of payment for
shares for more than seven days during any

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<PAGE> 152

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 Money
Market, Government, Tax-Exempt and U.S. Treasury Funds are offered under
separate Prospectuses to different categories of investors.

<PAGE> 153
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 Fund involved in liquidation, based on the number of shares of
the Fund held by each shareholder, except that currently a Fund's Retail A
Shares would be solely responsible for the Fund's payments to Service
Organizations under the Shareholder Services Plan.

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 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 an investment objective or 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.

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.

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<PAGE> 154

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 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 Fund, and
would be eligible for the dividends received deduction in the case of corporate
shareholders.

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<PAGE> 155

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 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.

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<PAGE> 156

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 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."

TAX-EXEMPT FUND

As stated in the Prospectuses for the Tax-ExemptFund, an investment in the
Fund is not intended to constitute a balanced investment program. Shares of the
Fund would not be suitable for tax-exempt institutions and may not be suitable
for retirement plans qualified under Section 401 of the Code, H.R. 10 plans and
individual retirement accounts because such plans and accounts are generally
tax-exempt and, therefore, not only would the shareholder not gain any
additional benefit from the Fund's dividends being tax-exempt, but such
dividends would be ultimately taxable to the beneficiaries when distributed.
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<PAGE> 157
In order for the Tax-ExemptFund to pay exempt-interest dividends for any
taxable year, at the close of each taxable quarter, at least 50% of the
aggregate value of the Fund's portfolio must consist of exempt-interest
obligations. Within 60 days after the close of its taxable year, the Fund will
notify its shareholders of the portion of the dividends paid by the Fund which
constitutes exempt-interest dividends with respect to such taxable year.
However, the aggregate amount of dividends so designated by the Fund cannot
exceed the excess of the amount of interest exempt from tax under Section 103 of
the Code received by the Fund over any amounts disallowed as deductions under
Sections 265 and 171(a)(2) of the Code. The percentage of total dividends paid
by the Fund with respect to any taxable year that qualifies as federal
exempt-interest dividends will be the same for all shareholders receiving
dividends from the Fund for such 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 disallowed to the extent of the
exempt dividends received with respect to the Shares.

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:

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<PAGE> 158
<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
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
Age 61 Fire 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'Neill 1 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.
</TABLE>

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<PAGE> 159
<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
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. Wellman 1 Trustee Private Investor;
2468 Ohio Street President, Ames &
Bangor, ME 04401 Wellman, from 1978
Age 64 to 1991; President,
Pingree Associates, Inc., from
1974 until 1990; Director,
Essex County Gas Company,
until January 1994; Director,
Maine Mutual Fire Insurance
Co.; Member, Maine Finance
Authority; Trustee, The Galaxy
VIP Fund; Trustee, Galaxy Fund
II.
</TABLE>

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<PAGE> 160

<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
W. Bruce McConnel, III Secretary Partner of the
Philadelphia National law firm Drinker
Bank Building Biddle & Reath,
1345 Chestnut Street Philadelphia,
Philadelphia, PA 19107 Pennsylvania.
Age 52

Neil Forrest Vice First Data Investor
First Data Investor President Services Group, Inc.
Services Group, Inc. and (formerly, the Shareholder
4400 Computer Drive Assistant Services Group, Inc. d/b/a
Westboro, MA 01581 Treasurer 440 Financial)
Age 35 1992 to present.

Louis J. Russo Assistant Vice President, First
First Data Investor Treasurer Data Investor Services
ServicesGroup, Inc. Group, Inc., (formerly, the
4400 Computer Drive Shareholder Services Group,
Westboro, MA 01581 Inc. d/b/a 440 Financial)
Age 37 1990 to present.
</TABLE>

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

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 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 may defer all or a portion of
the compensation earned from each of the Trusts to adeferred 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) (-FDISG+) 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,serves as a trustee, officer or
employee of Galaxy. The trustees and officers of Galaxy own less than 1% of its
outstanding shares.

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<PAGE> 161

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 Total
Retirement Compensation
Benefits from Galaxy
Aggregate Accrued as and Fund
Name of Compensation Part of Fund Complex*Paid
Person/Position from Galaxy Expenses to Trustees
<S> <C> <C> <C>
Bradford S. $19,500 None $27,500
Wellman
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 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

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<PAGE> 162

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 services provided and expenses assumed by Fleet, Galaxy paid Fleet for
the fiscal years ended October-31, 1993 and October-31, 1994 advisory fees of
$2,623,210 and $2,680,260, respectively, with respect to the Money Market
Fund; and $2,683,341 and $2,595,929, respectively, with respect to the
Government Fund. For the fiscal year ended October-31, 1995, Galaxy paid Fleet
advisory fees (net of reimbursement and/or waivers) of $3,321,036 for the Money
Market Fund and $3,551,367 for the Government Fund, respectively. For the same
period, Fleet waived advisory fees of $142,311 and $63,124, with respect to
the Money Market Fund and Government Fund, respectively.
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<PAGE> 163

For the fiscal years ended October-31, 1993 and October-31, 1994, Galaxy
paid Fleet advisory fees of $931,210 and $1,082,702, respectively, with
respect to the Tax-Exempt Fund; and $2,013,813 and $1,890,386, respectively,
with respect to the U.S. Treasury Fund. For the fiscal year ended October-31,
1995 , Galaxy paid Fleet advisory fees (net of expense reimbursements) of
$1,138,568 and $2,126,647 with respect to the Tax-Exempt Fund and U.S.
Treasury Fund, respectively. For the same period, Fleet reimbursed expenses in
the amounts of $36,228 and $17,558 with respect to the Tax-Exempt Fund and U.S.
Treasury Fund, respectively.

For the period April-15, 1993 (commencement of operations) through October-31,
1993 and for the fiscal years ended October-31, 1994 and October 31, 1995,
Fleet received advisory fees (net of reimbursement and/or waivers) of $-0-,
$91,691 and $387,361, respectively, with respect to the Institutional Treasury
Money Market Fund. For the same periods, Fleet waived advisory fees of $80,165,
$317,212 and $387,360, respectively, with respect to the Institutional
Treasury Money Market Fund.

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 until August 10,
1996, and thereafter 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

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(other than the Tax-Exempt Fund) held by defined contribution plans. Pursuant to
an agreement between Fleet Trust Company and FDISG, Fleet Trust Company is
paid $21.00 per year for each defined contribution plan participant account. As
of October-31, 1995, there were 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. FDISG bears this expense directly, and shareholders
of Trust Shares of the Funds, except the Tax-Exempt Fund, 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") 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, a wholly-owned
subsidiary of First Data Corporation, 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 of
$501,580 , $567,866 and $763,921, respectively, with respect to the Money
Market Fund; $512,792 , $544,223 and $799,533, respectively, with respect to
the Government Fund; $177,960 , $227,241 and $257,052, respectively, with
respect to the Tax-Exempt Fund; and $384,950 , $396,349 and $469,163,
respectively, with respect to the U.S. Treasury Fund.

For the period April-15, 1993 (commencement of operations) through October-31,
1993 and for the fiscal years ended October-31, 1994and October 31, 1995
FDISG and/or its predecessors received administration fees (net of waivers) of
$0, $86,068 and $125,448, respectively, with respect to the Institutional
Treasury Money Market Fund and waived administration fees of
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$49,358, $137,300 and $213,577, respectively, with respect to such 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 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.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.

Transactions in the over-the-counter market are generally principal
transactions with dealers and the costs of such transactions involve dealer
spreads rather than brokerage
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commissions. With respect to over-the-counter transactions, the Investment
Adviser will normally deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere or as described below.

The Funds do not intend to seek profits from short-term trading. Their
annual portfolio turnover will be relatively high, but since brokerage
commissions are normally not paid on money market instruments, it should not
have a material effect on the net income of any of these Funds.

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.

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, FDISG, 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 the Company has acquired during its most recent fiscal year. At
October 31, 1995, (a) the Money Market Fund held commercial paper of Morgan
Stanley Group, Inc. in the amount of $34,600,300 and had entered into repurchase
transactions with (i) Bear Stearns Securities Corp. in the amount of
$100,000,000 to be repurchased on November-1, 1995 at $100,016,389; and (ii)
HSBC Securities in the amount of $928,566 to be repurchased on November-1,
1995 in the amount of $942,800; (b) the Government Fund had entered into
repurchase transactions with (i) Bear Stearns Securities Corp. in the amount
of $100,000,000 to be repurchased on November-1, 1995 at $100,016,389; and
(ii) HSBC Securities in the amount of $22,797,650 to be repurchased on
November-1, 1995 in the amount of $22,801,418.

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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, except the Institutional Treasury
Money Market 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 (other than the Institutional
Treasury Money Market Fund). As of October 31, 1995, Galaxy had entered into
Shareholder Services Agreements only with Fleet Bank.

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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 such Funds on any day do not exceed the income to be accrued to such
Retail A Shares on that day.

For the fiscal year ended October-31, 1995, payments to Service
Organizations totaled $451,861, $269,314, $115,812 and $261,774 with respect
to Retail A Shares of the Money Market Fund, Government Fund, Tax-Exempt Fund
and U.S. Treasury 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
Retail A Shares of each Fund other than the Institutional Treasury Money Market
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.

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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. The most restrictive expense limitation currently in effect is:
2-1/2% of the first $30 million of average net assets, 2% of the next $70
million of average net assets and 1-1/2% of the remaining average net assets of
an investment company. 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 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, remain 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

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Galaxy 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,Philadelphia, Pennsylvania 19107, are
counsel to Galaxy and will pass upon certain legal matters on its behalf.

PERFORMANCE AND YIELD INFORMATION

The standardized annualized seven-day yields for the Money Market, Government,
Tax-Exempt, U.S. Treasury and Institutional Treasury Money Market Funds are
computed by: (1) determining the net change, exclusive of capital changes, in
the value of a hypothetical pre-existing account in a Fund having a balance of
one share at the beginning of a seven-day period, for which the yield is to be
quoted, (2) dividing the net change in account value by the value of the account
at the beginning of the base period to obtain the base period return, and (3)
annualizing the results (i.e., multiplying the base period return by (365/7)).
The net change in the value of the account in each Fund includes the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares, and all fees
that are charged by a Fund to all shareholder accounts in proportion to the
length of the base period, other than non-recurring account and sales charges.
For any account fees that vary with the size of the account, the amount of fees
charged is computed with respect to the Fund's mean (or median) account size.
The capital changes to be excluded from the calculation of the net change in
account value are realized gains and losses from the sale of securities and
unrealized appreciation and depreciation. The effective compound yield quotation
for each Fund is computed by adding 1 to the unannualized base period return
(calculated as described above), raising the sum to a power equal to 365 divided
by 7, and subtracting 1 from the result.

The current yield for the Money Market, Government, Tax-Exempt, U.S.
Treasury and
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Institutional Treasury Money Market Funds may be obtained by calling the
Distributor at the telephone numbers provided on the cover page of the
Prospectus. For the seven-day period ended October 31, 1995, the annualized
yields for Retail A Shares of the Money Market, Government, Tax-Exempt and U.S.
Treasury Funds were 4.94%, 4.94%, 3.03% and 4.74%, respectively, and the
effective yields for Retail A Shares of such Funds for the same period were
5.06%, 5.06%, 3.08% and 4.85%, respectively. For the seven-day period ended
October 31, 1995, the annualized and effective yields for the Institutional
Treasury Money Market Fund were 5.25% and 5.39%, respectively.

For the seven-day period ended October 31, 1995, the annualized yields for
Trust Shares of the Money Market, Government, Tax-Exempt and U.S. Treasury Funds
were 5.19%, 5.21%, 3.18% and 4.90%, respectively, and the effective yields of
Trust Shares of such Fund were 5.32%, 5.34%, 3.23% and 5.02%, respectively.

In addition, the Tax-Exempt Fund may calculate a "tax equivalent yield." The
tax equivalent yield for the Fund is computed by dividing that portion of the
Fund's yield which is tax-exempt by one minus a stated income tax rate and
adding the product to that portion, if any, of the Fund's computed yield that is
not tax-exempt. Tax equivalent yields assume the payment of federal income taxes
at a rate of 31%. Based on the foregoing calculation, the tax equivalent yield
of the Tax-Exempt Fund for the seven-day period ended October 31, 1995 for
Retail A Shares was 4.39%.

The tax-equivalent yield for Trust Shares of the Tax-Exempt Fund for the
seven-day period ended October 31, 1995 was 4.61%.

In addition, the U.S. Treasury Fund and Institutional Treasury Money Market
Fund may calculate a "state flow through yield," which shows the level of
taxable yield needed to produce an after-tax yield equivalent to a particular
state's tax-exempt yield achieved by the Fund. The "state flow through yield"
refers to that portion of income that is derived from interest income on direct
obligations of the U.S. Government, its agencies or instrumentalities and which
qualifies for exemption from state taxes. The yield calculation assumes that
100% of the interest income is exempt from state personal income tax. A "state
flow through yield" is computed by dividing that portion of a Fund's yield which
is tax-exempt by one minus a stated income tax rate. For illustration purposes,
state flow through yields assume the payment of state income taxes at the rates
of 3%, 7% or 11%. Based on the foregoing calculation and assuming state income
tax rates of 3%, 7% and 11%, the state flow through yields for the seven-day
period ended October 31, 1995 for Retail A Shares of the U.S. Treasury Fund
were 4.69%, 5.10% and 5.33%, respectively.

The state flow through yields for the seven-day period ended October 31, 1995
were 5.41%, 5.65% and 5.90%, respectively, with respect to the Institutional
Treasury Money Market Fund.

MISCELLANEOUS

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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 February 5, 1996, 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: Tax-Exempt Money Market
Fund -- Hope H. Van Beuren, East Main, R.R. 25 Enterprise Center, Middletown,
Rhode Island 02842 (15.10%); Joseph Dimenna, 1049 Fifth Avenue, Apartment P3,
New York, New York 10028 (11.24%); Massachusetts Municipal Money Market Fund --
Olsen & Company, Attention: Corporate Actions of - 0503, One Federal Street,
Boston, Massachusetts 02110-2003 (45.38%); Shawmut Bank, National Association,
Attention: Maureen Sanborn - Massachusetts Deposit Balancing, 150 Windsor Street
- - MSN 294, Hartford, Connecticut 06120 (7.37%); and Connecticut Municipal Money
Market Fund -- Shawmut Bank, National Association, Attention:Maureen Sanborn -
Massachusetts Deposit Balancing, 150 Windsor Street - MSN 294, Hartford,
Connecticut 06120 (57.55%); Olsen & Company, Attention: Corporate Actions of -
0530, One Federal Street, Boston, Massachusetts 02110 (26.89%); Short-Term Bond
Fund -- Womat Leasing, MSN 217, Attention: Mark Roberts, One Corporate Center,
Hartford, Connecticut 06103-3220 (10.15%); and Rhode Island Municipal Bond Fund
- -- Norstar Trust Company, Gales & Co., Funds Control, Attention: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (43.60%); James R. McCulloch, c/o
MICROFIBRE, P.O. Box 1208, Pawtucket, Rhode Island 02860 (8.01%).

As of February 5, 1996, the name, address, and share ownership of the entities
or person that held of record more than 5% of the outstanding Trust Shares of
each of Galaxy+s investment portfolios were as follows: Money Market Fund --
Fleet Financial Group, Inc., Employees Thrift Plan, c/o Kenneth Weissman,
Shawmut National Corporation, 777 Main Street, Hartford, Connecticut 06115
(5.49%); Tax-Exempt Fund -- Fleet Bank, Rhode Island, Custodian for A Banko
Inv., Attention: Ann Celander, 100 Westminster Street, Providence, Rhode Island
02903 (5.53%); Government Fund -- Brown University Non-Exp Fund RISLA A-Bill,
c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903 (13.11%); U.S.
Treasury Fund -- Fleet National Bank of Massachusettes, Schmid, Inc., Debtor in
Possession, c/o Robin Boweman, One Federal Street, Boston, Massachusetts, 02211
(6.35%); BIC Corporation Investment Management Accountant, Robert McDonald, BIC
Corporation Investment Management Account, Attention: Robert McDonald, 500 BIC
Drive Milford, Connecticut 06460 (5.54%); and Institutional Treasury Money
Market Fund -- CAI Wireless Systems II, c/o Fleet Bank, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (21.80%); AMS Escrow Account, Nortek Inc.,
Attention: Julia Quinn, c/o 50 Kennedy Plaza, Providence, Rhode Island 02903
(5.19%); Massachusetts Municipal Money Market Fund -- Shawmut Bank,
Connecticut,National Association, Co-Trustee Francelia Corbett, c/o Peter
Vannie,Shawmut Bank, Connecticut, National Association, Hartford, Connecticut
06155 (7.88%); Growth and Income Fund -- Shawmut Bank, National Association as
Trustee, Balanced Fund - EB c/o Doris Cote, 446 Main Street, Worcester,
Massachusetts 01608 (8.91%); Fleet Financial Group, Inc., Employees Thrift Plan
c/o Kenneth Weissman, 777 Main Street, Hartford, Connecticut 06115 (19.13%);
Small Cap Value -- Fleet Financial Group, Inc., Employees Thrift Plan, c/o
Kenneth Weissman, Shawmut National Corporation, 777 Main Street, Hartford,
Connecticut 06115 (16.11%); Shawmut Bank, National Association, Rogers
Corporation as Trustee, Attention: James Delucia, Shawmut Bank, Connecticut, 157
Church Street, P.O. Box 1909, New Haven, Connecticut 06509 (5.75%); Shawmut
Bank, Connecticut, as Trustee, SNC Employees Retirement Plan, c/o Thomas
Botticelli, Shawmut Bank, Connecticut, 777 Main Street, Hartford, Connecticut
06115-2001 (31.81%);. High Quality Bond Fund -- Fleet Saving Plus Plan, Fleet
Financial Group Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (14.41%);
Corporate Bond Fund -- Shawmut Bank, National Association as Trustee, Balanced
Fund -- EB c/o Doris Cote, 446 Main Street, Worcester, Massachusetts 01608,
(9.23%); BNE Unified Retirement Trust, Attention: Ben Branch, Trustee, 21
Merchants Road, 4th Floor, Boston, Massachusetts 02109 (18.82%); Connecticut
Municipal Bond Fund -- Shawmut Bank, Connecticut, as Agent for Florence Roberts,
c/o Anna Maria Simonelli, 777 Main Street, Hartford, Connecticut 06115-2001
(7.96%); Robert M. Ross, Jr. c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode
Island 02903 (5.13%); Ruthan Wein, 18 Timberland Drive, Farmington, Connecticut
06032 (7.83%); Massachusetts Municipal Bond Fund -- Joseph S. Teller, 8 Kilsyth
Terrace, #21, Brighton, Massachusetts 02146 (6.02%); Phillip H. Tobey c/o Fleet
Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903 (5.18%); Rhode Island
Municipal Bond -- Vera J. Clark, 175 East Avenue, Westerly, Rhode Island 02811
(7.19%); Tax-Exempt Bond Fund -- Nusco Retiree Health, P.O. Box 270 Hartford,
Connecticut 06141 (15.49%); Equity Value Fund -- Fleet Financial Group Inc.,
Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island 02903
(7.15%); Equity Growth Fund -- Fleet Financial Group Inc., Fleet Savings Plus
Plan, 50 Kennedy Plaza, Providence, Rhode Island 02903 (16.97%); International
Equity Fund -- Fleet Financial Group Inc., FFG Retirement & Pension Equity, 50
Kennedy Plaza, Providence, Rhode Island 02903 (13.41%); Fleet Financial Group
Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island 02903
(6.80%); Asset Allocation Fund -- Fleet Financial Group Inc., Fleet Savings Plus
Plan, 50 Kennedy Plaza, Rhode Island 02903 (32.94%); Edward & Angels 401K, 2700
Hospital Trust Tower, Providence, Rhode Island 02903 (12.15%); and Small Company
Equity Fund -- Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy
Plaza, Providence, Rhode Island 02903 (15.45%); BNE Unified Retirement Trust,
Attention: Ben Branch, Trustee, 21 Merchants Road, 4th Floor, Boston,
Massachusetts 02109 (8.26%).

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 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.
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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, Inc. ("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

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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 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

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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.

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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

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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

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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.

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<PAGE> 179

THE GALAXY FUND

STATEMENT OF ADDITIONAL INFORMATION

Connecticut Municipal Money Market Fund

Massachusetts Municipal Money Market Fund

Growth and Income Fund

Small Cap Value Fund

February 29, 1996

<PAGE> 180

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current Prospectuses (the "Prospectuses") for the
Connecticut Municipal Money Market, Massachusetts Municipal Money Market, Growth
and Income and Small Cap Value Funds of The Galaxy Fund ("Galaxy"), each dated
February 29, 1996, 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.
(formerly known as The Shareholder Services Group, Inc. d/b/a 440 Financial)
4400 Computer Drive, Westboro, Massachusetts 01581-5108 or by calling Galaxy at
(800) 628-0414. Capitalized terms used herein but not otherwise defined have the
same meanings as in the Prospectuses.

<PAGE> 181
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE GALAXY FUND 1
INVESTMENT OBJECTIVES AND POLICIES 1
Acceptable Investments - Money Market Funds 1
Types of Acceptable Investments - Money Market Funds 2
Types of Investments - Equity Funds 2
Money Market Instruments 3
U.S. Government Obligations 3
When-Issued Securities and Delayed Settlement
Transactions 4
Stand-By Commitments 4
Munipreferred Securities 5
Variable Rate Demand Notes 5
Temporary Investments 5
Restricted and Illiquid Securities 6
Repurchase Agreements, Reverse Repurchase Agreements and
Lending of Portfolio Securities 7
Derivative Securities 8
Portfolio Securities Generally 11
Portfolio Turnover 11
Special Considerations Relating to Connecticut
Municipal Securities 12
Additional Investment Limitations 13

NET ASSET VALUE - CONNECTICUT MUNICIPAL MONEY MARKET AND
MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS 18

DIVIDENDS - MONEY MARKET FUNDS 19

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 20

DESCRIPTION OF SHARES 21

ADDITIONAL INFORMATION CONCERNING TAXES 24
In General 24
Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds 27
Growth and Income and Small Cap Value Funds 27
Taxation of Certain Financial Instruments 27
State Taxation 29
Connecticut State Income Tax 29
Massachusetts State Income Tax 30

TRUSTEES AND OFFICERS 31
Shareholder and Trustee Liability 34

ADVISORY, ADMINISTRATION, CUSTODIAN AND TRANSFER AGENCY AGREEMENTS 35
Custodian and Transfer Agent 38
</TABLE>
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<TABLE>
<S> <C>
PORTFOLIO TRANSACTIONS 39

SHAREHOLDER SERVICES PLAN 41

DISTRIBUTION AND SERVICES PLAN 42

EXPENSES 43

DISTRIBUTOR 43

AUDITORS 44

COUNSEL 44

PERFORMANCE AND YIELD INFORMATION 44
Yield Quotations -- Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds 44

Tax-Equivalency Tables - Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds 45

Yield and Performance of the Growth and
Income and Small Cap Value Funds 48

MISCELLANEOUS 52
FINANCIAL STATEMENTS 53
APPENDIX A A-1
APPENDIX B B-1
</TABLE>

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THE GALAXY FUND

The Galaxy Fund ("Galaxy") is an open-end management company currently
offering shares of beneficial interest in twenty-four investment portfolios: the
Money Market Fund, Government Fund, Tax-Exempt Fund, U.S. Treasury Fund,
Institutional Treasury Money Market Fund, Connecticut Municipal Money Market
Fund, Massachusetts Municipal Money Market Fund, Short-Term Bond Fund,
Intermediate Government Income Fund, Corporate Bond Fund, High Quality Bond
Fund, Tax-Exempt Bond Fund, New York Municipal Bond Fund, Connecticut Municipal
Bond Fund, Massachusetts Municipal Bond Fund, Rhode Island Municipal Bond Fund,
Equity Value Fund, Equity Growth Fund, Equity Income Fund, International Equity
Fund, Small Company Equity Fund, Asset Allocation Fund, Growth and Income Fund
and Small Cap Value Fund. This Statement of Additional Information provides
additional investment information with respect to the Connecticut Municipal
Money Market Fund and Massachusetts Municipal Money Market Fund (collectively,
the "Money Market Funds"), and with respect to the Growth and Income Fund and
Small Cap Value Fund (collectively, the "Equity Funds") (the Money Market Funds
and Equity Funds are referred to herein collectively as the "Funds") and should
be read in conjunction with the current Prospectuses for the Funds.

The Connecticut Municipal Money Market, Massachusetts Municipal Money Market,
Growth and Income and Small Cap Value Funds commenced operations on October-4,
1993, October-5, 1993, December-14, 1992 and December-14, 1992, respectively, as
separate investment portfolios (the "Predecessor Connecticut Municipal Money
Market Fund," "Predecessor Massachusetts Municipal Money Market Fund,"
"Predecessor Growth and Income Fund" and "Predecessor Small Cap Value Fund,"
respectively, and collectively, the "Predecessor Funds") of The Shawmut Funds,
which was organized as a Massachusetts business trust. On December 4, 1995,
the Predecessor Funds were reorganized as new portfolios of Galaxy. Prior to the
reorganization, the Predecessor Funds offered and sold shares of beneficial
interest that were similar to Galaxy's Trust Shares and Retail A Shares.

INVESTMENT OBJECTIVES AND POLICIES

ACCEPTABLE INVESTMENTS - MONEY MARKET FUNDS

The Connecticut Municipal Money Market Fund invests primarily in debt
obligations issued by or on behalf of Connecticut and of other states,
territories, and possessions of the United States, including the District of
Columbia, and any political subdivision or financing authority of any of these,
the income from which is, in the opinion of qualified legal counsel, exempt from
both federal regular income tax and Connecticut

<PAGE> 184

state income tax imposed upon non-corporate taxpayers ("Connecticut Municipal
Securities").

The Massachusetts Municipal Money Market Fund invests primarily in debt
obligations issued by or on behalf of the Commonwealth of Massachusetts and of
other states, territories, and possessions of the United States, including the
District of Columbia, and any political subdivision or financing authority of
any of these, the income from which is, in the opinion of qualified legal
counsel, exempt from both federal regular income tax and income taxes imposed by
the Commonwealth of Massachusetts imposed upon non-corporate taxpayers
("Massachusetts Municipal Securities").

From time to time, such as when suitable municipal securities are not
available, the Money Market Funds may invest a portion of their respective
assets in cash. Any portion of a Money Market Fund's assets maintained in cash
will reduce the amount of assets in municipal securities and thereby reduce the
Money Market Fund's yield.

TYPES OF ACCEPTABLE INVESTMENTS - MONEY MARKET FUNDS

Examples of municipal securities are:

* municipal notes and commercial paper;

* general obligation serial bonds sold with differing
maturity dates;

* refunded municipal bonds; and

* all revenue bonds, including industrial development bonds.

TYPES OF INVESTMENTS - EQUITY FUNDS

The Growth and Income Fund invests principally in a professionally-managed and
diversified portfolio of common stocks of companies with prospects for above
average growth and dividends or of companies where significant fundamental
changes are taking place. The Growth and Income Fund will seek to invest in
equity securities of companies that are projected to show earnings growth
superior to the Standard-& Poor's 500 Composite Stock Index. Although the Growth
and Income Fund may invest in other securities and in money market instruments,
it is the Growth and Income Fund's policy, under normal market conditions, to
invest at least 65% of its assets in equity securities. The securities in which
the Growth and Income Fund may invest include foreign securities, as described
in the Prospectuses.

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The Small Cap Value Fund invests primarily in a diversified portfolio of
equity securities of companies that have a market value capitalization of up to
$1 billion to achieve long-term capital appreciation and current income. Under
normal circumstances, the Small Cap Value Fund will invest at least 65% of its
total assets in growth and income equity securities. In addition, the Small Cap
Value Fund may invest as described below, and as described in the Prospectuses.

The Equity Funds intend to limit their respective investments in foreign
securities, which are not freely traded on United States securities exchanges or
the over-the-counter market in the form of depository receipts, to no more than
5% of their respective total assets.

MONEY MARKET INSTRUMENTS

The Equity Funds may invest in the following money market instruments:

* instruments of domestic banks and savings and loans if they have capital,
surplus, and undivided profits of over $100,000,000, or if the principal
amount of the instrument is insured in full by the Federal Deposit
Insurance Corporation; and

* prime commercial paper (rated A-1 by Standard & Poor's Ratings Group,
Prime-1 by Moody's Investors Service, Inc., or F-1 by Fitch Investors
Service, L.P.)

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. Government obligations in which the Equity Funds may invest
generally include direct obligations of the U.S. Treasury (such as U.S. Treasury
bills, notes, and bonds) and obligations issued or guaranteed by U.S. Government
agencies or instrumentalities. These securities are backed by:

* the full faith and credit of the U.S. Treasury;

* the issuer's right to borrow an amount limited to a specific
line of credit from the U.S. Treasury;

* the discretionary authority of the U.S. Government to purchase
certain obligations of agencies or instrumentalities; or

* the credit of the agency or instrumentality issuing the
obligations.

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<PAGE> 186

Examples of agencies instrumentalities that are permissible investments and
may not always receive financial support from the U.S Government are:

* Federal Farm Credit Banks;

* Federal Home Loan Banks;

* Federal National Mortgage Association;

* Student Loan Marketing Association; and

* Federal Home Loan Mortgage Corporation.

WHEN-ISSUED SECURITIES AND DELAYED SETTLEMENT TRANSACTIONS

When a Fund agrees to purchase securities on a "when-issued" 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.

When a Fund engages in "when-issued" 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

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

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commitment," its cost will be reflected as unrealized depreciation for the
period during which the commitment is held by the Fund.

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

MUNIPREFERRED SECURITIES

The Money Market Funds may purchase interests in municipal securities that are
offered in the form of a security representing a diversified portfolio of
investment grade bonds. These securities provide investors, such as the Money
Market Funds, with liquidity and income exempt from federal regular income tax
and some state income taxes.

VARIABLE RATE DEMAND NOTES

Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable rate municipal securities than for fixed
income obligations.

The terms of these variable rate demand instruments require payment of
principal and accrued interest from the issuer of the municipal obligations, the
issuer of the participation interest or a guarantor of either issuer.

TEMPORARY INVESTMENTS

The Money Market Funds may also invest in high quality temporary investments
during times of unusual market conditions for defensive purposes.

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<PAGE> 188

From time to time, such as when suitable municipal statements are not
available, the Money Market Funds may invest a portion of their respective
assets in cash. Any portion of the Money Market Funds assets maintained in cash
will reduce the amount of assets in municipal securities and thereby reduce the
Funds' respective yields.

RESTRICTED AND ILLIQUID SECURITIES

The Equity Funds may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933. Section 4(2) commercial paper is restricted as to disposition under
federal securities law and is generally sold to institutional investors, such as
the Equity Funds, who agree that they are purchasing the paper for investment
purposes and not with a view to public distribution. Any resale by the purchaser
must be in an exempt transaction. Section 4(2) commercial paper is normally
resold to other institutional investors like the Equity Funds through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The Equity Funds believe that
Section 4(2) commercial paper and possibly certain other restricted securities
that meet the criteria for liquidity established by the Trustees are quite
liquid. The Equity Funds intend, therefore, to treat the restricted securities
that meet the criteria for liquidity established by the Trustees, including
Section 4(2) commercial paper (as determined by the Equity Funds' Investment
Adviser), as liquid and not subject to the investment limitation applicable to
illiquid securities. In addition, because Section 4(2) commercial paper is
liquid, the Equity Funds do not intend to subject such paper to the limitation
applicable to restricted securities.

The ability of the Board of Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
(the "SEC") Staff position set forth in the adopting release for Rule 144A under
the Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive,
safe-harbor for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities laws. The Rule
provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under the Rule. The Trust, on behalf of the Equity Funds, believes that the
Staff of the SEC has left the question of determining the liquidity of all
restricted securities (eligible for resale under Rule 144A) for determination to
the Board of Trustees. The Trustees consider the following criteria in
determining the liquidity of certain restricted securities:

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<PAGE> 189

* the frequency of trades and quotes for the security;

* the number of dealers willing to purchase or sell the
security and the number of other potential buyers;

* dealer undertakings to make a market in the security; and

* the nature of the security and the nature of the marketplace trades.

Investing in Rule 144A securities could have the effect of increasing the level
of a Fund's illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities. The Funds
expect that less than 5% of their respective net assets will be invested in Rule
144A securities during the current fiscal year.

REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS AND LENDING
OF PORTFOLIO SECURITIES

Each Fund may enter into repurchase agreements, which are arrangements in
which banks, broker/dealers, and other recognized financial institutions sell
U.S. Government securities or other securities to the Funds and agree at the
time of sale to repurchase them at a mutually agreed upon time and price within
one year from the date of acquisition. A Fund requires its custodian to take
possession of the securities subject to repurchase agreements and these
securities are marked to market daily. To the extent that the original seller
does not repurchase the securities from a Fund, the Fund could receive less than
the repurchase price on any sale of such securities. In the event that such a
defaulting seller filed for bankruptcy or became insolvent, disposition of such
securities by a Fund might be delayed pending court action. The Funds believe
that, under the regular procedures normally in effect for custody of a Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Funds will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker/dealers, which
are deemed by the Funds' Investment Adviser to be creditworthy pursuant to
guidelines established by the Board of Trustees.

The Equity Funds may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus

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interest at an agreed upon rate. The use of reverse repurchase agreements may
enable a Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Fund will be able to avoid
selling portfolio instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of a Fund in a
dollar amount sufficient to make payment for the obligations to be purchased are
segregated at the trade date. These securities are marked to market daily and
are maintained until the transaction is settled.

The collateral received when the Equity Funds lend portfolio securities must
be valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Funds. During the time
portfolio securities are on loan, the borrower pays a Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Funds or the borrower. The Funds may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.

DERIVATIVE SECURITIES

PUT AND CALL OPTIONS

An Equity Fund may purchase and sell put options on its portfolio securities
as described in the Prospectuses.

STOCK INDEX FUTURES AND OPTIONS

The Equity Funds may utilize stock index futures contracts and options on
stocks, stock indices, and stock index futures contracts for the purposes of
managing cash flows into and out of a Fund's portfolio and potentially reducing
transactional costs. The Funds may not use stock index futures contracts and
options for speculative purposes.

As a means of reducing fluctuations in the net asset value of shares of the
Equity Funds, the Funds may attempt to hedge all or a portion of their
respective portfolios through the purchase of listed put options on stocks,
stock indices and stock index futures contracts. These options will be used as a
form of forward pricing to protect portfolio securities against decreases in
value resulting from market factors, such as an anticipated increase in interest
rates. A purchased put option gives the Funds, in return for a premium, the
right to sell the underlying security to the writer (seller) at a specified
price during the term of the option. Put options on stock indices are similar to

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put options on stocks except for the delivery requirements. Instead of giving
the Funds the right to make delivery of stock at a specified price, a put option
on a stock index gives the Funds, as holders, the right to receive an amount of
cash upon exercise of the option.

The Equity Funds may also write covered call options. As the writer of a call
option, the Funds have the obligation upon exercise of the option during the
option period to deliver the underlying security upon payment of the exercise
price.

An Equity Fund may only: (1) buy listed put options on stock indices and stock
index futures contracts; (2) buy listed put options on securities held in its
portfolio; and (3) sell listed call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any such
additional consideration). A Fund will maintain its positions in securities,
option rights, and segregated cash subject to puts and calls until the options
are exercised, closed or expired. A Fund may also enter into stock index futures
contracts. A stock index futures contract is a bilateral agreement which
obligates the seller to deliver (and the purchaser to take delivery of) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock index at the close of trading of the contract and
the price at which the agreement is originally made. There is no physical
delivery of the stocks constituting the index, and no price is paid upon
entering into a futures contract.

In general, option contracts are closed out prior to their expiration. An
Equity Fund, when purchasing or selling a futures contract, will initially be
required to deposit in a segregated account in the broker's name with the Fund's
custodian an amount of cash or U.S. government securities approximately equal to
5% - 10% of the contract value. This amount is known as "initial margin," and it
is subject to change by the exchange or board of trade on which the contract is
traded. Subsequent payments to and from the broker are made on a daily basis as
the price of the index or the securities underlying the futures contract
fluctuates. These payments are known as "variation margins," and the fluctuation
in value of the long and short positions in the futures contract is a process
referred to as "marking to market." A Fund may decide to close its position on a
contract at any time prior to the contract's expiration. This is accomplished by
the Fund taking an opposite position at the then prevailing price, thereby
terminating its existing position in the contract. Because the initial margin
resembles a performance bond or good-faith deposit on the contract, it is
returned to the Fund upon the termination of the contract, assuming that all
contractual obligations have been satisfied. Therefore, the margin utilized in
futures contracts is readily distinguishable from the margin

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employed in security transactions, since the margin employed in futures
contracts does not involve the borrowing of funds to finance the transaction.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS

An Equity Fund will not enter into futures contracts to the extent that,
immediately thereafter, the sum of its initial margin deposits on open contracts
exceeds 5% of the market value of its total assets. Further, an Equity Fund will
enter into stock index futures contracts only for bona fide hedging purposes or
such other purposes permitted under Part 4 of the regulations promulgated by the
Commodity Futures Trading Commission. Also, an Equity Fund may not enter into
stock index futures contracts and options to the extent that the value of such
contracts would exceed 20% of the Fund's total net assets and may not purchase
put options to the extent that more than 5% of the value of the Fund's total
assets would be invested in premiums on open put option positions.

INDEXED SECURITIES

The Equity Funds may invest in indexed securities whose value is linked to
foreign currencies, interest rates, commodities, indices or other financial
indicators. Most indexed securities are short--to intermediate-term fixed-income
securities whose values at maturity or interest rates rise or fall according to
the change in one or more specified underlying instruments. Indexed securities
may be positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument or to
one or more options on the underlying instrument. Indexed securities may be more
volatile than the underlying instrument itself.

SWAP AGREEMENTS

As one way of managing their exposure to different types of investments, the
Equity Funds may enter into interest rate swaps, currency swaps, and other types
of swap agreements such as caps, collars, and floors. In a typical interest rate
swap, one party agrees to make regular payments equal to a floating interest
rate times a "notional principal amount," in return for payments equal to a
fixed rate times the same amount, for a specified period of time. If a swap
agreement provides for payments in different currencies, the parties might agree
to exchange notional principal amount as well. Swaps may also depend on other
prices or rates, such as the value of an index or mortgage prepayment rates.

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In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer or an interest rate cap rate falls below an
agreed upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements will tend to shift the Equity Funds' investment exposure from
one type of investment to another. For example, if an Equity Fund agreed to
exchange payments in dollars for payments in foreign currency, the swap
agreement would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and floors
have an effect similar to buying or writing options. Depending on how they are
used, swap agreements may increase or decrease the overall volatility of an
Equity Fund's investments and its share price and yield.

Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on the
Equity Funds' performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. The Equity Funds may also suffer
losses if they are unable to terminate outstanding swap agreements or reduce
their exposure through offsetting transactions.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Because the Equity Funds 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 Funds 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. An Equity 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 an Equity
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 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

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and is traded at a net price without commission. Neither spot transactions nor
forward foreign currency exchange contracts eliminate fluctuations in the prices
of a Fund's portfolio securities or in foreign exchange rates, or prevent loss
if the prices of these securities should decline.

The Equity Funds 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 a Fund's long-term investment
decisions, the Equity Funds 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 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.

PORTFOLIO SECURITIES GENERALLY

Subsequent to its purchase by a Fund an issue of securities may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Board of Trustees or the Investment Adviser, pursuant
to guidelines established by the Board, will promptly consider such an event in
determining whether the Fund involved should continue to hold the obligation.
The Board of Trustees or the Investment Adviser may continue to hold the
obligation if retention is in accordance with the interests of the particular
Fund and applicable regulations of the Securities and Exchange Commission.

PORTFOLIO TURNOVER

A 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

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bearing on the desirability of continuing to hold such investments. A high rate
of portfolio turnover involves correspondingly greater brokerage commission
expenses and other transaction costs, which must be ultimately borne by the
Fund's shareholders.

SPECIAL CONSIDERATIONS RELATING TO CONNECTICUT MUNICIPAL SECURITIES

The ability of the issuers of Connecticut Municipal Securities to pay the
principal and interest on their obligations may be impacted by a variety of
factors relating to the economy of Connecticut and to the fiscal stability of
issuers of Connecticut Municipal Securities. The latter may include such matters
as the ability of issuers to raise sufficient tax and other revenues to meet
their needs, the availability of aid from other governmental bodies, and the
burdens that may be imposed on issuers by law or necessity. To the extent that
the Connecticut Municipal Money Market Fund invests in obligations that are not
general obligations of their issuers, payments of principal and interest will
depend on all factors affecting the revenue sources from which payments thereon
are to be derived. The value of the obligations held by the Fund would be
adversely affected not only by any actual inability of their issuers to pay the
principal and interest thereon, but also by a public perception that such
ability is in doubt.

Investors should be aware that manufacturing was historically the most
important economic activity within Connecticut but, in terms of number or
persons employed, has steadily declined in the last ten years. Defense-related
business has typically represented a relatively high proportion of the
manufacturing sector, with defense awards to Connecticut traditionally being
among the highest in the nation on a per capita basis; reductions in defense
spending now underway threaten to have a substantial and permanent adverse
impact on Connecticut's economy. While unemployment in Connecticut as a whole
has generally remained below the national level, certain geographic areas in the
State have been affected by high unemployment and poverty.

The State derives over 70 percent of its revenues from taxes imposed by it.
The two major taxes have been the sales and use tax and the corporation business
tax, each of which is sensitive to changes in the level of economic activity in
Connecticut. Because of several consecutive annual operating deficits in the
State's general fund, Connecticut's first general income tax was enacted in 1991
and has now superseded them in importance.

The tax revenues of Connecticut municipalities are derived only from ad
valorem taxes on real and tangible personal property. Problems inherent with
these taxes impose practical

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limitations on the ability of Connecticut municipalities to raise additional
tax revenues. The U.S. Census Bureau reports that, at the time of the 1990
census, Connecticut's capital city of Hartford was the eighth poorest city in
the nation based on the percentage of its residents living in poverty; the same
report indicates that four of Connecticut's largest cities ranked among the 130
poorest cities in the nation by the same measure.

ADDITIONAL INVESTMENT LIMITATIONS

1. No Fund may sell any securities short or purchase any securities on margin,
but each Fund may obtain such short-term credits as may be necessary for
clearance of transactions, in the case of a Money Market Fund, or the clearance
of purchases and sales of portfolio securities, in the cash of an Equity Fund. A
deposit or payment by an Equity Fund of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.

2. No Fund may issue senior securities except that each Fund may borrow money or
engage in reverse repurchase agreements in amounts up to one-third of the value
of its total assets, including the amounts borrowed; and except to the extent
that the Equity Funds may enter into futures contracts. No Fund will borrow
money or engage in reverse repurchase agreements for investment leverage, but
rather as a temporary, extraordinary, or emergency measure to facilitate
management of the portfolio by enabling a Fund to meet redemption requests when
the liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. No Fund will purchase any securities while borrowings in excess
of 5% of its total assets are outstanding.

3. No Fund may mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. In those cases, a Fund may only mortgage, pledge, or
hypothecate assets having a market value not exceeding 10% of the value of total
assets at the time of purchase. For purposes of this limitation, the following
will not be deemed to be pledges of an Equity Fund's assets: (a) the deposit of
assets in escrow in connection with the writing of covered put or call options
and the purchase of

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<PAGE> 197
securities on a when-issued basis; and (b) collateral arrangements with respect
to: (i) the purchase and sale of stock options (and options on stock indices)
and (ii) initial or variation margin for futures contracts. Margin deposits
from the purchase and sale of futures contracts and related options are not
deemed to be a pledge.

4. No Fund may purchase or sell real estate or real estate limited partnerships,
although each Fund may invest in securities of issuers whose business involves
the purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.

5. No Fund may purchase or sell commodities, commodity contracts, or commodity
futures contracts except to the extent that an Equity Fund may engage in
transactions involving financial futures contracts or options on financial
futures contracts.

6. No Fund may underwrite any issue of securities, except as a Fund may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with its investment objective, policies and
limitations.

7. No Fund may lend any of its assets except that a Money Market Fund may
acquire publicly or non-publicly issued Connecticut or Massachusetts Municipal
Securities (as defined in their Prospectuses) or temporary investments or enter
into repurchase agreements, in accordance with their respective investment
objectives, policies, limitations and the Trust's Declaration of Trust; and
except that an Equity Fund may lend portfolio securities up to one-third the
value of its total assets. This limitation shall not prevent an Equity Fund from
purchasing or holding money market instruments, repurchase agreements,
obligations of the U.S. Government, its agencies or instrumentalities, variable
rate demand notes, bonds debentures, notes, certificates of indebtedness, or
certain debt instruments as permitted by its investment objective, policies and
limitations or the Trust's Declaration of Trust.

8. With respect to at least 50% of its total assets, a Money Market Fund will
invest no more than 5% of its total assets in the securities of a single issuer
and no more than 25% of its total assets in the securities of a single issuer at
the close of each quarter of each fiscal year. Under this limitation, each
governmental subdivision, including states, territories, possessions

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of the United States, or their political subdivisions, agencies, authorities,
instrumentalities, or similar entities will be considered a separate issuer if
its assets and revenues are separate from those of the governmental body
creating it and the security is backed only by its own assets and revenues.
Industrial development bonds backed only by the assets and revenue of a
nongovernmental user are considered to be issued solely by that user. If, in
the case of an industrial development bond or government-issued security, a
governmental or other entity guarantees the security, such guarantee would be
considered a separate security issued by the guarantor, as well as the other
issuer, subject to limited exclusions allowed by the 1940 Act.

9. With respect to securities comprising 75% of the value of its total assets,
no Equity Fund will purchase securities issued by any one issuer (other than
cash, cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities) if, as a result, more than 5% of the value of
its total assets would be invested in the securities of that issuer. An Equity
Fund will not acquire more than 10% of the outstanding voting securities of any
one issuer.

10. No Money Market Fund may purchase securities, if, as a result of such
purchase, 25% or more of the value of the Fund's total assets would be invested
in any one industry or in industrial development bonds or other securities, the
interest upon which is paid from revenues of similar types of projects. However,
a Money Market Fund may invest as temporary investments more than 25% of the
value of its assets in cash or cash items, securities issued or guaranteed by
the U.S. Government, its agencies, or instrumentalities, or instruments secured
by these money market instruments and repurchase agreements.

11. No Equity Fund will invest 25% of more of the value of its total assets in
any one industry (other than securities issued by the U.S. Government, its
agencies or instrumentalities). However, an Equity Fund may invest as temporary
investments more than 25% of the value of its assets in cash or cash items,
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or instruments secured by these money market instruments,
such as repurchase agreements.

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<PAGE> 199

12. No Money Market Fund will invest more than 10% of its net assets in
securities subject to restrictions on resale under the Securities Act of 1933.

The following limitations may be changed by Galaxy's Board of Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.

13. Each Fund will limit its investments in other investment companies to not
more than 3% of the total outstanding voting stock of any investment company;
will invest no more than 5% of its total assets in any one investment company;
and will invest no more than 10% of its total assets in investment companies in
general. However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, reorganization, or acquisition of assets.

The Money Market Funds will limit their respective investments in the securities
of other investment companies to those of money market funds which are of
comparable or better portfolio quality and have investment objectives and
policies similar to their own. Rule 2a-7 under the 1940 Act requires that the
Money Market Funds limit their investments to instruments that, in the opinion
of the Trustees, present minimal credit risk and that, if rated, meet minimum
rating standards set forth in Rule 2a-7 under the 1940 Act. If the instruments
are not rated, the Trustees must determine that they are of comparable quality.
Shares of investment companies purchased by the Money Market Funds will meet
these same criteria and will have investment policies consistent with Rule 2a-7
of the 1940 Act. Fleet will waive its investment advisory fee on assets invested
by the Money Market Funds in open-end investment companies.

The Equity Funds will purchase the securities of other investment companies only
in open market transactions involving only customary broker's commissions. It
should be noted that investment companies incur certain expenses such as
management fees, and therefore any investment by an Equity Fund in shares of
another investment company would be subject to such duplicate expenses.

14. No Fund may purchase or retain the securities of any issuer if the officers
and Trustees of the Trust or the Investment Adviser, owning individually more
than 1/2

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of 1% of the issuer's securities, together own more than 5% of the
issuer's securities.

15. No Fund may purchase or sell interests in oil, gas, or other mineral
exploration or development programs orleases; except that the Equity Funds may
purchase the securities of issuers which invest in or sponsor such programs.

16. No Money Market Fund may purchase or sell puts, calls, straddles, spreads,
or any combination thereof, except that each such Fund may purchase municipal
securities accompanied by agreements of sellers to repurchase them at the Fund's
option.

17. No Equity Fund may purchase put options on securities, unless the securities
are held in the Fund's portfolio and not more than 5% of the value of the Fund's
total assets would be invested in premiums on open put option positions.

18. No Equity Fund may write call options on securities, unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the amount
of any further payment. No Equity Fund may write call options in excess of 5% of
the value of its total assets.

19. No Equity Fund may invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of continuous
operations, including the operation of any predecessor.

20. No Money Market Fund may invest more than 5% of the value of its total
assets in industrial development bonds where the payment of principal and
interest are the responsibility of companies (or guarantors, where applicable)
with less than three years of continuous operations, including the operation of
any predecessor.

21. No Money Market Fund may invest more than 10%, and no Equity Fund will
invest more than 15%, of the value of its respective net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice, non-negotiable fixed time deposits with maturities
over seven days, and certain securities not determined by the Board of Trustees
to be liquid.

22. No Equity Fund may invest more than 10% of its total assets in securities
subject to restrictions on resale

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under the Securities Act of 1933, except for commercial paper issued under
Section 4(2) of the Securities Act of 1933 and certain other restricted
securities which meet the criteria for liquidity as established by the Board of
Trustees.

23. No Equity Fund may invest in companies for the purpose of exercising
management or control.

24. No Equity Fund may invest more than 5% of its net assets in warrants. No
more than 2% of this 5% may be warrants which are not listed on the New York
Stock Exchange.

Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in violation of
such restriction.

For purposes of their respective policies and limitations, the Funds consider
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash items."

The Predecessor Funds did not borrow money or pledge securities in excess of
5% of their respective net assets during the past fiscal year, and the Funds do
not intend to borrow money in excess of 5% of the value of their respective net
assets or invest more than 5% of their respective total assets in securities of
foreign issuers during the next twelve months.

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.

NET ASSET VALUE -- CONNECTICUT MUNICIPAL MONEY MARKET AND
MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS

Galaxy uses the amortized cost method of valuation to value shares of the
Money Market Funds. In order to use the amortized cost method, the Funds comply
with the various quality and maturity restrictions specified in Rule 2a-7
promulgated under the 1940 Act. Pursuant to this method, a security is valued at
its initial acquisition cost, as adjusted for amortization of premium or
accretion of discount, regardless of the impact of fluctuating interest rates on
the market value of the security. Where it is not appropriate to value a
security by the amortized cost method, the security will be valued either by
market

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quotations or by fair value as determined by or under the direction of Galaxy's
Board of Trustees. This method may result in periods during which value, as
determined by amortized cost, is higher or lower than the price a Fund would
receive if it sold the security. The value of securities in each of these Funds
can be expected to vary inversely with changes in prevailing interestrates.
Thus, if interest rates have increased from the time a security was purchased,
such security, if sold, might be sold at a price less than its cost. Similarly,
if interest rates have declined from the time a security was purchased, such
security, if sold, might be sold at a price greater than its purchase cost. In
either instance, if the security is held to maturity, no gain or loss will be
realized.

The Money Market Funds invest only in instruments that meet the applicable
quality requirements of Rule 2a-7 and maintain a dollar-weighted average
portfolio maturity appropriate to their objective of maintaining a stable net
asset value per share, provided that none of these Funds will purchase any
security deemed to have a remaining maturity (as defined in the 1940 Act) of
more than thirteen months nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. Galaxy's Board of Trustees has established
procedures reasonably designed, taking into account current market conditions
and each Fund's investment objective, to stabilize the net asset value per share
of each Money Market Fund for purposes of sales and redemptions at $1.00. These
procedures include review by the Board of Trustees, at such intervals as it
deems appropriate, to determine the extent, if any, to which the net asset value
per share of each Fund, calculated by using available market quotations,
deviates from $1.00 per share. In the event such deviation exceeds one-half of
one percent, the Board of Trustees will promptly consider what action, if any,
should be initiated. If the Board of Trustees believes that the extent of any
deviation from a Fund's $1.00 amortized cost price per share may result in
material dilution or other unfair results to new or existing investors, it has
agreed to take such steps as it considers appropriate to eliminate or reduce, to
the extent reasonably practicable, any such dilution or unfair results. These
steps may include selling portfolio instruments prior to maturity; shortening
the average portfolio maturity; withholding or reducing dividends; redeeming
shares in kind; reducing the number of a Fund's outstanding shares without
monetary consideration; or utilizing a net asset value per share determined by
using available market quotations.

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DIVIDENDS -- MONEY MARKET FUNDS

As stated, Galaxy uses its best efforts to maintain the net asset value per
share of each Money Market Fund at $1.00. As a result of a significant expense
or realized or unrealized loss incurred by any of the Funds, it is possible that
a Fund's net asset value per share may fall below $1.00. Should Galaxy incur or
anticipate any unusual or unexpected significant expense or loss which would
affect disproportionately the income of a Fund for a particular period, the
Board of Trustees would at that time consider whether to adhere to the present
dividend policy with respect to these Funds or to revise it in order to
ameliorate to the extent possible the disproportionate effect of such expense
or loss on the income of the Fund experiencing such effect. Such expense or
loss may result in a shareholder's receiving no dividends for the period in
which it holds shares of a Fund and in its receiving upon redemption a price
per share lower than that which it paid.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

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. As described in the
respective Prospectuses, Shares of the Money Market Funds, Retail A Shares of
the Equity Funds and Retail B Shares of the Growth and Income Fund are sold to
customers ("Customers") of Fleet Brokerage Securities, Inc., Fleet Securities,
Inc., Fleet Financial Group, Inc. ("Fleet Group"), its affiliates, their
correspondent banks, and other qualified banks, savings and loan associations
and broker/dealers ("Institutions"). As described in the applicable
Prospectuses, Retail A Shares of the Equity Funds, Shares of the Money Market
Funds and Retail B Shares of the Growth and Income Fund may also be sold to
individuals or corporations, who submit a purchase application to Galaxy,
purchasing either for their own accounts or for the accounts of others ("Direct
Investors"). In addition, Trust Shares in the Equity Funds are offered to
investors maintaining qualified accounts at bank and trust institutions,
including institutions affiliated with Fleet Financial Group, Inc.

Retail A Shares of the Equity Funds are sold to Direct Investors and Customers
at the public offering price based on a Fund's net asset value plus a front-end
sales charge as described in the applicable Prospectuses. Retail B Shares of the
Growth and Income Fund are sold to Direct Investors and Customers at the net
asset value next determined after a purchase order is received but are subject
to a contingent deferred sales charge which is payable on redemption of such
shares as described in the applicable Prospectuses.

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Retail A Shares of the Growth and Income and Small Cap Value Funds are offered
for sale with a maximum front-end sales charge of 3.75%, with certain exceptions
as described in the applicable Prospectus. An illustration of the computation of
the offering price per share of the Funds, using the value of each Predecessor
Fund's net assets and number of outstanding securities at the close of business
on October 31, 1995, is as follows:

<TABLE>
<CAPTION>
Growth and Small Cap
Income Fund Value Fund
------------ ------------
<S> <C> <C>
Net Assets $ 51,078,123 $ 27,545,997
Outstanding Shares 4,136,925 2,173,105

Net Asset Value Per
Share $ 12.35 $ 12.68

Sales Charge (3.75% of
the offering price) $ 0.48 $ 0.49

Offering to Public $ 12.83 $ 13.21
</TABLE>

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,

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Government Fund, Tax-Exempt Fund, U.S. Treasury Fund, Institutional Treasury
Money Market Fund, Connecticut Municipal Money Market Fund, Massachusetts
Municipal 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, Corporate Bond Fund, High Quality
Bond Fund, Tax-Exempt BondFund, 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 Money Market Fund, Government Fund,
Tax-Exempt Fund, U.S. Treasury Fund, Equity Funds and Bond Funds (plus a third
series of shares, i.e. Retail B Shares, of the Tax-Exempt Bond Fund, Short-Term
Bond Fund, High Quality Bond Fund, Equity Value Fund, Equity Growth Fund, Small
Company Equity Fund, Asset Allocation Fund and Growth and Income Fund) 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 the Equity Funds and to all
Shares of the Connecticut Municipal Money Market and Massachusetts Municipal
Money Market Funds) and the Distribution and Services Plan for Retail B Shares
of the Growth and Income Fund, 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 Equity Fund's Retail A
Shares (all Shares of the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds) would be solely responsible for the Fund's
payments to Service Organizations under the Shareholder Services Plan. The
Growth and Income 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.

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

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<PAGE> 206

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 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.

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'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 that 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 that is equal to their net asset value and that 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

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<PAGE> 207

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 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 of Galaxy 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 of Galaxy 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.

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<PAGE> 208

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 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 businessof 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. However, 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. 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

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<PAGE> 209

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 than three months have 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 withrespect 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.

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<PAGE> 210

properly include on his or her return payments of taxable interest or
dividends, or (iii) has failed to certify to the 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."

CONNECTICUT MUNICIPAL MONEY MARKET AND MASSACHUSETTS MUNICIPAL
MONEY MARKET FUNDS

Shareholders are not required to pay the federal income tax on any dividends
received from the Funds that represent net interest on tax-exempt municipal
securities.

In the case of a corporate shareholder, dividends of the Funds that represent
interest on municipal securities may be subject to the 25% corporate alternative
minimum tax. The corporate alternative minimum tax treats 75% of the excess of a
taxpayer's pre-tax 'adjusted current earning' over the taxpayer's alternative
minimum taxable income as a tax preference item. Since 'earnings and profits'
generally includes the full amount of any Fund's dividend, and alternative
minimum taxable income does not include the portion of a Fund's dividend
attributable to municipal securities that are not private activity bonds, 75% of
the difference will be included in the calculation of the corporation's
alternative minimum tax.

Dividends of any of the Funds representing net interest income on some
temporary investments, and any realized net short-term gains are taxed as
ordinary income. Long-term capital gains distributions are taxed as long-term
capital gains, regardless of the length of time the Fund shares have been held
by the shareholder. These tax consequences apply whether dividends are received
in cash or as additional shares. Information on the tax status of dividends and
distributions is provided annually.

GROWTH AND INCOME AND SMALL CAP VALUE FUNDS

Shareholders are subject to federal income tax on dividends received as cash
or additional shares.

Capital gains experienced by the Funds could result in an increase in
dividends. Capital losses could result in a decrease in dividends.

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.
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<PAGE> 211

Generally, futures contracts and options on futures contracts held by the
Equity Funds and certain foreign currency contracts entered into by the Equity
Funds (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 and 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 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 which 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.

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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 a 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 an Equity 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
shares may apply.

Some of the non-U.S. dollar denominated investments that an Equity 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
acquisitions 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 non-equity 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 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 Equity 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

CONNECTICUT STATE INCOME TAX

As applied to Connecticut resident individuals, estates and trusts owning
shares in the Connecticut Municipal Money Market Fund, the Connecticut State
Income Tax taxes items of income derived from such shares in a variety of ways.

Distributions that are tax-exempt interest dividends under the federal income
tax are not subject to the Connecticut State Income Tax to the extent that such
distributions are derived from interest on obligations issued by or on behalf of
the State of Connecticut or its instrumentalities or by State municipalities
("Connecticut obligations"), or to the extent that such dividends are derived
from interest on obligations, the income from which federal law forbids the
state to tax. All other tax-exempt interest dividends distributed by the
Connecticut Municipal Money Market Fund are subject to the Connecticut State
Income Tax.

Regarding proper treatment of distributions from the Connecticut Municipal
Money Market Fund which are capital gains dividends for federal income tax
purposes and which are derived

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from the sale or exchange of Connecticut obligations, shareholders should
consult their local tax adviser.

All other distributions from the Connecticut Municipal Money Market Fund are
subject to the Connecticut State Income Tax.

For purposes of the Connecticut State Income Tax, a shareholder's Connecticut
tax basis in the shares of the Connecticut Municipal Money Market Fund will be
the federal adjusted tax basis of such shareholder, and any gain realized for
federal income tax purposes on the disposition of shares in the Connecticut
Municipal Money Market Fund will constitute taxable gain for purposes of the
Connecticut State Income Tax.

The Connecticut corporation business tax is imposed on corporations and
certain other entities. Distributions from the Connecticut Municipal Money
Market Fund to a shareholder subject to the Connecticut corporation business tax
are not eligible for the dividends received deduction under the Connecticut
corporation business tax and therefore are included in the taxable income of a
taxpayer to the extent such distributions are treated as either exempt-interest
dividends or capital gains dividends for federal income tax purposes. The
Connecticut Department of Revenue Services has issued a letter ruling which has
the effect of treating all other distributions from the Connecticut Municipal
Money Market Fund as eligible for the Connecticut corporation business tax
dividends received deduction. Any gain realized for federal income tax purposes
on the disposition of shares in the Connecticut Municipal Money Market Fund is
includable in the gross income of a shareholder subject to the Connecticut
corporation business tax.

MASSACHUSETTS STATE INCOME TAX

Individual shareholders of the Massachusetts Municipal Money Market Fund who
are subject to Massachusetts income taxation will not be required to pay
Massachusetts income tax on that portion of their dividends which is
attributable to interest earned on Massachusetts tax-free municipal obligations,
gain from the sale of certain of such obligations, interest earned on
obligations of the Untied States and interest earned on obligations of United
States territories or possessions to the extent interest on such obligations is
exempt from taxation by the state pursuant to federal law. All remaining
dividends will be subject to Massachusetts income tax.

If a shareholder of the Massachusetts Municipal Money Market Fund is a
Massachusetts business corporation or any foreign business corporation that
exercises its charter, qualifies to do business, actually does business or owns
or uses any part of its capital, plant or other property in Massachusetts, then
it will be subject to Massachusetts excise taxation either as a

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<PAGE> 214

tangible property corporation or as an intangible property corporation. If the
corporate shareholder is tangible property corporation, it will be taxed upon
its net income allocated to Massachusetts and the value of certain tangible
property. If it is an intangible property corporation, it will be taxed upon
its net income and net worth allocated to Massachusetts. Net income is gross
income less allowable deductions for federal income tax purposes, subject to
specified modifications. Dividends received from the Massachusetts Municipal
Money Market Fund are includable in gross income and generally may not be
deducted by a corporate shareholder in computing its net income. The
corporation's shares in the Massachusetts Municipal Money Market Fund are not
includable in the computation of the tangible property base of a tangible
property corporation, but are includable in the computation of the net worth
base of an intangible property corporation.

Shares of Massachusetts Municipal Money Market Fund will be exempt from local
property taxes in Massachusetts.

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:

<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
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
Age 61 Fire 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.
</TABLE>

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<PAGE> 215

<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
John T. O'Neill 1 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.

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.

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<PAGE> 216
<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
Bradford S. Wellman 1 Trustee Private Investor;
2468 Ohio Street President, Ames &
Bangor, ME 04401 Wellman, from 1978
Age 64 to 1991; President,
Pingree Associates,
Inc., from 1974 until
1990; Director,
Essex County

Gas Company, until January
1994; Director, Maine Mutual
Fire Insurance Co.; Member,
Maine Finance Authority;
Trustee, The Galaxy VIP Fund;
Trustee, Galaxy Fund II.

W. Bruce McConnel, III Secretary Partner of the
Philadelphia National law firm Drinker
Bank Building Biddle & Reath,
1345 Chestnut Street Philadelphia,
Philadelphia, PA 19107 Pennsylvania.
Age 52

Neil Forrest Vice Vice President
First Data Investor President Investment Marketing and
Services Group, Inc. and Strategic Planning,
4400 Computer Drive Assistant Manufacturers and Traders
Westboro, MA 01581-5108 Treasurer Trust Co. (1990-1992);
Age 35 First Data Investor
Services Group, Inc.
(1992 to present).

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 Accounting,
Westboro, MA 01581-5108 Fidelity Investments from
Age 37 1988 to 1990.
</TABLE>

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

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

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<PAGE> 217

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 aggregate annual fee in the amount of $3,000, and the
President and Treasurer 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 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) ("FDISG") 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 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 for the fiscal year ended October-31, 1995:

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<PAGE> 218

<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 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
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<PAGE> 219

liability is limited to circumstances in which Galaxy itself would
be unable to meet its obligations.

ADVISORY, ADMINISTRATION, CUSTODIAN AND
TRANSFER AGENCY AGREEMENTS

For the fiscal year ended October 31, 1995, Shawmut Bank, N.A. ("Shawmut"),
the investment adviser for the Predecessor Funds, earned the following advisory
fees: Predecessor Connecticut Municipal Money Market Fund, $544,556, of which
$177,977 was voluntarily waived and $35,932 was reimbursed in expenses;
Predecessor Massachusetts Municipal Money Market Fund, $168,602, of which
$108,318 was voluntarily waived and $46,320 was reimbursed in expenses;
Predecessor Growth and Income Fund, $2,067,505, of which $365,382 was
voluntarily waived; and Predecessor Small Cap Value Fund, $1,304,952, of which
$304,915 was voluntarily waived.

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<PAGE> 220

For the fiscal year ended October 31, 1994, Shawmut earned the following
advisory fees: Predecessor Connecticut Municipal Money Market Fund, $305,260, of
which $50,074 was voluntarily waived; Predecessor Massachusetts Municipal Money
Market Fund, $136,636 of which $20,737 was voluntarily waived; Predecessor
Growth and Income Fund, $1,720,866, of which $344,173 was voluntarily waived;
and Predecessor Small Cap Value Fund, $1,180,502, of which $295,126 was
voluntarily waived.

For the period from October 4, 1993 (date of initial public investment) to
October 31, 1993, Shawmut earned the following advisory fees: Predecessor
Connecticut Municipal Money Market Fund, $1,104, all of which was voluntarily
waived. For the period from October-5, 1993 (date of the initial public
investment) to October 31, 1993, Shawmut earned the following in advisory fees:
Predecessor Massachusetts Municipal Money Market Fund, $134, all of which was
voluntarily waived. For the period from December 14, 1992 (date of initial
public investment) to October 31, 1993, Shawmut earned the following advisory
fees: Predecessor Growth and Income Fund, $1,191,845, of which $319,550 was
voluntarily waived; and Predecessor Small Cap Value Fund, $817,430, of which
$230,774 was voluntarily waived.

In addition, Shawmut reimbursed other operating expenses for the period ended
October 31, 1993 and for the fiscal year ended October 31, 1994, for the
following Predecessor Funds: Predecessor Connecticut Municipal Money Market
Fund, $10,084 and $222,800, respectively, and Massachusetts Municipal Money
Market Fund, $9,261 and $149,809, respectively.

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 Equity Funds held by defined contribution plans. Pursuant to an
agreement between Fleet Trust Company and FDISG, 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 Equity Funds held by
defined contribution plans. For the performance of such Sub- Account Services,
Fleet Trust Company is paid $21 per year for each defined contribution plan
participant account. Sub-Account Services include 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 material Fund communications. FDISG bears this expense
directly, and shareholders of Trust Shares of the Equity Funds bear this
expense indirectly through fees paid to FDISG for transfer agency services.

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<PAGE> 221

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, 440 Financial, a
wholly-owned subsidiary of First Data Corporation, acquired all of the assets of
440 Financial Group of Worcester, Inc.

For the fiscal year ended October 31, 1995, Federated Administrative
Services ("Federated"), a subsidiary of Federated Investors, served as
administrator of the Predecessor Funds and earned the following fees:
Predecessor Connecticut Municipal Money Market Fund, $109,347, none of which
was voluntarily waived; Precedecessor Massachusetts Municipal Money Market
Fund, $50,000, none of which was voluntarily waived; Predecessor Growth and
Income Fund, $207,280, none of which was voluntarily waived; and Predecessor
Small Cap Value Fund, $131,149, none of which was voluntarily waived.

For the fiscal year ended October 31, 1994, Federated earned the following
administrative fees: Predecessor Connecticut Municipal Money Market Fund,
$77,039, of which $3,405 was voluntarily waived; Predecessor Massachusetts
Municipal Money Market Fund, $50,000, none of which was voluntarily waived;
Predecessor Growth and Income Fund, $184,829, none of which was voluntarily
waived; and Predecessor Small Cap Value Fund, $126,698, none of which was
voluntarily waived.

For the period from October 4, 1993 (date of initial public investment) to
October 31, 1993, Federated earned the following fees: Predecessor Connecticut
Municipal Money Market Fund, $265, all of which was voluntarily waived. During
the period from October 5, 1993 (date
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<PAGE> 222

of initial public investment) to October 31, 1993, Federated earned the
following fees: Predecessor Massachusetts Municipal Money Market Fund, $32, all
of which was voluntarily waived. For the period from December 14, 1992 (date of
initial public investment) to October 31, 1993, Federated earned the following
administrative fees: Predecessor Growth and Income Fund, $149,519, none of
which was voluntarily waived and Predecessor Small Cap Value Fund, $102,587,
none of which was voluntarily waived.

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 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 Equity Funds 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 those Funds held outside
the United States. The assets of the Funds are held under bank custodianship in
compliance with the 1940 Act.

Shawmut Bank, N.A., ("Shawmut") served as custodian to the Predecessor Funds
and was entitled to receive a fee based upon a sliding scale ranging from a
minimum of .011% to a maximum of .02% as a percentage of net Fund assets, plus
certain transaction costs.

For the fiscal year ended October 31, 1995, Shawmut, the former custodian to
the Predecessor Funds, earned the following fees: Predecessor Connecticut
Municipal Money Market Fund, $21,791, all of which was voluntarily waived;
Predecessor Massachusetts Municipal Money Market Fund, $12,000, all of which
was voluntarily waived; Predecessor Growth and Income Fund, $41,361, all of
which was voluntarily waived; and Predecessor Small Cap Value Fund, $26,112,
all of which was voluntarily waived.

For the fiscal year ended October 31, 1994, Shawmut earned the following fees:
Predecessor Connecticut Municipal Money

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<PAGE> 223

Market Fund, $12,215, all of which was voluntarily waived; Predecessor
Massachusetts Municipal Money Market Fund, $12,000, all of which was
voluntarily waived; Predecessor Growth and Income Fund, $34,400, all of which
was voluntarily waived; and Predecessor Small Cap Value Fund, $23,598, all of
which was voluntarily waived. For the period from October 4, 1993 (date of
initial public investment) to October 31, 1993, Shawmut earned the following
fees: Predecessor Connecticut Municipal Money Market Fund, $44, all of which
was voluntarily waived. During the period from October 5, 1993 (date of initial
public investment) to October 31, 1993, Shawmut earned the following fees:
Predecessor Massachusetts Municipal Money Market Fund, $45, all of which was
voluntarily waived. For the period from December 14, 1992 (date of initial
public investment) to October 31, 1993, Shawmut earned the following fees:
Predecessor Growth and Income Fund, $10,719, none of which was voluntarily
waived; Predecessor Small Cap Value Fund, $7,827, all of which was voluntarily
waived.

PORTFOLIO TRANSACTIONS

Debt securities purchased or sold by the Money Market 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.

Transactions in equity securities on U.S. stock exchanges for the Equity Funds
involve the payment of negotiated brokerage commissions. On U.S. stock exchanges
on which commissions are negotiated, the cost of transactions may vary among
different brokers. Transactions in the over-the-counter market are generally
principal transactions with dealers and the costs of such transactions involve
dealer spreads rather than brokerage commissions. With respect to
over-the-counter transactions, the Investment Adviser will normally deal
directly with the dealers
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<PAGE> 224

who make a market in the securities involved except in
those circumstances where better prices and execution are available elsewhere or
as described below.

For the fiscal years ended October 31, 1995 and 1994, the Predecessor Growth
and Income and Predecessor Small Cap Value Funds paid $250,125 and $384,037
and $58,543 and $89,793, respectively, in brokerage commissions on brokerage
transactions.

The Equity 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. The Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds do not intend to seek profits from
short-term trading. Their annual portfolio turnover will be relatively high, but
since brokerage commissions are normally not paid on money market instruments,
it should not have a material effect on the net income of either of these Funds.

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, the Predecessor Growth and Income Fund entered into a repurchase
transaction with HSBC Securities, Inc. in the amount of $1,000,000 to be
repurchased on November 1, 1995 at $1,000,162.

<PAGE> 225

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 the Funds, 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 the Equity
Funds and all Shares of the Money Market Funds. As of October 31, 1995, Galaxy
had entered into Shareholder Services Agreements only with Fleet Bank.

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
Retail A Shares of the Equity Funds and all Shares of the Money Market Funds.
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 Equity Funds and all Shares of the Money
Market 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.

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<PAGE> 226

Investment Shares of the Predecessor Funds were subject to a Plan adopted
pursuant to Rule 12b-1 under the 1940 Act. The Plan permitted the payment of
fees to administrators (including broker/dealers and depository institutions
such as commercial banks and savings and loan associations) for distribution and
administrative services. The Plan was designed to stimulate administrators to
provide distribution and administrative support services to the Funds and their
shareholders. During the period from October 4, 1993 (date of initial public
investment) to October 31, 1993 and for the fiscal years ended October 31,
1994 and October-31, 1995, the Predecessor Connecticut Municipal Money Market
Fund paid $1,104 , $217,698 and $377,953, respectively, in 12b-1 fees, of which
$552 , $108,849 and $188,976, respectively, was voluntarily waived. For the
period from October 5, 1993 (date of initial public investment) to October 31,
1993 and for the fiscal years ended October 31, 1994 and October-31, 1995, the
Predecessor Massachusetts Municipal Money Market Fund did not accrue 12b-1 fees.
During the period from December 14, 1992 (date of initial public investment) to
October 31, 1993 and for the fiscal years ended October 31, 1994 and
October-31, 1995, the Predecessor Growth and Income and Predecessor Small Cap
Value Funds paid $33,658 , $96,587 and $166,932 and $29,532 , $89,974 and
$111,535, respectively, in 12b-1 fees, of which $16,829 , $48,294 and $83,466
and $14,766 , $44,987 and $55,768, respectively, was voluntarily waived.

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act with respect to Retail B Shares of the Growth and Income
Fund. This Plan is described in the applicable Prospectus.

Under the Distribution and Services Plan for Retail B Shares, payments by
Galaxy (i) for distribution expenses may not exceed .65% (annualized) of the
average daily net assets attributable to such Fund's outstanding Retail B
Shares, (ii) to an Institution for shareholder liaison services and/or
administrative support services may not exceed .25% (annualized) and .25%
(annualized), respectively, of the average daily net assets attributable to such
Fund's outstanding Retail B

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<PAGE> 227

Shares which are owned of record or beneficially by that Institution's
Customers for whom the Institution is the dealer of record or shareholder of
record or with whom it has a servicing relationship. As of the date of this
Prospectus, Galaxy intends to limit the Fund's payments for shareholder
liaison and administrative support services under the Plan to an aggregate fee
of not more than .30% (on an annualized basis) of the average daily net asset
value of Retail B Shares owned of record or beneficially by Customers of
Institutions.

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. The most restrictive expense limitation currently in effect is:
2-1/2% of the first $30 million of average net assets, 2% of the next $70
million of average net assets and 1-1/2% of the remaining average net assets of
an investment company. Such reimbursements, if any, will be estimated,
reconciled and paid on a monthly basis. The fees that the Service Organizations
may charge to customers for services provided in connection with their
investments in Galaxy are not 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, 440 Financial 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 and 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

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<PAGE> 228

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.

COUNSEL

Drinker Biddle & Reath (of which W. Bruce McConnel, III, Secretary of Galaxy,
is a partner), 1345 Chestnut Street, Suite 1100, Philadelphia, Pennsylvania
19107, are counsel to Galaxy and will pass upon certain legal matters on its
behalf. The law firm of Day, Berry & Howard, City Place, Hartford, Connecticut
06103-3499, serves as special Connecticut counsel to Galaxy and has reviewed the
portion of this Statement of Additional Information and the Prospectuses with
respect to the Connecticut Municipal Money Market Fund concerning Connecticut
taxes and the description of special considerations relating to Connecticut
Municipal Securities. The law firm of Ropes & Gray, One International Place,
Boston, Massachusetts 02110-2624, serves as special Massachusetts counsel to
Galaxy and has reviewed the portion of the Prospectuses with respect to the
Massachusetts Municipal Money Market Fund concerning Massachusetts taxes and the
description of special considerations relating to Massachusetts Municipal
Securities.

PERFORMANCE AND YIELD INFORMATION

YIELD QUOTATIONS -- CONNECTICUT MUNICIPAL MONEY MARKET AND
MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS

The standardized, annualized seven-day yields for the Connecticut Municipal
Money Market and Massachusetts Municipal Money Market Funds are computed by:
(1) determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account in a Fund having a balance of one share at
the beginning of a seven-day period, for which the yield is to be quoted, (2)
dividing the net change in account value by the value of the account at the
beginning of the base period to obtain the base period return, and (3)
analyzing the results (i.e., multiplying the base period return by (365/7)).
The net change in the value of the account in each Fund includes the value of
additional shares purchased with dividends from the original share and
dividends declared on both the original share

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<PAGE> 229
and any such additional shares, and all fees that are charged by a Fund to
all shareholder accounts in proportion to the length of the base period, other
than non-recurring account and sales charges. For any account fees that vary
with the size of the account, the amount of fees charged is computed with
respect to the Fund's mean (or median) account size. The capital changes to be
excluded from the calculation of the net change in account value are realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation. The effective compound yield quotation for each Fund is computed
by adding 1 to the unannualized base period return (calculated as described
above), raising the sum to a power equal to 365 divided by 7, and subtracting 1
from the result.

The current yield for the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds may be obtained by calling the Distributor at the
telephone numbers provided on the cover page of the Prospectus. For the
seven-day period ended October 31, 1995, the annualized and effective yields
for Investment Shares of the Predecessor Connecticut Municipal Money Market Fund
were 2.90% and 2.94%, respectively. For the seven-day period ended October
31, 1995, the annualized and effective yields of the Predecessor Massachusetts
Municipal Money Market Fund was were 3.09% and 3.14%, respectively.

In addition, the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds may calculate a "tax equivalent yield." The tax
equivalent yield for a Fund is computed by dividing that portion of the Fund's
yield which is tax-exempt by one minus a stated income tax rate and adding the
product to that portion, if any, of the Fund's computed yield that is not
tax-exempt. Tax equivalent yields of the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds assume a 32.50% and 40.00% respective
combined federal and state tax rate and indicate what each Fund would have had
to earn to equal its actual yield, assuming that income earned by the Fund is
100% tax-exempt. The tax-equivalent yields for the Investment and Trust Shares
of the Predecessor Connecticut Municipal Money Market Fund and the Shares of the
Predecessor Massachusetts Municipal Money Market Fund, for the seven-day period
ended October 31, 1995 were 4.30%, 4.67% and 5.15%, respectively.

TAX-EQUIVALENCY TABLES - CONNECTICUT MUNICIPAL MONEY MARKET AND
MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS

The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds may use tax-equivalency tables in advertising and sales
literature. The interest earned by the municipal securities in the Funds'
respective portfolios generally remain free from federal regular income tax,
and from the regular personal income tax imposed by Connecticut and
Massachusetts.1 As the tables below indicate, "tax-free" investments are
attractive choices for investors, particularly in times of narrow spreads
between "tax-free" and taxable yields.

Note: The maximum marginal tax rate for each bracket was used in calculating
the taxable yield equivalent for each chart. Furthermore, additional state and
local taxes paid on comparable taxable investments were not used to increase
federal deductions.

The charts below are for illustrative purposes only and use tax brackets that
went into effect beginning January 1, 1994. These are not indicators of past or
future performance of the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds.

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<PAGE> 230

TAXABLE YIELD EQUIVALENT FOR 1995
STATE OF CONNECTICUT
<TABLE>
<CAPTION>
Federal Tax Bracket:
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and State:
19.50% 32.50% 35.50% 40.50% 44.10%

Joint
Return: $1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 Over $250,000

Single
Return: $1-22,750 $22,751-55,100 $55,101-115,000 $115,001-250,000 Over $250,000
</TABLE>

<TABLE>
<CAPTION>
Tax-Exempt
Yield:

Taxable Yield Equivalent

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<PAGE> 231
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1995
STATE OF MASSACHUSETTS

Federal Tax Bracket:
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and State:
27.00% 40.00% 43.00% 48.00% 51.60%

Joint
Return: $1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 Over $250,000

Single
Return: $1-22,750 $22,751-55,100 $55,101-115,000 $115,001-250,000 Over $250,000
</TABLE>

<TABLE>
<CAPTION>
Tax-Exempt
Yield:

Taxable Yield Equivalent

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

1 Some portion of either classes' income may be subject to the federal
alternative minimum tax and state and local regular or alternative minimum
taxes.

YIELD AND PERFORMANCE OF THE GROWTH AND INCOME AND SMALL CAP
VALUE FUNDS

The Growth and Income and Small Cap Value 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 6
YIELD = 2[( - - - - +1 ) - 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

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<PAGE> 232

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 and to the particular series of shares in
proportion to the length of the base period and the Fund's mean (or median)
account size. Undeclared earned income will be subtracted from the offering
price per share (variable "d" in the formula). The Funds' maximum offering price
per Retail A Share for purposes of the formula will include the maximum sales
load imposed by the Funds--- currently 3.75% of the per share offering price.

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.

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<PAGE> 233

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.

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

P = hypothetical initial payment of $1,000 less any applicable
sales charge; 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

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<PAGE> 234

(reflecting any sales load charged upon such reinvestment), (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. In addition, the Equity Funds' Retail Shares average
annual total return and aggregate total return quotations will reflect the
deduction of the maximum sales load charged in connection with the purchase of
Retail Shares.

For the period ended October 31, 1995, the thirty-day yield for Investment
Shares of the Predecessor Growth and Income and Predecessor Small Cap Value
Funds were 1.80% and (0.14%), respectively, and the thirty-day yield for
Trust Shares of the Predecessor Growth and Income Fund and Predecessor Small Cap
Value Fund were 2.13% and 0.10%, respectively. The average annual total
return for the one-year period ended October 31, 1995 and for the period from
February-12, 1993 (date of initial public investment) to October 31, 1995 were
12.52% and 13.19%, respectively, for Investment Shares of the Predecessor
Growth and Income Fund and 21.27% and 12.65%, respectively, for Investment
Shares of the Predecessor Small Cap Value Fund.

The average annual total return for the one-year period ended October 31,
1995 and for the period from December-14, 1992 (date of initial public
investment) to October 31, 1995 were 18.80% and 12.80%, respectively, for
Trust Shares of the Predecessor Growth and Income Fund, and 21.52% and
12.05%, respectively, for Trust Shares of the Predecessor Small Cap Value Fund.
The aggregate total return for Investment Shares of the Predecessor Growth and
Income Fund and Predecessor Small Cap Value Fund for the period from
February-12, 1993 (date of initial public investment) to October 31, 1995 were
40.50% and 38.17%, respectively. The aggregate total return for Trust Shares
of the Predecessor Growth and Income Fund and Predecessor Small Cap Value Fund
for the period December-14, 1992 (date of initial public investment) to
October 31, 1995 were 41.47% and 38.78%, respectively.

As stated in the Funds' Prospectuses, the Funds may also calculate total
return quotations without deducting the maximum sales charge imposed on
purchases of Retail Shares. The effect of not deducting the sales charge will be
to increase the total return reflected.

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MISCELLANEOUS

As used in the Prospectuses, "assets belonging to a Fund" or "assets belonging
to a particular series of a Fund" means the consideration received by Galaxy
upon the issuance of shares in that particular Fund or 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
Fund or series of a Fund, assets belonging to the particular Fund or series of
the Fund are charged with the direct liabilities in respect of that Fund or
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 February 5, 1996, 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: Massachusetts Municipal
Money Market Fund -- Olsen & Company, Attention: Corporate Actions of - 0503,
One Federal Street, Boston, Massachusetts 02110-2003 (45.38%); Shawmut Bank,
National Association, Attention: Maureen Sanborn - Massachusetts Deposit
Balancing, 150 Windsor Street - MSN 294, Hartford, Connecticut 06120 (7.37%);
and Connecticut Municipal Money Market Fund -- Shawmut Bank, National
Association, Attention: Maureen Sanborn - Massachusetts Deposit Balancing, 150
Windsor Street - MSN 294, Hartford, Connecticut 06120 (57.55%); Olsen & Company,
Attention: Corporate Actions of - 0530, One Federal Street, Boston,
Massachusetts 02110 (26.89%); Tax-Exempt Money Market Fund -- Hope H. Van
Beuren, East Main, R.R. 25 Enterprise Center, Middletown, Rhode Island 02842
(15.10%); Joseph Dimenna, 1049 Fifth Avenue, Apartment P3, New York, New York
10028 (11.24%); Short-Term Bond Fund -- Womat Leasing, MSN 217, Attention: Mark
Roberts, One Corporate Center, Hartford, Connecticut 06103-3220 (10.15%); and
Rhode Island Municipal Bond Fund -- Norstar Trust Company, Gales & Co., Funds
Control, Attention: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(43.60%); James R. McCulloch, c/o MICROFIBRE, P.O. Box 1208, Pawtucket, Rhode
Island 02860.

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As of February 5, 1996, 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: Massachusetts Municipal
Money Market Fund -- Shawmut Bank, Connecticut, National Association, Co-Trustee
Francelia Corbett, c/o Peter Vannie, Shawmut Bank, Connecticut, National
Association, Hartford, Connecticut 06155 (7.88%); Growth and Income Fund --
Shawmut Bank, National Association as Trustee, Balanced Fund - EB c/o Doris
Cote, 446 Main Street, Worcester, Massachusetts 01608 (8.91%); Fleet Financial
Group, Inc., Employees Thrift Plan c/o Kenneth Weissman, 777 Main Street,
Hartford, Connecticut 06115 (19.13%); and Small Cap Value -- Fleet Financial
Group, Inc., Employees Thrift Plan, c/o Kenneth Weissman, Shawmut National
Corporation, 777 Main Street, Hartford, Connecticut 06115 (16.11%); Shawmut
Bank, National Association, Rogers Corporation as Trustee, Attention: James
Delucia, Shawmut Bank, Connecticut, 157 Church Street, P.O. Box 1909, New Haven,
Connecticut 06509 (5.75%); and Shawmut Bank, Connecticut, as Trustee, SNC
Employees Retirement Plan, c/o Thomas Botticelli, Shawmut Bank, Connecticut, 777
Main Street, Hartford, Connecticut 06115-2001 (31.81%); Money Market Fund --
Fleet Financial Group, Inc., Employees Thrift Plan, c/o Kenneth Weissman,
Shawmut National Corporation, 777 Main Street, Hartford, Connecticut 06115
(5.49%); Tax-Exempt Fund -- Fleet Bank, Rhode Island, Custodian for A Banko
Inv., Attention: Ann Celander, 100 Westminster Street, Providence, Rhode Island
02903 (5.53%); Government Fund -- Brown University Non-Exp Fund RISLA A-Bill,
c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903 (13.11%); U.S.
Treasury Fund -- Fleet National Bank of Massachusettes, Schmid, Inc., Debtor in
Possession, c/o Robin Boweman, One Federal Street, Boston, Massachusetts, 02211
(6.35%); BIC Corporation Investment Management Accountant, Robert McDonald, BIC
Corporation Investment Management Account, Attention: Robert McDonald, 500 BIC
Drive Milford, Connecticut 06460 (5.54%); Institutional Treasury Money Market
Fund -- CAI Wireless Systems II, c/o Fleet Bank, 50 Kennedy Plaza, Providence,
Rhode Island 02903 (21.80%); AMS Escrow Account, Nortek Inc., Attention: Julia
Quinn, c/o 50 Kennedy Plaza, Providence, Rhode Island 02903 (5.19%); High
Quality Bond Fund -- Fleet Saving Plus Plan, Fleet Financial Group Inc., 50
Kennedy Plaza, Providence, Rhode Island 02903 (14.41%); Corporate Bond Fund --
Shawmut Bank, National Association as Trustee, Balanced Fund -- EB c/o Doris
Cote, 446 Main Street, Worcester, Massachusetts 01608 (9.23%); BNE Unified
Retirement Trust, Attention: Ben Branch, Trustee, 21 Merchants Road, 4th Floor,
Boston, Massachusetts 02109 (18.82%); Connecticut Municipal Bond Fund -- Shawmut
Bank, Connecticut, as Agent for Florence Roberts, c/o Anna Maria Simonelli, 777
Main Street, Hartford, Connecticut 06115-2001 (7.96%); Robert M. Ross, Jr. c/o,
Fleet Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903 (5.13%); Ruthan
Wein, 18 Timberland Drive, Farmington, Connecticut 06032 (7.83%); Massachusetts
Municipal Bond Fund -- Joseph S. Teller, 8 Kilsyth Terrace, #21, Brighton,
Massachusetts 02146 (6.02%); Phillip H. Tobey, c/o Fleet Bank, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (5.18%); Rhode Island Municipal Bond -- Vera J.
Clark, 175 East Avenue,

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Westerly, Rhode Island 02811 (7.19%); Tax- Exempt Bond Fund -- Nusco Retiree
Health, P.O. Box 270 Hartford, Connecticut 06141 (15.49%); Equity Value Fund --
Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (7.15%); Equity Growth Fund -- Fleet Financial
Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island
02903 (16.97%); International Equity Fund -- Fleet Financial Group Inc., FFG
Retirement & Pension Equity, 50 Kennedy Plaza, Providence,Rhode Island 02903
(13.41%); Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy
Plaza, Providence, Rhode Island 02903 (6.80%); Asset Allocation Fund -- Fleet
Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Rhode Island
02903 (32.94%); Edward & Angels 401K, 2700 Hospital Trust Tower, Providence,
Rhode Island 02903 (12.15%); and Small Company Equity Fund -- Fleet Financial
Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island
02903 (15.45%); BNE Unified Retirement Trust, Attention: Ben Branch, Trustee,
21 Merchants Road, 4th Floor, Boston, Massachusetts 02109 (8.26%).

FINANCIAL STATEMENTS

The Annual Report of the Predecessor Funds for the fiscal year ended October
31, 1995 has been filed with the Securities and Exchange Commission. The
financial statements in such Annual Report (the "Financial Statements") and
incorporated into this Statement of Additional Information by reference. The
Financial Statements included in the Annual Report for the fiscal year ended
October 31, 1995 have been audited by Price Waterhouse LLP, independent
accountants for the Predecessor Funds, whose report thereon also appears in such
Annual Report and is incorporated herein by reference. The Financial Statements
in such Annual Report have been incorporated herein by reference in reliance
upon the report of said firm of independent accountants given upon their
authority as experts in accounting and auditing.

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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, ("S&P"), Moody's Investors Service, Inc. ("Moody's"),
IBCA Limited and IBCA Inc. ("IBCA") and Thomson BankWatch, Inc. ("Thomson").

Corporate and Tax-Exempt Bond Ratings

The five highest ratings of D&P for tax-exempt and corporate fixed-income
securities are AAA, AA, A, BBB and BB. 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. Securities that are rated BB are considered
to be below investment grade but are deemed likely to meet obligations when due.
The AA, A, BBB and BB ratings may be modified by an addition of a plus (+) or
minus (-) sign to show relative standing within these major rating categories.

The five highest ratings of Fitch for tax-exempt and corporate bonds are AAA,
AA, A, BBB and BB. 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

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considered to be adequate. Adverse changes in economic 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. BB bonds are considered to be speculative investments and
represent the likelihood of timely payment of principal and interest in
accordance with the terms of obligation for issues not in default.

The five highest ratings of S&P for tax-exempt and corporate bonds are AAA,
AA, A, BBB and BB. 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. Bonds rated BB have less near-term
vulnerability to default than other speculative issues. However, such bonds face
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lend to inadequate capacity to meet timely
interest and principal payments. The AA, A, BBB and BB ratings may be modified
by an addition of a plus (+) or minus (-) sign to show relative standing within
these major rating categories.

The five highest ratings of Moody's for tax-exempt and corporate bonds are
Aaa, Aa, A, Baa and Ba. 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

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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. Bonds rated Ba provide questionable protection of
interest and principal and indicate some speculative elements. Moody's may
modify a rating of Aa, A, Baa or Ba 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 completion of construction or elimination of the basis of the
condition.

The five highest ratings of IBCA for tax-exempt and corporate bonds are AAA,
AA, A, BBB and BB. 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. Obligations rated BB represent a low
degree of speculation and indicate a possibility of investment risk developing.
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

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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.

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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 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.

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Tax-Exempt Note Ratings

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 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.

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APPENDIX B

As stated in the applicable Prospectuses, the Growth and Income Equity and
Small Cap Value 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.

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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.

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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

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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. 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
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

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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.

III. Risks of Transactions in Futures Contracts

There are several risks in connection with the use of futures by the Equity
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, 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.

B-5

<PAGE> 249

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 Equity Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be 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

B-6

<PAGE> 250

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 Equity 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-7

<PAGE> 251
THE GALAXY FUND

4400 Computer Drive
Westboro, Massachusetts 01581-5108

For applications and information regarding initial purchases and current
performance, call 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 relates to three separate investment portfolios (individually,
a "Fund," collectively, the "Funds") offered to investors by Galaxy. Each Fund
has 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 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 in "money market" instruments. The
Intermediate Government Income 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 relates to the Retail A Shares representing interests in
each Fund and to the Retail B Shares representing interests in the Short-Term
Bond and High Quality Bond Funds (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail A Shares are sold
with a front-end sales charge. Retail B Shares are sold with a contingent
deferred sales charge. Retail Shares are offered to customers ("Customers") of
Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Financial
Group, Inc., its affiliates, their correspondent banks, and other qualified
banks, savings and loan associations and broker/dealers ("Institutions").
Retail Shares may also be purchased directly by individuals, corporations or
other entities, who submit a purchase application to Galaxy, purchasing either
for their own account or for the accounts of others ("Direct Investors").
Galaxy is also authorized to issue another series of shares in each Fund
("Trust Shares"), which are offered under a separate prospectus primarily 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. Retail A
Shares, Retail B Shares and Trust 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.

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.

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> 252
===============================================================================

---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Short-Term Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Intermediate Government Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
High Quality Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Special Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Other Investment Policies and
Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
How to Purchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Purchase Procedures - Customers of
Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Purchase Procedures - Direct Investors . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Purchase Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Applicable Sales Charges - Retail A Shares . . . . . . . . . . . . . . . . . . . . . . . 17
Quantity Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Applicable Sales Charges - Retail B Shares . . . . . . . . . . . . . . . . . . . . . . . 19
Characteristics of Retail A Shares and
Retail B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Factors to Consider When Selecting Retail A
Shares or Retail B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Redemption Procedures - Customers of Institutions . . . . . . . . . . . . . . . . . . . . 21
Redemption Procedures - Direct Investors . . . . . . . . . . . . . . . . . . . . . . . . 21
Other Redemption Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Investor Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Automatic Investment Program and
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Payroll Deduction Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
College Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Direct Deposit Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Information Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Galaxy Information Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Voice Response System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Galaxy Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 27
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
===============================================================================
<PAGE> 253
HIGHLIGHTS

Q: What is The Galaxy Fund?

A: Galaxy is an open-end management investment company (commonly known as
a mutual fund) that offers investors the opportunity to invest in different
investment portfolios, each having separate investment objectives and policies.
This Prospectus describes Galaxy's SHORT-TERM BOND, INTERMEDIATE GOVERNMENT
INCOME AND HIGH QUALITY BOND FUNDS. Prospectuses for Galaxy's 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, GROWTH AND
INCOME, CORPORATE BOND, TAX-EXEMPT BOND, NEW YORK MUNICIPAL BOND, CONNECTICUT
MUNICIPAL BOND, MASSACHUSETTS MUNICIPAL BOND and RHODE ISLAND MUNICIPAL BOND
FUNDS may be obtained by calling 1-800-628-0414.

Q: Who advises the Funds?

Q: What advantages do the Funds offer?

Q: How can I buy and redeem shares?

A: The Funds are distributed by 440 Financial Distributors, Inc. Retail
Shares of the Funds are sold to individuals, corporations or other entities,
who submit a purchase application to Galaxy, purchasing either for their own
accounts or for the accounts of others ("Direct Investors"). Shares may also
be purchased on behalf of Customers of Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loan associations
and broker/dealers ("Institutions"). Retail Shares may also be purchased by
employees of Fleet Financial Group, Inc. and its affiliates through payroll
deductions. Retail A Shares of the Funds may be purchased at their net asset
value plus a maximum initial sales charge of 3.75%. Retail A Shares are
currently subject to a shareholder servicing fee of up to .15% of the average
daily net asset value of such Shares. Retail B Shares of the Short-Term Bond
and High Quality Bond Funds may be purchased at their net asset value subject
to a contingent deferred sales charge ("CDSC"). The CDSC is paid on certain
Share redemptions made within six years of the purchase date at the maximum
rate of 5.00% of the lower of (i) the net asset value of the redeemed Shares or
(ii) the original purchase price of the redeemed Shares. Retail B Shares are
currently subject to shareholder servicing and distribution fees of up to .80%
of the average daily net asset value of such Shares. Share purchase and
redemption information for both Direct Investors and Customers is provided
below under "How to Purchase Shares" and "How to Redeem Shares." Except as
provided below under "Investor Programs," the minimum initial investment for
Direct Investors and the minimum initial aggregate investment for Institutions
purchasing on behalf of their Customers is $2,500. The minimum investment for
subsequent purchases is $100. There are no minimum investment requirements for
investors participating in the Automatic Investment Program described below.
Institutions may require Customers to maintain certain minimum investments in
Retail Shares. See "How to Purchase Shares -- Other Purchase Information"
below.

Q: When are dividends paid?

A: The net investment income of the Funds is declared daily and paid
monthly. Dividends and distributions are paid in cash, although shareholders
may choose to have dividends and distributions automatically reinvested in
additional Shares of the same series of Shares that they own without sales or
CDSC charges. Net realized capital gains of the Funds are distributed at least
annually. See "Dividends and Distributions."

Q: What potential risks are presented by the Funds' investment
practices?

A: The Short-Term Bond Fund invests primarily, and the Intermediate
Government Income Fund may invest, in corporate debt obligations rated within
the three highest ratings of S&P or Moody's and the High Quality Bond Fund
invests in such obligations rated within the two highest ratings of S&P or
Moody's. The Short-Term Bond Fund may invest in the debt obligations of
foreign companies and in obligations issued or guaranteed by foreign
governments or any of their political subdivisions or instrumentalities and the
Intermediate Government Income Fund and High Quality Bond Fund may invest in
obligations issued by Canadian Provincial Governments. The High Quality Bond
Fund may also invest in limited amounts in dollar-denominated high quality debt
obligations of U.S. companies issued outside the United States. The Funds may
lend their securities and enter into repurchase agreements and reverse
repurchase agreements with qualifying banks and broker/dealers. In addition,
each Fund may enter into interest rate futures contracts. The Funds may
purchase eligible securities on a "when-issued" basis and may purchase or sell
securities on a "forward commitment" or "delayed settlement" basis. In
addition, the Funds may acquire "stand-by commitments" with respect to
obligations issued by state or local governmental issuers ("Municipal
Securities") held in their respective portfolios. The value of the Funds'
portfolio securities will generally vary inversely with changes in prevailing
interest rates. See "Investment Objectives and Policies."

Q: What shareholder privileges are offered by the Funds?

A: Retail A Shares of a Fund may be exchanged for Retail A Shares of any
other Galaxy portfolio which offers Retail A Shares

<PAGE> 254

and for shares of any other investment portfolio otherwise advised by Fleet or
its affiliates. Retail B Shares of the Short-Term Bond and High Quality Bond
Funds may be exchanged for Retail B Shares of any other Galaxy portfolio which
offers Retail B Shares. In either case, exchanges are not subject to sales or
additional CDSC charges. Galaxy offers Individual Retirement Accounts
("IRAs"), Simplified Employee Pension Plan ("SEP") and Keogh Plan accounts,
which can be established by contacting Galaxy's distributor. Retail Shares are
also available for purchase through Multi-Employee Retirement Plan ("MERP")
accounts which can be established by Customers directly with Fleet Brokerage
Securities, Inc. or its affiliates. Galaxy also offers an Automatic Investment
Program which allows investors to automatically invest in Retail Shares on a
monthly or quarterly basis, as well as certain other shareholder privileges.
See "Investor Programs."

<PAGE> 255
EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction expenses
imposed by each Fund with respect to its Retail A Shares and/or Retail B
Shares, and (ii) the operating expenses for Retail A Shares and/or Retail B
Shares of each Fund. Shareholder Transaction Expenses are charges you pay when
buying or selling shares of the Funds. Annual Fund Operating Expenses are paid
out of each Fund's assets and include fees for portfolio management,
maintenance of shareholder accounts, general Fund administration, accounting
and other services. Examples based on the table are also shown.

<TABLE>
<CAPTION>
INTERMEDIATE
SHORT-TERM GOVERNMENT HIGH QUALITY
BOND FUND INCOME FUND BOND FUND
-------------------- ------------ --------------------
(RETAIL A (RETAIL B (RETAIL A (RETAIL A (RETAIL B
SHAREHOLDER TRANSACTION EXPENSES SHARES) SHARES) SHARES) SHARES) SHARES)
- -------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Front End Sales Charge Imposed on
Purchases (as a percentage of
offering price). . . . . . . . . . . . . 3.75%(1) None 3.75%(1) 3.75% None
Sales Charge Imposed on
Reinvested Dividends . . . . . . . . . . None None None None None
Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower) . . . . . None 5.00%(2) None None 5.00%(2)
Redemption Fees(3) . . . . . . . . . . . None None None None None
Exchange Fees . . . . . . . . . . . . . . None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
Advisory Fees (After Fee Waivers) . . . . .55% .55% .55% .55% .55%
12b-1 Fees(4) . . . . . . . . . . . . . . None .80% None None .80%
Other Expenses . . . . . . . . . . . . . .59% .43% .54% .54% .38%
----- ----- ----- ----- -----
Total Fund Operating Expenses (After
Fee Waivers) . . . . . . . . . . . . . . 1.14% 1.78% 1.09% 1.09% 1.73%
===== ===== ===== ===== =====
</TABLE>
- ----------------
1 Reduced sales charge may be available. See "How to Purchase and Redeem
Shares--Applicable Sales Charges -- Retail A Shares."
2 This amount applies to redemptions during the first year. The charge
decreases to 4.00%, 3.00%, 3.00%, 2.00% and 1.00% for redemptions made
during the second through sixth years, respectively. Retail B Shares
automatically convert to Retail A Shares after six years. See "How to
Purchase and Redeem Shares--Applicable Sales Charge--Retail B Shares."
3 Direct Investors are charged a $5.00 fee if redemption proceeds are paid
by wire.
4 Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers, Inc.

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 (Retail A Shares)(1) ........... $49 $72 $ 97 $169
Short-Term Bond Fund (Retail B Shares)
Assuming complete redemption at end of period (2) .. $68 $85 $115 $174(3)
Assuming no redemption ............................. $18 $55 $95 $174(3)
Intermediate Bond Fund (Retail A Shares)(1) ......... $48 $71 $95 $164
High Quality Bond Fund (Retail A Shares)(1) ......... $48 $71 $95 $164
High Quality Bond Fund (Retail B Shares)
Assuming complete redemption at end of period(2) ... $67 $84 $112 $169(3)
Assuming no redemption ............................. $17 $54 $92 $169(3)
</TABLE>

- ---------------
1 Assumes deduction at time of purchase of maximum applicable front-end
sales charge.
2 Assumes deduction of maximum applicable contingent deferred sales charge.
3 Based on conversion of Retail B Shares to Retail A Shares after six
years.

<PAGE> 256

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Retail A Shares and
Retail B Shares of the Funds will bear directly or indirectly. The information
contained in the Expense Summary and Example with respect to Retail A Shares of
the Funds is based on expenses incurred by each Fund during the last fiscal
year, restated to reflect the expenses each Fund expects to incur during the
current fiscal year on its Retail A Shares. The information contained in the
Expense Summary and Example with respect to Retail B Shares of the Short-Term
Bond Fund and High Quality Bond Fund is based on expenses each Fund expects to
incur during the current fiscal year with respect to its Retail B Shares.
Without voluntary fee waivers by the Investment Adviser, "Advisory Fees" would
be .75%, .75% and .75% and Total Fund Operating Expenses would be 1.34%, 1.29%
and 1.29% for Retail A Shares of the Short-Term Bond, Intermediate Government
Income and High Quality Bond Funds, respectively, and Advisory Fees would be
.75% and .75% and Total Fund Operating Expenses would be 1.98% and 1.93% for
Retail B Shares of the Short-Term Bond and High Quality Bond Funds,
respectively. For more complete descriptions of these costs and expenses, see
"How to Purchase Shares," "How to Redeem Shares," "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 or other
Institutions directly to their Customer accounts for services related to an
investment in Retail 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.

FINANCIAL HIGHLIGHTS

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

The financial highlights presented below for the fiscal year ended October
31, 1995 and prior periods 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
Galaxy's 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 reflect 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). During the periods shown,
Retail B Shares were not offered by the Short-Term Bond and High Quality Bond
Funds. 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> 257
SHORT-TERM BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD
1995 1994 YEAR ENDED ENDED
------------------------- OCTOBER 31, OCTOBER 31,
RETAIL 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) 0.55 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: ............... 0.88 (0.07) 0.69 0.51
------- ------ -------- ---------
Less Dividends:
Dividends from net investment income ................. (0.55) (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 ................................. (0.55) (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 ........................................... 9.28% (0.68%) 6.98% 5.21%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ...................... $31,542 $34,061 $85,211 $57,403
Ratios to average net assets:
Net investment income including reimbursement/waiver . 5.54% 4.43% 4.51% 5.77%(6)
Operating expenses including reimbursement/waiver .... 0.99% 0.93% 0.86% 0.90%(6)
Operating expenses excluding reimbursement/waiver .... 1.32% 1.14% 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 Retail Shares before reimbursement
and waiver of fees by the Investment Adviser for the years ended October
31, 1995 and 1994 were $0.52 and $0.42, respectively.
4 Net investment income per share before fee waivers and/or reimbursements
by the Investment Adviser and/or Administrator for the year ended
October 31, 1993 and for the period ended October 31, 1992 were $0.45 and
$0.40, respectively.
5 Not Annualized.
6 Annualized.

5
<PAGE> 258

INTERMEDIATE GOVERNMENT INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD
1995 1994 ENDED
---------------------- YEAR ENDED OCTOBER 31,(2) OCTOBER 31,
RETAIL 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)......... 0.61 0.57 0.65 0.71 0.73 0.76 0.82 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:................. 1.21 (0.46) 0.75 1.11 1.44 0.20 0.98 0.40
------ ------ ------ ------ ------ ------ ------ ------
Less Dividends:
Dividends from net investment
income........................... (0.61) (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............... (0.61) (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......................... 12.85% (4.42%) 7.06% 10.95% 15.35% 2.06% 10.22% 3.90%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).... $79,558 $94,669 $447,359 $199,135 $99,942 $80,645 $71,400 $58,318
Ratios to average net assets:
Net investment income including
reimbursement/waiver............. 6.10% 5.58% 6.03% 6.52% 7.25% 7.69% 8.19% 6.41%(6)
Operating expenses including
reimbursement/waiver............. 1.02% 0.78% 0.80% 0.80% 0.96% 0.98% 0.99% 0.98%(6)
Operating expenses excluding
reimbursement/waiver............. 1.26% 0.99% 1.00% 0.94% 0.96% 0.99% 1.00% 0.98%(6)
Portfolio Turnover Rate.............. 145% 124% 153% 103% 150% 162% 112% 41%(5)
</TABLE>

- -------------
1 The Fund (formerly called 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 Retail Shares before waiver of fees
by the Investment Adviser for the years ended October 31, 1995 and 1994
were $0.58 and $0.54, respectively.
4 Net investment income per share before waiver of fees by the Investment
Adviser and/or Administrator and for the years ended October 31, 1993,
1992, 1990 and 1989 were $0.63, $0.70, $0.73, and $0.82, respectively.
5 Not Annualized.
6 Annualized.

6
<PAGE> 259

HIGH QUALITY BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD
1995 1994 YEAR ENDED ENDED
--------------------------- OCTOBER 31,(2) OCTOBER 31,
RETAIL 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) ......................... 0.62 0.64 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: ............ 1.71 (0.92) 1.59 1.04 0.97
------- ------- -------- -------- -------
Less Dividends:
Dividends from net investment income ............... (0.62) (0.64) (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 .............................. (0.62) (0.91) (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 ................................. 18.46% (8.41%) 15.63% 10.32% 10.04%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $30,093 $26,654 $162,594 $108,774 $57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver ............................. 6.16% 6.25% 5.98% 6.55% 7.25%(6)
Operating expenses including
reimbursement/waiver ............................. 1.02% 0.81% 0.76% 0.87% 0.95%(6)
Operating expenses excluding
reimbursement/waiver ............................. 1.26% 1.02% 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."
3 Net investment income per share for Retail Shares before waiver of fees
by the Investment Adviser for the years ended October 31, 1995 and 1994
were $0.59 and $0.62, respectively.
4 Net investment income per share before waiver of fees by the Investment
Adviser for the years ended October 31, 1993 and 1992 and for the period
ended October 31, 1991 were $0.63, $0.67 and $0.64, respectively.
5 Not Annualized.
6 Annualized.

6
<PAGE> 260

INVESTMENT OBJECTIVES AND POLICIES

The Investment Adviser 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 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 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 pre-tax basis, is comparable to that of corporate or U.S. debt
obligations. 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." 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.

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 government 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.

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.

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 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,

8
<PAGE> 261
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 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 obligations 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 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 "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
obligations issued by Canadian Provincial Governments. See "Investment
Objectives and Policies--Short-Term Bond Fund."

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.

9
<PAGE> 262
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 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 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.

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.

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 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 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.

10
<PAGE> 263
ever 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.

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 10% 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.

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.

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<PAGE> 264
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, or any other investment companies
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 ("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 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. Additional
information concerning futures 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 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 security 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 commitment,
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 might 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.

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

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<PAGE> 265
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 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, each 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.

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
unit. Fleet may determine that SMBS acquired by the Funds are liquid under
guidelines established by the Board of Trustees.

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<PAGE> 266

Guaranteed Investment Contracts

Each Fund may invest in guaranteed investment contracts ("GICs") issued by
United States and Canadian insurance companies. Pursuant to GICs, the Funds
make 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' 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

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' 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

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 "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 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 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.

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 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

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<PAGE> 267
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 10% limitation on purchases of illiquid instruments
described under Investment Limitation No. 3 above, Rule 144A securities will
not be considered to be 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 of a 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
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.

HOW TO PURCHASE 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.

GENERAL

Investments in Retail A Shares of the Funds are subject to a front-end
sales charge. Investments in Retail B Shares of the Short-Term Bond and High
Quality Bond Fund are subject to a back-end sales charge. This back-end sales
charge declines over time and is known as a "contingent deferred sales charge."

Investors shall read "Characteristics of Retail A Shares and Retail B
Shares" and "Factors to Consider When Selecting Retail A Shares or Retail B
Shares" before deciding between the two.

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<PAGE> 268
savings and loan associations and broker/dealers ("Institutions") on behalf of
their customers ("Customers"). Purchases by Direct Investors may take place
only on days on which the Distributor, Galaxy's custodian and Galaxy's transfer
agent are open for business ("Business Days"). If an Institution accepts a
purchase order from a 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 Distributor's procedures. Retail Shares of the Funds
will be issued only in exchange for monetary consideration as described below.

PURCHASE PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Purchase orders for Retail Shares are placed by Customers of Institutions
through their Institutions. The Institution is responsible for transmitting
Customer purchase orders to the Distributor 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. Retail
Shares purchased by Institutions on behalf of their Customers will normally be
held of record by the Institution and beneficial ownership of Retail Shares
will be recorded by the Institution and reflected in the account statements
provided to their Customers. Galaxy's transfer agent may establish an account
of record for each Customer of an Institution reflecting beneficial ownership
of Retail Shares. Depending on the terms of the arrangement between a
particular Institution and Galaxy's transfer agent, confirmations of Retail
Share purchases and redemptions and pertinent account statements will either be
sent by Galaxy's transfer agent directly to a Customer with a copy to the
Institution, or will be furnished directly to the Customer by the Institution.
Other procedures for the purchase of Retail Shares established by Institutions
in connection with the requirements of their Customer accounts may apply.
Customers wishing to purchase Retail Shares through their Institution should
contact such entity directly for appropriate purchase instructions.

PURCHASE PROCEDURES -- DIRECT INVESTORS

Purchases by Mail. Retail Shares may be purchased by completing a
purchase application and mailing it, together with a check payable to each Fund
in which a Direct Investor wishes to invest, to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01518-5108

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling the Distributor at
1-800-628-0414.

Purchases by Wire. Direct Investors may also purchase Retail Shares by
arranging to transmit federal funds by wire to Fleet Bank of Massachusetts,
N.A. as agent for First Data Investor Services Group, Inc. (formerly known as
The Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, an investor must
telephone 1-800-628-0413 to place an order and for instructions. Federal funds
and registration instructions should be wired through the Federal Reserve
System to:

Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
ABA # 0110-0013-8
DDA # 79673-5702
Ref: The Galaxy Fund
Shareholder Name
Shareholder Account Number

Direct Investors making initial investments by wire must promptly complete
a purchase application and forward it to The Galaxy Fund, P.O. Box 15108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108. Applications may be
obtained by calling the Distributor at 1-800-628-0414. Redemptions will not be
processed until the application in proper form has been received by FDISG.
Direct Investors making subsequent investments by wire should follow the
instructions above.

Effective Time of Purchases. A purchase order for Retail Shares received
and accepted by the Distributor from an Institution or a Direct Investor on a
Business Day prior to the close of regular trading hours on the Exchange
(currently, 4:00 p.m. Eastern Time) will be executed at the net asset value per
share determined on that date, 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 fifth Business Day following the receipt of such order. Such
order will be executed on the day on which the purchase price is received in
proper form. 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 or
Direct Investor submitting the order. Payment for orders which are not
received or accepted will be returned. If an Institution accepts a purchase
order from a 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 above procedures.

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<PAGE> 269
OTHER PURCHASE INFORMATION

Except as provided in "Investor Programs" below, the minimum initial
investment by a Direct Investor, or initial aggregate investment by an
Institution investing on behalf of its Customers, is $2,500. The minimum
investment for subsequent purchases is $100. The minimum investment
requirement with respect to IRAs, SEPs, MERPs and Keogh Plans (see below under
"Retirement Plans") is $500 ($250 for spousal IRA accounts). There are no
minimum investment requirements for investors participating in the Automatic
Investment Program described below. Customers may agree with a particular
Institution to varying minimum initial and minimum subsequent purchase
requirements with respect to their accounts.

Galaxy reserves the right to reject any purchase order, in whole or in
part, or to waive any minimum investment requirement. The issuance of Retail
Shares to Direct Investors and Institutions is recorded on the books of Galaxy
and Retail Share certificates will not be issued.

APPLICABLE SALES CHARGES -- RETAIL A SHARES

The public offering price for Retail A Shares of the Funds is the sum of
the net asset value of the Retail A Shares purchased plus any applicable
front-end sales charge. The sales charge is assessed as follows:

<TABLE>
<CAPTION>
TOTAL SALES CHARGE REALLOWANCE TO DEALERS
------------------------- ----------------------
AS A % OF AS A % OF AS A % OF
OFFERING PRICE NET ASSET OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE VALUE PER SHARE PER SHARE
- --------------------- --------- --------------- ---------
<S> <C> <C> <C>
Less than $50,000 .................... 3.75 3.90 3.75
$50,000 but less than $100,000 ....... 3.50 3.63 3.50
$100,000 but less than $250,000 ...... 3.00 3.09 3.00
$250,000 but less than $500,000 ...... 2.50 2.56 2.50
$500,000 but less than $1,000,000 .... 2.00 2.04 2.00
$1,000,000 but less than $3,000,000 .. 1.00 1.01 1.00
$3,000,000 and over .................. 0.50 0.50 0.50
</TABLE>

Further reductions in the sales charges shown above are also possible. See
"Quantity Discounts" below.

The Distributor will pay the appropriate reallowance to dealers to
broker-dealer organizations which have entered into agreements with the
Distributor. The reallowance to dealers may be changed from time to time.

At various times the Distributor may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts. Also, the Distributor in its discretion may from time to time,
pursuant to objective criteria established by the Distributor, pay fees to
qualifying dealers for certain services or activities which are primarily
intended to result in sales of Retail A Shares of a Fund. If any such program
is made available to any dealer, it will be made available to all dealers on
the same terms and conditions. Payments made under such programs will be made
by the Distributor out of its own assets and not out of the assets of the Fund.
These programs will not change the price of Retail A Shares or the amount that
the Funds will receive from such sales.

In certain situations or for certain individuals, the front-end sales
charge for Retail A Shares of the Fund may be waived either because of the
nature of the investor or the reduced sales effort required to attract such
investments. In order to receive the sales charge waiver, an investor must
explain the status of his or her investment at the time of purchase. No sales
charge is assessed on the following types of transactions and/or investors:

o reinvestment of dividends and distributions;
o IRA, SEP and Keogh Plan accounts;
o purchases by persons who were beneficial owners of shares of the Funds or any
of the other portfolios offered by Galaxy or any other funds advised by
Fleet or its affiliates before December 1, 1995;
o purchases by directors, officers and employees of the Funds' Distributor and
of broker-dealers having agreements with the Funds' Distributor pertaining
to the sale of Retail A Shares to the extent permitted by such organizations;
o investors who purchase pursuant to a "wrap fee" program offered by any
broker-dealer or other financial institution or financial planning
organization;
o purchases by members of Galaxy's Board of Trustees;
o purchases by officers, directors, employees and retirees of Fleet Financial
Group, Inc. and any of its affiliates; and
o any purchase of Retail A Shares pursuant to the Reinstatement Privilege
described below.

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<PAGE> 270
QUANTITY DISCOUNTS

Direct Investors or Customers may be entitled to reduced sales charges
through Rights of Accumulation, a Letter of Intent or a combination of
investments, as described below, even if the Direct Investor or Customer does
not wish to make an investment of a size that would normally qualify for a
quantity discount.

In order to obtain quantity discount benefits, a Direct Investor or
Customer must notify Galaxy's administrator, First Data Investor Services
Group, Inc. (formerly known as The Shareholder Services Group, Inc. d/b/a 440
Financial) ("FDISG ") at the time of purchase that he or she would like to take
advantage of any of the discount plans described below. Upon such
notification, the investor will receive the lowest applicable sales charge.
Quantity discounts may be modified or terminated at any time and are subject to
confirmation of a Direct Investor's or Customer's holdings through a check of
appropriate records. For more information about quantity discounts, please
contact the Distributor or your Institution.

Rights of Accumulation. A reduced sales charge applies to any purchase
of Retail A Shares of any portfolio of Galaxy that is sold with a sales charge
("Eligible Fund") where a Direct Investor's or Customer's then current
aggregate investment in Retail A Shares is $50,000 or more. "Aggregate
investment" means the total of: (a) the dollar amount of the then current
purchase of shares of an Eligible Fund; and (b) the value (based on current
net asset value) of previously purchased and beneficially-owned shares of any
Eligible Fund on which a sales charge has been paid. If, for example, a Direct
Investor or Customer beneficially owns shares of one or more Eligible Funds
with an aggregate current value of $49,000 on which a sales charge has been
paid and subsequently purchases shares of an Eligible Fund having a current
value of $1,000, the sales charge applicable to the subsequent purchase would
be reduced to 3.50% of the offering price. Similarly, with respect to each
subsequent investment, all shares of Eligible Funds that are beneficially owned
by the investor at the time of investment may be combined to determine the
applicable sales charge.

Letter of Intent. By completing the Letter of Intent included as part of
the Account Application, a Direct Investor or Customer becomes eligible for the
reduced sales charge applicable to the total number of Eligible Fund Retail A
Shares purchased in a 13-month period pursuant to the terms and under the
conditions set forth below and in the Letter of Intent. To compute the
applicable sales charge, the offering price of Retail A Shares of an Eligible
Fund on which a sales charge has been paid and that are beneficially owned by a
Direct Investor or Customer on the date of submission of the Letter of Intent,
may be used as a credit toward completion of the Letter of Intent. However,
the reduced sales charge will be applied only to new purchases.

FDISG will hold in escrow Retail A Shares equal to 5% of the amount
indicated in the Letter of Intent for payment of a higher sales charge if a
Direct Investor or Customer does not purchase the full amount indicated in the
Letter of Intent. The escrow will be released when a Direct Investor or
Customer fulfills the terms of the Letter of Intent by purchasing the specified
amount. If purchases qualify for a further sales charge reduction, the sales
charge will be adjusted to reflect a Direct Investor's or Customer's total
purchases. If total purchases are less than the amount specified, a Direct
Investor or Customer will be requested to remit an amount equal to the
difference between the sales charge actually paid and the sales charge
applicable to the total purchases. If such remittance is not received within
20 days, FDISG, as attorney-in-fact pursuant to the terms of the Letter of
Intent and at the Distributor's direction, will redeem an appropriate number of
Retail A Shares held in escrow to realize the difference. Signing a Letter of
Intent does not bind a Direct Investor or Customer to purchase the full amount
indicated at the sales charge in effect at the time of signing, but a Direct
Investor or Customer must complete the intended purchase in accordance with the
terms of the Letter of Intent to obtain the reduced sales charge. To apply, a
Direct Investor or Customer must indicate his or her intention to do so under a
Letter of Intent at the time of purchase.

Qualification for Discounts. For purposes of applying the Rights of
Accumulation and Letter of Intent privileges described above, the scale of
sales charges applies to the combined purchases made by any individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or the aggregate investments of a trustee or
custodian of any qualified pension or profit sharing plan established (or the
aggregate investment of a trustee or other fiduciary) for the benefit of the
persons listed above.

Reinstatement Privilege. Direct Investors and Customers may reinvest all
or any portion of their redemption proceeds in Retail A Shares of the Funds or
in Retail A Shares of another portfolio of Galaxy within 90 days of the
redemption trade date without paying a sales load. Retail A Shares so
reinvested will be purchased at a price equal to the net asset value next
determined after the Transfer Agent receives a reinstatement request and
payment in proper form.

Direct Investors and Customers wishing to exercise this Privilege must
submit a written reinstatement request to the Transfer Agent stating that the
investor is eligible to use the Privilege. The reinstatement request and
payment must be received within 90 days of the trade date of the redemption.
Currently, there are no restrictions on the number of times an investor may use
this Privilege.

Generally, exercising the Reinstatement Privilege will not affect the
character of any gain or loss realized on redemptions for federal income tax
purposes. However, if a redemption results in a loss, the reinstatement may
result in the loss being disallowed under the Internal Revenue Code's "wash
sale" rules.

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APPLICABLE SALES CHARGE -- RETAIL B SHARES

The public offering price for Retail B Shares is the net asset value of
the Retail B Shares purchased. Although Direct Investors and Customers pay no
front-end sales charge on purchases of Retail B Shares, such Shares are subject
to a contingent deferred sales charge at the rates set forth below if they are
redeemed within six years of purchase. Securities dealers, brokers, financial
institutions and other industry professionals will receive commissions from the
Distributor in connection with sales of Retail B Shares. These commissions may
be different than the reallowances or placement fees paid to dealers in
connection with sales of Retail A Shares. The contingent deferred sales charge
on Retail B Shares is based on the lesser of the net asset value of the Shares
on the redemption date or the original cost of the Shares being redeemed. As a
result, no sales charge is imposed on any increase in the principal value of a
Direct Investor's or Customer's Retail B Shares. In addition, a contingent
deferred sales charge will not be assessed on Retail B Shares purchased through
reinvestment of dividends or capital gains distributions.

The amount of any contingent deferred sales charge Direct Investors and
Customers must pay depends on the number of years that elapse between the
purchase date and the date such Retail B Shares are redeemed. Solely for
purposes of this determination, all payments during a month will be aggregated
and deemed to have been made on the first day of the month.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
---------------------- ---------------------
<S> <C>
Less than one 5.00%
More than one but less than two 4.00%
More than two but less than three 3.00%
More than three but less than four 3.00%
More than four but less than five 2.00%
More than five but less than six 1.00%
After six None
</TABLE>

When a Direct Investor or Customer redeems his or her Retail B Shares, the
redemption request is processed to minimize the amount of the contingent
deferred sales charge that will be charged. Retail B Shares are redeemed first
from those shares that are not subject to a contingent deferred sales charge
(i.e., Retail B Shares that were acquired through reinvestment of dividends or
distributions or that qualify for other deferred sales charge exemptions) and
after that from the Retail B Shares that have been held the longest.

The proceeds from the contingent deferred sales charge that a Direct
Investor or Customer may pay upon redemption go to the Distributor, which may
use such amounts to defray the expenses associated with the
distribution-related services involved in selling Retail B Shares.

Exemptions from the Contingent Deferred Sales Charge. Certain types of
redemptions may also qualify for an exemption from the contingent deferred
sales charge. To receive exemptions (i), (vi) or (viii) listed below, a
Direct Investor or Customer must explain the status of his or her redemption at
the time Retail B Shares are redeemed. The contingent deferred sales charge
with respect to Retail B Shares is not charged on: (i) exchanges described
under "Investor Programs - Exchange Privilege" below; (ii) redemptions in
connection with required (or, in some cases, discretionary) distributions to
participants or beneficiaries of an employee pension, profit-sharing or other
trust or qualified retirement or Keogh plan, individual retirement account or
custodial account maintained pursuant to Section 403(b)(7) of the Internal
Revenue Code of 1986, as amended (the "Code"); (iii) redemptions in connection
with required (or, in some cases, discretionary) distributions to participants
in qualified retirement or Keogh plans, individual retirement accounts or
custodial accounts maintained pursuant to Section 403(b)(7) of the Code due to
death, disability or the attainment of a specified age; (iv) redemptions
effected pursuant to a Fund's right to liquidate a shareholder's account if the
aggregate net asset value of Retail B Shares held in the account is less than
the minimum account size; (v) redemptions in connection with the combination of
the Fund with any other investment company registered under the 1940 Act by
merger, acquisition of assets, or by any other transaction; (vi) redemptions in
connection with the death or disability of a shareholder; (vii) redemptions
resulting from a tax-free return of an excess contribution pursuant to Section
408(d)(4) or (5) of the Code; or (viii) any redemption of Retail B Shares held
by Direct Investors or Customers, provided the Direct Investor or Customer was
the beneficial owner of shares of the Short-Term Bond or High Quality Bond
Funds (or any of the other portfolios offered by Galaxy or otherwise advised by
Fleet or its affiliates) before December 1, 1995.

CHARACTERISTICS OF RETAIL A SHARES AND RETAIL B SHARES

The primary difference between Retail A Shares and Retail B Shares lies in
their sales charge structures and shareholder servicing/distribution expenses.
A Direct Investor or Customer should understand that the purpose and function
of the sales charge structures and shareholder servicing/distribution
arrangements for both Retail A Shares and Retail B Shares are the same.

Retail A Shares of the Funds are sold at their net asset value plus a
front-end sales charge of up to 3.75%. This front-end sales charge may be
reduced or waived in some cases. (See "Applicable Sales Charges--Retail A
Shares" and "Quantity Discounts.") Retail A Shares of a Fund are subject to
ongoing shareholder servicing fees at an annual rate of up to .15% of a

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Fund's average daily net assets attributable to its Retail A Shares.

Retail B Shares of the Short-Term Bond Fund and High Quality Bond Fund are
sold at net asset value without an initial sales charge. Normally, however, a
deferred sales charge is paid if the Shares are redeemed within six years of
investment. (See "Applicable Sales Charges -- Retail B Shares.") Retail B
Shares of a Fund are subject to ongoing shareholder servicing and distribution
fees at an annual rate of up to .80% of the Fund's respective average daily
net assets attributable to its Retail B Shares. These ongoing fees, which are
higher than those charged on Retail A Shares, will cause Retail B Shares to
have a higher expense ratio and pay lower dividends than Retail A Shares.

Six years after purchase, Retail B Shares of the Short-Term Bond Fund and
High Quality Bond will convert automatically to Retail A Shares of the Funds.
The purpose of the conversion is to relieve a holder of Retail B Shares of the
higher ongoing expenses charged to those Shares, after enough time has passed
to allow the Distributor to recover approximately the amount it would have
received if a front-end sales charge had been charged. The conversion from
Retail B Shares to Retail A Shares takes place at net asset value, as a result
of which a Direct Investor or Customer receives dollar-for-dollar the same
value of Retail A Shares as he or she had of Retail B Shares. The conversion
occurs six years after the beginning of the calendar month in which the Shares
are purchased. As a result of the conversion, the converted Shares are
relieved of the distribution and shareholder servicing fees borne by Retail B
Shares, although they are subject to the shareholder servicing fees borne by
Retail A Shares.

Retail B Shares acquired through a reinvestment of dividends or
distributions (as discussed under "Applicable Sales Charges -- Retail B
Shares") are also converted at the earlier of two dates -- six years after the
beginning of the calendar month in which the reinvestment occurred or the date
of conversion of the most recently purchased Retail B Shares that were not
acquired through reinvestment of dividends or distributions. For example, if a
Direct Investor or Customer makes a one-time purchase of Retail B Shares of a
Fund, and subsequently acquires additional Retail B Shares of such Fund only
through reinvestment of dividends and/or distributions, all of such Direct
Investor's or Customer's Retail B Shares in the Fund, including those acquired
through reinvestment, will convert to Retail A Shares of such Fund on the same
date.

FACTORS TO CONSIDER WHEN SELECTING RETAIL A SHARES OR RETAIL B SHARES

Before purchasing Retail A Shares or Retail B Shares of the Short-Term
Bond Fund or High Quality Bond Fund, Direct Investors and Customers should
consider whether, during the anticipated periods of their investments in the
particular Fund, the accumulated distribution and shareholder servicing fees
and potential contingent deferred sales charge on Retail B Shares prior to
conversion would be less than the initial sales charge and accumulated
shareholder servicing fees on Retail A Shares purchased at the same time, and
to what extent such differential would be offset by the higher yield of Retail
A Shares. In this regard, to the extent that the sales charge for Retail A
Shares is waived or reduced by one of the methods described above, investments
in Retail A Shares become more desirable. An investment of $250,000 or more in
Retail B Shares would not be in most shareholders' best interest. Shareholders
should consult their financial advisers and/or brokers with reference to the
advisability of purchasing Retail B Shares in amounts exceeding $250,000.

Although Retail A Shares are subject to a shareholder servicing fee, they
are not subject to the higher distribution and shareholder servicing fee
applicable to Retail B Shares. For this reason, Retail A Shares can be
expected to pay correspondingly higher dividends per Share. However, because
initial sales charges are deducted at the time of purchase, purchasers of
Retail A Shares (that do not qualify for exemptions from or reductions in the
initial sales charge) would have less of their purchase price initially
invested in these Funds than purchasers of Retail B Shares in the Funds.

As described above, purchasers of Retail B Shares will have more of their
initial purchase price invested. Any positive investment return on this
additional invested amount would partially or wholly offset the expected higher
annual expenses borne by Retail B Shares. Because a Fund's future returns
cannot be predicted, there can be no assurance that this will be the case.
Holders of Retail B Shares would, however, own Shares that are subject to a
contingent deferred sales charge of up to 5.00% upon redemption, depending upon
the year of redemption. Direct Investors or Customers expecting to redeem
during this six-year period should compare the cost of the contingent deferred
sales charge plus the aggregate annual Retail B Shares' distribution and
shareholder servicing fees to the cost of the initial sales charge and
shareholder servicing fees on the Retail A Shares. Over time, the expense of
the annual distribution and shareholder servicing fees on the Retail B Shares
may equal or exceed the initial sales charge and annual shareholder servicing
fee applicable to Retail A Shares. For example, if net asset value remains
constant, the aggregate distribution and shareholder servicing fees with
respect to Retail B Shares of a Fund would equal or exceed the initial sales
charge and aggregate shareholder servicing fees of Retail A Shares
approximately six years after purchase. In order to reduce such fees for
investors that hold Retail B Shares for more than six years, Retail B Shares
will be automatically converted to Retail A Shares as described above at the
end of such six-year period.

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HOW TO REDEEM SHARES
GENERAL

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Distributor. Proceeds from the
redemptions of Retail B Shares of the Short-Term Bond and High Quality Bond
Funds will be reduced by the amount of any applicable contingent deferred sales
charge. Galaxy reserves the right to transmit redemption proceeds within seven
days after receiving the redemption order if, in its judgment, an earlier
payment could adversely affect a Fund.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Payments for redemption orders received by the Distributor on a Business
Day will normally be wired on the fifth Business Day to the Institutions.

Direct Investors may redeem all or part of their Retail Shares in
accordance with any of the procedures described below.

REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Shares may be redeemed by a Direct Investor by
submitting a written request for redemption to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the number and series of
shares (i.e. Retail A or Retail B) to be redeemed, (ii) identify the
shareholder account number and tax identification number, and (iii) be signed
by each registered owner exactly as the Retail Shares are registered. A
redemption request for an amount in excess of $50,000, or for any amount where
(i) the proceeds are to be sent elsewhere than the address of record (excluding
the transfer of assets to a successor custodian), (ii) the proceeds are to be
sent to an address of record which has changed in the preceding 90 days, or
(iii) the check is to be made payable to someone other than the registered
owner(s), must be accompanied by signature guarantees. The guarantor of a
signature must be a bank which is a member of the FDIC, a trust company, a
member firm of a national securities exchange or any other eligible guarantor
institution. The Distributor will not accept guarantees from notaries public.
The Distributor may require additional supporting documents for redemptions
made by corporations, executors, administrators, trustees and guardians. A
redemption request will not be deemed to be properly received until the
Distributor receives all required documents in proper form. The Funds
ordinarily will make payment for Retail Shares redeemed by mail within five
Business Days after proper receipt by the Distributor of the redemption
request. Questions with respect to the proper form for redemption requests
should be directed to the Distributor at 1-800-628-0413.

Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling 1-800-628-0413 and instructing the Distributor to mail a check for
redemption proceeds of up to $50,000 to the address of record. A redemption
request for an amount in excess of $50,000, or for any amount where (i) the
proceeds are to be sent elsewhere than the address of record (excluding the
transfer of assets to a successor custodian), (ii) the proceeds are to be sent
to an address of record which has changed in the preceding 90 days, or (iii)
the check is to be made payable to someone other than the registered owner(s),
must be accompanied by signature guarantees. (See "Redemption by Mail.")

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem
Retail Shares by instructing the Distributor by wire or telephone to wire the
redemption proceeds of $1,000 or more directly to Direct Investor's account at
any commercial bank in the United States. The Distributor charges a $5.00 fee
for each wire redemption and the fee is deducted from the redemption proceeds.
The redemption proceeds must be paid to the same bank and account as designated
on the application or in written instructions subsequently received by the
Distributor. To request redemption of Retail Shares by wire, Direct Investors
should call the Distributor at 1-800-628-0413.

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<PAGE> 274
details regarding signature guarantees). Further documentation may be
requested from corporations, executors, administrators, trustees, or guardians.
If, due to temporary adverse conditions, investors are unable to effect
telephone transactions, investors are encouraged to follow the procedures for
transactions by wire or mail which are described above.

Galaxy reserves the right to refuse a wire or telephone redemption if it
believes it is advisable to do so. Procedures for redeeming Retail Shares by
wire or telephone may be modified or terminated at any time by Galaxy or the
Distributor. In attempting to confirm that telephone instructions are genuine,
Galaxy will use such procedures as are considered reasonable, including
recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security number, address and/or bank). If Galaxy fails to follow established
procedures for the authentication of telephone instructions, it may be liable
for losses due to unauthorized or fraudulent telephone transactions.

No redemption by a Direct Investor in any Fund will be processed until
Galaxy has received a completed application with respect to the Direct
Investor's account.

If any portion of the Retail Shares to be redeemed represents an
investment made by personal check, Galaxy reserves the right to delay payment
of proceeds until the Distributor is reasonably satisfied that the check has
been collected which could take up to 15 days from the purchase date. A Direct
Investor who anticipates the need for more immediate access to his or her
investment should purchase Retail Shares by federal funds or bank wire or by
certified or cashier's check. Banks normally impose a charge in connection
with the use of bank wires, as well as certified checks, cashier's checks and
federal funds.

OTHER REDEMPTION INFORMATION

Except as provided under "Investor Programs" below, Galaxy reserves the
right to redeem accounts (other than retirement plan accounts) involuntarily,
upon 60 days' written notice, if the account's net asset value falls below
$250 as a result of redemptions. In addition, if an investor has agreed with a
particular Institution to maintain a minimum balance in his or her account at
the Institution with respect to Retail Shares of a Fund, and the balance in
such account falls below that minimum, the Customer may be obliged by the
Institution to redeem all of his or her shares.

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

Direct Investors and Customers of Institutions may, after appropriate
prior authorization, exchange Retail A Shares of a Fund having a value of at
least $100 for Retail A Shares of any of the other Funds or portfolios offered
by Galaxy or for shares of any other investment portfolios otherwise advised by
Fleet or its affiliates in which the Direct Investor or Customer maintains an
existing account, provided that such other Shares may legally be sold in the
state of the investor's residence. Direct Investors and Customers of
Institutions may exchange Retail B Shares of the Short-Term Bond and
High-Quality Bond Funds for Retail B Shares of the Tax-Exempt Bond, Equity
Value, Equity Growth, Small Company Equity, Asset Allocation and Growth and
Income Funds offered by Galaxy, provided that such other Retail B Shares may
legally be sold in the state of the investor's residence.

No additional sales charge will be incurred when exchanging Retail A
Shares of a Fund for Retail A Shares of another Galaxy portfolio that imposes a
sales charge. Retail B Shares may be exchanged without the payment of any
contingent deferred sales charge at the time the exchange is made. In
determining the holding period for calculating the contingent deferred sales
charge payable on redemptions of Retail B Shares, the holding period of the
Retail B Shares originally held will be added to the holding period of the
Retail B Shares acquired through exchange.

The minimum initial investment to establish an account in another eligible
Fund by exchange, except for the Institutional Treasury Money Market Fund, is
$2,500, unless at the time of the exchange the Direct Investor or Customer
elects, with respect to the Fund into which the exchange is being made, to
participate in the Automatic Investment Program described below, in which event
there is no minimum initial investment requirement, or in the College
Investment Program described below, in which event the minimum initial
investment is generally $100. The minimum initial investment to establish an
account by exchange in the Institutional Treasury Money Market Fund is $2
million.

An exchange involves a redemption of all or a portion of the Retail Shares
of a Fund and the investment of the redemption proceeds in Retail Shares of
another Fund or portfolio offered by Galaxy or, with respect to Retail A
Shares, otherwise advised by Fleet or its affiliates. The redemption will be
made at the per share net asset value next determined after the exchange
request is received. The Retail Shares of a Fund or portfolio to be acquired
will be purchased at the per share net asset value next determined after
acceptance of the exchange request, plus any applicable sales charge.

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Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in any of the
Funds. For further information regarding Galaxy's exchange privilege, Direct
Investors should call FDISG at 1-800-628-0413. Customers of Institutions
should call their Institution for such information. Customers exercising the
exchange privilege into other eligible Funds should request and review these
Funds' prospectuses prior to making an exchange (call 1-800-628-0414 for a
prospectus). Telephone all exchanges to 1-800-628-0413. See "How to Redeem
Shares--Redemption Procedures--Direct Investors--Redemptions by Wire" above
for a description of Galaxy's policy regarding telephone instructions.

Galaxy does not charge any exchange fee. However, Institutions may charge
such fees with respect to either all exchange requests or with respect to any
request which exceeds the permissible number of free exchanges during a
particular period. Customers of Institutions should contact their Institution
for applicable information.

For federal income tax purposes, an exchange of shares is a taxable event
and, accordingly, a capital gain or loss may be realized by an investor.
Before making an exchange request, the Customer should consult a tax or other
financial adviser to determine the tax consequences.

RETIREMENT PLANS

Retail Shares of the Funds are available for purchase in connection with
the following tax-deferred prototype retirement plans:

Simplified Employee Pension Plans ("SEPs"), a form of retirement plan for
sole proprietors, partnerships and corporations. The minimum initial
investment for a SEP account is $500.

Keogh Plans, a retirement vehicle for self-employed individuals. The
minimum initial investment for a Keogh Plan is $500.

Investors purchasing Retail Shares pursuant to a retirement plan are not
subject to the minimum investment provisions described above under "How to
Purchase Shares -- Other Purchase Information." Detailed information
concerning eligibility, service fees and other matters related to these plans
and the form of application is available from Galaxy's distributor (call
1-800-628-0413) with respect to IRAs, SEPs and Keogh Plans and from Fleet
Brokerage Securities, Inc. (call 1-800-221-8210) with respect to MERPs.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Automatic Investment Program permits a Direct Investor to purchase
Retail Shares of a Fund (minimum of $50 per transaction) each month or each
quarter. Provided the Direct Investor's financial institution allows automatic
withdrawals, Retail Shares are purchased by transferring funds from a Direct
Investor's checking, bank money market, NOW or savings account designated by
the Direct Investor. The account designated will be debited in the specified
amount, and Retail Shares will be purchased on a monthly or quarterly basis, on
any Business Day designated by a Direct Investor. If the designated day falls
on a weekend or holiday, the purchase will be made on the Business Day closest
to the designated day. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated.

The Systematic Withdrawal Plan permits a Direct Investor to automatically
redeem Retail Shares on a monthly, quarterly, semi-annual, or annual basis on
any Business Day designated by a Direct Investor, if the account has a starting
value of at least $10,000. If the designated day falls on a weekend or
holiday, the redemption will be made on the Business Day closest to the
designated day. Proceeds of the redemption will be sent to the shareholder's
address of record or financial institution within five Business Days of the
redemption. If redemptions exceed purchases and dividends, the number of
shares in the account will be reduced. Investors may terminate the Systematic
Withdrawal Plan at any time upon written notice to the Transfer Agent (but not
less than five days before a payment date). There is no charge for this
service. Purchases of additional Retail A Shares concurrently with withdrawals
are ordinarily not advantageous because of

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the sales charge involved in the additional purchases. The maintenance of a
Systematic Withdrawal Plan may be disadvantageous for holders of Retail B
Shares due to the effect of the contingent deferred sales charge.

PAYROLL DEDUCTION PROGRAM

The Payroll Deduction Program provides Direct Investors with a convenient,
systematic way to purchase Fund shares by deducting a minimum amount of $25 per
pay period from their paycheck. To be eligible for the Program, the payroll
department of a Direct Investor's employer must have the capability to forward
transactions directly through the Automated Clearing House (ACH), or
indirectly through a third party payroll processing company that has access to
the ACH. A Direct Investor must complete and submit a Galaxy Payroll Deduction
Application to his or her employer's payroll department, which will arrange for
the specified amount to be debited from the Direct Investor's paycheck each pay
period. Retail Shares of Galaxy will be purchased within three days after the
debit occurred. If the designated day falls on a weekend or non-Business Day,
the purchase will be made on the Business Day closest to the designated day. A
Direct Investor should allow between two to four weeks for the Payroll
Deduction Program to be established after submitting an application to the
employer's payroll department.

COLLEGE INVESTMENT PROGRAM

The College Investment Program (the "College Program") permits a Direct
Investor to open an account with Galaxy and purchase Retail Shares of a Fund
with a minimum amount of $100 for initial or subsequent investments, except
that if the Direct Investor purchases Retail Shares through the Automatic
Investment Program, the minimum per transaction is $50. The College Program is
designed to assist Direct Investors who want to finance a college savings plan.
See "Investor Programs--Automatic Investment Program and Systematic Withdrawal
Plan" for information on the Automatic Investment Program. Galaxy reserves the
right to redeem accounts participating in the College Program involuntarily,
upon 60 days' written notice, if the account's net asset value falls below the
applicable minimum initial investment as a result of redemptions. See "How to
Redeem Shares--Other Redemption Information" above for further information.

DIRECT DEPOSIT PROGRAM

INFORMATION SERVICES

GALAXY INFORMATION CENTER -- 24 HOUR INFORMATION SERVICE

The Galaxy Information Center provides Fund performance and investment
information 24 hours a day, 7 days a week. To access the Galaxy Information
Center, just call 1-800-628-0414.

VOICE RESPONSE SYSTEM

The Voice Response System provides Direct Investors automated access to
Fund and account information as well as the ability to make telephone exchanges
and redemptions. These transactions are subject to the terms and conditions
described under Investor Programs. To access the Voice Response System, just
call 1-800-FOR-GLXY (367-4599) from any touch-tone telephone and follow the
recorded instructions.

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GALAXY SHAREHOLDER SERVICES

For account information and recent exchange transactions, Direct Investors
can call Galaxy Shareholder Services Monday through Friday, between the hours
of 9:00 a.m. to 5:00 p.m. (Eastern Time) at 1-800-628-0413.

Galaxy also offers a TDD service for the hearing impaired. Just call
1-800-696-6515, 24 hours a day, 7 days a week.

Direct Investors residing outside the United States can contact Galaxy by
calling 1-508-855-5237.

Investment returns and principal values will vary with market conditions
so that an investor's Retail Shares, when redeemed, may be worth more or less
than their original cost. Past performance is no guarantee of future results.
Unless otherwise indicated, total return figures include changes in share
price, and reinvestment of dividends and capital gains distributions, if any.

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 and Direct
Investors may elect to have their dividends reinvested in additional Retail
Shares of the same series of a 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 to Galaxy's transfer agent (see "Custodian and Transfer
Agent" below) and will become effective with respect to dividends paid after
its receipt.

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 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.

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.) Such ordinary income
distributions will qualify for the dividends received deduction for
corporations to the extent of the total qualifying dividends received by the
distributing Fund from domestic corporations for the taxable year.

Distribution by the Funds of the excess of their respective net long-term
capital gain over their 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 Retail 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.

Prior to purchasing shares of a Fund, the impact of capital gain
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any capital gain distribution paid
shortly after the purchase of shares of a Fund will have the effect of reducing
the per share net asset value by the per share amount of the distribution.
Furthermore, all or a portion of such distributions, although in effect a
return of capital to the shareholder, are subject to tax.

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 Funds and their sharehold-

25
<PAGE> 278
ers 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

Investors are advised to contact 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.

MANAGEMENT OF THE FUNDS

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.

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 dervative 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. Thomas and Marie M. Schofield serve as
co-portfolio managers of the High Quality Bond Fund. In this capacity, Mr.
Thomas and Ms. Schofield are primarily responsible for the day-to-day
management of this Fund's investment portfolio. Mr. Thomas, 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 the 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 so that it is entitled to receive advisory fees at the
annual rate of .55% of each 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 rates of .45%, .53% and .53%, respectively, of the Short-Term
Bond, Intermediate Government Income and High Quality Bond Funds' average daily
net assets.

26
<PAGE> 279
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 their net asset value per Retail Share or result in
financial losses 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

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

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 under Galaxy's Shareholder Services
Plan described below and holders of Retail B Shares of the Short-Term Bond and
High Quality Bond Funds bear the fees that are paid under Galaxy's Distribution
and Services Plan described below. 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 difference in
the expenses paid by the respective series will affect their performance.

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 Retail Share held, and
a proportionate fractional vote for each fractional Retail 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.

27
<PAGE> 280
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.

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act with respect to Retail B Shares of the Short-Term Bond and
High Quality Bond Funds. Under the Distribution and Services Plan, Galaxy may
pay (a) the Distributor or another person for expenses and activities intended
to result in the sale of Retail B Shares, including the payment of commissions
to broker-dealers and other industry professionals who sell Retail B Shares and
the direct or indirect cost of financing such payments, (b) Institutions for
shareholder liaison services, which means personal services for holders of
Retail B Shares and/or the maintenance of shareholder accounts, such as
responding to customer inquiries and providing information on accounts, and (c)
Institutions for administrative support services, which include but are not
limited to (i) transfer agent and subtransfer agent services for beneficial
owners of Retail B Shares; (ii) aggregating and processing purchase and
redemption orders; (iii) providing beneficial owners with statements showing
their positions in Retail B Shares; (iv) processing dividend payments; (v)
providing subaccounting services for Retail B Shares held beneficially; (vi)
forwarding shareholder communications, such as proxies, shareholder reports,
dividend and tax notices, and updating prospectuses to beneficial owners; and
(vii) receiving, translating and transmitting proxies executed by beneficial
owners.

Under the Distribution and Services Plan for Retail B Shares, payments by
Galaxy (i) for distribution expenses may not exceed the annual rate of .65% of
the average daily net assets attributable to the Short-Term Bond and High
Quality Bond Funds' outstanding Retail B Shares, and (ii) to an Institution for
shareholder liaison services and/or administrative support services may not
exceed the annual rates of .15% and .15%, respectively, of the average daily
net assets attributable to each such Funds' outstanding Retail B Shares which
are owned of record or beneficially by that Institution's Customers for whom
the Institution is the dealer of record or shareholder of record or with whom
it has a servicing relationship. As of the date of this Prospectus, Galaxy
intends to limit the Funds' payments for shareholder liaison and administrative
support services under the Plan to an aggregate fee of not more than .15% (on
an annualized basis) of the average daily net asset value of Retail B Shares
owned of record or beneficially by Customers of Institutions.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

28
<PAGE> 281
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, 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 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 15108, 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 including 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, distribution, 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

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 Funds may also advertise their performance using "average annual total
returns" over various periods of time. Such total return figure reflects 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
reflect the maximum front-end sales load charged by the Funds for Retail A
Shares and the applicable contingent deferred sales charge for Retail B Shares
and assume that dividends and capital gains distributions made by a Fund during
the period are reinvested in Fund shares.

The Funds may also advertise total return data without reflecting the
sales charge imposed on the purchase of Retail A Shares in accordance with the
rules of the SEC. Quotations that do not reflect the sales charge will be
higher than quotations that do reflect the sales charge.

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

29
<PAGE> 282
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 to accounts of Customers that have invested in 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 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
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, a particular Fund or a particular series of
shares 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, such Fund or such series of
shares, or (b) 67% or more of the shares of Galaxy, such Fund or such series of
shares present at a meeting if more than 50% of the outstanding shares of
Galaxy, such Fund or such series of shares are represented at the meeting in
person or by proxy.

30
<PAGE> 283

[RECYCLE LOGO]

50% Recycled Paper
10% Post-Consumer Waste

<PAGE> 284
GALAXY
CORPORATE BOND
FUND

FEBRUARY 29, 1996

PROSPECTUS

Trust Shares

FN-426 15026 (3/96) pkg. 50
<PAGE> 285
TRUST

THE GALAXY FUND

CORPORATE BOND FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 286

================================================================================

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 MAY NOT
LAWFULLY BE MADE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE

<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . 4
In General . . . . . . . . . . . . . . . . . . . . 4
Special Risk Considerations . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . 14
Purchase Procedures--Customers of
Institutions . . . . . . . . . . . . . . . . . 14
Purchase Procedures--Direct Investors . . . . . . . 14
Other Purchase Information . . . . . . . . . . . . 15
Redemption Procedures--Customers of
Institutions . . . . . . . . . . . . . . . . . 15
Redemption Procedures--Direct
Investors . . . . . . . . . . . . . . . . . . . 16
Other Redemption Information . . . . . . . . . . . 17
INFORMATION SERVICES . . . . . . . . . . . . . . . . 17
Galaxy Information Center . . . . . . . . . . . . . 17
Voice Response System . . . . . . . . . . . . . . . 17
Galaxy Shareholder Services . . . . . . . . . . . . 18
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . 18
TAXES . . . . . . . . . . . . . . . . . . . . . . . . 18
Federal . . . . . . . . . . . . . . . . . . . . . . 18
State and Local . . . . . . . . . . . . . . . . . . 19
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . 19
Investment Adviser . . . . . . . . . . . . . . . . 19
Authority to Act as Investment Adviser . . . . . . 20
Administrator . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . 21
Shareholder Services Plan . . . . . . . . . . . . . 21
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . 22
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . 22
EXPENSES . . . . . . . . . . . . . . . . . . . . . . 23
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . 23
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 24
</TABLE>

================================================================================
<PAGE> 287

THE GALAXY FUND

4400 Computer Drive For applications and information regarding
Westboro, MA 01581-5108 initial purchases and current performance,
call 1-800-628-0414. For additional
purchases, redemptions, exchanges and other
shareholder services, call 1-800-628-0143.

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 Corporate Bond Fund (the "Fund")
offered by Galaxy.

The Fund's investment objective is to seek a high level of current
income by investing primarily in investment grade, fixed-income obligations.
Subject to this objective, the Fund's investment adviser will consider the
total rate of return on portfolio securities in managing the Fund. At least 65%
of the Fund's total assets will be invested in obligations of private and
public corporations. Under normal market and economic conditions, the Fund will
invest substantially all of its assets in investment grade debt obligations
rated at the time of purchase within the four highest ratings of Standard &
Poor's Ratings Group ("S&P") or Moody's Investors Services, 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 an additional series of shares in the Fund
("Retail A Shares"). Retail A Shares will be 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.
As of the date of this Prospectus, however, Retail A Shares of the Fund are not
being offered by Galaxy and, accordingly, those investors eligible to purchase
Retail A Shares may currently purchase Trust Shares of the Fund. Trust Shares
and Retail A Shares 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 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 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE 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 __, 1996
<PAGE> 288
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 Trust Shares of the Fund expect to incur during the current
fiscal year. Examples based on the table are also shown.

<TABLE>
<CAPTION>
CORPORATE
SHAREHOLDER TRANSACTION EXPENSES BOND FUND
- -------------------------------- ---------
<S> <C>
Sales Load . . . . . . . . . . . . . . . . . . . . . . None
Sales Load on Reinvestment Dividends . . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . . . None
Redemption Fees(1) . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . .38%
----
Total Fund Operating Expenses (After Fee Waivers) . . . .93%
====
</TABLE>

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

(1) Direct Investors (as defined in below "How to Purchase and Redeem Shares")
are charged a $5.00 fee if redemption proceeds are paid by wire.

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>
Corporate Bond Fund . . . . . . . . . . . $8 $29 $50 $112
</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 1.13% 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 charged by affiliates of Fleet Investment Advisors, Inc.
or any other institution 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 distributed 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.

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<PAGE> 289
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, Retail A
Shares. As described below under "Description of Galaxy and Its Shares," Trust
Shares and Retail A 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 A Shares, and
(ii) Trust Shares and Retail A Shares bear differing transfer agency expenses.
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. 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.

CORPORATE BOND FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31,
1995(1)
---------
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $ 10.00
-------
Income from Investment Operations:
Net investment income (2) . . . . . . . . . . . . . . . . . . 0.61
Net realized and unrealized gain (loss) on investments . . . 0.74
-------
Total from Investment Operations: . . . . . . . . . . . . . 1.35
-------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . (0.61)
Dividends from net realized capital gains . . . . . . . . . . --
-------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . (0.61)
-------
Net increase (decrease) in net asset value . . . . . . . . . . 0.74
-------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $ 10.74
=======
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 13.85%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . $37,391
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . 6.61%(4)
Operating expenses including reimbursement/waiver . . . . . . 1.06%(4)
Operating expenses excluding reimbursement/waiver . . . . . . 1.26%(4)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 41%(3)
</TABLE>

- ---------------
(1) The Fund commenced operations on December 12, 1994.
(2) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the period ended October 31,
1995 was $0.57.
(3) Not Annualized.
(4) Annualized.

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<PAGE> 290
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek a high level of current
income. Subject to this objective, Fleet Investment Advisors, Inc., the Fund's
investment adviser (the "Investment Adviser" or "Fleet") will consider the
total rate of return on securities in managing the Fund. The Fund will invest
at least 65% of its total assets in corporate debt obligations, which shall
mean obligations of (i) domestic or foreign business corporations, which may be
convertible into common stock or other securities, or (ii) agencies,
instrumentalities or authorities which are organized in corporation form by one
or more states or political subdivisions in the United States or by one or more
foreign governments. The value of convertible securities fluctuates in relation
to changes in interest rates like bonds and, in addition, fluctuates in
relation to the underlying common stock. The Fund may also invest in
obligations issued or guaranteed by the U.S. or foreign governments, their
agencies or instrumentalities, or by supranational banks or other
organizations. Examples of supranational banks 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 invest, from time to time, in municipal securities.
The purchase of municipal securities may be advantageous when, as a result of
their tax status or prevailing economic, regulatory or other circumstances, the
performance of such securities is expected to be 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. See "Other
Investment Policies and Risk Considerations." The Fund may also invest in money
market instruments. 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 (and not less than 95%) of its assets in debt obligations
rated, at the time of purchase, within the four highest ratings of S&P or
Moody's (or which, if unrated, are determined by the Investment Adviser to be
of comparable quality), obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and money market instruments.
Debt obligations rated in the fourth highest rating categories (BBB or Baa)
possess speculative characteristics and are more susceptible than those in the
top three rating categories to changes in economic or other conditions that
could lead to a weakened capacity to make payments of interest and principal.
In the event that the rating of any debt obligation held by the Fund falls
below the four highest rating categories of S&P or Moody's, the Fund will not
be obligated to dispose of such investment obligation and may continue to hold
the obligation as long as (i) the value of all the debt obligations of the Fund
which are rated below such four highest rating categories does not exceed 5% of
the Fund's net assets, and (ii) in the opinion of the Investment Adviser, such
investment is considered appropriate under the circumstances. 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 BBB 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.

In addition, the Fund may invest in debt obligations of foreign
issuers such as foreign corporations and banks, as well as foreign governments
and their political subdivisions. Such investments may subject the Fund to
special investment risks. See "Special Risks and Considerations."

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<PAGE> 291
The Fund may enter into currency forward contracts (agreements to
exchange one currency for another at a future date) to manage currency risks
and to facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse rate changes, they
involve a risk of loss if the Investment Adviser fails to predict foreign
currency values correctly.

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" 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.

SPECIAL RISK CONSIDERATIONS

Generally, the market value of fixed income securities in the Fund can
be expected to vary inversely to changes in prevailing interest rates. During
periods of declining interest rates, the market value of investment portfolios
comprised primarily of fixed income securities, such as the Fund, will tend to
increase, and during periods of rising interest rates, the market value will
tend to decrease. In addition, during periods of declining interest rates, the
yields of investment portfolios comprised primarily of fixed income securities
will tend to be higher than prevailing market rates and, in periods of rising
interest rates, yields will tend to be somewhat lower. Fixed income securities
with longer maturities, which tend to produce higher yields, are subject to
potentially greater capital appreciation and depreciation than obligations with
shorter maturities. Changes in the financial strength of an issuer or changes
in the ratings of any particular security may also offset the value of these
investments. Fluctuations in the market value of fixed income securities
subsequent to their acquisition will not offset cash income from such
securities but will be reflected in the Fund's net asset value.

Although the 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 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 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

5
<PAGE> 292
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.

The Fund's investments in obligations rated below the four highest
ratings of S&P and Moody's have different risks than investments in securities
that are rated "investment grade." Risk of loss upon default by the issuer is
significantly greater because lower-rated securities are generally unsecured
and are often subordinated to other creditors of the issuer, and because the
issuers frequently have high levels of indebtedness and are more sensitive to
adverse economic conditions, such as recessions, individual corporate
developments and increasing interest rates than are investment grade issuers.
As a result, the market price of such securities may be particularly volatile.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Foreign Investments

The Fund may invest in debt obligations of foreign issuers such as
foreign corporations and banks, as well as foreign governments and their
political subdivisions. Such investments may subject the Fund to special
investment risks. See "Special Risk Considerations" above. The Fund will not
invest more than 20% of its net assets in the securities of foreign issuers.

The Fund may enter into currency forward contracts (agreements to
exchange one currency for another at a future date) to manage currency risks
and to facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate changes,
they involve a risk of loss if Fleet fails to predict foreign currency values
correctly.

U.S. Government Obligations and Money Market Instruments

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.

6
<PAGE> 293
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.

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 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.

Repurchase and Reverse Repurchase Agreements

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<PAGE> 294
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 15% 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 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.

8
<PAGE> 295
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
("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 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 assets, the Fund's liquidity and the ability
of the Investment Adviser to manage the Fund might 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
its investment objective.

Asset-Backed Securities

9
<PAGE> 296
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 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 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> 297
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.

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 15% limitation on such
investments, unless there is an active and substantial secondary market for the
particular instrument and market quotations are readily available.

Zero Coupon Bonds

Zero coupon bonds do not make interest payments; instead, they are
sold at a deep discount from their face value and are redeemed at face value
when they mature. Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change. In calculating its
daily dividend, the Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.

A broker/dealer creates a derivative zero by separating the interest
and principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury Securities),
TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury Receipts) are
examples of derivative zeros.

The Federal Reserve Bank creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them as
individual securities. Bonds issued by the Resolution Funding Corporation
(REFCORP) and the Financing Corporation (FICO) can also be separated in this
fashion. Original issue zeros are zero coupon securities originally issued by
the U.S. Government, a U.S. Government agency or a corporation in zero coupon
form.

Portfolio Turnover

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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 "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 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 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 its total assets at the time of such borrowing.

3. Invest more than 15% 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 its 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 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

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of the Fund during any period that qualified institutional buyers were no
longer interested in purchasing these securities. For purposes of the 15%
limitation on purchases of illiquid instruments described under Investment
Limitation No. 3 above, Rule 144A securities will not be considered to be
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.

PRICING OF SHARES

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.

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PURCHASE OF SHARES

The Distributor has established several procedures to enable different
types of investors to purchase Trust Shares of the Fund. Trust Shares may be
purchased by investors ("Customers") who maintain qualified accounts at bank
and trust institutions, including subsidiaries of Fleet Financial Group, Inc.,
who are participants in employer-sponsored defined contribution plans, or who
are customers of Fleet Brokerage Securities, Inc., Fleet Securities, Inc.,
Fleet Financial Group, Inc., its affiliates, their correspondent banks, and
other qualified banks, savings and loan associations and broker/dealers
(collectively, "Institutions"). Trust Shares of the Fund may also be purchased
by individuals, corporations or other entities, who submit a purchase
application to Galaxy, purchasing directly for their own accounts or for the
accounts of others ("Direct Investors"). Purchases of Trust Shares will be
effected only on days on which the Distributor, Galaxy's custodian and Galaxy's
transfer agent are open for business ("Business Days"). If an Institution
accepts a purchase order from a 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 Distributor's procedures.

PURCHASE PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Purchase orders for Trust Shares are placed by Customers of
Institutions through their Institution. The Institution is responsible for
transmitting Customer purchase orders to the Distributor 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. Trust Shares purchased by Institutions on behalf of their
Customers will normally be held of record by the Institution and beneficial
ownership of Trust Shares will be recorded by the Institution and reflected in
the account statements provided to their Customers. Galaxy's transfer agent may
establish an account of record for each Customer of an Institution reflecting
beneficial ownership of Trust Shares. Depending on the terms of the arrangement
between a particular Institution and Galaxy's transfer agent, confirmations of
Trust Share purchases and redemptions and pertinent account statements will
either be sent by Galaxy's transfer agent directly to a Customer with a copy to
the Institution, or will be furnished directly to the Customer by the
Institution. Other procedures for the purchase of Trust Shares established by
Institutions in connection with the requirements of their Customer accounts may
apply. Customers wishing to purchase Trust Shares through their Institution
should contact such entity (in the case of employee plans, their employer)
directly for appropriate purchase instructions.

Trust Shares of the Fund 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.

PURCHASE PROCEDURES -- DIRECT INVESTORS

Purchases by Mail. Trust Shares may be purchased by completing a
purchase application and mailing it, together with a check payable to the Fund
to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling the Distributor at
1-800-628-0414.

Subsequent investments in an existing account may be made at any time
by sending a check payable to the Fund to Galaxy at the address above along
with either (a) the detachable form that regularly accompanies

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<PAGE> 301
confirmation of a prior transaction, (b) a subsequent order form that may be
obtained from the Distributor, or (c) a letter stating the amount of the
investment, the name of the Fund and the account number in which the investment
is to be made. If a Direct Investor's check does not clear, the purchase will
be cancelled.

Purchases by Wire. Direct Investors may also purchase Trust Shares of
the Fund by arranging to transmit Federal funds by wire to Fleet Bank of
Massachusetts, N.A. as agent for First Data Investor Services Group, Inc.
(formerly known as The Shareholder Services Group, Inc. d/b/a 440 Financial)
("FDISG"), Galaxy's transfer agent. Such purchases may only be made on days on
which the Distributor, Galaxy's custodian and Galaxy's transfer agent are open
for business. Prior to making any purchase by wire, an investor must telephone
1-800-628-0413 to place an order and for instructions. Federal funds and
registration instructions should be wired through the Federal Reserve System
to:

Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
ABA # 0110-0013-8
DDA # 79673-5702
Ref: The Galaxy Fund
Shareholder Name
Shareholder Account Number

Direct Investors making initial investments by wire must promptly
complete a purchase application and forward it to The Galaxy Fund, P.O. Box
15108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108. Applications
may be obtained by calling the Distributor at 1-800-628-0414. Redemptions will
not be processed until the application in proper form has been received. Direct
Investors making subsequent investments by wire should follow the instructions
above.

OTHER PURCHASE INFORMATION

Although Galaxy does not impose any minimum initial or subsequent
investment requirement with respect to Trust Shares of the Fund, 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.

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

Effective Time of Purchases. A purchase order for Trust Shares
received and accepted by the Distributor from an Institution or a Direct
Investor on a Business Day prior to the close of regular trading hours on the
Exchange (currently, 4:00 p.m. Eastern Time) will be executed at the net asset
value per share determined on that date, 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 third Business Day following the receipt of
such order. Such order will be executed on the day on which the purchase price
is received in proper form. 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 or Direct Investor submitting the order. Payment for orders which
are not received or accepted will be returned.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

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Distributor and to credit its Customers' accounts with the redemption proceeds
on a timely basis. No charge for wiring redemption payments to Institutions is
imposed by Galaxy, although Institutions may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution. Payment for redemption
orders received by the Distributor on a Business Day will normally be wired on
the third Business Day to the Institution. However, 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.

REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Trust Shares may be redeemed by a Direct Investor
by submitting a written request for redemption to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the number of shares to be
redeemed, (ii) identify the shareholder account number and tax identification
number, and (iii) be signed by each registered owner exactly as the Trust
Shares are registered. A redemption request for an amount in excess of $50,000,
or for any amount where (i) the proceeds are to be sent elsewhere than the
address of record (excluding the transfer of assets to a successor custodian),
(ii) the proceeds are to be sent to an address of record which has changed in
the preceding 90 days, or (iii) the check is to be made payable to someone
other than the registered owner(s), must be accompanied by signature
guarantees. The guarantor of a signature must be a bank which is a member of
the FDIC, a trust company, a member firm of a national securities exchange or
any other eligible guarantor institution. The Distributor will not accept
guarantees from notaries public. The Distributor may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians. A redemption request will not be deemed
to be properly received until the Distributor receives all required documents
in proper form. The Fund ordinarily will make payment for Trust Shares redeemed
by mail within three Business Days after proper receipt by the Distributor of
the redemption request. Questions with respect to the proper form for
redemption requests should be directed to the Distributor at 1-800-628-0413.

Redemption by Telephone. Direct Investors may redeem Trust Shares by
calling 1-800-628-0413 and instructing the Distributor to mail a check for
redemption proceeds of up to $50,000 to the address of record. A redemption
request for an amount in excess of $50,000, or for any amount where (i) the
proceeds are to be sent elsewhere than the address of record (excluding the
transfer of assets to a successor custodian), (ii) the proceeds are to be sent
to an address of record which has changed in the preceding 90 days, or (iii)
the check is to be made payable to someone other than the registered owner(s),
must be accompanied by signature guarantees. (See "Redemption by Mail.")

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem
Trust Shares by instructing the Distributor by wire or telephone to wire the
redemption proceeds of $1,000 or more directly to a Direct Investor's account
at any commercial bank in the United States. The Distributor charges a $5.00
fee for each wire redemption and the fee is deducted from the redemption
proceeds. The redemption proceeds must be paid to the same bank and account as
designated on the application or in written instructions subsequently received
by the Distributor. To request redemption of Trust Shares by wire, Direct
Investors should call the Distributor at (800) 628-0413.

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In order to arrange for redemption by wire after an account has been
opened or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to Galaxy, at the address listed above
under "Redemption by Mail." Such requests must be signed by the investor and
accompanied by a signature guarantee (see "Redemption by Mail" above for
details regarding signature guarantees). Further documentation may be requested
from corporations, executors, administrators, trustees, or guardians. If, due
to temporary adverse conditions, investors are unable to effect telephone
transactions, investors are encouraged to follow the procedures for
transactions by wire or mail which are described above.

Galaxy reserves the right to refuse a wire or telephone redemption if
it believes it is advisable to do so. Procedures for redeeming Trust Shares by
wire or telephone may be modified or terminated at any time by Galaxy or the
Distributor. In attempting to confirm that telephone instructions are genuine,
Galaxy will use such procedures as are considered reasonable, including
recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security number, address and/or bank). If Galaxy fails to follow established
procedures for the authentication of telephone instructions, it may be liable
for losses due to unauthorized or fraudulent telephone transactions.

No redemption by a Direct Investor will be processed until Galaxy has
received a completed application with respect to the Direct Investor's account.

If any portion of the Trust Shares to be redeemed represents an
investment made by personal check, Galaxy reserves the right to delay payment
of proceeds until the Distributor is reasonably satisfied that the check has
been collected which could take up to 15 days from the purchase date. A Direct
Investor who anticipates the need for more immediate access to his or her
investment should purchase Trust Shares by federal funds or bank wire or by
certified or cashier's check. Banks normally impose a charge in connection with
the use of bank wires, as well as certified checks, cashier's checks and
Federal funds.

OTHER REDEMPTION INFORMATION

If an investor has agreed with a particular Institution to maintain a
minimum balance in his or her account at the Institution with respect to Trust
Shares of the Fund, and the balance in such account falls below that minimum,
the Customer may be obliged by the Institution to redeem all of his or her
shares.

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Distributor. Galaxy reserves the
right to wire redemption proceeds within seven days after receiving the
redemption order if, in its judgment, an earlier payment could adversely affect
the Fund.

INFORMATION SERVICES

GALAXY INFORMATION CENTER -- 24 HOUR INFORMATION SERVICE

The Galaxy Information Center provides Fund performance and investment
information 24 hours a day, 7days a week. To access the Galaxy Information
Center Automated Telephone Service, just call 1-800-628-0414.

VOICE RESPONSE SYSTEM

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conditions described above under "How To Purchase and Redeem Shares." To access
the Voice Response System, just call 1-800-FOR-GLXY (367-4599) from any
touch-tone telephone and follow the recorded instructions.

GALAXY SHAREHOLDER SERVICES

For account information, Direct Investors can call Galaxy Shareholder
Services Monday through Friday, between the hours of 9:00 a.m. to 5:00 p.m.
(Eastern Time) at 1-800-628-0413.

Galaxy also offers a TDD service for the hearing impaired. Just call
1-800-696-6515, 24 hours a day, 7 days a week.

Direct Investors residing outside the United States can contact Galaxy
by calling 1-508-855-5237.

Investment returns and principal values will vary with market
conditions so that an investor's Trust Shares, when redeemed, may be worth more
or less than their original cost. Past performance is no guarantee of future
results. Unless otherwise indicated, total return figures include changes in
share price, and reinvestment of dividends and capital gains distributions, if
any.

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 and Direct
Investors 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
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 of
Institutions 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.

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<PAGE> 305
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 Trust 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 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 Trust
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 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.

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

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<PAGE> 306
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.

The Fund's portfolio manager, David Lindsay, is primarily responsible
for the day-to-day management of the Fund's investment portfolio. Mr. Lindsay,
a Senior Vice President and Chief Bond Plus Investment Officer, has been with
Fleet and its predecessors since 1986 and has been the Fund's portfolio manager
since its inception.

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 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. For the period from December 12, 1994 (commencement of
operations) to October 31, 1995, Fleet received advisory fees at the effective
annual rate of 0.55% of the Fund's average daily net assets.

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 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

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<PAGE> 307
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 period from December 12, 1994 (commencement of operations) to October 31,
1995, the Fund paid FDISG administration fees at the effective annual rate of
0.088% of its average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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.

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

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annual rate of up to .30% of the average daily net asset value of Retail A
Shares owned beneficially by Customers. Institutions may 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 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

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, 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 01581-5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108.

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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

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 the
Trust Shares and Retail A Shares of the Fund.

The Fund may also advertise its 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 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 gains 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.

23
<PAGE> 310
Any additional fees charged directly by Institutions 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 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.

24
<PAGE> 311

[GALAXY FUNDS LOGO]

TAX-EXEMPT BOND FUND
NEW YORK MUNICIPAL BOND FUND
CONNECTICUT MUNICIPAL BOND FUND
MASSACHUSETTS MUNICIPAL BOND FUND
RHODE ISLAND MUNICIPAL BOND FUND

[GALAXY LOGO]

FN-17015040(3/96) pkg.50 February 29, 1996
<PAGE> 312
TRUST

THE GALAXY FUND

TAX-EXEMPT BOND FUND
NEW YORK MUNICIPAL BOND FUND
CONNECTICUT MUNICIPAL BOND FUND
MASSACHUSETTS MUNICIPAL BOND FUND
RHODE ISLAND MUNICIPAL BOND FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 313
================================================================================

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 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>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . 10
Tax-Exempt Bond Fund . . . . . . . . . . . . . . . . . . . 10
New York Municipal Bond Fund . . . . . . . . . . . . . . . 10
Connecticut Municipal Bond Fund . . . . . . . . . . . . . . 11
Massachusetts Municipal Bond Fund . . . . . . . . . . . . . 13
Rhode Island Municipal Bond Fund . . . . . . . . . . . . . 14
Special Considerations and Risks . . . . . . . . . . . . . 15
Other Investment Policies and
Risk Considerations . . . . . . . . . . . . . . . . . . . 17
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . 24
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . . 25
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . 25
Distributor . . . . . . . . . . . . . . . . . . . . . . . . 25
Purchase of Shares . . . . . . . . . . . . . . . . . . . . 25
Redemption of Shares . . . . . . . . . . . . . . . . . . . 26
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 27
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . 27
State and Local . . . . . . . . . . . . . . . . . . . . . . 28
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 29
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . 29
Investment Adviser . . . . . . . . . . . . . . . . . . . . 29
Authority to Act as Investment Adviser . . . . . . . . . . 30
Administrator . . . . . . . . . . . . . . . . . . . . . . . 30
DESCRIPTION OF GALAXY AND ITS
SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Shareholder Services Plan . . . . . . . . . . . . . . . . . 32
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . 32
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . 33
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

================================================================================
<PAGE> 314
THE GALAXY FUND

4400 Computer Drive For applications and information
Westboro, Massachusetts 01581-5108 regarding initial purchases and current
performance, call 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 five series of Galaxy's shares
(collectively, the "Trust Shares") which represent interests in five separate
investment portfolios (individually, a "Fund," collectively, the "Funds")
offered to investors by Galaxy, each having its own investment objective and
policies:

The TAX-EXEMPT BOND FUND'S investment objective is to provide
shareholders with as high a level of current interest income free of Federal
income tax as is consistent with preservation of capital. Under normal market
and economic conditions, the Fund will invest substantially all of its assets
in bonds and notes issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia and their respective
authorities, agencies, instrumentalities and political subdivisions the
interest on which, in the opinion of bond counsel to the issuer, is exempt from
regular Federal income tax ("Municipal Securities"). The Fund's average
portfolio maturity will vary in response to variations in the comparative
yields of differing maturities of instruments.

The NEW YORK MUNICIPAL BOND FUND'S investment objective is to seek as
high a level of current interest income exempt from Federal income tax and, to
the extent possible, from New York State and New York City personal income tax,
as is consistent with relative stability of principal. Under normal market and
economic conditions, the Fund will invest at least 65% of its assets in New
York Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the
Investment Company Act of 1940 (the "1940 Act").

The CONNECTICUT MUNICIPAL BOND FUND'S investment objective is to seek
as high a level of current interest income exempt from Federal income tax and,
to the extent possible, from Connecticut personal income tax, as is consistent
with relative stability of principal. Under normal market and economic
conditions, the Fund will invest at least 65% of its assets in Connecticut
Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the 1940
Act.

The MASSACHUSETTS MUNICIPAL BOND FUND'S investment objective is to
seek as high a level of current interest income exempt from Federal income tax
and, to the extent possible, from Massachusetts personal income taxes as is
consistent with relative stability of principal. Under normal market and
economic conditions, the Fund will invest at least 65% of its assets in
Massachusetts Municipal Securities. The Fund's average portfolio maturity will
vary in response to variations in the comparative yields of differing
maturities of instruments. The Fund is a non-diversified investment portfolio
under the 1940 Act.

The RHODE ISLAND MUNICIPAL BOND FUND'S investment objective is to seek
as high a level of current interest income exempt from Federal income tax and,
to the extent possible, from Rhode Island personal income tax, as is consistent
with relative stability of principal. Under normal market and economic
conditions, the Fund will invest at least 65% of its assets in Rhode Island
Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the 1940
Act.
<PAGE> 315
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. Galaxy is also authorized to issue an additional series of shares, Retail
A Shares, in the New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds, and two
additional series of shares, Retail A Shares and Retail B Shares, in the
Tax-Exempt 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 Corporation, Fleet Securities, Inc., Fleet Financial Group,
Inc., its affiliates, their correspondent banks and other qualified banks,
savings and loans associations and broker/dealers on behalf of their customers.
Trust Shares, 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. As of the date of
this Prospectus, Trust Shares of the Rhode Island Municipal Bond Fund were not
being offered to investors. 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. (the
"Investment Adviser" or "Fleet") 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 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 THE 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

2
<PAGE> 316
EXPENSE SUMMARY

<TABLE>
<CAPTION>
NEW YORK CONNECTICUT MASSACHUSETTS RHODE ISLAND
TAX-EXEMPT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
SHAREHOLDER TRANSACTION EXPENSES BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
- -------------------------------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales Load . . . . . . . . . . . . . . None None None None None
Sales Load on Reinvested Dividends . . None None None None None
Deferred Sales Load . . . . . . . . . . None None None None None
Redemption Fees . . . . . . . . . . . . None None None None None
Exchange Fees . . . . . . . . . . . . . None None None None None

<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fees
(After Fee Waivers) . . . . . . . . . .55% .55% .25% .25% .25%
12b-1 Fees . . . . . . . . . . . . . . None None None None None
Other Expenses (After Expense
Reimbursements) . . . . . . . . . . . .15% .17% .48% .48% .70%
----- ----- ----- ----- -----
Total Fund Operating Expenses
(After Fee Waivers and
Expense Reimbursements) . . . . . . . .70% .72% .73% .73% .95%
===== ===== ===== ===== =====
</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>
Tax-Exempt Bond Fund . . . . . . . . . . . . . . . . . . . . . . . $7 $22 $38 $85
New York Municipal Bond Fund . . . . . . . . . . . . . . . . . . . $7 $23 $39 $88
Connecticut Municipal Bond Fund . . . . . . . . . . . . . . . . . $7 $23 $40 $89
Massachusetts Municipal Bond Fund . . . . . . . . . . . . . . . . $7 $23 $40 $89
Rhode Island Municipal Bond Fund . . . . . . . . . . . . . . . . . $10 $30 $52 $114
</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
Funds will bear directly or indirectly. The information contained in the
Expense Summary and Example with respect to Trust Shares of the Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond and Massachusetts
Municipal Bond Funds is based on expenses incurred by these Funds during the
last fiscal year, restated to reflect the expenses each Fund expects to incur
during the current fiscal year on its Trust Shares. Information contained in
the Expense Summary and Example with respect to Trust Shares of the Rhode
Island Municipal Bond Fund is based on expenses the Fund expects to incur
during the current fiscal year on its Trust Shares. Without voluntary fee
waivers and expense reimbursements by the Investment Adviser and/or
Administrator, "Advisory Fees" would be .75%, .75%, .75%, .75% and .75%, Other
Expenses would be .21%, .32%, .56%, .53% and .85% and Total Fund Operating
Expenses would be .96%, 1.07%, 1.31%, 1.28% and 1.60% for Trust Shares of the
Tax-Exempt Bond Fund, New York Municipal Bond Fund, Connecticut Municipal Bond
Fund, Massachusetts Municipal Bond Fund and Rhode Island Municipal Bond Fund,
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 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.

3
<PAGE> 317
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 New York Municipal Bond Fund, Connecticut Municipal Bond Fund,
Massachusetts Municipal Bond Fund and Rhode Island Municipal Bond Fund, and two
additional series of shares, Retail A Shares and Retail B Shares, in the
Tax-Exempt 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 the Funds 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 each Fund's outstanding Retail A Shares, (ii) Retail B Shares of the
Tax-Exempt Bond 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 fiscal year ended
October 31, 1995, and prior periods for the Tax-Exempt Bond, New York Municipal
Bond, Connecticut Municipal Bond and Massachusetts Municipal 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 Trust Shares and
Retail A Shares of the Funds. As of the date of this Prospectus, Trust Shares
of the Rhode Island Municipal Bond Fund had not yet been offered to investors.
Information in the financial highlights for the Rhode Island Municipal Bond
Fund sets forth certain historic investment results of Retail A Shares of the
Fund and is intended to provide investors with a perspective as to that Fund's
financial history. More information about the performance of the Funds 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.

4
<PAGE> 318
TAX-EXEMPT BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
---------------------- YEAR ENDED PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(2) OCTOBER 31, 1992(1,2)
---------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . $ 9.99 $ 11.12 $ 10.11 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . . 0.54 0.53 0.54 0.34
Net realized and unrealized
gain/(loss) on investments . . . . . . . . . . . . 0.79 (1.04) 1.01 0.11
------- ------- ------- -------
Total From Investment Operations . . . . . 1.33 (0.51) 1.55 0.45
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . (0.54) (0.53) (0.54) (0.34)
Dividends from net realized capital gains . . . . . -- -- -- --
Dividends in excess of net realized capital gains . -- (0.09) -- --
------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . . (0.54) (0.62) (0.54) (0.34)
------- ------- ------- -------
Net increase/(decrease) in net asset value . . . . . . 0.79 (1.13) 1.01 0.11
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . $ 10.78 $ 9.99 $ 11.12 $ 10.11
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . 13.62% (4.75%) 15.63% 4.55%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . $91,740 $91,647 $144,048 $15,891
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . 5.18% 5.01% 5.00% 5.03%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . 0.72% 0.78% 0.64% 0.42%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . 0.97% 1.00% 1.08% 2.15%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . 11% 17% 38% 11%(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 reimbursement and
waiver of fees by the Investment Adviser and/or Administrator for the
years ended October 31, 1995 and 1994 were $0.51 and $0.50, respectively.

(4) Net investment income per share before fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator for the year
ended October 31, 1993 and for the period ended October 31, 1992 were
$0.49 and $0.23, respectively.

(5) Not Annualized.

(6) Annualized.

5
<PAGE> 319
NEW YORK MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
---------------------- YEAR ENDED PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(2) OCTOBER 31, 1992(1,2)
---------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . $ 9.89 $ 11.04 $ 10.00 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . 0.51 0.49 0.50 0.38
Net realized and unrealized gain/(loss) on
investments . . . . . . . . . . . . . . . . . . 0.89 (1.15) 1.04 --
------- ------- ------- -------
Total From Investment Operations . . . . 1.40 (0.66) 1.54 0.38
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . (0.51) (0.49) (0.50) (0.38)
Dividends from net realized capital gains . . . . -- -- -- --
------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . (0.51) 0.49 (0.50) (0.38)
------- ------- ------- -------
Net increase/(decrease) in net asset value . . . . . 0.89 (1.15) 1.04 --
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . $ 10.78 $ 9.89 $ 11.04 $ 10.00
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . 14.23% (6.14%) 15.66% 3.83%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . $23,077 $24,209 $70,242 $20,144
Ratios to average net assets:
Net investment income including:
reimbursement/waiver . . . . . . . . . . . . . . 4.91% 4.64% 4.54% 5.22%(6)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . 0.74% 0.87% 0.87% 0.65%(6)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . 1.07% 1.08% 1.19% 1.70%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . 5% 18% 3% 19%(5)
</TABLE>

- ---------------
(1) The Fund commenced operations on December 31, 1991.

(5) Not Annualized.

(6) Annualized.

6
<PAGE> 320
CONNECTICUT MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
--------------------- PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(1,2)
--------------------- ---------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 9.22 $10.32 $ 10.00
------ ------ -------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . . . . 0.46 0.46 0.25
Net realized and unrealized gain/(loss) on investments . 0.91 (1.10) 0.32
------ ------ -------
Total From Investment Operations . . . . . . . . 1.37 (0.64) 0.57
------ ------ -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . (0.46) (0.46) (0.25)
Dividends from net realized capital gains . . . . . . . -- -- --
------ ------ -------
Total Dividends: . . . . . . . . . . . . . . . . (0.46) (0.46) (0.25)
------ ------ -------
Net increase/(decrease) in net asset value . . . . . . . . 0.91 (1.10) 0.32
------ ------ -------
Net Asset Value, End of Period . . . . . . . . . . . . . . $10.13 $ 9.22 $ 10.32
====== ====== =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . 15.21% (6.37%) 5.80%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $4,083 $4,419 $18,771
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.76% 4.66% 4.30%(6)
Operating expenses including reimbursement/waiver 0.45% 0.23% 0.00%(6)
Operating expenses excluding reimbursement/waiver 1.24% 1.41% 1.73%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 7% 4% 7%(5)
</TABLE>

- ---------------
(1) The Fund commenced operations on March 16, 1993.

(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 fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator for the
period ended October 31, 1993 was $0.15.

(5) Not Annualized.

(6) Annualized.

7
<PAGE> 321
MASSACHUSETTS MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
--------------------- PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(1,2)
--------------------- ---------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . $ 9.12 $10.24 $ 10.00
------ ------ -------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . 0.45 0.48 0.29
Net realized and unrealized
gain/(loss) on investments . . . . . . . . . . . 0.86 (1.12) 0.24
------ ------ -------
Total From Investment Operations . . . . . 1.31 (0.64) 0.53
------ ------ -------
Less Dividends:
Dividends from net investment income . . . . . . . (0.45) (0.48) (0.29)
Dividends from net realized capital gains . . . . -- -- --
------ ------ -------
Total Dividends: . . . . . . . . . . . . . (0.45) (0.48) (0.29)
------ ------ -------
Net increase/(decrease) in net asset value . . . . . 0.86 (1.12) 0.24
------ ------ -------
Net Asset Value, End of Period . . . . . . . . . . . $ 9.98 $ 9.12 $ 10.24
====== ====== =======
Total Return . . . . . . . . . . . . . . . . . . . . 14.72% (6.46%) 5.42%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . $7,607 $5,617 $20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.73% 4.89% 4.87%(6)
Operating expenses including reimbursement/waiver 0.52% 0.33% 0.05%(6)
Operating expenses excluding reimbursement/waiver 1.31% 1.41% 1.82%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . 19% 11% 0%(5)
</TABLE>

- ---------------
(1) The Fund commenced operations on March 12, 1993.

(4) Net investment income per share before fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator for the
period ended October 31, 1993 was $0.18.

(5) Not annualized.

(6) Annualized.

8
<PAGE> 322
RHODE ISLAND MUNICIPAL BOND FUND
(FOR A RETAIL SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1995(1)
-------------------
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . $ 10.00
-------
Income From Investment Operations:
Net Investment Income(2) . . . . . . . . . . . . . 0.44
Net realized and unrealized gain (loss) on investments 0.67
-------
Total From Investment Operations . . . . . 1.11
-------
Less Dividends:
Dividends from net investment income . . . . . . . (0.44)
Dividends from net realized capital gains . . . . --
-------
Total Dividends: . . . . . . . . . . . . . (0.44)
-------
Net increase (decrease) in net asset value . . . . . 0.67
-------
Net Asset Value, End of Period . . . . . . . . . . . $ 10.67
=======
Total Return . . . . . . . . . . . . . . . . . . . . 11.29%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . $10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver 5.13%(4)
Operating expenses including reimbursement/waiver 0.40%(4)
Operating expenses excluding reimbursement/waiver 2.25%(4)
Portfolio Turnover Rate . . . . . . . . . . . . . . . 34%(3)
</TABLE>

- ---------------
(1) The Fund commenced operations on December 20, 1994. On September 7, 1995,
Retail Shares of the Fund were redesignated "Retail A Shares".

(2) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the period ended October 31,
1995 was $0.28.

(3) Not annualized.

(4) Annualized.

9
<PAGE> 323
INVESTMENT OBJECTIVES AND POLICIES

Fleet Investment Advisors, Inc., the Funds' investment adviser (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.

TAX-EXEMPT BOND FUND

The Tax-Exempt Bond Fund's investment objective is to provide
shareholders with as high a level of current interest income free of Federal
income tax as is consistent with preservation of capital. To achieve this
objective, the Fund will invest substantially all of its assets in debt
obligations issued by or on behalf of states, territories and possessions of
the United States, the District of Columbia and their respective authorities,
agencies, instrumentalities and political subdivisions, the interest on which,
in the opinion of bond counsel to the issuer, is exempt from regular Federal
income tax ("Municipal Securities"). The Fund's average weighted maturity will
vary in response to variations in comparative yields of differing maturities of
instruments, in accordance with the Fund's investment objective.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in Municipal
Securities, primarily bonds (at least 65% under normal market conditions).
Municipal Securities will consist primarily of issues which are rated at the
time of purchase within the three highest ratings assigned by Standard & Poor's
Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") or
unrated instruments determined by the Fund's Investment Adviser to be of
comparable quality. Municipal Securities rated within the three highest ratings
of S&P or Moody's are considered to be investment grade. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The Fund may from time to time, during temporary defensive periods,
hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. Uninvested cash reserves will not earn income.
Such taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; or (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments. Under normal market conditions, the Fund anticipates that not
more than 5% of its net assets will be invested in any one category of taxable
securities. For more information, see "Other Investment Policies and Risk
Considerations" below.

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

NEW YORK MUNICIPAL BOND FUND

10
<PAGE> 324
principal. To achieve this objective, the Fund will invest primarily in New
York Municipal Securities as defined below. The Fund's average portfolio
maturity will vary in response to variations in the comparative yields of
differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of New York and other states,
territories and possessions of the United States, the District of Columbia and
their respective authorities, agencies, instrumentalities and political
sub-divisions, the interest on which, in the opinion of bond counsel to the
issuer, is exempt from regular Federal income tax ("Municipal Securities"). The
Fund expects that except during temporary defensive periods or when, in the
opinion of the Fund's Investment Adviser, suitable obligations are unavailable
for investment, at least 65% of the Fund's assets will be invested in debt
securities of the State of New York, its political sub-divisions, authorities,
agencies, instrumentalities and corporations, and certain other governmental
issuers such as Puerto Rico, the interest on which, in the opinion of bond
counsel to the issuer, is exempt from Federal, New York State and New York City
personal income taxes ("New York Municipal Securities"). See "Special
Considerations and Risks -- New York Municipal Bond Fund" below for a
discussion of certain risks in investing in New York Municipal Securities.
Dividends derived from interest on Municipal Securities other than New York
Municipal Securities will generally be exempt from regular Federal income tax
but may be subject to New York State and New York City personal income tax. See
"Taxes" below.

Municipal Securities purchased by the Fund will consist primarily of
issues which are rated at the time of purchase within the three highest ratings
assigned by S&P or Moody's or unrated instruments determined by the Fund's
Investment Adviser to be of comparable quality. Municipal Securities rated
within the three highest ratings of S&P or Moody's are considered to be
investment grade. Municipal Securities purchased by the Fund whose ratings are
subsequently downgraded below the three highest ratings of S&P and Moody's will
be disposed of in an orderly manner, normally within 30 to 60 days. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

The Fund may from time to time, during temporary defensive periods,
hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. Uninvested cash reserves will not earn income.
Such taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

CONNECTICUT MUNICIPAL BOND FUND

11
<PAGE> 325
possible, from Connecticut personal income tax, as is consistent with relative
stability of principal. To achieve this objective, the Fund will invest
primarily in Connecticut Municipal Securities as defined below. The Fund's
average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of Connecticut and other
states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular Federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, at least 65% of the Fund's assets will be
invested in Municipal Securities issued by or on behalf of the State of
Connecticut, its political sub-divisions, or any public instrumentality, state
or local authority, district or similar public entity created under the laws of
Connecticut, and certain other governmental issuers such as Puerto Rico, the
interest on the obligations of which is exempt from Connecticut personal income
taxes by virtue of Federal law ("Connecticut Municipal Securities"). See
"Special Considerations and Risks -- Connecticut Municipal Bond Fund" below,
for a discussion of certain risks in investing in Connecticut Municipal
Securities. Dividends derived from interest on Municipal Securities other than
Connecticut Municipal Securities will generally be exempt from regular Federal
income tax but subject to Connecticut personal income tax. See "Taxes" below.

The Fund may from time to time, during temporary defensive periods,
hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. Uninvested cash reserves will not earn income.
Such taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

MASSACHUSETTS MUNICIPAL BOND FUND

12
<PAGE> 326
The Massachusetts Municipal Bond Fund is a non-diversified investment
portfolio, the investment objective of which is to seek as high a level of
current interest income exempt from Federal income tax and, to the extent
possible, from Massachusetts personal income tax, as is consistent with
relative stability of principal. To achieve this objective, the Fund will
invest primarily in Massachusetts Municipal Securities as defined below. The
Fund's average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the Commonwealth of Massachusetts and
other states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular Federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, at least 65% of the Fund's assets will be
invested in debt securities of the Commonwealth of Massachusetts, its political
sub-divisions, authorities, agencies, instrumentalities and corporations, and
certain other governmental issuers such as Puerto Rico, the interest on which,
in the opinion of bond counsel to the issuer, is exempt from Federal and
Massachusetts personal income taxes ("Massachusetts Municipal Securities"). See
"Special Considerations and Risks -- Massachusetts Municipal Bond Fund" below
for a discussion of certain risks in investing in Massachusetts Municipal
Securities. Dividends derived from interest on Municipal Securities other than
Massachusetts Municipal Securities will generally be exempt from regular
Federal income tax but may be subject to Massachusetts personal income tax. See
"Taxes" below.

The Fund may from time to time, during temporary defensive periods,
hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. Uninvested cash reserves will not earn income.
Such taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

RHODE ISLAND MUNICIPAL BOND FUND

13
<PAGE> 327
The Rhode Island Municipal Bond Fund is a non-diversified investment
portfolio, the investment objective of which is to seek as high a level of
current interest income exempt from Federal income tax and, to the extent
possible, from Rhode Island personal income tax, as is consistent with relative
stability of principal. To achieve this objective, the Fund will invest
primarily in Rhode Island Municipal Securities as defined below. The Fund's
average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of Rhode Island and other
states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular Federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, at least 65% of the Fund's assets will be
invested in debt securities of the State of Rhode Island, its political
sub-divisions, authorities, agencies, instrumentalities and corporations, and
certain other governmental issuers such as Puerto Rico, the interest on which,
in the opinion of bond counsel to the issuer, is exempt from Federal and Rhode
Island personal income taxes ("Rhode Island Municipal Securities"). See
"Special Considerations and Risks -- Rhode Island Municipal Bond Fund" below
for a discussion of certain risks in investing in Rhode Island Municipal
Securities. Dividends derived from interest on Municipal Securities other than
Rhode Island Municipal Securities will generally be exempt from regular Federal
income tax but may be subject to Rhode Island personal income tax. See "Taxes"
below.

The Fund may from time to time, during temporary defensive periods,
hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. Uninvested cash reserves will not earn income.
Such taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

See "Special Considerations and Risks" and "Other Investment Policies
and Risk Considerations" below for information regarding additional investment
policies of the Rhode Island Municipal Bond Fund.

14
<PAGE> 328
SPECIAL CONSIDERATIONS AND RISKS

In General

Generally, the market value of fixed income securities, such as
Municipal Securities, in the Funds can be expected to vary inversely to changes
in prevailing interest rates. During periods of declining interest rates, the
market value of investment portfolios comprised primarily of fixed income
securities, such as the Funds, will tend to increase, and during periods of
rising interest rates, the market value will tend to decrease. In addition,
during periods of declining interest rates, the yields of investment portfolios
comprised primarily of fixed income securities will tend to be higher than
prevailing market rates and, in periods of rising interest rates, yields will
tend to be somewhat lower. Fixed income securities with longer maturities,
which tend to produce higher yields, are subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities. Changes
in the financial strength of an issuer or changes in the ratings of any
particular security may also offset the value of these investments.
Fluctuations in the market value of fixed income securities subsequent to their
acquisition will not offset cash income from such securities but will be
reflected in a Fund's net asset value.

Although no Fund presently intends to do so on a regular basis, each
Fund may invest more than 25% of its assets in Municipal Securities the
interest on which is paid solely from revenues of similar projects if such
investment is deemed necessary or appropriate by the Investment Adviser. To the
extent that a Fund's assets are concentrated in Municipal Securities payable
from revenues of similar projects, the Fund will be subject to the particular
risks presented by such projects to a greater extent than it would be if its
assets were not so concentrated.

The New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds are classified as
non-diversified investment companies under the 1940 Act. Investment return on a
non-diversified portfolio typically is dependent upon the performance of a
smaller number of securities relative to the number held in a diversified
portfolio. Consequently, the change in value of any one security may affect the
overall value of a non-diversified portfolio more than it would a diversified
portfolio, and thereby subject the market-based net asset value per share of
the non-diversified portfolio to greater fluctuations. In addition, a
non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives may be.

New York Municipal Bond Fund

The New York Municipal Bond Fund's ability to achieve its investment
objective is dependent upon the ability of the issuers of New York Municipal
Securities to meet their continuing obligations for the payment of principal
and interest. New York State and New York City face long-term economic problems
that could seriously affect their ability and that of other issuers of New York
Municipal Securities to meet their financial obligations.

Certain substantial issuers of New York Municipal Securities
(including issuers whose obligations may be acquired by the Fund) have
experienced serious financial difficulties in recent years. These difficulties
have at times jeopardized the credit standing and impaired the borrowing
abilities of all New York issuers and have generally contributed to higher
interest costs for their borrowings and fewer markets for their outstanding
debt obligations. In recent years, several different issues of Municipal
Securities of New York State and its agencies and instrumentalities and of New
York City have been downgraded by S&P and Moody's. On the other hand, strong
demand for New York Municipal Securities has more recently had the effect of
permitting New York Municipal Securities to be issued with yields relatively
lower, and after issuance, to trade in the market at prices relatively higher,
than comparably rated Municipal Securities issued by others. A recurrence of
the financial difficulties previously experienced by certain issuers of New
York Municipal Securities could result in defaults or declines in the market
values of those issuers' existing obligations and, possibly, in the obligations
of other issuers

15
<PAGE> 329
of New York Municipal Securities. Although as of the date of this Prospectus no
issuers of New York Municipal Securities are in default with respect to the
payment of their Municipal Securities, the occurrence of any such default could
adversely affect the market values and marketability of all New York Municipal
Securities and, consequently, the net asset value of the Fund's portfolio.

Other considerations affecting the Fund's investments in New York
Municipal Securities are summarized in the Statement of Additional Information.

Connecticut Municipal Bond Fund

The Connecticut Municipal Bond Fund's ability to achieve its
investment objective depends on the ability of issuers of Connecticut Municipal
Securities to meet their continuing obligations to pay principal and interest.
Since the Fund invests primarily in Connecticut Municipal Securities, the value
of the Fund's shares may be especially affected by factors pertaining to the
economy of Connecticut and other factors specifically affecting the ability of
issuers of Connecticut Municipal Securities to meet their obligations.

Fiscal stress is reflected in the State's economic and revenue
forecasts, a rising debt burden that reflects a significant increase in bond
activity since fiscal 1987-88, a cumulative general fund deficit for fiscal
1990-91 of over $965 million, and uncertainty concerning the solutions for
these imbalances. Accumulated surpluses in a budget stabilization fund created
in 1983 to protect against future deficit problems were exhausted in 1990. The
lack of a contingency fund balance, combined with reduced revenue-raising
flexibility in the near term, places additional constraints on managing these
financial problems and any others that may arise. As a result of the recent
recurring budgetary problems, Connecticut's general obligation bonds were
downgraded by S&P from AA+ to AA in April 1990 and, in September 1991, to AA-;
by Moody's from Aa1 to Aa in April 1990; and by Fitch Investors Service, L.P.
from AA+ to AA in March 1995.

Certain Connecticut municipalities have experienced severe fiscal
difficulties and have reported operating and accumulated deficits in recent
years. The most notable of them is the City of Bridgeport, which filed a
bankruptcy petition on June 7, 1991. The State opposed the petition. The United
States Bankruptcy Court for the District of Connecticut held that Bridgeport
had authority to file such a petition but that its petition should be dismissed
on the grounds that Bridgeport was not insolvent when the petition was filed.
Regional economic difficulties, reductions in revenues, and increased expenses
could lead to further fiscal problems for the State and its political
subdivisions, authorities, and agencies. This could result in declines in the
value of their outstanding obligations, increases in their future borrowings
costs, and impairment of their ability to pay debt service on their
obligations.

Other considerations affecting the Fund's investments in Connecticut
Municipal Securities are summarized in the Statement of Additional Information.

Massachusetts Municipal Bond Fund

16
<PAGE> 330
Massachusetts. In addition, constitutional or statutory restrictions may limit
a government's power to raise revenues or increase taxes. The availability of
federal, state and local aid to an issuer of Massachusetts Municipal Securities
may also affect that issuer's ability to meet its obligations. Payments of
principal and interest on limited obligation bonds will depend on the economic
condition of the facility or specific revenue source from whose revenues the
payments will be made, which in turn could be affected by economic, political
and demographic conditions in Massachusetts or a particular locality. Any
reduction in the actual or perceived ability of an issuer of Massachusetts
Municipal Securities to meet its obligations (including a reduction in the
rating of its outstanding securities) would likely affect adversely the market
value and marketability of its obligations and could affect adversely the
values of other Massachusetts Municipal Securities as well.

Rhode Island Municipal Bond Fund

The Rhode Island Municipal Bond Fund's ability to achieve its
investment objective depends on the ability of issuers of Rhode Island
Municipal Securities to meet their continuing obligations to pay principal and
interest. Since the Fund invests primarily in Rhode Island Municipal
Securities, the value of the Fund's shares may be especially affected by
factors pertaining to the economy of Rhode Island and other factors
specifically affecting the ability of issuers of Rhode Island Municipal
Securities to meet their obligations. As a result, the value of the Fund's
shares may fluctuate more widely than the value of shares of a portfolio
investing in securities of issuers in a number of different states. The ability
of Rhode Island and its political subdivisions to meet their obligations will
depend primarily on the availability of tax and other revenues to those
governments and on their fiscal conditions generally. The amount of tax and
other revenues available to governmental issuers of Rhode Island Municipal
Securities may be affected from time to time by economic, political and
demographic conditions within Rhode Island. In addition, constitutional or
statutory restrictions may limit a government's power to raise revenues or
increase taxes. The availability of federal, state and local aid to an issuer
of Rhode Island Municipal Securities may also affect that issuer's ability to
meet its obligations. Payments of principal and interest on limited obligation
bonds will depend on the economic condition of the facility or specific revenue
source from whose revenues the payments will be made, which in turn could be
affected by economic, political and demographic conditions in Rhode Island or a
particular locality. Any reduction in the actual or perceived ability of an
issuer of Rhode Island Municipal Securities to meet its obligations (including
a reduction in the rating of its outstanding securities) would likely affect
adversely the market value and marketability of its obligations and could
affect adversely the value of other Rhode Island Municipal Securities as well.

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.

17
<PAGE> 331
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 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.

Types of Municipal Securities

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legal obligation of the state or municipality which created the issuer.

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.

Private Activity Bonds

Each Fund may invest in "private activity bonds" the interest on
which, although exempt from regular Federal income tax, may constitute an item
of tax preference for purposes of the Federal alternative minimum tax.
Investments in such securities, however, will not be treated as investments in
Municipal Securities for purposes of the 80% requirement mentioned above and,
under normal market conditions, will not exceed 20% of a Fund's total assets
when added together with any taxable investments held by the Fund.

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.

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 10% 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.

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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, provided, however, that the Tax-Exempt Bond Fund may
only invest in securities of other investment companies which invest in high
quality short-term Municipal 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 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, or any
other investment companies 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.

Custodial Receipts and Certificates of Participation

Securities acquired by the Funds may be in the form of custodial
receipts evidencing rights to receive a specific future interest payment,
principal payment or both on certain Municipal Securities. Such obligations are
held in custody by a bank on behalf of holders of the receipts. These custodial
receipts are known by various names, including "Municipal Receipts," "Municipal
Certificates of Accrual on Tax-Exempt Securities" ("M-CATs") and "Municipal
Zero Coupon Receipts." The Funds may also purchase from time to time
certificates of participation that, in the opinion of counsel to the issuer,
are exempt from Federal income tax. A certificate of participation gives a Fund
an undivided interest in a pool of Municipal Securities held by a bank.
Certificates of participation may have fixed, floating or variable rates of
interest. If a certificate of participation is unrated, the Investment Adviser
will have determined that the instrument is of comparable quality to those
instruments in which the Fund may invest pursuant to guidelines approved by
Galaxy's Board of Trustees. For certain certificates of participation, a Fund
will have the right to demand payment, on not more than 30 days' notice, for
all or any part of the Fund's participation interest, plus accrued interest.
As to these instruments, each Fund intends to exercise its right to demand
payment as needed to provide liquidity, to maintain or improve the quality of
its

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investment portfolio or upon a default (if permitted under the terms of the
instrument).

Futures Contracts

Each Fund, except the Tax-Exempt Bond Fund, may purchase and sell
municipal bond index futures contracts as a hedge against changes in market
conditions. A municipal bond index assigns values daily to the municipal bonds
included in the index based on the independent assessment of dealer-to-dealer
municipal bond brokers. A municipal bond index futures contract represents a
firm commitment by which two parties agree to take or make delivery of an
amount equal to a specified dollar amount multiplied by the difference between
the municipal bond index value on the last trading date of the contract and the
price at which the futures contract is originally struck. No physical delivery
of the underlying securities in the index is made.

Each Fund, except the Tax-Exempt Bond Fund, may also enter into
contracts for the future delivery of fixed-income securities commonly known as
interest rate futures contracts. Interest rate futures contracts are similar to
municipal bond index futures contracts except that, instead of a municipal bond
index, the "underlying commodity" is represented by various types of
fixed-income securities.

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 ("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 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. Any 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 the Statement of Additional Information
and in Appendix B thereto.

When-Issued, Forward Commitment and Delayed Settlement Transactions

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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 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 investment
objectives.

Stand-By Commitments

The Funds 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, except the Tax-Exempt Bond 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, except the Tax-Exempt Bond 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

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of the Fund's principal investment to the extent of the premium paid. The yield
of a Fund that invests 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.

Guaranteed Investment Contracts

Each Fund, except the Tax-Exempt Bond 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' 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

Each Fund, except the Tax-Exempt Bond 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' 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

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

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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 a its 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.

4. Purchase any securities which would cause 25% or more of
the value of its 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
there is no limitation with respect to securities issued or guaranteed
by the U.S. Government, any state, territory or possession of the U.
S. Government, the District of Columbia, or any of their authorities,
agencies, instrumentalities or political subdivisions.

In addition, the Tax-Exempt Bond Fund may not:

5. 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 the securities
of 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 New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds may not:

6. 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 the securities
of such issuer, except that up to 50% of the value of a Fund's total
assets may be invested without regard to this 5% limitation, provided
that no more than 25% of the value of a Fund's total assets are
invested in the securities of any one issuer.

With respect to Investment Limitation No. 2 above, each Fund
intends to limit any borrowings (including

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reverse repurchase agreements) to not more than 10% of the value of
its total assets at the time of such borrowing.

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 of a 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 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.

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. ("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

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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"). As of the date of this
Prospectus, Trust Shares of the Rhode Island Municipal Bond Fund were not being
offered to investors.

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 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 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 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.

Redemption orders are effected at the net asset value per share next
determined after receipt 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
a Fund.

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 sixty days
written notice if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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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 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

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 relieves a
Fund of liability for federal income taxes to the extent the Fund's earnings
are distributed in accordance with the Code.

The policy of each Fund is to pay dividends with respect to each
taxable year equal to at least the sum of 90% of its net exempt interest income
and 90% of its net investment company taxable income, if any. Dividends derived
from interest on Municipal Securities (known as exempt interest dividends) may
be treated by the Funds' shareholders as items of interest excludable from
their gross income under Section 103(a) of the Code, unless under the
circumstances applicable to a particular shareholder, exclusion would be
disallowed. (See the Statement of Additional Information under "Additional
Information Concerning Taxes.")

If a Fund should hold certain "private activity bonds" issued after
August 7, 1986, shareholders must include, as an item of tax preference, the
portion of dividends paid by the Fund that is attributable to interest on such
bonds in their federal alternative minimum taxable income for purposes of
determining liability (if any) for the 26% to 28% alternative minimum tax for
individuals and the 20% alternative minimum tax and the environmental tax
applicable to corporations. Corporate shareholders must also take all exempt
interest dividends into account in determining certain adjustments for federal
alternative minimum and environmental tax purposes. Shareholders receiving
Social Security benefits should note that all exempt interest dividends will be
taken into account in determining the taxability of such benefits. Interest on
indebtedness incurred by a shareholder to purchase or carry Trust Shares
generally is not deductible for federal income tax purposes.

Dividends from a Fund which are derived from taxable income or from
long-term or short-term capital gains will be subject to federal income tax,
whether such dividends are paid in the form of cash or additional Trust Shares
of the Funds.

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.

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

A taxable gain or loss may be realized by a shareholder upon
redemption, transfer or exchange of Fund shares

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depending upon the tax basis of such shares and their price at the time of
redemption, transfer or exchange.

STATE AND LOCAL

Exempt-interest dividends and other distributions paid by the Funds
may be taxable to shareholders under state or local law as dividend income,
even though all or a portion of such distributions may be derived from interest
on tax-exempt obligations which, if realized directly, would be exempt from
such income taxes.

With respect to the New York Municipal Bond Fund, exempt-interest
dividends (as defined for federal income tax purposes) derived from interest on
New York Municipal Securities (as defined above) will be exempt from New York
State and New York City personal income taxes (but not corporate franchise
taxes), provided the interest on such obligations is and continues to be exempt
from applicable federal, New York State and New York City income taxes. To the
extent that investors are subject to state and local taxes outside of New York
State and New York City, dividends by the Fund may be taxable income for
purposes thereof. Dividends and distributions derived from income (including
capital gains on all New York Municipal Securities) other than interest on New
York Municipal Securities described above are not exempt from New York State
and New York City taxes. Interest or indebtedness incurred or continued by a
shareholder to purchase or carry Shares of the Fund is not deductible for New
York State or New York City personal income tax purposes.

Dividends paid by the Connecticut Municipal Bond Fund that qualify as
exempt-interest dividends for Federal income tax purposes are not subject to
the Connecticut personal income tax to the extent that they are derived from
Connecticut Municipal Securities. Other Fund dividends and distributions,
whether received in cash or additional Trust Shares, are subject to this tax,
except that capital gain dividends derived from obligations issued by or on
behalf of the State of Connecticut or its political subdivisions or other
public entities created under Connecticut law are not subject to the tax.
Dividends and distributions paid by the Fund that constitute items of tax
preference for purposes of the federal alternative minimum tax, other than any
derived from Connecticut Municipal Securities, could cause liability for the
net Connecticut minimum tax applicable to investors subject to the Connecticut
personal income tax who are required to pay federal alternative minimum tax.
Dividends by the Fund, including those that qualify as exempt-interest
dividends for federal income tax purposes, are taxable for purposes of the
Connecticut Corporation Business Tax; however, 70% (100% if the investor owns
at least 20% of the total voting power and value of the Fund's shares) of
amounts that are treated as dividends and not as exempt-interest dividends or
capital gain dividends for federal income tax purposes are deductible for
purposes of this tax, but no deduction is allowed for expenses related thereto.
Shares of the Fund are not subject to property tax within the State of
Connecticut or its political subdivisions.

Distributions by the Massachusetts Municipal Bond Fund to its
shareholders are exempt from Massachusetts personal income taxation to the
extent they are derived from (and designated by the Fund as being derived from)
(i) interest on Massachusetts Municipal Securities, or (ii) capital gains
realized by the Fund from the sale of certain Massachusetts Municipal
Securities. Distributions from the Fund's other net investment income and
short-term capital gains will be taxable as ordinary income. Distributions
from the Fund's net long-term capital gains will be taxable as long-term
capital gains regardless of how long the shareholder has owned Fund shares. The
tax treatment of distributions is the same whether distributions are paid in
cash or in additional Trust Shares of the Fund. Distributions by the Fund to
corporate shareholders, including exempt-interest dividends, may be subject to
Massachusetts corporate excise tax.

28
<PAGE> 342
derived from) interest earned on Rhode Island Municipal Securities or
obligations of the United States. Distributions from the Fund's other net
investment income and short-term capital gains will be taxable as ordinary
income. Distributions from the Fund's net long-term capital gains will be
taxable as long-term capital gains regardless of how long the shareholder has
owned Fund shares. The tax treatment of distributions is the same whether
distributions are paid in cash or in additional Trust Shares of the Fund. Any
loss realized from the redemption of Fund shares within six months after the
purchase of such shares will be disallowed for Rhode Island personal income tax
purposes to the extent of exempt interest dividends received on such shares.

The Fund will be subject to the Rhode Island business corporation tax
on its "gross income" apportioned to the State of Rhode Island, and the Rhode
Island business corporation sur-tax. For this purpose, gross income does not
include interest income earned by the Fund on Rhode Island Municipal Securities
and obligations of the United States, capital gains realized by the Fund on the
sale of certain Rhode Island Municipal Securities, and 50 percent of the Fund's
other net capital gains.

MISCELLANEOUS

The foregoing summarizes some of the important 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, and with respect to shareholders of the New York Municipal
Bond, Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds, the New York State and New York City personal income tax,
Connecticut personal income tax, Massachusetts personal income tax, and Rhode
Island personal income tax, consequences, respectively, of distributions made
each year.

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.

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, Intermediate Government Income, Corporate Bond and High
Quality Bond Funds.

29
<PAGE> 343
The Tax-Exempt Bond Fund's portfolio manager, Mary McGoldrick, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Ms. McGoldrick, a Vice President and member of the Investment Policy
Committee, has been with Fleet and its predecessors since June 1988 and has
managed the Fund since its inception.

Effective March 1, 1996, Ms. McGoldrick will assume responsibility for
the management of the investment portfolios of the New York Municipal Bond,
Conneticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds.

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 Funds so that it is entitled to receive an advisory fee at the
annual rate of .55% of each 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 rates of .48%, .38%, .14% and .08%, respectively, of the
Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal Bond and
Massachusetts Municipal Bond Funds' average daily net assets.

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 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

30
<PAGE> 344
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 (after
fee waivers) at the effective rates of .088%, .088%, 0% and 0% of the average
daily net assets of the Tax-Exempt Bond, New York Municipal Bond, Connecticut
Municipal Bond and Massachusetts Municipal Bond Funds, respectively. For the
period from December 20, 1994 (commencement of operations) to October 31, 1995,
FDISG received administration fees at the effective rate of .086% of the Rhode
Island Municipal Bond Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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 and holders of Retail B Shares of the
Tax-Exempt 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 the 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 difference 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 Tax-Exempt 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 to Trust
Shares.

31
<PAGE> 345
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

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.

CUSTODIAN AND TRANSFER AGENT

32
<PAGE> 346
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
15108, 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, including 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, distribution, 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

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. Each Fund may also quote its "tax equivalent yield" which
demonstrates the level of taxable yield necessary to produce an after-tax
equivalent yield to a Fund's tax-free yield. It is calculated by increasing a
Fund's yield (calculated as above) by the amount necessary to reflect the
payment of income taxes at stated tax rates. The tax-equivalent yield will
always be higher than a Fund's yield.

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.

33
<PAGE> 347
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 to accounts of
Customers that have invested in Trust Shares of a Fund will not be included in
calculations of yield and performance.

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.

34
<PAGE> 348

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<PAGE> 349

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<PAGE> 351

THE GALAXY FUND

For applications and information regarding initial purchases and current
performance, call 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 relates to five separate investment portfolios (individually, a
"Fund," collectively, the "Funds") offered to investors by Galaxy. Each Fund
has its own investment objective and policies:

The TAX-EXEMPT BOND FUND's investment objective is to provide shareholders
with as high a level of current interest income free of federal income tax as
is consistent with preservation of capital. Under normal market and economic
conditions, the Fund will invest substantially all of its assets in bonds and
notes issued by or on behalf of states, territories and possessions of the
United States, the District of Columbia and their respective authorities,
agencies, instrumentalities and political subdivisions the interest on which,
in the opinion of bond counsel to the issuer, is exempt from regular Federal
income tax ("Municipal Securities"). The Fund's average portfolio maturity
will vary in response to variations in the comparative yields of differing
maturities of instruments.

The NEW YORK MUNICIPAL BOND FUND's investment objective is to seek as high a
level of current interest income exempt from federal income tax and, to the
extent possible, from New York State and New York City personal income tax, as
is consistent with relative stability of principal. Under normal market and
economic conditions, the Fund will invest at least 65% of its assets in New
York Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the
Investment Company Act of 1940 (the "1940 Act").

The CONNECTICUT MUNICIPAL BOND FUND's investment objective is to seek as
high a level of current interest income exempt from federal income tax and, to
the extent possible, from Connecticut personal income tax, as is consistent
with relative stability of principal. Under normal market and economic
conditions, the Fund will invest at least 65% of its assets in Connecticut
Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the 1940
Act.

The MASSACHUSETTS MUNICIPAL BOND FUND's investment objective is to seek as
high a level of current interest income exempt from federal income tax and, to
the extent possible, from Massachusetts personal income taxes as is consistent
with relative stability of principal. Under normal market and economic
conditions, the Fund will invest at least 65% of its assets in Massachusetts
Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the 1940
Act.

The RHODE ISLAND MUNICIPAL BOND FUND's investment objective is to seek as
high a level of current interest income exempt from federal income tax and, to
the extent possible, from Rhode Island personal income tax, as is consistent
with relative stability of principal. Under normal market and economic
conditions, the Fund will invest at least 65% of its assets in Rhode Island
Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the 1940
Act.

This prospectus relates to the Retail A Shares representing interests in
each Fund and to the Retail B Shares representing interests in the Tax-Exempt
Bond Fund (Retail A Shares and Retail B Shares are referred to collectively as
"Retail Shares"). Retail A Shares are sold with a front-end sales charge.
Retail B Shares are sold with a contingent deferred sales charge. Retail Shares
are offered to customers ("Customers") of Fleet Brokerage Securities, Inc.,
Fleet Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks, and other qualified banks, savings and loan associations
and broker/dealers ("Institutions"). Retail Shares may also be purchased
directly by individuals, corporations or other entities, who submit a purchase
application to Galaxy, purchasing either for their own accounts or for the
accounts of others ("Direct Investors"). Galaxy is also authorized to issue an
additional series of shares in each Fund ("Trust Shares"), which are offered
under a separate prospectus primarily to investors maintaining qualified
accounts at bank and trust institutions, including institutions affiliated with
Fleet Financial Group, Inc. Retail A Shares, Retail B Shares and Trust 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. As of the date of this Prospectus, Trust Shares of the Rhode
Island Municipal Bond Fund were not being offered to investors. See "Financial
Highlights", "Management of the Funds" and "Description of Galaxy and Its
Shares" herein.

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 THEPRINCIPAL 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> 352
===============================================================================
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 THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . 10
Tax-Exempt Bond Fund . . . . . . . . . . . . . . . . . . . 10
New York Municipal Bond Fund . . . . . . . . . . . . . . . 10
Connecticut Municipal Bond Fund . . . . . . . . . . . . . . . 11
Massachusetts Municipal Bond Fund . . . . . . . . . . . . 12
Rhode Island Municipal Bond Fund . . . . . . . . . . . . . 12
Special Considerations and Risks . . . . . . . . . . . . . 13
Other Investment Policies and Risk Considerations . . . . . 15
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . 19
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . 20
HOW TO PURCHASE SHARES . . . . . . . . . . . . . . . . . . . 20
Distributor . . . . . . . . . . . . . . . . . . . . . . . . 20
General . . . . . . . . . . . . . . . . . . . . . . . . . 20
Purchase Procedures -- Customers of
Institutions . . . . . . . . . . . . . . . . . . . . . . 20
Purchase Procedures -- Direct Investors . . . . . . . . . 21
Other Purchase Information . . . . . . . . . . . . . . . . 21
Applicable Sales Charges -- Retail A Shares . . . . . . . 21
Quantity Discounts . . . . . . . . . . . . . . . . . . . . 22
Applicable Sales Charges -- Retail B Shares . . . . . . . 23
Characteristics of Retail A Shares and
Retail B Shares . . . . . . . . . . . . . . . . . . . . 24
Factors to Consider When Selecting Retail
A Shares or Retail B Shares . . . . . . . . . . . . . . . 24
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . 25
Redemption Procedures -- Customers of
Institutions . . . . . . . . . . . . . . . . . . . . . . 25
Redemption Procedures -- Direct Investors . . . . . . . . . 25
Other Redemption Information . . . . . . . . . . . . . . . 26
INVESTOR PROGRAMS . . . . . . . . . . . . . . . . . . . . . . 26
Exchange Privilege . . . . . . . . . . . . . . . . . . . . 26
Automatic Investment Program
and Systematic Withdrawal Plan . . . . . . . . . . . . . 27
Payroll Deduction Program . . . . . . . . . . . . . . . . . 27
College Investment Program . . . . . . . . . . . . . . . . 28
Direct Deposit Program . . . . . . . . . . . . . . . . . . 28
INFORMATION SERVICES . . . . . . . . . . . . . . . . . . . . 28
Galaxy Information Center . . . . . . . . . . . . . . . . . 28
Voice Response System . . . . . . . . . . . . . . . . . . 28
Galaxy Shareholder Services . . . . . . . . . . . . . . . . 28
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . 28
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Federal . . . . . . . . . . . . . . . . . . . . . . . . . 29
State and Local . . . . . . . . . . . . . . . . . . . . . 29
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 30
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . 30
Investment Adviser . . . . . . . . . . . . . . . . . . . . 30
Authority to Act as Investment Adviser . . . . . . . . . . 31
Administrator . . . . . . . . . . . . . . . . . . . . . . . 31
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . 31
Shareholder Services Plan . . . . . . . . . . . . . . . . 32
Distribution and Services Plan . . . . . . . . . . . . . . 32
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . 33
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 33
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . 33
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
<PAGE> 353
HIGHLIGHTS

Q: What is The Galaxy Fund?

A: Galaxy is an open-end management investment company (commonly known as
a mutual fund) that offers investors the opportunity to invest in different
investment portfolios, each having separate investment objectives and policies.
This Prospectus describes Galaxy's TAX-EXEMPT BOND FUND, NEW YORK MUNICIPAL
BOND FUND, CONNECTICUT MUNICIPAL BOND FUND, MASSACHUSETTS MUNICIPAL BOND FUND
and RHODE ISLAND MUNICIPAL BOND FUND. Prospectuses for Galaxy's 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 and HIGH
QUALITY BOND FUNDS may be obtained by calling 1-800-628-0414.

Q: Who advises the Funds?

Q: What advantages do the Funds offer?

Q: How can I buy and redeem shares?

A: The Funds are distributed by 440 Financial Distributors, Inc. Retail
Shares of the Funds are sold to individuals, corporations or other entities,
who submit a purchase application to Galaxy, purchasing either for their own
accounts or for the accounts of others ("Direct Investors"). Shares may also be
purchased on behalf of Customers of Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loan associations
and broker/dealers ("Institutions"). Retail A Shares of the Funds may be
purchased at their net asset value plus a maximum initial sales charge of
3.75%. Retail A Shares are currently subject to a shareholder servicing fee of
up to .15% of the average daily net asset value of such shares. Retail B Shares
of the Tax-Exempt Bond Fund may be purchased at their net asset value subject
to a contingent deferred sales charge ("CDSC"). The CDSC is paid on certain
share redemptions made within six years of the purchase date at the maximum
rate of 5.00% of the lower of (i) the net asset value of the redeemed shares or
(ii) the original purchase price of the redeemed shares. Retail B Shares are
currently subject to shareholder servicing and distribution fees of up to .80%
of the average daily net asset value of such shares. Share purchase and
redemption information for both Direct Investors and Customers is provided
below under "How to Purchase Shares" and "How to Redeem Shares." Except as
provided below in "Investor Programs," the minimum initial investment for
Direct Investors and the minimum initial aggregate investment for Institutions
purchasing on behalf of their Customers is $2,500. The minimum investment for
subsequent purchases is $100. There are no minimum investment requirements for
investors participating in the Automatic Investment Program described below.
Institutions may require Customers to maintain certain minimum investments in
Retail Shares. See "How to Purchase Shares -- Other Purchase Information"
below.

Q: When are dividends paid?

A: The net investment income of the Funds is declared daily and paid
monthly. Net realized capital gains of the Funds are distributed at least
annually. Dividends and distributions are paid in cash, although shareholders
may choose to have dividends and distributions automatically reinvested in
additional shares of the same series of shares that they own without sales or
CDSC charges. See "Dividends and Distributions."

Q: What potential risks are presented by the Funds' investment practices?

A: The Tax-Exempt Bond Fund invests primarily in Municipal Securities
rated within the three highest ratings of Standard & Poor's Ratings Group
("S&P") or Moody's Investors Service, Inc. ("Moody's") and the New York
Municipal Bond Fund, Connecticut Municipal Bond Fund, Massachusetts Municipal
Bond Fund and Rhode Island Municipal Bond Fund invest primarily in New York
Municipal Securities, Connecticut Municipal Securities, Massachusetts Municipal
Securities and Rhode Island Municipal Securities, respectively, rated within
the three highest ratings of S&P or Moody's. Because the New York Municipal
Bond, Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds invest primarily in New York Municipal Securities,
Connecticut Municipal Securities, Massachusetts Municipal Securities and Rhode
Island Municipal Securities, respectively, the achievement of their investment
objectives is dependent upon the ability of the issuers of such Municipal
Securities to meet their continuing obligations for the payment of principal
and interest. In addition, because the New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode Island Municipal Bond
Funds are non-diversified, their investment

1
<PAGE> 354
return may be dependent upon the performance of a smaller number of securities
relative to the number of securities held in a diversified portfolio. The Funds
may lend their securities and enter into repurchase agreements and reverse
repurchase agreements with qualifying banks and broker/dealers. In addition,
each Fund except the Tax-Exempt Bond Fund may enter into interest rate futures
contracts and municipal bond index futures contracts. The Funds may purchase
eligible securities on a "when-issued" basis and may purchase or sell
securities on a "forward commitment" or "delayed settlement" basis. In
addition, the Funds may acquire "stand-by commitments" with respect to
Municipal Securities held in their respective portfolios. The value of the
Funds' portfolio securities will generally vary inversely with changes in
prevailing interest rates. See "Investment Objectives and Policies."

Q: What shareholder privileges are offered by the Funds?

A: Retail A Shares of a Fund may be exchanged for Retail A Shares of any
other Galaxy portfolio which offers Retail A Shares and for shares of any other
investment portfolio otherwise advised by Fleet or its affiliates. Retail B
Shares of the Tax-Exempt Bond Fund may be exchanged for Retail B Shares of any
other Galaxy portfolio which offers Retail B Shares. In either case, exchanges
are not subject to sales or additional CDSC charges. Galaxy offers an Automatic
Investment Program which allows investors to automatically invest in Retail
Shares on a monthly or quarterly basis, as well as other shareholder
privileges. See "Investor Programs."

2
<PAGE> 355
EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction expenses
imposed by each Fund with respect to its Retail A Shares and/or Retail B
Shares, and (ii) the operating expenses for Retail A Shares and/or Retail B
Shares of each Fund. SHAREHOLDER TRANSACTION EXPENSES are charges you pay when
buying or selling shares of a Fund. ANNUAL FUND OPERATING EXPENSES are paid out
of each Fund's assets and include fees for portfolio management, maintenance of
shareholder accounts, general Fund administration, accounting and other
services. Examples based on the summary are also shown.

<TABLE>
<CAPTION>
NEW YORK CONNECTICUT MASSACHUSETTS RHODE ISLAND
TAX-EXEMPT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
---------------------- --------- ----------- ------------- ------------
(RETAIL A (RETAIL B (RETAIL A (RETAIL A (RETAIL A (RETAIL A
SHARES) SHARES) SHARES) SHARES) SHARES) SHARES)
--------- --------- --------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------
Front End Sales Charge Imposed
on Purchases (as a percentage of
offering price) . . . . . . . . . . . . . 3.75%(1) None 3.75%(1) 3.75%(1) 3.75%(1) 3.75%(1)
Sales Charge Imposed on Reinvested
Dividends . . . . . . . . . . . . . . . . None None None None None None
Deferred Sales Charge (as a percentage
of original purchase price or
redemption proceeds, whichever is lower) . None 5.00%(2) None None None None
Redemption Fees(3) . . . . . . . . . . . . . None None None None None None
Exchange Fees . . . . . . . . . . . . . . . . None None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
Advisory Fees
(After Fee Waivers) . . . . . . . . . . . .55% .55% .55% .25% .25% .25%
12b-1 Fees(3) . . . . . . . . . . . . . . . . None .80% None None None None
Other Expenses (After Expense
Reimbursements) . . . . . . . . . . . . . .40% .29% .40% .70% .70% .70%
----- ----- ----- ----- ----- -----
Total Fund Operating Expenses (After Fee
Waivers and Expense Reimbursements) . . . .95% 1.64% .95% .95% .95% .95%
===== ===== ===== ===== ===== =====
</TABLE>
- ----------------
(1) Reduced sales charge may be available. See "How to Purchase and Redeem
Shares - Applicable Sales Charges - Retail A Shares".
(2) This amount applies to redemptions made during the first year. The
charge decreases to 4.00%, 3.00%, 3.00%, 2.00% and 1.00% for
redemptions made during the second through sixth years, respectively.
Retail B Shares automatically convert to Retail A Shares after six
years. See "How to Purchase Shares - Applicable Sales Charges - Retail
B Shares".
(3) Direct Investors are charged a $5.00 fee if redemption proceeds are
paid by wire.
(4) Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers, Inc.

- ----------------
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>
Tax-Exempt Bond Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . . . . $47 $66 $ 87 $148
Tax-Exempt Bond Fund (Retail B Shares)
Assuming complete redemption at end of period (2) . . . . . . . . . . . . . $66 $81 $108 $156(3)
Assuming no redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . $16 $51 $ 88 $156(3)
New York Municipal Bond Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . $47 $66 $ 87 $148
Connecticut Municipal Bond Fund (Retail A Shares)(1) . . . . . . . . . . . . . $47 $66 $ 87 $148
Massachusetts Municipal Bond Fund (Retail A Shares)(1) . . . . . . . . . . . . $47 $66 $ 87 $148
Rhode Island Municipal Bond Fund (Retail A Shares)(1) . . . . . . . . . . . . . $47 $66 $ 87 $148
</TABLE>

- ----------------
(1) Assumes deduction at time of purchase of maximum applicable front-end
sales charge.
(2) Assumes deduction of maximum applicable contingent deferred sales
charge.
(3) Based on conversion of Retail B Shares to Retail A Shares after six
years.

3
<PAGE> 356
The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Retail A Shares and
Retail B Shares of the Funds will bear directly or indirectly. The information
contained in the Expense Summary and Example with respect to Retail A Shares of
the Funds is based on expenses incurred by each Fund during the last fiscal
year, restated to reflect the expenses each Fund expects to incur during the
current fiscal year on its Retail A Shares. The information contained in the
Expense Summary and Example with respect to Retail B Shares of the Tax-Exempt
Bond Fund is based on expenses the Fund expects to incur during the current
fiscal year on its Retail B Shares. Without voluntary fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator, Advisory Fees
would be .75%, .75%, .75%, .75% and .75%, Other Expenses would be .46%, .55%,
.78%, .75% and .85% and Total Fund Operating Expenses would be 1.21%, 1.30%,
1.53%, 1.50% and 1.60% for Retail A Shares of the Tax-Exempt Bond Fund, New
York Municipal Bond Fund, Connecticut Municipal Bond Fund, Massachusetts
Municipal Bond Fund and Rhode Island Municipal Bond Fund, respectively, and
Advisory Fees would be .75%, Other Expenses would be .35% and Total Fund
Operating Expenses would be 1.90% for Retail B Shares of the Tax-Exempt Bond
Fund. For more complete descriptions of these costs and expenses, see "How to
Purchase Shares," "How to Redeem Shares," "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 or other
Institutions directly to their Customer accounts for services related to an
investment in Retail 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.

FINANCIAL HIGHLIGHTS

This Prospectus describes Retail A Shares in each Fund and Retail B Shares
in the Tax-Exempt Bond Fund. Galaxy is also authorized to issue an additional
series of shares in each Fund ("Trust Shares"), which are offered under a
separate prospectus. As described below under "Description of Galaxy and Its
Shares", Retail A Shares, Retail B Shares and Trust Shares represent equal pro
rata interests in a Fund, except that (i) Retail A Shares of the Funds 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 each Fund's outstanding
Retail A Shares, (ii) Retail B Shares of the Tax-Exempt Bond Fund bear the
expenses incurred under Galaxy's Distribution and Services Plan 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) Retail A Shares, Retail B Shares and
Trust Shares bear differing transfer agency expenses.

The financial highlights presented below for the fiscal year ended October
31, 1995, and prior periods for the Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond and Massachusetts Municipal 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 for the fiscal
year ended October 31, 1995. Such financial highlights should be read in
conjunction with the financial statements contained in Galaxy's 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 reflect the investment results of both
Retail A Shares and Trust Shares of the Funds. During the periods shown, Retail
B Shares were not offered by the Tax-Exempt Bond Fund. More information about
the performance of the Funds 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.

4
<PAGE> 357
TAX-EXEMPT BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD
1995 1994 YEAR ENDED ENDED
--------------------- OCTOBER 31, OCTOBER 31,
RETAIL SHARES 1993(1) 1992(1,2)
--------------------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 9.99 $ 11.12 $ 10.11 $ 10.00
------- -------- -------- --------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . . . . 0.52 0.53 0.54 0.34
Net realized and unrealized gain (loss) on investments . 0.79 (1.04) 1.01 0.11
------- -------- -------- --------
Total From Investment Operations: . . . . . . . 1.31 (0.51) 1.55 0.45
------- -------- -------- --------
Less Dividend:
Dividends from net investment income . . . . . . . . . . (0.52) (0.53) (0.54) (0.34)
Dividend from net realized capital gains . . . . . . . . -- -- -- --
Dividend in excess of net realized capital gains . . . . -- (0.09) -- --
------- -------- -------- --------
Total Dividends: . . . . . . . . . . . . . . . . (0.52) (0.62) (0.54) (0.34)
------- -------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . 0.79 (1.13) 1.01 0.11
------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 10.78 $ 9.99 $ 11.12 $ 10.11
======= ======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . . . . . . 13.40% (4.75%) 15.63% 4.55%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $31,609 $35,911 $144,048 $15,891
Ratios to average net assets:
Net investment income including reimbursement/waiver . . 4.99% 5.01% 5.00% 5.03%(6)
Operating expenses including reimbursement/waiver . . . 0.91% 0.80% 0.64% 0.42%(6)
Operating expenses excluding reimbursement/waiver . . . 1.24% 1.03% 1.08% 2.15%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 11% 17% 38% 11%(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 Retail Shares before
reimbursement and waiver of fees by the Investment Adviser and/or
Administor for the years ended October 31, 1995 and 1994 were $0.48
and $0.50, respectively.
4 Net investment income per share before fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator for the
year ended October 31, 1993 and for the period ended October 31, 1992
were $0.49 and $0.23, respectively.
5 Not Annualized.
6 Annualized.

5
<PAGE> 358

NEW YORK MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD
1995 1994 YEAR ENDED ENDED
---------------------- OCTOBER 31, OCTOBER 31,
RETAIL SHARES 1993(2) 1992(1,2)
---------------------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 9.89 $ 11.04 $ 10.00 $10.00
-------- -------- -------- ------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . . . . 0.49 0.49 0.50 0.38
Net realized and unrealized gain (loss) on investments . 0.89 (1.15) 1.04 --
-------- -------- -------- ------
Total From Investment Operations: . . . . . . . . . 1.38 (0.66) 1.54 0.38
-------- -------- -------- ------
Less Dividends:
Dividends from net investment income . . . . . . . . . . (0.49) (0.49) (0.50) (0.38)
Dividends from net realized capital gains . . . . . . . -- -- -- --
-------- -------- -------- ------
Total Dividends: . . . . . . . . . . . . . . . . . (0.49) (0.49) (0.50) (0.38)
-------- -------- -------- ------
Net increase (decrease) in net asset value . . . . . . . . 0.89 (1.15) 1.04 --
-------- -------- -------- ------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 10.78 $ 9.89 $ 11.04 $10.00
======== ======== ======== ======
Total Return . . . . . . . . . . . . . . . . . . . . . . . 14.03% (6.14%) 15.66% 3.83%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $42,870 $42,451 $70,242 $20,144
Ratios to average net assets:
Net investment income including reimbursement/waiver . . 4.73% 4.64% 4.54% 5.22%(6)
Operating expenses including reimbursement/waiver . . . 0.92% 0.87% 0.87% 0.65%(6)
Operating expenses excluding reimbursement/waiver . . . 1.31% 1.10% 1.19% 1.70%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 5% 18% 3% 19%(5)
</TABLE>

- ---------------------
1 The Fund commenced operations on December 31, 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 Retail Shares before
reimbursement and waiver of fees by the Investment Adviser and/or
Administrator for the years ended October 31, 1995 and 1994 were
$0.44 and $0.46, respectively.
4 Net investment income per share before fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator for the
year ended October 31, 1993 and for the period ended October 31, 1992
were $0.47 and $0.30, respectively.
5 Not Annualized.
6 Annualized.

6
<PAGE> 359

CONNECTICUT MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994 YEAR ENDED
-------------------------- OCTOBER 31,
RETAIL SHARES 1993(1,2)
-------------------------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . . $ 9.22 $ 10.32 $ 10.00
-------- -------- --------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . . . . . . . . . . . 0.44 0.46 0.25
Net realized and unrealized gain (loss) on investments . . . . . . . . 0.91 (1.10) 0.32
-------- -------- --------
Total From Investment Operations: . . . . . . . . . . . . . . . . 1.35 (0.64) 0.57
-------- -------- --------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . . . (0.44) (0.46) (0.25)
Dividends from net realized capital gains . . . . . . . . . . . . . . -- -- --
-------- -------- --------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . . . . (0.44) (0.46) (0.25)
-------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . . . . . . . . 0.91 (1.10) 0.32
-------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . . $ 10.13 $ 9.22 $ 10.32
======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.94% (6.39%) 5.80%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . . . . . $18,066 $18,229 $18,771
Ratios to average net assets:
Net investment income including reimbursement/waivers . . . . . . . . 4.53% 4.66% 4.30%(6)
Operating expenses including reimbursement/waivers . . . . . . . . . 0.68% 0.25% 0.00%(6)
Operating expenses excluding reimbursement/waiver . . . . . . . . . . 1.48% 1.42% 1.73%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . 7% 4% 7%(5)
</TABLE>

- ----------------
1 The Fund commenced operations on March 16, 1993.
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 Retail Shares before
reimbursement and waiver of fees by the Investment Adviser and/or
Administrator for the years ended October 31, 1995 and 1994 were
$0.37 and $0.34, respectively.
4 Net investment income per share before fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator for the
period ended October 31, 1993 was $0.15.
5 Not Annualized.
6 Annualized.

7
<PAGE> 360
MASSACHUSETTS MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994 YEAR ENDED
------------------------- OCTOBER 31,
RETAIL SHARES 1993(1,2)
------------------------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . . $ 9.12 $ 10.24 $ 10.00
-------- -------- --------
Income From Investment Operations:
Net Investment Income(3,4) . . . . . . . . . . . . . . . . . . . . . . 0.44 0.47 0.29
Net realized and unrealized gain (loss) on investments . . . . . . . . 0.86 (1.12) 0.24
-------- -------- --------
Total From Investment Operations: . . . . . . . . . . . . . . . . 1.30 (0.65) 0.53
-------- -------- --------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . . . (0.44) (0.47) (0.29)
Dividends from net realized capital gains . . . . . . . . . . . . . . -- -- --
-------- -------- --------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . . . . (0.44) (0.47) (0.29)
-------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . . . . . . . . 0.86 (1.12) 0.24
-------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . . $ 9.98 $ 9.12 $ 10.24
======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.52% (6.46%) 5.42%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . . . . . $16,113 $15,966 $20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . . . . . . 4.56% 4.89% 4.87%(6)
Operating expenses including reimbursement/waiver . . . . . . . . . . 0.70% 0.33% 0.05%(6)
Operating expenses excluding reimbursement/waiver . . . . . . . . . . 1.58% 1.43% 1.82%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . 19% 11% 0%(5)
</TABLE>

- ----------------
1 The Fund commenced operations on March 12, 1993.
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 Retail Shares before reimbursement
and waiver of fees by the Investment Adviser and/or Administrator for
the years ended October 31, 1995 and 1994 were $0.36 and $0.37,
respectively.
4 Net investment income per share before fee waivers and expense
reimbursements by the Investment Adviser and/or Administrator and for
the period ended October 31, 1993 was $0.18.
5 Not Annualized.
6 Annualized.

8
<PAGE> 361

RHODE ISLAND MUNICIPAL BOND FUND
(FOR A RETAIL SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1995(1)
-------------------
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-------
Income From Investment Operations:
Net Investment Income(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.44
Net realized and unrealized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . 0.67
-------
Total From Investment Operations: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
-------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.44)
Dividends from net realized capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
-------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.44)
-------
Net increase (decrease) in net asset value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.67
-------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.67
=======
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.29%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . . . . . . . . . . . . . . . . . . . . . . 5.13%(4)
Operating expenses including reimbursement/waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40%(4)
Operating expenses excluding reimbursement/waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25%(4)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34%(3)
</TABLE>

- ------------------
1 The Fund commenced operations on December 20, 1994. On September 7,
1995, Retail Shares of the Fund were redesignated "Retail A Shares."
2 Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the period ended
October 31, 1995 was $0.28.
3 Not Annualized.
4 Annualized.

9
<PAGE> 362
INVESTMENT OBJECTIVES AND POLICIES

TAX-EXEMPT BOND FUND

The Tax-Exempt Bond Fund's investment objective is to provide shareholders
with as high a level of current interest income free of Federal income tax as
is consistent with preservation of capital. To achieve this objective, the Fund
will invest substantially all of its assets in debt obligations issued by or on
behalf of states, territories and possessions of the United States, the
District of Columbia and their respective authorities, agencies,
instrumentalities and political subdivisions the interest on which, in the
opinion of bond counsel to the issuer, is exempt from regular Federal income
tax ("Municipal Securities"). The Fund's average weighted maturity will vary in
response to variations in comparative yields of differing maturities of
instruments, in accordance with the Fund's investment objective.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in Municipal
Securities, primarily bonds (at least 65% under normal market conditions).
Municipal Securities will consist primarily of issues which are rated at the
time of purchase within the three highest ratings assigned by S&P or Moody's or
unrated instruments determined by the Fund's Investment Adviser to be of
comparable quality. Municipal Securities rated within the three highest ratings
of S&P or Moody's are considered to be investment grade. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The Fund may from time to time, during temporary defensive periods, hold
uninvested cash reserves or invest in taxable obligations in such proportions
as, in the opinion of the Investment Adviser, prevailing market or economic
conditions warrant. Uninvested cash reserves will not earn income. Such
taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; or (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments. Under normal market conditions, the Fund anticipates that not
more than 5% of its net assets will be invested in any one category of taxable
securities. For more information, see "Other Investment Policies and Risk
Considerations" below.

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

NEW YORK MUNICIPAL BOND FUND

The New York Municipal Bond Fund is a non-diversified investment portfolio,
the investment objective of which is to seek as high a level of current
interest income exempt from Federal income tax and, to the extent possible,
from New York State and New York City personal income tax, as is consistent
with relative stability of principal. To achieve this objective, the Fund will
invest primarily in New York Municipal Securities as defined below. The Fund's
average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of New York and other states,
territories and possessions of the United States, the District of Columbia and
their respective authorities, agencies, instrumentalities and political
sub-divisions, the interest on which, in the opinion of bond counsel to the
issuer, is exempt from regular Federal income tax ("Municipal Securities"). The
Fund expects that except during temporary defensive periods or when, in the
opinion of the Fund's Investment Adviser, suitable obligations are unavailable
for investment, 65% of the Fund's assets will be invested in debt securities of
the State of New York, its political sub-divisions, authorities, agencies,
instrumentalities and corporations, and certain other governmental issuers such
as Puerto Rico, the interest on which, in the opinion of bond counsel to the
issuer, is exempt from Federal, New York State and New York City personal
income taxes ("New York Municipal Securities"). See "Special Considerations and
Risks -- New York Municipal Bond Fund" below for a discussion of certain risks
in investing in New York Municipal Securities. Dividends derived from interest
on Municipal Securities other than New York Municipal Securities will generally
be exempt from regular Federal income tax but may be subject to New York State
and New York City personal income tax. See "Taxes" below.

10
<PAGE> 363
comparable quality. Municipal Securities rated within the three highest ratings
of S&P or Moody's are considered to be investment grade. Municipal Securities
purchased by the Fund whose ratings are subsequently downgraded below the three
highest ratings of S&P and Moody's will be disposed of in an orderly manner,
normally within 30 to 60 days. See Appendix A to the Statement of Additional
Information for a description of S&P's and Moody's rating categories.

The Fund may from time to time, during temporary defensive periods, hold
uninvested cash reserves or invest in taxable obligations in such proportions
as, in the opinion of the Investment Adviser, prevailing market or economic
conditions warrant. Uninvested cash reserves will not earn income. Such
taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

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

CONNECTICUT MUNICIPAL BOND FUND

The Connecticut Municipal Bond Fund is a non-diversified investment
portfolio, the investment objective of which is to seek as high a level of
current interest income exempt from Federal income tax and, to the extent
possible, from Connecticut personal income tax, as is consistent with relative
stability of principal. To achieve this objective, the Fund will invest
primarily in Connecticut Municipal Securities as defined below. The Fund's
average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of Connecticut and other
states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular Federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, 65% of the Fund's assets will be invested in
Municipal Securities issued by or on behalf of the State of Connecticut, its
political sub-divisions, or any public instrumentality, state or local
authority, district or similar public entity created under the laws of
Connecticut and certain other governmental issuers such as Puerto Rico, the
interest on the obligations of which is exempt from Connecticut personal income
taxes by virtue of federal law ("Connecticut Municipal Securities"). See
"Special Considerations and Risks -- Connecticut Municipal Bond Fund" below,
for a discussion of certain risks in investing in Connecticut Municipal
Securities. Dividends derived from interest on Municipal Securities other than
Connecticut Municipal Securities will generally be exempt from regular Federal
income tax but may be subject to Connecticut personal income tax. See "Taxes"
below.

Municipal Securities purchased by the Fund will consist primarily of issues
which are rated at the time of purchase within the three highest ratings
assigned by S&P or Moody's or unrated instruments determined by the Fund's
Investment Adviser to be of comparable quality. Municipal Securities rated
within the three highest ratings of S&P or Moody's are considered to be
investment grade. Municipal Securities purchased by the Fund whose ratings are
subsequently downgraded below the three highest ratings of S&P and Moody's will
be disposed of in an orderly manner, normally within 30 to 60 days. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

The Fund may from time to time, during temporary defensive periods, hold
uninvested cash reserves or invest in taxable obligations in such proportions
as, in the opinion of the Investment Adviser, prevailing market or economic
conditions warrant. Uninvested cash reserves will not earn income. Such
taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

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

11
<PAGE> 364

MASSACHUSETTS MUNICIPAL BOND FUND

The Massachusetts Municipal Bond Fund is a non-diversified investment
portfolio, the investment objective of which is to seek as high a level of
current interest income exempt from Federal income tax and, to the extent
possible, from Massachusetts personal income tax, as is consistent with
relative stability of principal. To achieve this objective, the Fund will
invest primarily in Massachusetts Municipal Securities as defined below. The
Fund's average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the Commonwealth of Massachusetts and
other states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular Federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, 65% of the Fund's assets will be invested in
debt securities of the Commonwealth of Massachusetts, its political sub-
divisions, authorities, agencies, instrumentalities and corporations, and
certain other governmental issuers such as Puerto Rico, the interest on which,
in the opinion of bond counsel to the issuer, is exempt from Federal and
Massachusetts personal income taxes ("Massachusetts Municipal Securities"). See
"Special Considerations and Risks - Massachusetts Municipal Bond Fund" below
for a discussion of certain risks in investing in Massachusetts Municipal
Securities. Dividends derived from interest on Municipal Securities other than
Massachusetts Municipal Securities will generally be exempt from regular
Federal income tax but may be subject to Massachusetts personal income tax. See
"Taxes" below.

Municipal Securities purchased by the Fund will consist primarily of issues
which are rated at the time of purchase within the three highest ratings
assigned by S&P or Moody's or unrated instruments determined by the Fund's
Investment Adviser to be of comparable quality. Municipal Securities rated
within the three highest ratings of S&P or Moody's are considered to be
investment grade. Municipal Securities purchased by the Fund whose ratings are
subsequently downgraded below the three highest ratings of S&P and Moody's will
be disposed of in an orderly manner, normally within 30 to 60 days. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

The Fund may from time to time, during temporary defensive periods, hold
uninvested cash reserves or invest in taxable obligations in such proportions
as, in the opinion of the Investment Adviser, prevailing market or economic
conditions warrant. Uninvested cash reserves will not earn income. Such
taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

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

RHODE ISLAND MUNICIPAL BOND FUND

The Rhode Island Municipal Bond Fund is a non-diversified investment
portfolio, the investment objective of which is to seek as high a level of
current interest income exempt from Federal income tax and, to the extent
possible, from Rhode Island personal income tax, as is consistent with relative
stability of principal. To achieve this objective, the Fund will invest
primarily in Rhode Island Municipal Securities as defined below. The Fund's
average portfolio maturity will vary in response to variations in the
comparative yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of Rhode Island and other
states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular Federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, at least 65% of the Fund's assets will be
invested in debt securities of the State of Rhode Island, its political sub-
divisions, authorities, agencies, instrumentalities and corporations, and
certain other governmental issuers such as Puerto Rico, the interest on which,
in the opinion of bond counsel to the issuer, is exempt from Federal and Rhode
Island personal income taxes ("Rhode Island Municipal Securities"). See
"Special Considerations and Risks - Rhode Island Municipal Bond Fund" below for
a discussion of certain risks in investing in Rhode Island Municipal
Securities. Dividends derived from interest on

12
<PAGE> 365
Municipal Securities other than Rhode Island Municipal Securities will
generally be exempt from regular Federal income tax but may be subject to Rhode
Island personal income tax. See "Taxes" below.

Municipal Securities purchased by the Fund will consist primarily of issues
which are rated at the time of purchase within the three highest ratings
assigned by S&P or Moody's or unrated instruments determined by the Fund's
Investment Adviser to be of comparable quality. Municipal Securities rated
within the three highest ratings of S&P or Moody's are considered to be
investment grade. Municipal Securities purchased by the Fund whose ratings are
subsequently downgraded below the three highest ratings of S&P and Moody's will
be disposed of in an orderly manner, normally within 30 to 60 days. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

The Fund may from time to time, during temporary defensive periods, hold
uninvested cash reserves or invest in taxable obligations in such proportions
as, in the opinion of the Investment Adviser, prevailing market or economic
conditions warrant. Uninvested cash reserves will not earn income. Such
taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (iv) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

See "Special Considerations and Risks" and "Other Investment Policies and
Risk Considerations" below for information regarding additional investment
policies of the Rhode Island Municipal Bond Fund.

SPECIAL CONSIDERATIONS AND RISKS

In General

Generally, the market value of fixed income securities, such as Municipal
Securities, in the Funds can be expected to vary inversely to changes in
prevailing interest rates. During periods of declining interest rates, the
market value of investment portfolios comprised primarily of fixed income
securities, such as the Funds, will tend to increase, and during periods of
rising interest rates, the market value will tend to decrease. In addition,
during periods of declining interest rates, the yields of investment portfolios
comprised primarily of fixed income securities will tend to be higher than
prevailing market rates and, in periods of rising interest rates, yields will
tend to be somewhat lower. Fixed income securities with longer maturities,
which tend to produce higher yields, are subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities. Changes
in the financial strength of an issuer or changes in the ratings of any
particular security may also offset the value of these investments.
Fluctuations in the market value of fixed income securities subsequent to their
acquisition will not offset cash income from such securities but will be
reflected in a Fund's net asset value.

Although no Fund presently intends to do so on a regular basis, each Fund
may invest more than 25% of its assets in Municipal Securities the interest on
which is paid solely from revenues of similar projects if such investment is
deemed necessary or appropriate by the Investment Adviser. To the extent that a
Fund's assets are concentrated in Municipal Securities payable from revenues of
similar projects, the Fund will be subject to the particular risks presented by
such projects to a greater extent than it would be if its assets were not so
concentrated.

The New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds are classified as
non-diversified investment companies under the 1940 Act. Investment return on a
non-diversified portfolio typically is dependent upon the performance of a
smaller number of securities relative to the number held in a diversified
portfolio. Consequently, the change in value of any one security may affect
the overall value of a non-diversified portfolio more than it would a
diversified portfolio, and thereby subject the market-based net asset value per
share of the non-diversified portfolio to greater fluctuations. In addition, a
non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives may be.

New York Municipal Bond Fund

Certain substantial issuers of New York Municipal Securities (including
issuers whose obligations may be acquired by the Fund) have experienced serious
financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowing abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowings and fewer markets for their outstanding debt obligations. In recent
years, several different issues of Municipal Securities of New York State and
its agencies and instrumentalities and of New York City have been downgraded by
S&P and Moody's. On the other hand, strong demand for New York Municipal
Securities has more recently had the effect of permitting New York Municipal
Securities to be issued with yields relatively lower, and after issuance, to
trade in the market at prices

13
<PAGE> 366
relatively higher, than comparably rated Municipal Securities issued by others.
A recurrence of the financial difficulties previously experienced by certain
issuers of New York Municipal Securities could result in defaults or declines
in the market values of those issuers' existing obligations and, possibly, in
the obligations of other issuers of New York Municipal Securities. Although as
of the date of this Prospectus no issuers of New York Municipal Securities are
in default with respect to the payment of their Municipal Securities, the
occurrence of any such default could adversely affect the market values and
marketability of all New York Municipal Securities and, consequently, the net
asset value of the Fund's portfolio.

Other considerations affecting the Fund's investments in New York Municipal
Securities are summarized in the Statement of Additional Information.

Connecticut Municipal Bond Fund

The Connecticut Municipal Bond Fund's ability to achieve its investment
objective depends on the ability of issuers of Connecticut Municipal Securities
to meet their continuing obligations to pay principal and interest. Since the
Fund invests primarily in Connecticut Municipal Securities, the value of the
Fund's shares may be especially affected by factors pertaining to the economy
of Connecticut and other factors specifically affecting the ability of issuers
of Connecticut Municipal Securities to meet their obligations.

Fiscal stress is reflected in the State's economic and revenue forecasts, a
rising debt burden that reflects a significant increase in bond activity since
fiscal 1987-88, a cumulative general fund deficit for fiscal 1990-91 of over
$965 million, and uncertainty concerning the solutions for these imbalances.
Accumulated surpluses in a budget stabilization fund created in 1983 to protect
against future deficit problems were exhausted in 1990. The lack of a
contingency fund balance, combined with reduced revenue-raising flexibility in
the near term, places additional constraints on managing these financial
problems and any others that may arise. As a result of the recent recurring
budgetary problems, Connecticut's general obligation bonds were downgraded by
S&P from AA+ to AA in April 1990 and, in September 1991, to AA-; by Moody's
from Aa1 to Aa in April 1990; and by Fitch Investors Service, L.P. from AA+ to
AA in March 1995.

Other considerations affecting the Fund's investments in Connecticut
Municipal Securities are summarized in the Statement of Additional Information.

Massachusetts Municipal Bond Fund

The Massachusetts Municipal Bond Fund's ability to achieve its investment
objective depends on the ability of issuers of Massachusetts Municipal
Securities to meet their continuing obligations to pay principal and interest.
Since the Fund invests primarily in Massachusetts Municipal Securities, the
value of the Fund's shares may be especially affected by factors pertaining to
the economy of Massachusetts and other factors specifically affecting the
ability of issuers of Massachusetts Municipal Securities to meet their
obligations. As a result, the value of the Fund's shares may fluctuate more
widely than the value of shares of a portfolio investing in securities of
issuers in a number of different states. The ability of Massachusetts and its
political subdivisions to meet their obligations will depend primarily on the
availability of tax and other revenues to those governments and on their fiscal
conditions generally. The amount of tax and other revenues available to
governmental issuers of Massachusetts Municipal Securities may be affected from
time to time by economic, political and demographic conditions within
Massachusetts. In addition, constitutional or statutory restrictions may limit
a government's power to raise revenues or increase taxes. The availability of
federal, state and local aid to an issuer of Massachusetts Municipal Securities
may also affect that issuer's ability to meet its obligations. Payments of
principal and interest on limited obligation bonds will depend on the economic
condition of the facility or specific revenue source from whose revenues the
payments will be made, which in turn could be affected by economic, political
and demographic conditions in Massachusetts or a particular locality. Any
reduction in the actual or perceived ability of an issuer of Massachusetts
Municipal Securities to meet its obligations (including a reduction in the
rating of its outstanding securities) would likely affect adversely the market
value and marketability of its obligations and could affect adversely the
values of other Massachusetts Municipal Securities as well.

Rhode Island Municipal Bond Fund

14
<PAGE> 367
may limit a government's power to raise revenues or increase taxes. The
availability of federal, state and local aid to an issuer of Rhode Island
Municipal Securities may also affect that issuer's ability to meet its
obligations. Payments of principal and interest on limited obligation bonds
will depend on the economic condition of the facility or specific revenue
source from whose revenues the payments will be made, which in turn could be
affected by economic, political and demographic conditions in Rhode Island or a
particular locality. Any reduction in the actual or perceived ability of an
issuer of Rhode Island Municipal Securities to meet its obligations (including
a reduction in the rating of its outstanding securities) would likely affect
adversely the market value and marketability of its obligations and could
affect adversely the value of other Rhode Island Municipal Securities as well.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations and Money Market Instruments

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.

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.

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.

Types of Municipal Securities

Each Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public

15
<PAGE> 368
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

Private Activity Bonds

Each Fund may invest in "private activity bonds", the interest on which,
although exempt from regular Federal income tax, may constitute an item of tax
preference for purposes of the Federal alternative minimum tax. Investments in
such securities, however, will not be treated as investments in Municipal
Securities for purposes of the 80% requirement mentioned above and, under
normal conditions, will not exceed 20% of a Fund's total assets when added
together with any taxable investments held by the Fund.

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.

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 10% 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.

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

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<PAGE> 369
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,
or any other investment companies 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.

Custodial Receipts and Certificates of Participation

Securities acquired by the Funds may be in the form of custodial receipts
evidencing rights to receive a specific future interest payment, principal
payment or both on certain Municipal Securities. Such obligations are held in
custody by a bank on behalf of holders of the receipts. These custodial
receipts are known by various names, including "Municipal Receipts," "Municipal
Certificates of Accrual on Tax-Exempt Securities" ("M-CATs") and "Municipal
Zero Coupon Receipts." The Funds may also purchase from time to time
certificates of participation that, in the opinion of counsel to the issuer,
are exempt from Federal income tax. A certificate of participation gives a Fund
an undivided interest in a pool of Municipal Securities held by a bank.
Certificates of participation may have fixed, floating or variable rates of
interest. If a certificate of participation is unrated, the Investment Adviser
will have determined that the instrument is of comparable quality to those
instruments in which the Fund may invest pursuant to guidelines approved by
Galaxy's Board of Trustees. For certain certificates of participation, a Fund
will have the right to demand payment, on not more than 30 days' notice, for
all or any part of the Fund's participation interest, plus accrued interest.
As to these instruments, each Fund intends to exercise its right to demand
payment as needed to provide liquidity, to maintain or improve the quality of
its investment portfolio or upon a default (if permitted under the terms of the
instrument).

Futures Contracts

Each Fund, except the Tax-Exempt Bond Fund, may purchase and sell municipal
bond index futures contracts as a hedge against changes in market conditions. A
municipal bond index assigns values daily to the municipal bonds included in
the index based on the independent assessment of dealer-to-dealer municipal
bond brokers. A municipal bond index futures contract represents a firm
commitment by which two parties agree to take or make delivery of an amount
equal to a specified dollar amount multiplied by the difference between the
municipal bond index value on the last trading date of the contract and the
price at which the futures contract is originally struck. No physical delivery
of the underlying securities in the index is made.

Each Fund, except the Tax-Exempt Bond Fund, may also enter into contracts
for the future delivery of fixed-income securities commonly known as interest
rate futures contracts. Interest rate futures contracts are similar to
municipal bond index futures contracts except that, instead of a municipal bond
index, the "underlying commodity" is represented by various types of
fixed-income securities.

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 ("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
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. Any 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 the Statement of Additional Information
and in Appendix B thereto.

When-Issued, Forward Commitment and Delayed Settlement Transactions

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<PAGE> 370
security 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 assets, the Fund's liquidity and the ability
of the Investment Adviser to manage the Fund might 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
investment objectives.

Stand-by Commitments

The Funds 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

Mortgage-Backed Securities

Each Fund, except the Tax-Exempt Bond 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 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.

Guaranteed Investment Contracts

Each Fund, except the Tax-Exempt Bond Fund, may invest in guaranteed
investment contracts ("GICs") issued by United States and Canadian insurance
companies. Pursuant to GICs, the Funds make 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' 10% limitation on such
investments, unless there is an active and substantial secondary market for the
particular instrument and market quotations are readily available.

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<PAGE> 371
Bank Investment Contracts

Each Fund, except the Tax-Exempt Bond 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' 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

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
"Taxes -- Federal."

INVESTMENT LIMITATIONS

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 its 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.

4. Purchase any securities which would cause 25% or more of the value of
its 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 there is no limitation with respect
to securities issued or guaranteed by the U.S. Government, any state,
territory or possession of the U. S. Government, the District of Columbia,
or any of their authorities, agencies, instrumentalities or political
subdivisions.

In addition, the Tax-Exempt Bond Fund may not:

5. 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 the securities of 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 New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds may not:

6. 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 the securities of such issuer, except that up to
50% of the value of a Fund's total assets may be invested without regard to
this 5% limitation, provided that no more than 25% of the value of a Fund's
total assets are invested in the securities of any one issuer.

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.

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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 of a 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 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.

HOW TO PURCHASE 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.

GENERAL

Investments in Retail A Shares of the Funds are subject to a front-end sales
charge. Investments in Retail B Shares of the Tax-Exempt Bond Fund are subject
to a back-end sales charge. This back-end sales charge declines over time and
is known as a "contingent deferred sales charge."

Investors should read "Characteristics of Retail A Shares and Retail B
Shares" and "Factors to Consider When Selecting Retail A Shares or Retail B
Shares" before deciding between the two.

The Distributor has established several procedures to enable different types
of investors to purchase Retail Shares of the Funds. The Retail Shares
described in this Prospectus may be purchased by individuals, corporations or
other entities, who submit a purchase application to Galaxy, purchasing directly
either for their own accounts or for the accounts of others ("Direct
Investors"). Retail Shares may also be purchased by Fleet Brokerage Securities,
Inc., Fleet Securities, Inc., Fleet Financial Group, Inc., its affiliates,
their correspondent banks and other qualified banks, savings and loan
associations and broker/dealers ("Institutions") on behalf of their customers
("Customers"). Purchases by Direct Investors may take place only on days on
which the Distributor, Galaxy's custodian and Galaxy's transfer agent are open
for business ("Business Days"). If an Institution accepts a purchase order from
a 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 Distributor's procedures. Retail Shares of the Funds will be issued only in
exchange for monetary consideration as described below.

PURCHASE PROCEDURES -- CUSTOMERS OF INSTITUTIONS

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<PAGE> 373
agent directly to a Customer with a copy to the Institution, or will be
furnished directly to the Customer by the Institution. Other procedures for the
purchase of Retail Shares established by Institutions in connection with the
requirements of their Customer accounts may apply. Customers wishing to
purchase Retail Shares through their Institution should contact such entity
directly for appropriate purchase instructions.

PURCHASE PROCEDURES -- DIRECT INVESTORS

Purchases by Mail. Retail Shares may be purchased by completing a purchase
application and mailing it, together with a check payable to each Fund in which
a Direct Investor wishes to invest, to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling the Distributor at
1-800-628-0414.

Subsequent investments in an existing account in any Fund may be made at any
time by sending a check for a minimum of $100 payable to the Fund in which the
additional investment is being made to Galaxy at the address above along with
either (a) the detachable form that regularly accompanies confirmation of a
prior transaction, (b) a subsequent order form that may be obtained from the
Distributor, or (c) a letter stating the amount of the investment, the name of
the Fund and the account number in which the investment is to be made. If a
Direct Investor's check does not clear, the purchase will be cancelled.

Purchases by Wire. Direct Investors may also purchase Retail Shares by
arranging to transmit federal funds by wire to Fleet Bank of Massachusetts,
N.A. as agent for First Data Investor Services Group, Inc. (formerly known as
The Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, an investor must
telephone 1-800-628-0413 to place an order and for instructions. Federal funds
and registration instructions should be wired through the Federal Reserve
System to:

Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
ABA # 0110-0013-8
DDA # 79673-5702
Ref: The Galaxy Fund
Shareholder Name
Shareholder Account Number

Direct Investors making initial investments by wire must promptly complete a
purchase application and forward it to The Galaxy Fund, P.O. Box 15108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108. Applications may be
obtained by calling the Distributor at 1-800-628-0414. Redemptions will not be
processed until the application in proper form has been received by FDISG.
Direct Investors making subsequent investments by wire should follow the
instructions above.

Effective Time of Purchases. A purchase order for Retail Shares received and
accepted by the Distributor from an Institution or a Direct Investor on a
Business Day prior to the close of regular trading hours on the Exchange
(currently, 4:00 p.m. Eastern Time) will be executed at the net asset value per
share determined on that date, 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 third Business Day following the receipt of such order. Such
order will be executed on the day on which the purchase price is received in
proper form. 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 or
Direct Investor submitting the order. Payment for orders which are not received
or accepted will be returned. If an Institution accepts a purchase order from a
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 above procedures.

OTHER PURCHASE INFORMATION

Except as provided in "Investor Programs" below, the minimum initial
investment by a Direct Investor, or initial aggregate investment by an
Institution investing on behalf of its Customers, is $2,500. The minimum
investment for subsequent purchases is $100. There are no minimum investment
requirements for investors participating in the Automatic Investment Program
described below. Customers may agree with a particular Institution to varying
minimum initial and minimum subsequent purchase requirements with respect to
their accounts.

Galaxy reserves the right to reject any purchase order, in whole or in part,
or to waive any minimum investment requirement. The issuance of Retail Shares
to Direct Investors and Institutions is recorded on the books of Galaxy and
Retail Share certificates will not be issued.

APPLICABLE SALES CHARGE -- RETAIL A SHARES

The public offering price for Retail A Shares of the Funds is the sum of the
net asset value of the Retail A Shares purchased plus any applicable front-end
sales charge. The sales charge is assessed as follows:

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<PAGE> 374

<TABLE>
<CAPTION>
TOTAL SALES CHARGE REALLOWANCE TO DEALERS
------------------------------------- ----------------------
AS A % OF AS A % OF AS A % OF
OFFERING PRICE NET ASSET OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE VALUE PER SHARE PER SHARE
- --------------------- -------------- --------------- ----------------------
<S> <C> <C> <C>
Less than $50,000 . . . . . . . . . . . . . . . . . . . 3.75 3.90 3.75
$50,000 but less than $100,000 . . . . . . . . . . . . 3.50 3.63 3.50
$100,000 but less than $250,000 . . . . . . . . . . . . 3.00 3.09 3.00
$250,000 but less than $500,000 . . . . . . . . . . . . 2.50 2.56 2.50
$500,000 but less than $1,000,000 . . . . . . . . . . . 2.00 2.04 2.00
$1,000,000 but less than $3,000,000 . . . . . . . . . . 1.00 1.01 1.00
$3,000,000 and over . . . . . . . . . . . . . . . . . . 0.50 0.50 0.50
</TABLE>

Further reductions in the sales charges shown above are also possible. See
"Quantity Discounts" below.

In certain situations or for certain individuals, the front-end sales charge
for Retail A Shares of the Funds may be waived either because of the nature of
the investor or the reduced sales effort required to attract such investments.
In order to receive the sales charge waiver, an investor must explain the
status of his or her investment at the time of purchase. No sales charge is
assessed on the following types of transactions and/or investors:

- reinvestment of dividends and distributions;

- IRA, SEP and Keogh Plan accounts;

- purchases by persons who were beneficial owners of shares of the Funds
or any of the other portfolios offered by Galaxy or any other funds
advised by Fleet or its affiliates before December 1, 1995;

- purchases by directors, officers and employees of the Funds' Distributor
and of broker-dealers having agreements with the Funds' Distributor
pertaining to the sale of Retail A Shares to the extent permitted by such
organizations;

- investors who purchase pursuant to a "wrap fee" program offered by any
broker-dealer or other financial institution or financial planning
organization;

- purchases by members of Galaxy's Board of Trustees;

- purchases by officers, directors, employees and retirees of Fleet
Financial Group, Inc. and any of its affiliates; and

- any purchase of Retail A Shares pursuant to the Reinstatement Privilege
described below.

QUANTITY DISCOUNTS

In order to obtain quantity discount benefits, a Direct Investor or Customer
must notify Galaxy's administrator, First Data Investor Services Group, Inc.
(formerly known as The Shareholder Services Group, Inc. d/b/a 440 Financial)
("FDISG") at the time of purchase that he or she would like to take advantage
of any of the discount plans described below. Upon such notification, the
investor will receive the lowest applicable sales charge. Quantity discounts
may be modified or terminated at any time and are subject to confirmation of a
Direct Investor's or Customer's holdings through a check of appropriate
records. For more information about quantity discounts, please contact the
Distributor or your Institution.

Rights of Accumulation. A reduced sales charge applies to any purchase of
Retail A Shares of any portfolio of Galaxy that is sold with a sales charge
("Eligible Fund") where a Direct Investor's or Customer's then current
aggregate investment in Retail A Shares is $50,000 or more. "Aggregate
investment" means the total of: (a) the dollar amount of the then current
purchase of shares of an Eligible Fund; and (b) the value (based on current
net asset value) of previously purchased and beneficially-owned shares of any
Eligible Fund on which a sales charge has been paid. If, for example, a Direct
Investor or Customer beneficially owns shares of one or more Eligible Funds
with an aggregate current value of $49,000 on which a sales charge has been
paid and subsequently purchases shares of an Eligible Fund having a current
value of $1,000, the sales charge applicable to the subsequent purchase would
be reduced to 3.50% of the offering price. Similarly, with respect to each
subsequent investment, all shares of Eligible Funds that are beneficially
owned by the investor at the time of investment may be combined to determine
the applicable sales charge.

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<PAGE> 375
Letter of Intent. By completing the Letter of Intent included as part of the
Account Application, a Direct Investor or Customer becomes eligible for the
reduced sales charge applicable to the total number of Eligible Fund Retail A
Shares purchased in a 13-month period pursuant to the terms and under the
conditions set forth below and in the Letter of Intent. To compute the
applicable sales charge, the offering price of Retail A Shares of an Eligible
Fund on which a sales charge has been paid and that are beneficially owned by a
Direct Investor or Customer on the date of submission of the Letter of Intent,
may be used as a credit toward completion of the Letter of Intent. However, the
reduced sales charge will be applied only to new purchases.

FDISG will hold in escrow Retail A Shares equal to 5% of the amount
indicated in the Letter of Intent for payment of a higher sales charge if a
Direct Investor or Customer does not purchase the full amount indicated in the
Letter of Intent. The escrow will be released when a Direct Investor or
Customer fulfills the terms of the Letter of Intent by purchasing the specified
amount. If purchases qualify for a further sales charge reduction, the sales
charge will be adjusted to reflect a Direct Investor's or Customer's total
purchases. If total purchases are less than the amount specified, a Direct
Investor or Customer will be requested to remit an amount equal to the
difference between the sales charge actually paid and the sales charge
applicable to the total purchases. If such remittance is not received within 20
days, FDISG, as attorney-in-fact pursuant to the terms of the Letter of Intent
and at the Distributor's direction, will redeem an appropriate number of Retail
A Shares held in escrow to realize the difference. Signing a Letter of Intent
does not bind a Direct Investor or Customer to purchase the full amount
indicated at the sales charge in effect at the time of signing, but a Direct
Investor or Customer must complete the intended purchase in accordance with the
terms of the Letter of Intent to obtain the reduced sales charge. To apply, a
Direct Investor or Customer must indicate his or her intention to do so under a
Letter of Intent at the time of purchase.

Reinstatement Privilege. Direct Investors and Customers may reinvest all or
any portion of their redemption proceeds in Retail A Shares of the Funds or in
Retail A Shares of another portfolio of Galaxy within 90 days of the
redemption trade date without paying a sales load. Retail A Shares so
reinvested will be purchased at a price equal to the net asset value next
determined after the Transfer Agent receives a reinstatement request and
payment in proper form.

APPLICABLE SALES CHARGES -- RETAIL B SHARES

The public offering price for Retail B Shares of the Tax-Exempt Bond Fund is
the net asset value of the Retail B Shares purchased. Although Direct Investors
and Customers pay no front-end sales charge on purchases of Retail B Shares,
such Shares are subject to a contingent deferred sales charge at the rates set
forth below if they are redeemed within six years of purchase. Securities
dealers, brokers, financial institutions and other industry professionals will
receive commissions from the Distributor in connection with sales of Retail B
Shares. These commissions may be different than the reallowances or placement
fees paid to dealers in connection with sales of Retail A Shares. The
contingent deferred sales charge on Retail B Shares is based on the lesser of
the net asset value of the Shares on the redemption date or the original cost
of the Shares being redeemed. As a result, no sales charge is imposed on any
increase in the principal value of a Direct Investor's or Customer's Retail B
Shares. In addition, a contingent deferred sales charge will not be assessed on
Retail B Shares purchased through reinvestment of dividends or capital gains
distributions.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- ---------------------- ---------------------
<S> <C>
Less than one 5.00%
More than one but less than two 4.00%
More than two but less than three 3.00%
More than three but less than four 3.00%
More than four but less than five 2.00%
More than five but less than six 1.00%
After six None
</TABLE>

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<PAGE> 376
When a Direct Investor or Customer redeems his or her Retail B Shares, the
redemption request is processed to minimize the amount of the contingent
deferred sales charge that will be charged. Retail B Shares are redeemed first
from those shares that are not subject to a contingent deferred sales charge
(i.e., Retail B Shares that were acquired through reinvestment of dividends or
distributions or that qualify for other deferred sales charge exemptions) and
after that from the Retail B Shares that have been held the longest.

CHARACTERISTICS OF RETAIL A SHARES AND RETAIL B SHARES

Retail A Shares of the Funds are sold at their net asset value plus a
front-end sales charge of up to 3.75%. This front-end sales charge may be
reduced or waived in some cases. (See "Applicable Sales Charges -- Retail A
Shares" and "Quantity Discounts.") Retail A Shares are subject to ongoing
shareholder servicing fees at an annual rate of up to .15% of the Fund's
average daily net assets attributable to its Retail A Shares.

Retail B Shares of the Tax-Exempt Bond Fund are sold at net asset value
without an initial sales charge. Normally, however, a deferred sales charge is
paid if the Shares are redeemed within six years of investment. (See
"Applicable Sales Charges -- Retail B Shares.") Retail B Shares of the Fund
are subject to ongoing shareholder servicing and distribution fees at an annual
rate of up to .80% of the Fund's average daily net assets attributable to its
Retail B Shares. These ongoing fees, which are higher than those charged on
Retail A Shares, will cause Retail B Shares to have a higher expense ratio and
pay lower dividends than Retail A Shares.

Six years after purchase, Retail B Shares of the Tax-Exempt Bond Fund will
convert automatically to Retail A Shares of the Fund. The purpose of the
conversion is to relieve a holder of Retail B Shares of the higher ongoing
expenses charged to those Shares, after enough time has passed to allow the
Distributor to recover approximately the amount it would have received if a
front-end sales charge had been charged. The conversion from Retail B Shares to
Retail A Shares takes place at net asset value, as a result of which a Direct
Investor or Customer receives dollar-for-dollar the same value of Retail A
Shares as he or she had of Retail B Shares. The conversion occurs six years
after the beginning of the calendar month in which the Shares are purchased. As
a result of the conversion, the converted Shares are relieved of the
distribution and shareholder servicing fees borne by Retail B Shares, although
they are subject to the shareholder servicing fees borne by Retail A Shares.

Retail B Shares acquired through a reinvestment of dividends or
distributions (as discussed under "Applicable Sales Charges -- Retail B
Shares") are also converted at the earlier of two dates -- six years after the
beginning of the calendar month in which the reinvestment occurred or the date
of conversion of the most recently purchased Retail B Shares that were not
acquired through reinvestment of dividends or distributions. For example, if a
Direct Investor or Customer makes a one-time purchase of Retail B Shares of the
Fund, and subsequently acquires additional Retail B Shares of such Fund only
through reinvestment of dividends and/or distributions, all of such Direct
Investor's or Customer's Retail B Shares in the Fund, including those acquired
through reinvestment, will convert to Retail A Shares of the Fund on the same
date.

FACTORS TO CONSIDER WHEN SELECTING RETAIL A SHARES OR RETAIL B SHARES

Before purchasing Retail A Shares or Retail B Shares of the Tax-Exempt Bond
Fund, Direct Investors and Customers should consider whether, during the
anticipated periods of their investments in the Fund, the accumulated
distribution and shareholder servicing fees and potential contingent deferred
sales charge on Retail B Shares prior to conversion would be less than the
initial sales charge and accumulated shareholder servicing fees on Retail A
Shares purchased at the same time, and to what extent such differential would
be offset by the higher yield of Retail A Shares. In this regard, to the extent
that the sales charge for Retail A Shares is waived or reduced by one of the
methods described above, investments in Retail A Shares become more desirable.
An invest

24
<PAGE> 377
ment of $250,000 or more in Retail B Shares would not be in most shareholders'
best interest. Shareholders should consult their financial advisers and/or
brokers with reference to the advisability of purchasing Retail B Shares in
amounts exceeding $250,000.

Although Retail A Shares are subject to a shareholder servicing fee, they
are not subject to the higher distribution and shareholder servicing fee
applicable to Retail B Shares. For this reason, Retail A Shares can be expected
to pay correspondingly higher dividends per Share. However, because initial
sales charges are deducted at the time of purchase, purchasers of Retail A
Shares (that do not qualify for exemptions from or reductions in the initial
sales charge) would have less of their purchase price initially invested in the
Fund than purchasers of Retail B Shares in the Fund.

As described above, purchasers of Retail B Shares will have more of their
initial purchase price invested. Any positive investment return on this
additional invested amount would partially or wholly offset the expected higher
annual expenses borne by Retail B Shares. Because the Fund's future returns
cannot be predicted, there can be no assurance that this will be the case.
Holders of Retail B Shares would, however, own Shares that are subject to a
contingent deferred sales charge of up to 5.00% upon redemption, depending upon
the year of redemption. Direct Investors or Customers expecting to redeem
during this six-year period should compare the cost of the contingent deferred
sales charge plus the aggregate annual Retail B Shares' distribution and
shareholder servicing fees to the cost of the initial sales charge and
shareholder servicing fees on the Retail A Shares. Over time, the expense of
the annual distribution and shareholder servicing fees on the Retail B Shares
may equal or exceed the initial sales charge and annual shareholder servicing
fee applicable to Retail A Shares. For example, if net asset value remains
constant, the aggregate distribution and shareholder servicing fees with
respect to Retail B Shares of the Fund would equal or exceed the initial sales
charge and aggregate shareholder servicing fees of Retail A Shares
approximately six years after purchase. In order to reduce such fees for
investors that hold Retail B Shares for more than six years, Retail B Shares
will be automatically converted to Retail A Shares as described above at the
end of such six-year period.

HOW TO REDEEM SHARES

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Distributor. Proceeds from the
redemptions of Retail B Shares of the Tax-Exempt Bond Fund will be reduced by
the amount of any applicable contingent deferred sales charge. Galaxy reserves
the right to transmit redemption proceeds within seven days after receiving the
redemption order if, in its judgment, an earlier payment could adversely affect
a Fund.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Payments for redemption orders received by the Distributor on a Business Day
will normally be wired on the fifth Business Day to the Institutions.

Direct Investors may redeem all or part of their Retail Shares in accordance
with any of the procedures described below.

REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Shares may be redeemed by a Direct Investor by
submitting a written request for redemption to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the number of shares to be
redeemed, (ii) identify the shareholder account number and tax identification
number, and (iii) be signed by each registered owner exactly as the Retail
Shares are registered. A redemption request for an amount in excess of $50,000,
or for any amount where (i) the proceeds are to be sent elsewhere than the
address of record (excluding the transfer of assets to a successor custodian),
(ii) the proceeds are to be sent to an address of record which has changed in
the preceding 90 days, or (iii) the check is to be made payable to someone
other than the registered owner(s), must be accompanied by signature
guarantees. The guarantor of a signature must be a bank which is a member of
the FDIC, a trust company, a member firm of a national securities exchange or
any other eligible guarantor institution. The Distributor will not accept
guarantees from notaries public. The Distributor may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians. A redemption request will not be deemed
to be properly received until the Distributor receives all required documents
in proper form. The Funds ordinarily will make payment for Retail Shares
redeemed by mail within five Business Days after proper receipt by the
Distributor of the redemption request. Questions with respect to the proper
form for redemption requests should be directed to the Distributor at
1-800-628-0413.

Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling 1-800-628-0413 and instructing the

25
<PAGE> 378
Distributor to mail a check for redemption proceeds of up to $50,000 to the
address of record. A redemption request for an amount in excess of $50,000, or
for any amount where (i) the proceeds are to be sent elsewhere than the address
of record (excluding the transfer of assets to a successor custodian), (ii) the
proceeds are to be sent to an address of record which has changed in the
preceding 90 days, or (iii) the check is to be made payable to someone other
than the registered owner(s), must be accompanied by signature guarantees. (See
"Redemption by Mail.")

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem
Retail Shares by instructing the Distributor by wire or telephone to wire the
redemption proceeds of $1,000 or more directly to a Direct Investor's account
at any commercial bank in the United States. The Distributor charges a $5.00
fee for each wire redemption and the fee is deducted from the redemption
proceeds. The redemption proceeds must be paid to the same bank and account as
designated on the application or in written instructions subsequently received
by the Distributor. To request redemption of Retail Shares by wire, Direct
Investors should call the Distributor at 1-800-628-0413.

In order to arrange for redemption by wire after an account has been opened
or to change the bank or account designated to receive redemption proceeds, a
written request must be sent to Galaxy, at the address listed above under
"Redemption by Mail." Such requests must be signed by the investor and
accompanied by a signature guarantee (see "Redemption by Mail" above for
details regarding signature guarantees). Further documentation may be requested
from corporations, executors, administrators, trustees, or guardians. If, due
to temporary adverse conditions, investors are unable to effect telephone
transactions, investors are encouraged to follow the procedures for
transactions by wire or mail which are described above.

Galaxy reserves the right to refuse a wire or telephone redemption if it
believes it is advisable to do so. Procedures for redeeming Retail Shares by
wire or telephone may be modified or terminated at any time by Galaxy or the
Distributor. In attempting to confirm that telephone instructions are genuine,
Galaxy will use such procedures as are considered reasonable, including
recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security number, address and/or bank). If Galaxy fails to follow established
procedures for the authentication of telephone instructions it may be liable
for losses due to unauthorized or fraudulent telephone transactions.

No redemption by a Direct Investor in any Fund will be processed until
Galaxy has received a completed application with respect to the Direct
Investor's account.

If any portion of the Retail Shares to be redeemed represents an investment
made by personal check, Galaxy reserves the right to delay payment of proceeds
until the Distributor is reasonably satisfied that the check has been collected
which could take up to 15 days from the purchase date. A Direct Investor who
anticipates the need for more immediate access to his or her investment should
purchase Retail Shares by federal funds or bank wire or by certified or
cashier's check. Banks normally impose a charge in connection with the use of
bank wires, as well as certified checks, cashier's checks and federal funds.

OTHER REDEMPTION INFORMATION

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

Direct Investors and Customers of Institutions may, after appropriate prior
authorization, exchange Retail A Shares of a Fund having a value of at least
$100 for Retail A Shares of any of the other portfolios offered by Galaxy or
for shares of any other investment portfolios otherwise advised by Fleet or its
affiliates in which the Direct Investor or Customer maintains an existing
account, provided that such other Shares may legally be sold in the state of
the investor's residence. Direct Investors and Customers of Institutions may
exchange Retail B Shares of the Tax-Exempt Bond Fund for Retail B Shares of the
Short-Term Bond, High Quality Bond, Equity Value, Equity Growth, Small Company
Equity, Asset Allocation and Growth and Income Funds offered by Galaxy in which
the Direct Investor or Customer maintains an existing account, provided that
such other Retail B Shares may legally be sold in the state of the investor's
residence.

No additional sales charge will be incurred when exchanging Retail A Shares
of a Fund for Retail A Shares of another Galaxy portfolio that imposes a sales
charge. Retail B Shares may be exchanged without the payment of any contingent
deferred sales charge at the time the exchange is made. In determining the
holding period for calculating the contingent deferred sales charge payable on
redemptions of Retail B Shares, the holding period of the Retail B Shares
originally held will be added to the holding period of the Retail B Shares
acquired through exchange.

26
<PAGE> 379
the Automatic Investment Program described below, in which event there is no
minimum initial investment requirement, or in the College Investment Program
described below, in which event the minimum initial investment is generally
$100. The minimum initial investment to establish an account by exchange in the
Institutional Treasury Money Market Fund is $2 million.

An exchange involves a redemption of all or a portion of the Retail Shares
of a Fund and the investment of the redemption proceeds in Retail Shares of
another portfolio offered by Galaxy or, with respect to Retail A Shares,
otherwise advised by Fleet or its affiliates. The redemption will be made at
the per Share net asset value next determined after the exchange request is
received. The Retail Shares of a Fund or portfolio to be acquired will be
purchased at the per Share net asset value next determined after acceptance of
the exchange request, plus any applicable sales charge.

For federal income tax purposes, an exchange of Shares is a taxable event
and, accordingly, a capital gain or loss may be realized by an investor. Before
making an exchange request, the Customer should consult a tax or other
financial adviser to determine the tax consequences.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

PAYROLL DEDUCTION PROGRAM

The Payroll Deduction Program provides Direct Investors with a convenient,
systematic way to purchase Fund shares by deducting a minimum amount of $25 per
pay period from their paycheck. To be eligible for the Program, the payroll
department of a Direct Investor's employer must have the capability to forward
transactions directly through the Automated Clearing House (ACH), or indirectly
through a third party payroll processing company that has access to the ACH. A
Direct Investor must complete and submit a Galaxy Payroll Deduction Application
to his or her employer's payroll department, which will arrange for the
specified amount to be debited from the Direct Investor's paycheck each pay
period. Retail shares of Galaxy will be purchased within three days after the
debit occurred. If the designated day falls on a weekend or non-Business Day,
the purchase will be made on the Business Day closest to the designated day.
A Direct Investor should allow between two to four weeks for the Payroll
Deduction Program to be established after submitting an application to the
employer's payroll department.

27
<PAGE> 380
COLLEGE INVESTMENT PROGRAM

The College Investment Program (the "College Program") permits a Direct
Investor to open an account with Galaxy and purchase Retail Shares of a Fund
with a minimum amount of $100 for initial or subsequent investments, except
that if the Direct Investor purchases Retail Shares through the Automatic
Investment Program, the minimum per transaction is $50. The College Program is
designed to assist Direct Investors who want to finance a college savings plan.
See "Investor Program - Automatic Investment Program and Systematic Withdrawal
Plan" for information on the Automatic Investment Program. Galaxy reserves the
right to redeem accounts participating in the College Program involuntarily,
upon 60 days' written notice, if the account's net asset value falls below the
applicable minimum initial investment as a result of redemptions. See "How to
Redeem Shares -- Other Redemption Information" above for further information.

DIRECT DEPOSIT PROGRAM

INFORMATION SERVICES

GALAXY INFORMATION CENTER -- 24 HOUR INFORMATION SERVICE

The Galaxy Information Center provides Fund performance and investment
information 24 hours a day, seven days a week. To access the Galaxy Information
Center, just call 1-800-628-0414.

VOICE RESPONSE SYSTEM

The Voice Response System provides Direct Investors automated access to Fund
and account information as well as the ability to make telephone exchanges and
redemptions. These transactions are subject to the terms and conditions
described under Investor Programs. To access the Voice Response System, just
call 1-800-FOR-GLXY (367-4599) from any touch-tone telephone and follow the
recorded instructions.

GALAXY SHAREHOLDER SERVICES

Galaxy also offers a TDD service for the hearing impaired. Just call
1-800-696-6515, 24 hours a day, seven days a week.

Direct Investors residing outside the United States can contact Galaxy by
calling 1-508-855-5237.

Investment returns and principal values will vary with market conditions so
that an investor's Retail Shares, when redeemed, may be worth more or less than
their original cost. Past performance is no guarantee of future results. Unless
otherwise indicated, total return figures include changes in share price, and
reinvestment of dividends and capital gains distributions, if any.

DIVIDENDS AND DISTRIBUTIONS

28
<PAGE> 381

TAXES

FEDERAL

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.

The policy of each Fund is to pay dividends with respect to each taxable
year equal to at least the sum of 90% of its net exempt interest income and 90%
of its net investment company taxable income, if any. Dividends derived from
interest on Municipal Securities (known as exempt-interest dividends) may be
treated by the Funds' shareholders as items of interest excludable from their
gross income under Section 103(a) of the Code, unless under the circumstances
applicable to a particular shareholder, exclusion would be disallowed. (See the
Statement of Additional Information under "Additional Information Concerning
Taxes.")

If a Fund should hold certain "private activity bonds" issued after August
7, 1986, shareholders must include, as an item of tax preference, the portion
of dividends paid by the Fund that is attributable to interest on such bonds in
their Federal alternative minimum taxable income for purposes of determining
liability (if any) for the 26% to 28% alternative minimum tax for individuals
and the 20% alternative minimum tax and the environmental tax applicable to
corporations. Corporate shareholders must also take all exempt-interest
dividends into account in determining certain adjustments for Federal
alternative minimum and environmental tax purposes. Shareholders receiving
Social Security benefits should note that all exempt-interest dividends will be
taken into account in determining the taxability of such benefits. Interest on
indebtedness incurred by a shareholder to purchase or carry Fund shares
generally is not deductible for Federal income tax purposes.

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

STATE AND LOCAL

Exempt-interest dividends and other distributions paid by the Funds may be
taxable to shareholders under state or local law as dividend income, even
though all or a portion of such distributions may be derived from interest on
tax-exempt obligations which, if realized directly, would be exempt from such
income taxes.

With respect to the New York Municipal Bond Fund, exempt-interest dividends
(as defined for federal income tax purposes) derived from interest on New York
Municipal Securities (as defined above) will be exempt from New York State and
New York City personal income taxes (but not corporate franchise taxes),
provided the interest on such obligations is and continues to be exempt from
applicable federal, New York State and New York City income taxes. To the
extent that investors are subject to state and local taxes outside of New York
State and New York City, dividends by the Fund may be taxable income for
purposes thereof. Dividends and distributions derived from income (including
capital gains on all New York Municipal Securities) other than interest on New
York Municipal Securities described above are not exempt from New York State
and New York City taxes. Interest or indebtedness incurred or continued by a
shareholder to purchase or carry shares of the Fund is not deductible for
federal, New York State or New York City personal income tax purposes.

Dividends paid by the Connecticut Municipal Bond Fund that qualify as
exempt-interest dividends for federal income tax purposes are not subject to
the Connecticut personal income tax to the extent that they are derived from
Connecticut Municipal Securities. Other Fund dividends and distributions,
whether received in cash or additional Retail Shares, are subject to this tax,
except that capital gain dividends derived from obligations issued by or on
behalf of the State of Connecticut or its political subdivisions or other
public entities created under Connecticut law are not subject to the tax.
Dividends and distributions paid by the Fund that constitute items of tax
preference for purposes of the federal alternative minimum tax, other than any
derived from Connecticut Municipal Securities, could cause liability for the
net Connecticut minimum tax, applicable to investors subject to the Connecticut
personal income tax who are required to pay federal alternative minimum tax.
Dividends paid by the Fund, including those that qualify as exempt-interest
dividends for federal income tax purposes, are taxable for purposes of the
Connecticut Corporation Business Tax; however, 70% (100% if the investor owns
at least 20% of the total voting power and value of the Fund's shares) of
amounts that are treated as dividends and not as exempt-interest dividends or
capital gain dividends for federal income tax purposes are deductible for
purposes of this tax, but no deduction is

29
<PAGE> 382
allowed for expenses related thereto. Shares of the Fund are not subject to
property tax within the State of Connecticut or its political subdivisions.

Distributions by the Massachusetts Municipal Bond Fund to its shareholders
are exempt from Massachusetts personal income taxation to the extent they are
derived from (and designated by the Fund as being derived from) (i) interest on
Massachusetts Municipal Securities, or (ii) capital gains realized by the Fund
from the sale of certain Massachusetts Municipal Securities. Distributions from
the Fund's other net investment income and short-term capital gains will be
taxable as ordinary income. Distributions from the Fund's net long-term capital
gains will be taxable as long-term capital gains regardless of how long the
shareholder has owned Fund shares. The tax treatment of distributions is the
same whether distributions are paid in cash or in additional Retail Shares of
the Fund. Distributions by the Fund to corporate shareholders, including
exempt-interest dividends, may be subject to Massachusetts corporate excise
tax.

The Rhode Island Municipal Bond Fund has received a ruling from the Rhode
Island Division of Taxation to the effect that distributions by it to its
shareholders are exempt from Rhode Island personal income taxation and the
Rhode Island business corporation tax to the extent they are derived from (and
designated by the Fund as being derived from) interest earned on Rhode Island
Municipal Securities or obligations of the United States. Distributions from
the Fund's other net investment income and short-term capital gains will be
taxable as ordinary income. Distributions from the Fund's net long-term capital
gains will be taxable as long-term capital gains regardless of how long the
shareholder has owned Fund shares. The tax treatment of distributions is the
same whether distributions are paid in cash or in additional Retail Shares of
the Fund. Any loss realized from the redemption of Fund shares within six
months after the purchase of such shares will be disallowed for Rhode Island
personal income tax purposes to the extent of exempt interest dividends
received on such shares.

The Fund will be subject to the Rhode Island business corporation tax on its
"gross income" apportioned to the State of Rhode Island, and the Rhode Island
business corporation surtax. For this purpose, gross income does not include
interest income earned by the Fund on Rhode Island Municipal Securities and
obligations of the United States, capital gains realized by the Fund on the
sale of certain Rhode Island Municipal Securities, and 50 percent of the Fund's
other net capital gains.

MISCELLANEOUS

The foregoing summarizes some of the important 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, and with respect to shareholders of the New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds, the New York State and New York City personal income tax,
Connecticut personal income tax, Massachusetts personal income tax and Rhode
Island personal income tax consequences, respectively, of distributions made
each year.

MANAGEMENT OF THE FUNDS

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, Intermediate Government Income, Corporate Bond and High
Quality Bond Funds.

The Tax-Exempt Bond Fund's portfolio manager, Mary McGoldrick, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Ms. McGoldrick, a Vice President and a member of the Investment Policy
Committee, has been with Fleet and its predecessors since June 1988, and has
managed the Fund since its inception.

Effective March 1, 1996, Ms. McGoldrick will assume responsibility for the
management of the investment portfolios of the New York Municipal Bond,
Connecticut Municipal Bond,

30
<PAGE> 383
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds.

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 Funds so that it is entitled to receive advisory fees 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 rates of .48%, .38%, .14% and .08% of the Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond and Massachusetts
Municipal Bond Funds' average daily net assets, respectively.

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 their net asset value per share or result in
financial losses 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

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 (after fee waivers) at the effective annual
rates of .088%, .088%, 0% and 0% of the average daily net assets of the
Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal Bond and
Massachusetts Municipal Bond Funds, respectively. For the period from December
20, 1994 (commencement of operations) to October 31, 1995, FDISG received
administration fees at the effective annual rate of .086% of the Rhode Island
Municipal Bond Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

31
<PAGE> 384
Massachusetts Municipal Bond Fund; and Class R-Series 1 shares (Trust Shares)
and Class R-Series 2 shares (Retail A Shares), each series representing
interests in the Rhode Island Municipal Bond Fund. The Tax-Exempt Bond Fund is
classified as a diversified investment company and the New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds are classified as non-diversified companies 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 Funds' Trust 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 and holders of Retail B Shares of the Tax-Exempt
Bond Fund bear the fees that are paid under Galaxy's Distribution and Services
Plan described below. 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 difference in
the expenses paid by the respective series will affect their performance.

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 Retail Share held, and a
proportionate fractional vote for each fractional Retail 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

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.

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act with respect to Retail B Shares of the Tax-Exempt Bond Fund.
Under the Distribution and Services Plan, Galaxy may pay (a) the Distributor or
another person for expenses and activities intended to result in the sale of
Retail B Shares, including the payment of commissions to broker-dealers and
other industry professionals who sell Retail B Shares and the direct or
indirect cost of financing such payments, (b) Institutions for shareholder
liaison services, which means personal services for holders of Retail B Shares
and/or the maintenance of shareholder accounts, such as responding to customer
inquiries and providing information on accounts, and (c) Institutions for
administrative support services, which include but are not limited to (i)
transfer agent and subtransfer agent services for beneficial owners of Retail B
Shares; (ii) aggregating and processing purchase and redemption orders; (iii)
providing beneficial owners

32
<PAGE> 385
with statements showing their positions in Retail B Shares; (iv) processing
dividend payments; (v) providing subaccounting services for Retail B Shares
held beneficially; (vi) forwarding shareholder communications, such as proxies,
shareholder reports, dividend and tax notices, and updating prospectuses to
beneficial owners; and (vii) receiving, translating and transmitting proxies
executed by beneficial owners.

Under the Distribution and Services Plan for Retail B Shares, payments by
Galaxy (i) for distribution expenses may not exceed the annual rate of .65% of
the average daily net assets attributable to the Fund's outstanding Retail B
Shares and (ii) to an Institution for shareholder liaison services and/or
administrative support services may not exceed the annual rates of .15% and
.15%, respectively, of the average daily net assets attributable to the Fund's
outstanding Retail B Shares which are owned of record or beneficially by that
Institution's Customers for whom the Institution is the dealer of record or
shareholder of record or with whom it has a servicing relationship. As of the
date of this Prospectus, Galaxy intends to limit the Fund's payments for
shareholder liaison and administrative support services under the Plan to an
aggregate fee of not more than .15% (on an annualized basis) of the average
daily net asset value of Retail B Shares owned of record or beneficially by
Customers of Institutions.

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, and FDISG 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 15108, 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 including 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 Funds also pay for brokerage fees
and commissions in connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

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 maximum public offering price 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. Each Fund may also quote its "tax equivalent yield"
which demonstrates the level of taxable yield necessary to produce an after-tax
equivalent yield to a Fund's tax-free yield. It is calculated by increasing a
Fund's yield (calculated as above) by the amount necessary to reflect the
payment of income taxes at stated tax rates. The tax-equivalent yield will
always be higher than a Fund's yield.

The Funds may also advertise their performance using "average annual total
returns" over various periods of time. Such total return figure reflects 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 reflect
the maximum front-end sales load charged by the Funds for Retail A Shares and
the applicable contingent deferred sales charge for

33
<PAGE> 386
Retail B Shares and assume that dividends and capital gains distributions made
by a Fund during the period are reinvested in Fund shares.

The Funds may also advertise total return data without reflecting the sales
charge imposed on the purchase of Retail A Shares in accordance with the rules
of the SEC. Quotations that do not reflect the sales charge will be higher than
quotations that do reflect the sales charge.

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 to accounts of
Customers that have invested in 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 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
Funds' investment operations and annual financial statements audited by
independent certified public accountants.

34
<PAGE> 387

[LOGO]

50% Recycled Paper
10% Post-Consumer Waste

<PAGE> 388

THE GALAXY FUND

4400 Computer Drive For an application and information
Westboro, Massachusetts 01581-5108 regarding initial purchases and
current performance, call
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 separate series of Galaxy's shares
("Retail A Shares") which represent interests in the RHODE ISLAND MUNICIPAL
BOND FUND, a separate investment portfolio (the "Fund") offered to investors by
Galaxy. The Fund is a municipal bond fund, and its objective is to seek as
high a level of current interest income exempt from federal income tax and, to
the extent possible, from Rhode Island personal income tax, as is consistent
with relative stability of principal. Under normal market and economic
conditions, the Fund will invest at least 65% of its assets in Rhode Island
Municipal Securities. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments. The Fund is a non-diversified investment portfolio under the
Investment Company Act of 1940 (the "1940 Act").

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.

The Retail A Shares described in this Prospectus are offered to
customers ("Customers") of Fleet Brokerage Securities, Inc., Fleet Securities,
Inc., Fleet Financial Group, Inc., its affiliates, their correspondent banks,
and other qualified banks, savings and loan associations and broker/dealers
("Institutions"). Retail A Shares may also be purchased directly by
individuals, corporations or other entities, who submit a purchase application
to Galaxy, purchasing either for their own accounts or for the accounts of
others ("Direct Investors"). Galaxy is also authorized to issue an additional
series of shares in the Fund ("Trust Shares"), which are offered under a
separate prospectus primarily to investors maintaining qualified accounts at
bank and trust institutions affiliated with Fleet Financial Group, Inc. As of
the date of this Prospectus, however, Trust Shares of the Fund are not being
offered to investors. Retail A Shares and Trust Shares represent equal pro
rate 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 Fund" and "Description of Galaxy and Its
Shares" herein.

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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE 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> 389
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 THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 1
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . 4
Special Considerations and Risks . . . . . . . . . . . 4
Other Investment Policies and Risk Considerations . . . 5
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . 9
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . 10
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . 10
Distributor . . . . . . . . . . . . . . . . . . . . . . 10
Purchase of Shares . . . . . . . . . . . . . . . . . . 10
Public Offering Price . . . . . . . . . . . . . . . . . 11
Quantity Discounts . . . . . . . . . . . . . . . . . . 11
Purchase Procedures--Customers of
Institutions . . . . . . . . . . . . . . . . . . . . 12
Purchase Procedures--Direct Investors . . . . . . . . . 13
Other Purchase Information . . . . . . . . . . . . . . 13
Redemption Procedures--Customers
of Institutions . . . . . . . . . . . . . . . . . . . 13
Redemption Procedures--Direct
Investors . . . . . . . . . . . . . . . . . . . . . . 14
Other Redemption Information . . . . . . . . . . . . . 15
INVESTOR PROGRAMS . . . . . . . . . . . . . . . . . . . . . 15
Exchange Privilege . . . . . . . . . . . . . . . . . . 15
Automatic Investment Program
and Systematic Withdrawal Plan . . . . . . . . . . . 16
Payroll Deduction Program . . . . . . . . . . . . . . . 16
College Investment Program . . . . . . . . . . . . . . 16
Direct Deposit Program . . . . . . . . . . . . . . . . 16
INFORMATION SERVICES . . . . . . . . . . . . . . . . . . . 16
Galaxy Information Center--24 Hour
Information Service . . . . . . . . . . . . . . . . . 16
Voice Response System . . . . . . . . . . . . . . . . . 17
Galaxy Shareholder Services . . . . . . . . . . . . . . 17
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . 17
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Federal . . . . . . . . . . . . . . . . . . . . . . . . 17
State and Local . . . . . . . . . . . . . . . . . . . . 18
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 18
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . 18
Investment Adviser . . . . . . . . . . . . . . . . . . 18
Authority to Act as Investment Adviser . . . . . . . . 19
Administrator . . . . . . . . . . . . . . . . . . . . . 19
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . 19
Shareholder Services Plan . . . . . . . . . . . . . . . 20
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . 20
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 20
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . 20
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 390
HIGHLIGHTS

Q: What is The Galaxy Fund?

A: Galaxy is an open-end management investment company (commonly
known as a mutual fund) that offers investors the opportunity to invest in
different investment portfolios, each having separate investment objectives and
policies. This Prospectus describes Galaxy's Rhode Island Municipal Bond
Fund. Prospectuses for Galaxy's 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,
SMALL CAP VALUE, GROWTH AND INCOME, SHORT-TERM BOND, INTERMEDIATE GOVERNMENT
INCOME, CORPORATE BOND, HIGH QUALITY BOND, TAX-EXEMPT BOND, NEW YORK MUNICIPAL
BOND, CONNECTICUT MUNICIPAL BOND and MASSACHUSETTS MUNICIPAL BOND FUNDS may be
obtained by calling 1-800-628-0414.

Q: Who advises the Fund?

A: The Fund is managed by Fleet Investment Advisors Inc. (the
"Investment Adviser" or "Fleet"), an indirect wholly-owned subsidiary of Fleet
Financial Group, Inc. Fleet Financial Group, Inc. is a financial services
company with total assets as of December 31, 1995 of approximately $84.8
billion. See "Management of the Fund--Investment Adviser."

Q: What advantages does the Fund offer?

A: The Fund offers investors the opportunity to invest in a
professionally managed investment portfolio without having to become involved
with the detailed accounting and safekeeping procedures normally associated
with direct investments in securities. The Fund also offers the economic
advantages of block trading in portfolio securities and the availability of a
family of twenty-four mutual funds should your investment goals change.

Q: How does one buy and redeem shares?

A: The Fund is distributed by 440 Financial Distributors, Inc.
Retail A Shares of the Fund are sold to individuals, corporations or other
entities, who submit a purchase application to Galaxy, purchasing either for
their own accounts or for the accounts of others ("Direct Investors"). Retail A
Shares may also be purchased on behalf of customers ("Customers") of Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Financial Group,
Inc., its affiliates, their correspondent banks and other qualified banks,
savings and loan associations and broker/dealers ("Institutions"). Retail A
Shares of the Fund may be purchased at their net asset plus a maximum initial
sales charge of 3.75%. Retail A Shares are currently subject to a shareholder
servicing fee of up to .15% of the average daily net asset value of such
shares. Share purchase and redemption information for both Direct Investors and
Customers is provided below under "How to Purchase and Redeem Shares." Except
as provided below under "Investor Programs," the minimum initial investment for
Direct Investors and the minimum initial aggregate investment for Institutions
purchasing on behalf of their Customers is $2,500. The minimum investment for
subsequent purchases is $100. There are no minimum investment requirements for
investors participating in the Automatic Investment Program described below.
The minimum initial investment in the College Investment Program described
below is $100 ($50 minimum per transaction if investment is made through the
Automatic Investment Program). Institutions may require Customers to maintain
certain minimum investments in Retail A Shares. See "How to Purchase and Redeem
Shares--Other purchase information" below.

Q: When are dividends paid?

A: The net investment income of the Fund is declared daily and paid
monthly. Net realized capital gains of the Fund are distributed at least
annually. See "Dividends and Distributions."

Q: What potential risks are presented by the Fund's investment
practices?

A: The Fund invests primarily in Rhode Island Municipal Securities
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").
Because the Fund invests primarily in Rhode Island Municipal Securities, the
achievement of its investment objective is dependent upon the ability of the
issuers of such Rhode Island Municipal Securities to meet their continuing
obligation for the payment of principal and interest. In addition, because the
Fund is non-diversified, its investment return may be dependent upon the
performance of a smaller number of securities relative to the number of
securities held in a diversified portfolio. The Fund may lend its securities
and enter into repurchase agreements and reverse repurchase agreements with
qualifying banks and broker/dealers. The Fund may enter into interest rate
futures contracts and municipal bond index future contracts. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "forward commitment" or "delayed settlement" basis. The Fund
may also acquire "stand-by commitments" with respect to Municipal Securities
held in its portfolio. The value of the Fund's portfolio securities will
generally vary inversely with changes in prevailing interest rates. See
"Investment Objective and Policies."

Q: What shareholder privileges are offered by the Fund?

A: Retail A Shares of the Fund may be exchanged for Retail A Shares
of any other Galaxy portfolio which offers Retail A Shares. Exchanges are not
subject to sales charges. Galaxy offers an Automatic Investment Program which
allows investors to automatically invest in Retail A Shares on a monthly or
quarterly basis, as well as other shareholder privileges. See "Investor
Programs."

1
<PAGE> 391
EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction
expenses imposed by the Fund with respect to its Retail A Shares and (ii) the
operating expenses for Retail A Shares of the Fund. Shareholder Transaction
Expenses are charges you pay when buying and selling shares of the Fund. ANNUAL
FUND OPERATING EXPENSES are paid out of the Fund's assets and include fees for
portfolio management, maintenance of shareholder accounts, general Fund
administration, accounting and other services. Examples based on the summary
are also shown.

<TABLE>
<CAPTION>
RHODE ISLAND
MUNICIPAL
SHAREHOLDER TRANSACTION EXPENSES BOND FUND
- -------------------------------- ---------
<S> <C>
Front End Sales Charge Imposed on Purchases (as a percentage of offering price) . . 3.75%(1)
Sales Load on Reinvested Dividends . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None

<CAPTION>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------------------------------------
<S> <C>
Advisory Fees (After Fee Waivers) . . . . . . . . . . . . . . . . . . . . . . . . . .25%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (After Expense Reimbursements) . . . . . . . . . . . . . . . . . . . .70%
-----
Total Fund Operating Expenses (After Fee Waivers and Expense Reimbursements) . . . .95%
=====
</TABLE>

- ---------------
(1) Reduced sales charges may be available. See "How to Purchase and Redeem
Shares--Public Offering Price" and "How to Purchase and Redeem
Shares--Quantity Discounts."

(2) Direct Investors are charged a $5.00 fee if redemption proceeds are paid
by wire.

EXAMPLE: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING
(1) DEDUCTION AT THE TIME OF PURCHASE OF THE MAXIMUM APPLICABLE FRONT-END SALES
LOAD, (2) A 5% ANNUAL RETURN, AND (3) 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>
Rhode Island Municipal Bond Fund . . . . . . . . . . . . . $47 $66 $87 $148
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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 Retail A Shares. Without voluntary fee waivers and
expense reimbursements by the Investment Adviser and/or Administrator,
"Advisory Fees" would be .75%, "Other Expenses" would be .85% and "Total Fund
Operating Expenses" would be 1.60% for Retail A 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 or other
Institutions directly to their Customer accounts for services related to an
investment in Retail 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> 392
FINANCIAL HIGHLIGHTS

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

RHODE ISLAND MUNICIPAL BOND FUND
(FOR A RETAIL SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1995(1)
-------------------
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . $ 10.00

Income From Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.44
Net realized and unrealized gain (loss) on investments . . . . . . . . . . . . . 0.67
-------
Total From Investment Operations: . . . . . . . . . . . . . . . . . . . . 1.11
-------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . . . . . . . (0.44)
Dividends from net realized capital gains . . . . . . . . . . . . . . . . . . . --
-------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.44)
-------
Net increase (decrease) in net asset value . . . . . . . . . . . . . . . . . . . . 0.67
-------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.67
=======

Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.29%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . . . . . . . . . . $10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . . . . . . . . . . . 5.13%(4)
Operating expenses including reimbursement/waiver . . . . . . . . . . . . . . . 0.40%(4)
Operating expenses excluding reimbursement/waiver . . . . . . . . . . . . . . . 2.25%(4)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34%(3)
</TABLE>

- ---------------
(1) The Fund commenced operations on December 20, 1994. On September 7, 1995,
Retail Shares of the Fund were redesignated "Retail A Shares".

(2) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the period ended October 31,
1995 was $0.28.

(3) Not Annualized.

(4) Annualized

3
<PAGE> 393
INVESTMENT OBJECTIVE AND POLICIES

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 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.

The Fund is a non-diversified investment portfolio, the investment
objective of which is to seek as high a level of current interest income exempt
from federal income tax and, to the extent possible, from Rhode Island personal
income tax, as is consistent with relative stability of principal. To achieve
this objective, the Fund will invest primarily in Rhode Island Municipal
Securities as defined below. The Fund's average portfolio maturity will vary in
response to variations in the comparative yields of differing maturities of
instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in debt
obligations issued by or on behalf of the State of Rhode Island and other
states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions, the interest on which, in the opinion of bond counsel
to the issuer, is exempt from regular federal income tax ("Municipal
Securities"). The Fund expects that except during temporary defensive periods
or when, in the opinion of the Fund's Investment Adviser, suitable obligations
are unavailable for investment, 65% of the Fund's assets will be invested in
debt securities of the State of Rhode Island, its political sub-divisions,
authorities, agencies, instrumentalities and corporations, and certain other
governmental issuers such as Puerto Rico, the interest on which, in the opinion
of bond counsel to the issuer, is exempt from federal and Rhode Island personal
income taxes ("Rhode Island Municipal Securities"). See "Special Considerations
and Risks" below for a discussion of certain risks in investing in Rhode Island
Municipal Securities. Dividends derived from interest on Municipal Securities
other than Rhode Island Municipal Securities will generally be exempt from
regular federal income tax but may be subject to Rhode Island personal income
tax. See "Taxes" below.

Municipal Securities purchased by the Fund will consist primarily of
issues which are rated at the time of purchase within the three highest ratings
assigned by S&P or Moody's or unrated instruments determined by the Fund's
Investment Adviser to be of comparable quality. Municipal Securities rated
within the three highest ratings of S&P or Moody's are considered to be
investment grade. Municipal securities purchased by the Fund whose ratings are
subsequently downgraded below the three highest ratings of S&P and Moody's will
be disposed of in an orderly manner, normally within 30 to 60 days. See
Appendix A to the Statement of Additional Information for a description of
S&P's and Moody's rating categories.

The Fund may from time to time, during temporary defensive periods,
hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. Uninvested cash reserves will not earn income.
Such taxable instruments may include (i) obligations of the U.S. Treasury; (ii)
obligations of agencies or instrumentalities of the U.S. Government; (iii)
"money market" instruments such as certificates of deposit and bankers'
acceptances of selected banks and commercial paper rated within the two highest
ratings assigned by any major rating service; (iv) repurchase agreements
collateralized by U.S. Government obligations or other "money market"
instruments; (v) futures contracts; or (vi) securities issued by other
investment companies that invest in high quality, short-term securities. Under
normal market conditions, the Fund anticipates that not more than 5% of its net
assets will be invested in any one category of taxable securities. For more
information, see "Other Investment Policies and Risk Considerations" below.

SPECIAL CONSIDERATIONS AND RISKS

In General

Generally, the market value of fixed income securities, such as
Municipal Securities, in the Fund can be expected to vary inversely to changes
in prevailing interest rates. During periods of declining interest rates, the
market value of investment portfolios comprised primarily of fixed income
securities, such as the Fund, will tend to increase, and during periods of
rising interest rates, the market value will tend to decrease. In addition,
during periods of declining interest rates, the yields of investment portfolios
comprised primarily of fixed income securities will tend to be higher than
prevailing market rates and, in periods of rising interest rates, yields will
tend to be somewhat lower. Fixed income securities with longer maturities,
which tend to produce higher yields, are subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities. Changes
in the financial strength of an issuer or changes in the ratings of any
particular security may also offset the value of these investments.
Fluctuations in the market value of fixed income securities subsequent to their
acquisition will not offset cash income from such securities but will be
reflected in the Fund's net asset value.

4
<PAGE> 394
The Fund is classified as a non-diversified investment company under
the 1940 Act. Investment return on a non-diversified portfolio typically is
dependent upon the performance of a smaller number of securities relative to
the number held in a diversified portfolio. Consequently, the change in value
of any one security may affect the overall value of a non-diversified portfolio
more than it would a diversified portfolio, and thereby subject the
market-based net asset value per share of the non-diversified portfolio to
greater fluctuations. In addition, a non-diversified portfolio may be more
susceptible to economic, political and regulatory developments than a
diversified investment portfolio with similar objectives may be.

Although the Fund does not presently intend to do so on a regular
basis, the Fund may invest more than 25% of its assets in Municipal Securities
the interest on which is paid solely from revenues of similar projects if such
investment is deemed necessary or appropriate by the Investment Adviser. To the
extent that the Fund's assets are concentrated in Municipal Securities payable
from revenues of similar projects, the Fund will be subject to the particular
risks presented by such projects to a greater extent than it would be if its
assets were not so concentrated.

Rhode Island Municipal Securities

The Fund's ability to achieve its investment objective depends on the
ability of issuers of Rhode Island Municipal Securities to meet their
continuing obligations to pay principal and interest. Since the Fund invests
primarily in Rhode Island Municipal Securities, the value of the Fund's shares
may be especially affected by factors pertaining to the economy of Rhode Island
and other factors specifically affecting the ability of issuers of Rhode Island
Municipal Securities to meet their obligations. As a result, the value of the
Fund's shares may fluctuate more widely than the value of shares of a portfolio
investing in securities of issuers in a number of different states. The ability
of Rhode Island and its political subdivisions to meet their obligations will
depend primarily on the availability of tax and other revenues to those
governments and on their fiscal conditions generally. The amount of tax and
other revenues available to governmental issuers of Rhode Island Municipal
Securities may be affected from time to time by economic, political and
demographic conditions within Rhode Island. In addition, constitutional or
statutory restrictions may limit a government's power to raise revenues or
increase taxes. The availability of federal, state and local aid to an issuer
of Rhode Island Municipal Securities may also affect that issuer's ability to
meet its obligations. Payments of principal and interest on limited obligation
bonds will depend on the economic condition of the facility or specific revenue
source from whose revenues the payments will be made, which in turn could be
affected by economic, political and demographic conditions in Rhode Island or a
particular locality. Any reduction in the actual or perceived ability of an
issuer of Rhode Island Municipal Securities to meet its obligations (including
a reduction in the rating of its outstanding securities) would likely affect
adversely the market value and marketability of its obligation and could affect
adversely the values of the Rhode Island Municipal Securities as well.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations and Money Market Instruments

Obligations issued or guaranteed by the U.S. Government, its agencies
and its 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. Investments in bank obligations are limited to the obligations of
financial institutions having more than $1 billion in total assets at the time
of purchase.

5
<PAGE> 395
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.

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.

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
Fund 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 Instruments

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% limitation described in
Investment Limitation No. 3 under "Investment Limitations" in this Prospectus.

Private Activity Bonds

The Fund may invest in "private activity bonds," the interest on
which, although exempt from regular federal income tax, may constitute an item
of tax preference for purposes of the federal alternative minimum tax.
Investments in such securities, however, will not be treated as investments in
Municipal Securities for purposes of the 80% requirement mentioned above and,
under normal market conditions, will not exceed 20% of the Fund's total assets
when added together with any taxable investments held by the Fund. 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.

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 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.

6
<PAGE> 396
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 a Fund may decline below
the repurchase price. The Fund would pay interest on amounts obtained pursuant
to a reverse repurchase agreement.

Securities Lending

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 a Fund within the limits prescribed by
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, or 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.

Custodial Receipts and Participation Interests

Securities acquired by the Fund may be in the form of custodial
receipts evidencing rights to receive a specific future interest payment,
principal payment or both on certain Municipal Securities. Such obligations are
held in custody by a bank on behalf of holders of the receipts. These custodial
receipts are known by various names, including "Municipal Receipts," "Municipal
Certificates of Accrual on Tax-Exempt Securities" ("M-CATs") and "Municipal
Zero Coupon Receipts." The Fund may also purchase from time to time
participation interests in debt securities held by trusts or financial
institutions. A participation interest gives the Fund an undivided interest in
the security or securities involved. Participation interests may have fixed,
floating or variable rates of interest, and will have remaining maturities of
thirteen months or less as determined in accordance with the regulations of the
Securities and Exchange Commission (although the securities held by the issuer
may have longer maturities). If a participation interest is unrated, the
Investment Adviser will have determined that the instrument is of comparable
quality to those instruments in which the Fund may invest pursuant to
guidelines approved by Galaxy's Board of Trustees. For certain participation
interests, the Fund will have the right to demand payment, on not more than 30
days' notice, for all or any part of the Fund's participation interest, plus
accrued interest. As to these instruments, the Fund intends to exercise its
right to demand payment as needed to provide liquidity, to maintain or improve
the quality of its investment portfolio or upon a default (if permitted under
the terms of the instrument).

Futures Contracts

The Fund may purchase and sell municipal bond index futures contracts
as a hedge against changes in market conditions. A municipal bond index assigns
values daily to the municipal bonds included in the index based on the
independent assessment of dealer-to-dealer municipal bond brokers. A municipal
bond index futures contract represents a firm commitment by which two parties
agree to take or make delivery of an amount equal to a specified dollar amount
multiplied by the difference between the municipal bond index value on the last
trading date of the contract and the price at which the futures contract is
originally struck. No physical delivery of the underlying securities in the
index is made.

The Fund may also enter into contracts for the future delivery of
fixed-income securities commonly known as interest rate futures contracts.
Interest rate futures contracts are similar to municipal bond index futures
contracts except that, instead of a municipal bond index, the "underlying
commodity" is represented by various types of fixed-income securities.

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 ("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

7
<PAGE> 397
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 they hold or intend to purchase or may be unable to close a
futures position in the event of adverse price movements. Any 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 the Statement of Additional Information
and in Appendix B thereto.

When-Issued, Forward Commitment and Delayed Settlement
Transactions

The Fund may purchase Municipal Securities on a "when-issued" basis
and may purchase or sell securities on a "forward commitment" basis. The Fund
may also purchase or sell 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. The Fund's forward
commitments, when-issued purchases and delayed settlements are not expected to
exceed 25% of the value of its total assets absent unusual market conditions.
In the event its forward commitments, when-issued purchases and delayed
settlements ever exceeded 25% of the value of its assets, the Fund's liquidity
and the ability of the investment adviser to manage the Fund might 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 its investment objective.

Stand-by Commitments

The Fund may acquire "stand-by commitments" with respect to Municipal
Securities held in its portfolio. 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 to maturity
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.

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 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 saving
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-

8
<PAGE> 398
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" below.

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
would make 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
"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 Objective and Policies."

The Fund may not:

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 its 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.

4. Purchase securities which would cause 25% or more of the
value of its 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;

9
<PAGE> 399
provided, however, that there is no limitation with respect to
securities issued or guaranteed by the U.S. Government, any state,
territory or possession of the U.S. Government, the District of
Columbia or any of their authorities, agencies, instrumentalities or
political sub- divisions.

5. 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 the securities
of such issuer, except that up to 50% of the value of the Fund's total
assets may be invested without regard to this 5% limitation, provided
that no more than 25% of the value of the Fund's total assets are
invested in the securities of any one issuer.

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.

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

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 municipal 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"), an indirect
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 Distributor has established several procedures to enable different
types of investors to purchase Retail A Shares of the Fund. The Retail A Shares
described in this Prospectus may be purchased by individuals, corporations or
other entities, who submit a purchase application to Galaxy, purchasing
directly either for their own accounts or for the accounts of others ("Direct
Investors"). Retail Shares may also be purchased by Fleet Brokerage Securities,
Inc., Fleet Securities, Inc., Fleet Financial Group, Inc., its affiliates,
their correspondent banks and other qualified banks, savings and loan
associations and broker/dealers ("Institutions") on behalf of their customers
("Customers"). Purchases by Direct Investors may take place only on days on
which the Distributor, Galaxy's custodian and Galaxy's transfer agent are open
for business ("Business Days"). If an Institution accepts a purchase order from
a 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 Distributor's procedures. Retail A Shares of the Fund will be issued only
in exchange for monetary consideration as described below.

10
<PAGE> 400
PUBLIC OFFERING PRICE

The public offering price for Retail A Shares of the Fund is the sum
of the net asset value of the Retail A Shares purchased plus any applicable
front-end sales charge. The sales charge is assessed as follows:

<TABLE>
<CAPTION>
REALLOWANCE
TOTAL SALES CHARGE TO DEALERS
---------------------------------- --------------
AS A % OF AS A % OF NET AS A % OF
OFFERING PRICE ASSET VALUE OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE PER SHARE PER SHARE
- --------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Less than $50,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.75 3.90 3.75
$50,000 but less than $100,000 . . . . . . . . . . . . . . . . . . . . . . 3.50 3.63 3.50
$100,000 but less than $250,000 . . . . . . . . . . . . . . . . . . . . . . 3.00 3.09 3.00
$250,000 but less than $500,000 . . . . . . . . . . . . . . . . . . . . . . 2.50 2.56 2.50
$500,000 but less than $1,000,000 . . . . . . . . . . . . . . . . . . . . . 2.00 2.04 2.00
$1,000,000 but less than $3,000,000 . . . . . . . . . . . . . . . . . . . . 1.00 1.01 1.00
$3,000,000 and over . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50 0.50 0.50
</TABLE>

Further reductions in the sales charges shown above are also possible.
See "Quantity Discounts" below.

At various times, the Distributor may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts. Also, the Distributor in its discretion may from time to time,
pursuant to objective criteria established by the Distributor, pay fees to
qualifying dealers for certain services or activities which are primarily
intended to result in sales of Retail A Shares of the Fund. If any such program
is made available to any dealer, it will be made available to all dealers on
the same terms and conditions. Payments made under such programs will be made
by the Distributor out of its own assets and not out of the assets of the Fund.
These programs will not change the price of Retail A Shares or the amount that
the Fund will receive from such sales.

- reinvestment of dividends and distributions;

- IRA, SEP and Keogh Plan accounts;

- purchases by persons who were beneficial owners of shares of the
Fund or any of the other portfolios offered by Galaxy or any other
funds advised by Fleet or its affiliates before December 1, 1995;

- purchases by directors, officers and employees of the Fund's
Distributor and of broker-dealers having agreements with the Fund's
Distributor pertaining to the sale of Retail A Shares to the extent
permitted by such organizations;

- investors who purchase pursuant to a "wrap fee" program offered by
any broker-dealer or other financial institution or financial
planning organization;

- purchases by members of Galaxy's Board of Trustees;

- purchases by officers, directors, employees and retirees of Fleet
Financial Group, Inc. and any of its affiliates; and

- any purchase of Retail A Shares pursuant to the Reinstatement
Privilege described below.

QUANTITY DISCOUNTS

In order to obtain quantity discount benefits, a Direct Investor or
Customer must notify Galaxy's administrator, First Data Investor Services
Group, Inc. (formerly known as The Shareholder Services Group, Inc. d/b/a 440
Financial) ("FDISG") at the time of purchase that he or she would like to take
advantage of any of the discount plans described below. Upon such notification,
the investor will receive the lowest applicable sales charge. Quantity
discounts may be modified or terminated at any time and are subject to
confirmation of a Direct Investor's or Customer's holdings through a check of
appropriate records. For more information about quantity discounts, please
contract the Distributor or your Institution.

11
<PAGE> 401
on current net asset value) of previously purchased and beneficially-owned
shares of any Eligible Fund on which a sales charge has been paid. If, for
example, a Direct Investor or Customer beneficially owns shares of one or more
Eligible Funds with an aggregate current value of $49,000 on which a sales
charge has been paid and subsequently purchases shares of an Eligible Fund
having a current value of $1,000, the sales charge applicable to the subsequent
purchase would be reduced to 3.50% of the offering price. Similarly, with
respect to each subsequent investment, all shares of Eligible Funds that are
beneficially owned by the investor at the time of investment may be combined to
determine the applicable sales charge.

Letter of Intent. By completing the Letter of Intent included as part
of the Account Application, a Direct Investor or Customer becomes eligible for
the reduced sales charge applicable to the total number of Eligible Fund Retail
A Shares purchased in a 13-month period pursuant to the terms and under the
conditions set forth below and in the Letter of Intent. To compute the
applicable sales charge, the offering price of Retail A Shares of an Eligible
Fund on which a sales charge has been paid that are beneficially owned by a
Direct Investor or Customer on the date of submission of the Letter of Intent,
may be used as a credit toward completion of the Letter of Intent. However, the
reduced sales charge will be applied only to new purchases.

FDISG will hold in escrow Retail A Shares equal to 5% of the amount
indicated in the Letter of Intent for payment of a higher sales charge if a
Direct Investor or Customer does not purchase the full amount indicated in the
Letter of Intent. The escrow will be released when a Direct Investor or
Customer fulfills the terms of the Letter of Intent by purchasing the specified
amount. If purchases qualify for a further sales charge reduction, the sales
charge will be adjusted to reflect a Direct Investor's or Customer's total
purchases. If total purchases are less than the amount specified, a Direct
Investor or Customer will be requested to remit an amount equal to the
difference between the sales charge actually paid and the sales charge
applicable to the total purchases. If such remittance is not received within 20
days, FDISG as attorney-in-fact pursuant to the terms of the Letter of Intent
and at the Distributor's direction, will redeem an appropriate number of Retail
A Shares held in escrow to realize the difference. Signing a Letter of Intent
does not bind a Direct Investor or Customer to purchase the full amount
indicated at the sales charge in effect a the time of signing, but a Direct
Investor or Customer must complete the intended purchase in accordance with the
terms of the Letter of Intent to obtain the reduced sales charge. To apply, a
Direct Investor or Customer must indicate his or her intention to do so under a
Letter of Intent at the time of purchase.

Qualification for Discounts. For purposes of applying the Rights of
Accumulation and Letter of Intent privileges described above, the scale of
sales charges applies to the combined purchases made by any individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or the aggregate investments of a trustee or
custodian of any qualified pension plan (or the aggregate investment of a
trustee or other fiduciary) established for the benefit of the persons listed
above.

Reinstatement Privilege. Direct Investors and Customers may reinvest
all or any portion of their redemption proceeds in Retail A Shares of the Fund
or in Retail A Shares of another portfolio of Galaxy within 90 days of the
redemption trade date without paying a sales load. Retail A Shares so
reinvested will be purchased at a price equal to the net asset value next
determined after the Transfer Agent receives a reinstatement request and
payment in proper form.

Direct Investors and Customers wishing to exercise this Privilege must
submit a written reinstatement request to the Transfer Agent stating that the
investor is eligible to use the Privilege. The reinstatement request and
payment must be received within 90 days of the trade of the redemption.
Currently, there are no restrictions on the number of times an investor may use
this Privilege.

PURCHASE PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Purchase orders for Retail A Shares are placed by Customers of
Institutions through their Institution. The Institution is responsible for
transmitting Customer purchase orders to the Distributor 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. Retail A Shares purchased by Institutions on behalf of
their Customers will normally be held of record by the Institution and
beneficial ownership of Retail A Shares will be recorded by the Institution and
reflected in the account statements provided to their Customers. Galaxy's
transfer agent may establish an account of record for each Customer of an
Institution reflecting beneficial ownership of Retail A Shares. Depending on
the terms of the arrangement between a particular Institution and Galaxy's
transfer agent, confirmations of Retail A Share purchases and redemptions and
pertinent account statements will either be sent by Galaxy's transfer agent
directly to a Customer with a copy to the Institution, or will be furnished
directly to the Customer by the Institution. Other procedures for the purchase
of Retail A Shares established by Institutions in connection with the
requirements of their Customer accounts may apply. Customers wishing to
purchase Retail A Shares through their Institution should contact such entity
directly for appropriate purchase instructions.

12
<PAGE> 402
PURCHASE PROCEDURES -- DIRECT INVESTORS

Purchases by Mail. Retail A Shares may be purchased by completing a
purchase application and mailing it, together with a check payable to the Fund,
to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westboro, MA 01581-5108

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling the Distributor at
1-800-628-0414.

Subsequent investments in an existing account in the Fund may be made
at any time by sending a check for a minimum of $100 payable to the Fund to
Galaxy at the address above along with either (a) the detachable form that
regularly accompanies confirmation of a prior transaction, (b) a subsequent
order form that may be obtained from the Distributor, or (c) a letter stating
the amount of the investment, the name of the Fund and the account number in
which the investment is to be made. If a Direct Investor's check does not
clear, the purchase will be cancelled.

Purchases by Wire. Investors may also purchase Retail A Shares by
arranging to transmit federal funds by wire to Fleet Bank of Massachusetts,
N.A. as agent for First Data Investor Services Group, Inc. (formerly known as
The Shareholder Services Group, Inc. d/b/a 440 Financial) ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, an investor must
telephone 1-800-628-0413 to place an order and for instructions. Federal funds
and registration instructions should be wired through the Federal Reserve
System to:

Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
Shareholder Name
Shareholder Account Number

Direct Investors making initial investments by wire must promptly
complete a purchase application and forward it to The Galaxy Fund, P.O. Box
5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108. Applications may
be obtained by calling the Distributor at 1-800-628-0414. Redemptions will not
be processed until the application in proper form has been received by FDISG.
Direct Investors making subsequent investments by wire should follow the
instructions above.

Effective Time of Purchases. A purchase order for Retail A Shares
received and accepted by the Distributor from an Institution or a Direct
Investor on a Business Day prior to the close of regular trading hours on the
Exchange (currently, 4:00 p.m. Eastern Time) will be executed at the net asset
value per share determined on that date, 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 third Business Day following the receipt of
such order. Such order will be executed on the day on which the purchase price
is received in proper form. 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 or Direct Investor submitting the order. Payment for orders which
are not received or accepted will be returned. If an Institution accepts a
purchase order from a 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 above procedures.

OTHER PURCHASE INFORMATION

Except as provided in "Investor Programs" below, the minimum initial
investment by a Direct Investor, or initial aggregate investment by an
Institution investing on behalf of its Customers, is $2,500. The minimum
investment for subsequent purchases is $100. There are no minimum investment
requirements for investors participating in the Automatic Investment Program
described below. Customers may agree with a particular Institution to varying
minimum initial and minimum subsequent purchase requirements with respect to
their accounts.

Galaxy reserves the right to reject any purchase order, in whole or in
part, or to waive any minimum investment requirement. The issuance of Retail A
Shares to Direct Investors and Institutions is recorded on the books of Galaxy
and Retail A Share certificates will not be issued.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

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

Payments for redemption orders received by the Distributor on a
Business Day will normally be wired on the fifth Business Day to the
Institutions.

Direct Investors may redeem all or part of their Retail A Shares in
accordance with any of the procedures described below.

13
<PAGE> 403
REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Shares may be redeemed by a Direct Investor by
submitting a written request for redemption to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the number of shares to be
redeemed, (ii) identify the shareholder account number and tax identification
number, and (iii) be signed by each registered owner exactly as the shares are
registered. A redemption request for an amount in excess of $50,000, or for any
amount where (i) the proceeds are to be sent elsewhere than the address of
record (excluding the transfer of assets to a successor custodian), (ii) the
proceeds are to be sent to an address of record which has changed in the
preceding 90 days, or (iii) the check is to be made payable to someone other
than the registered owner(s), must be accompanied by signature guarantees. The
guarantor of a signature must be a bank which is a member of the FDIC, a trust
company, a member firm of a national securities exchange or any other eligible
guarantor institution. The Distributor will not accept guarantees from notaries
public. The Distributor may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees and
guardians. A redemption request will not be deemed to be properly received
until the Distributor receives all required documents in proper form. The Fund
ordinarily will make payment for Retail A Shares redeemed by mail within five
Business Days after proper receipt by the Distributor of the redemption
request. Questions with respect to the proper form for redemption requests
should be directed to the Distributor at 1-800-628-0413.

Redemption by Telephone. Direct investors may redeem Retail Shares by
calling 1-800-628-0413 and instructing the Distributor to mail a check for
redemption proceeds of up to $50,000 to the address of record. A redemption
request for an amount in excess of $50,000 or for any amount where (i) the
proceeds are to be sent elsewhere than the address of record (excluding the
transfer of assets to a successor custodian), (ii) the proceeds are to be sent
to an address of record which has changed in the preceding 90 days, or (iii)
the check is to be made payable to someone other than the registered owner(s),
must be accompanied by signature guarantees. (See "Redemption by Mail.")

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem
Retail A Shares by instructing the Distributor by wire or telephone to wire the
redemption proceeds of $1,000 or more directly to a Direct Investor's account
at any commercial bank in the United States. The Distributor charges a $5.00
fee for each wire redemption and the fee is deducted from the redemption
proceeds. The redemption proceeds must be paid to the same bank and account as
designated on the application or in written instructions subsequently received
by the Distributor. To request redemption of Retail A Shares by wire, Direct
Investors should call the Distributor at 1-800-628-0413.

In order to arrange for redemption by wire after an account has been
opened or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to Galaxy, at the address listed above
under "Redemption by Mail." Such requests must be signed by the investor and
accompanied by a signature guarantee (see "Redemption by Mail" above for
details regarding signature guarantees). Further documentation may be requested
from corporations, executors, administrators, trustees, or guardians. If, due
to temporary adverse conditions, investors are unable to effect telephone
transactions, investors are encouraged to follow the procedures for
transactions by wire or mail which are described above.

Galaxy reserves the right to refuse a wire or telephone redemption if
it believes it is advisable to do so. Procedures for redeeming Retail A Shares
by wire or telephone may be modified or terminated at any time by Galaxy or the
Distributor. In attempting to confirm that telephone instructions are genuine,
Galaxy will use such procedures as are considered reasonable, including
recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security number, address and/or bank). If Galaxy fails to follow established
procedures for the authentication of telephone instructions, it may be liable
for losses due to unauthorized or fraudulent telephone transactions.

No redemption by a Direct Investor in the Fund will be processed until
Galaxy has received a completed application with respect to the Direct
Investor's account.

If any portion of the Retail A Shares to be redeemed represents an
investment made by personal check, Galaxy reserves the right to delay payment
of proceeds until the Distributor is reasonably satisfied that the check has
been collected, which could take up to 15 days from the purchase date. A Direct
Investor who anticipates the need for more immediate access to his or her
investment should purchase Retail A Shares by federal funds or bank wire or by
certified or cashier's check. Banks normally impose a charge in connection with
the use of bank wires, as well as certified checks, cashier's checks and
federal funds.

14
<PAGE> 404
OTHER REDEMPTION INFORMATION

Galaxy reserves the right to redeem accounts (other than retirement
plan accounts) involuntarily, upon 60 days' written notice, if the account's
net asset value falls below $250 as a result of redemptions. In addition, if an
investor has agreed with a particular Institution to maintain a minimum balance
in his or her account at the Institution with respect to Retail A Shares of the
Fund, and the balance in such account falls below that minimum, the Customer
may be obliged by the Institution to redeem all of his or her shares.

Redemption orders are effected at the net asset value per share next
determined after receipt and acceptance of the order by the Distributor. Galaxy
reserves the right to wire redemption proceeds within seven days after
receiving the redemption order if, in its judgment, an earlier payment could
adversely affect the Fund.

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

Direct Investors and Customers of Institutions may, after appropriate
prior authorization, exchange Retail A Shares of the Fund having a value of at
least $100 for Retail A Shares of any of the other Funds or portfolios offered
by Galaxy or for shares of any other investment portfolios otherwise advised by
Fleet or its affiliates in which the Direct Investor or Customer maintains an
existing account, provided that such other shares may legally be sold in the
state of the investor's residence. No additional sales charge will be incurred
when exchanging Retail A Shares of the Fund for Retail A Shares of another
Galaxy Portfolio that imposes a sales charge.

The minimum initial investment to establish an account by exchange in
another Fund offered by Galaxy or otherwise advised by Fleet, except for the
Institutional Treasury Money Market Fund, is $2,500, unless at the time of
exchange the Direct Investor or Customer elects, with respect to the Fund into
which the exchange is being made, to participate in the Automatic Investment
Program described below, in which event there is no minimum initial investment
requirement, or in the College Investment Program described below, in which
event the minimum initial investment is generally $100. The minimum initial
investment to establish an account by exchange in the Institutional Treasury
Money Market Fund is $2 million.

An exchange involves a redemption of all or a portion of the shares of
the Fund and the investment of the redemption proceeds in shares of another
Fund or portfolio offered by Galaxy or otherwise advised by Fleet. The
redemption will be made at the per share net asset value next determined after
the exchange request is received. The shares of the Fund or portfolio to be
acquired will be purchased at the per share net asset value next determined
after acceptance of the exchange request, plus any applicable sales charge.

Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in the Fund. For
further information regarding Galaxy's exchange privilege, Direct Investors
should call FDISG at 1-800-628-0413. Customers of Institutions should call
their Institution for such information. Customers exercising the exchange
privilege with 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, Small Cap
Value, Growth and Income, Short-Term Bond, Intermediate Government Income,
Corporate Bond, High Quality Bond, New York Municipal Bond, Connecticut
Municipal Bond and Massachusetts Municipal Bond Funds should request and review
these Funds' prospectuses prior to making an exchange (call 1-800-628-0414 for
a prospectus). Telephone all exchanges to 1-800-628-0413. See "How to Purchase
and Redeem Shares--Redemption Procedures--Direct Investors--Redemption by Wire"
above for a description of Galaxy's policy regarding telephone instructions.

In order to prevent abuse of this privilege to the disadvantage of
other shareholders, Galaxy reserves the right to terminate the exchange
privilege of any shareholder who requests more than three exchanges a year.
Galaxy will determine whether to do so based on a consideration of both the
number of exchanges that any particular shareholder or group of shareholders
has requested and the time period over which their exchange requests have been
made, together with the level of expense to Galaxy which will result from
effecting additional exchange requests. The exchange privilege may be modified
or terminated at any time. At least 60 days' notice of any material
modification or termination will be given to shareholders except where notice
is not required under the regulations of the SEC.

Galaxy does not charge any exchange fee. However, Institutions may
charge such fees with respect to either all exchange requests or with respect
to any request which exceeds the permissible number of free exchanges during a
particular period. Customers of Institutions should contact their Institution
for applicable information.

For federal income tax purposes, an exchange of shares is a taxable
event and, accordingly, a capital gain or loss may be realized by an investor.
Before making an exchange request, the Customer should consult a tax or other
financial adviser to determine the tax consequences.

15
<PAGE> 405
AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Automatic Investment Program permits a Direct Investor to purchase
Retail A Shares of the Fund (minimum of $50 per transaction) each month or each
quarter. Provided the Direct Investor's financial institution allows automatic
withdrawals, Fund shares are purchased by transferring funds from a Direct
Investor's checking, bank money market, NOW or savings account designated by
the investor. The account designated will be debited in the specified amount,
and Retail A Shares will be purchased, on any Business Day designated by a
Direct Investor. If the designated day falls on a weekend or holiday, the
purchase will be made on the Business Day closest to the designated day. Only
an account maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated.

The Systematic Withdrawal Plan permits a Direct Investor to redeem
Retail A Shares of the Fund on a monthly, quarterly, semi-annual, or annual
basis on any Business Day designated by a Direct Investor, if the account has a
starting value of at least $10,000. If the designated day falls on a weekend or
holiday, the redemption will be made on the Business Day closest to the
designated day. Proceeds of the redemption will be sent to the shareholder's
address of record or financial institution within five business days of the
redemption. If redemptions exceed purchases and dividends, the number of shares
in the account will be reduced. Investors may terminate the Systematic
Withdrawal Plan at any time upon written notice to the Transfer Agent (but not
less than five days before a payment date). There is no charge for this
service. Purchases of additional Retail A Shares concurrently with withdrawals
are ordinarily not advantageous because of the sales charge.

PAYROLL DEDUCTION PROGRAM

The Payroll Deduction Program provides Direct Investors with a
convenient, systematic way to purchase Fund shares by deducting a minimum
amount of $25 per pay period from their paycheck. To be eligible for the
Program, the payroll department of a Direct Investor's employer must have the
capability to forward transactions directly through the Automated Clearing
House (ACH), or indirectly through a third party payroll processing company
that has access to the ACH. A Direct Investor must complete and submit a Galaxy
Payroll Deduction Application to his or her employer's payroll department,
which will arrange for the specified amount to be debited from the Direct
Investor's paycheck each pay period. Retail shares of Galaxy will be purchased
[two Business Days after/on the same day] the debit occurred. If the designated
day falls on a weekend or non-Business Day, the purchase will be made on the
Business Day closest to the designated day. A Direct Investor should allow
between two to four weeks for the Payroll Deduction Program to be established
after submitting an application to the employer's payroll department.

COLLEGE INVESTMENT PROGRAM

The College Investment Program (the "College Program") permits a
Direct Investor to open an account with Galaxy and purchase Retail A Shares of
the Fund with a minimum amount of $100 for initial or subsequent investments,
except that if the Direct Investor purchases Retail A Shares through the
Automatic Investment Program, the minimum per transaction is $50. The College
Program is designed to assist Direct Investors who want to finance a college
savings plan. See "Investor Programs--Automatic Investment Program and
Systematic Withdrawal Plan" for information on the Automatic Investment
Program. Galaxy reserves the right to redeem accounts participating in the
College Program involuntarily, upon 60 days written notice, if the account's
net asset value falls below the applicable minimum initial investment as a
result of redemptions. See "How to Purchase and Redeem Shares--Other Redemption
Information" above for further information.

Investors in the College Program will receive consolidated monthly
statements of their accounts. Detailed information concerning College Program
accounts and applications may be obtained from Galaxy's distributor (call
1-800-628-0413).

DIRECT DEPOSIT PROGRAM

Direct Investors receiving social security benefits are eligible for
the Direct Deposit Program. This Program enables Direct Investors to purchase
Retail A Shares of the Fund by having social security payments automatically
deposited into his or her Fund account. There is no minimum deposit
requirement. For instructions on how to enroll in the Direct Deposit Program,
Direct Investors should call the Distributor at 1-800-628-0413.

Death or legal incapacity will terminate a Direct Investor's
participation in the Program. Direct Investors may elect at any time to
terminate his or her participation by notifying in writing the Social Security
Administration. Further, Galaxy may terminate a Direct investor's participation
upon 30 days' notice to the Direct Investor.

INFORMATION SERVICES

GALAXY INFORMATION CENTER -- 24 HOUR INFORMATION SERVICE

The Galaxy Information Center provides Fund performance and investment
information 24 hours a day, seven days a week. To access the Galaxy Information
Center Automated Telephone Service, just call 1-800-628-0414.

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<PAGE> 406
VOICE RESPONSE SYSTEM

The Voice Response System provides Direct Investors automated access to Fund
and account information as well as the ability to make telephone exchanges and
redemptions. These transactions are subject to the terms and conditions
described under Investor Programs. To access the Voice Response System, just
call 1-800-FOR-GLXY (367-4599) from any touchtone telephone and follow the
recorded instructions.

GALAXY SHAREHOLDER SERVICES

For account information and recent exchange transactions, Direct
Investors can call Galaxy Shareholder Services Monday through Friday, between
the hours of 9:00 a.m. to 5:00 p.m. (Eastern Time) at 1-800-628-0413.

Galaxy also offers a TDD service for the hearing impaired. Just call
1-800-696-6515, 24 hours a day, seven days a week.

Direct Investors residing outside the United States can contact Galaxy
by calling 1-508-855-5237.

Investment returns and principal values will vary with market
conditions so that an investor's Retail A Shares, when redeemed, may be worth
more or less than their original cost. Past performance is no guarantee of
future results. Unless otherwise indicated, total return figures include
changes in share price, and reinvestment of dividends and capital gains
distributions, if any.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Fund are declared 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 and Direct
Investors may elect to have their dividends reinvested in additional Retail A
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
to Galaxy's transfer agent (see "Custodian and Transfer Agent" below) and will
become effective with respect to dividends paid after its receipt.

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 relieves the
Fund of liability for federal income taxes to the extent the Fund's earnings
are distributed in accordance with the Code.

The policy of the Fund is to pay dividends with respect to each
taxable year equal to at least the sum of 90% of its net exempt interest income
and 90% of its net investment company taxable income, if any. Dividends derived
from interest on Municipal Securities (known as exempt-interest dividends) may
be treated by the Fund's shareholders as items of interest excludable from
their gross income under section 103(a) of the Code, unless under the
circumstances applicable to a particular shareholder, exclusions would be
disallowed. (See the Statement of Additional Information under "Additional
Information Concerning Taxes.")

If the Fund should hold certain "private activity bonds" issued after
August 7, 1986, shareholders must include, as an item of tax preference, the
portion of dividends paid by the Fund that is attributable to interest on such
bonds in their Federal alternative minimum taxable income for purposes of
determining liability (if any) for the 26% to 28% alternative minimum tax for
individuals and the 20% alternative minimum tax and the environmental tax
applicable to corporations. Corporate shareholders must also take all
exempt-interest dividends into account in determining certain adjustments for
federal alternative minimum and environmental tax purposes. Shareholders
receiving Social Security benefits should note that all exempt-interest
dividends will be taken into account in determining the taxability of such
benefits. Interest on indebtedness incurred by a shareholder to purchase or
carry Fund Shares generally is not deductible for federal income tax purposes.

Dividends from the Fund which are derived from taxable income or from
long-term or short-term capital gains will be subject to federal income tax,
whether such dividends are paid in the form of cash or additional Retail A
Shares of the Fund.

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.

Investors considering buying shares of the Fund on or just before the
record date of a capital gain distribution should be aware that the amount of
the forth coming distribution payment, although in effect a return of capital,
generally will be taxable.

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.

17
<PAGE> 407
STATE AND LOCAL

Exempt-interest dividends and other distributions paid by the Fund may
be taxable to shareholders under state or local law as dividend income, even
though all or a portion of such distributions may be derived from interest on
tax-exempt obligations which, if realized directly, would be exempt from such
income taxes.

The Fund believes that distributions by it to its shareholders are
exempt from Rhode Island personal income taxation and the Rhode Island business
corporation tax to the extent they are derived from (and designated by the Fund
as being derived from) interest earned on Rhode Island Municipal Securities or
obligations of the United States. Distributions from the Fund's other net
investment income and short-term capital gains will be taxable as ordinary
income. Distributions from the Fund's net long-term capital gains will be
taxable as long-term capital gains regardless of how long the shareholder has
owned Fund shares. The tax treatment of distributions is the same whether
distributions are paid in cash or in additional shares of the Fund. Any loss
realized form the redemption of the Fund shares within six months after the
purchase of such shares will be disallowed for Rhode Island personal income tax
purposes to the extent of exempt-interest dividends received on such shares.

The Fund will be subject to the Rhode Island business corporation tax
on its "gross income" apportioned to the State of Rhode Island, and the Rhode
Island business corporation surtax. For this purpose, gross income does not
include interest income earned by the Fund on Rhode Island Municipal Securities
and obligations of the United States, capital gains realized by the Fund on the
sale of certain Rhode Island Municipal Securities, and 50 percent of the Fund's
other net capital gains.

The Fund has obtained a ruling from the Rhode Island Division of
Taxation confirming the Rhode Island tax treatment of its distribution income,
as described above.

MISCELLANEOUS

The foregoing summarizes some of the important 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 and Rhode Island personal income tax consequences of distributions
made each year.

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 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, Small Cap Value, Growth and Income,
Short-Term Bond, Intermediate Government Income, Corporate Bond, High Quality
Bond, New York Municipal Bond, Connecticut Municipal Bond and Massachusetts
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, Mary McGoldrick will assume responsibility
for the management of the investment portfolio of the Fund. Ms. McGoldrick, a
Vice President and member of the Investment Policy Committee, has been with
Fleet and its predecessors since June 1988.

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 fees for the Fund are higher than fees paid by most
other mutual funds, although the Board of Trustees of Galaxy believes that they
are not higher than average advisory fees paid by funds with similar investment
objectives and policies.

18
<PAGE> 408
support services which they provide to beneficial shareholders. Fleet is
currently waiving a portion of the advisory fee payable to it by the Fund so
that it is entitled to receive advisory fees 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.

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 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 its net asset value per share or result in financial
losses 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

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, the
Fund paid administration fees at the effective annual rate of .086% of its
average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

Shares of each series in the Fund bear their pro rate portfolio 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 have certain exchange and other privileges
which are not available to Trust Shares. Trust Shares of the Fund are sold
without a sales load.

Each share of Galaxy (irrespective of series designation) has a par
value of $.001 per share, currently 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 and declared in the discretion of Galaxy's Board of
Trustees.

19
<PAGE> 409
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

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 no more
than .15% (on an annualized basis) of the average daily net asset value of the
Retail A Shares of the Fund. 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 a
schedule of any fees that they may charge in connection with Customer
investments in Retail A Shares.

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 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.

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

20
<PAGE> 410
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 yield of the
Fund. The performance and yield data will be calculated separately for Retail A
Shares and Trust 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 analyzing 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 quote its "tax-equivalent yield" which
demonstrates the level of taxable yield necessary to produce an after-tax
equivalent yield to the Fund's tax-free yield. It is calculated by increasing
the Fund's yield (calculated above) by the amount necessary to reflect the
payment of federal income taxes at a stated tax rate. The tax-equivalent yield
will always be higher than the Fund's yield.

The Fund may also advertise its performance using "average annual
total return" over various periods of time. Such total return figure reflects
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
reflect the sales load charged by the Fund with respect to its Retail A Shares
and assume that dividends and capital gains distributions made by the Fund
during the period are reinvested in Fund Shares.

The Fund may also advertise total-return without reflecting the sales
charge imposed on the purchase of Retail A Shares in accordance with the rules
of the SEC. Quotations that do not reflect the sales charge will be higher than
quotations that do reflect the sales charge.

Performance and yield of the Fund will fluctuate and any quotation of
performance or yield should not be considered as representative of future
performance. Since yield fluctuates, 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 to accounts of
Customers that have invested in Retail A Shares of the Fund will not be
included in calculations of yield and performance.

The Fund's portfolio manager 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.

21
<PAGE> 411

[RECYCLE LOGO]

50% Recycled Paper
10% Post-Consumer Waste

FN-400 (3/96)
<PAGE> 412

THE GALAXY FUND

Statement of Additional Information
for Retail Shares of the
Short-Term Bond Fund

Intermediate Government Income Fund

High Quality Bond Fund

for Retail and Trust Shares of the

Corporate Bond Fund

Tax-Exempt Bond Fund

New York Municipal Bond Fund

Connecticut Municipal Bond Fund

Massachusetts Municipal Bond Fund

Rhode Island Municipal Bond Fund

February 29, 1996

<PAGE> 413

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectuses (the "Prospectuses") for (i)
Retail A Shares of the Short-Term Bond, Intermediate Government Income, High
Quality Bond, Corporate Bond, Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds , (ii) Retail B Shares of the Short-Term Bond, High
Quality Bond and Tax-Exempt Bond Funds and (iii) Trust Shares of the Corporate
Bond, Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal 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> 414

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES 1
Variable and Floating Rate Obligations 1
Bank Obligations 1
Asset-Backed Securities 2
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 7
Foreign Currency Exchange Transactions --
Short-Term Bond and Corporate Bond Funds 7
Special Considerations Relating to New York
Municipal Securities 8
Special Considerations Relating to
Connecticut Municipal Securities 22
Additional Investment Limitations 24

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 26

DESCRIPTION OF SHARES 29

ADDITIONAL INFORMATION CONCERNING TAXES 32
In General 32
Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal
Bond Funds 35
Short-Term Bond and Corporate Bond Funds 36
Taxation of Certain Financial Instruments 37
State Taxation 39

TRUSTEES AND OFFICERS 39
Shareholder and Trustee Liability 43
ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS 44
Custodian and Transfer Agent 48

PORTFOLIO TRANSACTIONS 49

SHAREHOLDER SERVICES PLAN 50

DISTRIBUTION AND SERVICES PLAN 52

EXPENSES 54

DISTRIBUTOR 54
</TABLE>

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<PAGE> 415

<TABLE>
<CAPTION>
Page
<S> <C>
AUDITORS 55

COUNSEL 55

PERFORMANCE AND YIELD INFORMATION 55
Yield and Performance of the Funds 55

MISCELLANEOUS 61

FINANCIAL STATEMENTS 62
APPENDIX A A-1
APPENDIX B B-1
</TABLE>
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<PAGE> 416

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 nine of those investment
portfolios: Retail A Shares and Retail B Shares of the Short- Term Bond Fund,
Retail A Shares of the Intermediate Government Income Fund (formerly
Intermediate Bond Fund), Retail A Shares and Retail B Shares of High Quality
Bond Fund and Trust Shares and Retail A Shares of the Corporate Bond Fund (the
"Taxable Bond Funds"), and Trust Shares, Retail A Shares and Retail B Shares of
the Tax-Exempt Bond Fund, and Trust Shares and Retail A Shares of the New York
Municipal Bond Fund, Connecticut Municipal Bond Fund, Massachusetts Municipal
Bond Fund and Rhode Island Municipal Bond Fund (the "Tax-Exempt Bond Funds,"
and collectively with the Taxable Bond Funds, 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.

<PAGE> 417

ASSET-BACKED SECURITIES

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.

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

Municipal Securities acquired by the Tax-Exempt Bond 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

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<PAGE> 418

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 Tax-Exempt Bond 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 Tax-Exempt Bond 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 Tax-Exempt Bond 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 securities purchased by the
Tax-Exempt Bond 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 Tax-Exempt Bond 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 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

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<PAGE> 419

of interest on and principal of its Municipal Securities may be materially
adversely affected by litigation or other conditions.

Among other instruments, the Tax-Exempt Bond 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 Tax-Exempt Bond 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.

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. Such proposals, while pending or if
enacted, might materially and adversely affect the availability of Municipal
Securities for investment by the Tax-Exempt Bond Funds and the liquidity and
value of their respective portfolios. In such an event, each Tax-Exempt Bond
Fund would re-evaluate its investment objective and policies and consider
possible changes in its structure or possible dissolution.

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 Tax-
Exempt Bond Funds nor Fleet

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will review the proceedings relating to the issuance of Municipal Securities or
the bases for such opinions.

The Taxable Bond 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.

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

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and may be sold, transferred or assigned by the Fund only with respect to the
underlying instruments.

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

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would be invested in high quality, short-term "money market" instruments.

GOVERNMENT SECURITIES

FOREIGN CURRENCY EXCHANGE TRANSACTIONS -- SHORT-TERM BOND AND
CORPORATE BOND FUNDS

Because the Short-Term Bond and Corporate Bond Funds 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 Funds 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. A 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 a 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 a
Fund's portfolio securities or in foreign exchange rates, or prevent loss if the
prices of these securities should decline.

The Funds may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign

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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 a 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 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.

SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL SECURITIES

Some of the significant financial considerations relating to the Fund s
investment in New York Municipal Securities are summarized below. This summary
information is not intended to be a complete description and is principally
derived from official statements relating to issues of New York Municipal
Securities that were available prior to the date of this Statement of Additional
Information. The accuracy and completeness of the information contained in those
official statements have not been independently verified.

STATE ECONOMY. New York is the third most populous state in the nation and has a
relatively high level of personal wealth. The State s economy is diverse with a
comparatively large share of the nation s finance, insurance, transportation,
communications and services employment, and a very small share of the nation s
farming and mining activity. The State has a declining proportion of its
workforce engaged in manufacturing, and an increasing proportion engaged in
service industries. New York City (the City ), which is the most populous city
in the State and nation and is the center of the nation s largest metropolitan
area, accounts for a large portion of the State s population and personal
income.

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The State has historically been one of the wealthiest states in the nation.
For decades, however, the State, has grown more slowly than the nation as a
whole, gradually eroding its relative economic position. The recession has been
more severe in the State, owing to a significant retrenchment in the financial
services industry, cutbacks in defense spending, and an overbuilt real estate
market. There can be no assurance that the State economy will not experience
worse-than-predicted results in the 1995-96 fiscal year, with corresponding
material and adverse effects on the State s projections of receipts and
disbursements.

The unemployment rate in the State dipped below the national rate in the
second half of 1981 and remained lower until 1991. It stood at 6.9% in 1994. The
total employment growth rate in the State has been below the national average
since 1984 and is expected to slow to less than 0.5% in 1995. State per capita
personal income remains above the national average. State per capita income for
1994 was estimated at $25,999, which was 19.2% above the 1994 estimated national
average of $21,809. During the past ten years, total personal income in the
State rose slightly faster than the national average only in 1986 through 1989.

STATE BUDGET. The State Constitution requires the governor (the Governor ) the
submit to the State legislature (the Legislature ) a balanced executive budget
which contains a complete plan of expenditures for the ensuing fiscal year and
all moneys and revenues estimated to be available therefor, accompanied by bills
containing all proposed appropriations or reappropriations and any new or
modified revenue measures to be enacted in connection with the executive budget.
The entire plan constitutes the proposed State financial plan for that fiscal
year. The Governor is required to submit to the Legislature quarterly budget
updates which include a revised cash-basis state financial plan, and an
explanation of any changes from the previous state financial plan.

The State s budget for the 1995-96 fiscal year was enacted by the Legislature
on June 7, 1995, more than two months after the start of the fiscal year. Prior
to adoption of the budget, the Legislature enacted appropriations for
disbursements considered to be necessary for State operations and other
purposes,

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including all necessary appropriations for debt service. The State financial
plan for the 1995-96 fiscal year was formulated on June 20, 1995 and was based
upon the State's budget as enacted by the Legislature and signed into law by the
Governor (the 1995-96 State Financial Plan).

The 1995-96 State Financial Plan was the first to be enacted in the
administration of the Governor, who assumed office on January 1. It was the
first budget in over half a century which proposed and, as enacted, projected an
absolute year-over-year decline in disbursements in the General Fund, the State
s principal operating fund. Spending for State operations was projected to drop
even more sharply, by 4.6%. Nominal spending from all State spending sources
(i.e., excluding Federal aid) was proposed to increase by only 2.5% from the
prior fiscal year, in contrast to the prior decade when such spending growth
averaged more than 6.0% annually.

The 1995-96 State Financial Plan included actions that will have an effect on
the budget outlook for State fiscal year 1996-97 and beyond. The Division of the
Budget estimated that the 1995-96 State Financial Plan contained actions that
provide nonrecurring resources or savings totaling approximately $900 million
while the State comptroller (the Comptroller) believed that such amount
exceeded $1 billion. In addition to this use of nonrecurring resources, the
1995-96 State Financial Plan reflected actions that will directly affect the
State s 1996-97 fiscal year baseline receipts and disbursements. The three-year
plan to reduce State personal income taxes will decrease State tax receipts by
an estimated $1.7 billion in State fiscal year 1996-97 in addition to the amount
of reduction in State fiscal year 1995-96. Further significant reductions in the
personal income tax are scheduled for the 1997-98 State fiscal year. Other tax
reductions enacted in 1994 and 1995 are estimated to cause an additional
reduction in receipts of over $500 million in 1996-97, as compared to the level
of receipts in 1995-96. Similarly, many actions taken to reduce disbursements in
the State s 1995-96 fiscal year are expected to provide greater reductions in
the State s fiscal year 1996-97. These include actions to reduce the State
workforce, reduce Medicaid and welfare expenditures and slow community mental
hygiene program development.

The State issued the first of the three required quarterly updates (the First
Quarter Update ) to the 1995-96 State Financial Plan on July 28, 1995.
The First Quarter Update projected continued balance in the State s 1995-96
State Financial Plan. Actual cash receipts and disbursements during the first
quarter of the fiscal year were impacted by the late adoption of the budget, and
fell somewhat short of original monthly cashflow estimates. Receipt variances
were mainly related to timing issues rather than changes in the forecast.
Disbursement variances were also ascribed to timing factors.

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On October 2, 1995, the State Comptroller released a report on the State s
financial condition. The report identified several risks to the 1995-96 State
Financial Plan and also estimated a potential imbalance in receipts and
disbursements in the 1996-97 fiscal year of at least $2.7 billion and in the
1997-98 fiscal year of at least $3.9 billion. The Governor is required to submit
a balanced budget to the State Legislature and has indicated that he will close
any potential imbalance primarily through General Fund expenditure reductions
and without increases in taxes or deferrals of scheduled tax reductions.

The State issued its second quarterly update to the 1995-96 State Financial
Plan on October 26, 1995. The Mid-Year Update projected continued balance in the
1995-96 State Financial Plan, with estimated receipts reduced by a net $71
million and estimated disbursements reduced by a net $30 million as compared to
the First Quarter Update. The resulting General Fund balance decreased from $213
million in the First Quarter Update to $172 million in the Mid-Year Update,
reflecting the use of $41 million from the contingency reserve fund for payments
of litigation and disallowance expenses.

The Division of the Budget revised the cash-basis 1995-96 State Financial Plan
on December 15, 1995, in conjunction with the release of the Executive Budget
for the 1996-97 fiscal year (the December Update and together with the First
Quarter Update and the Mid-Year Update, the Financial Plan Updates ). These
projections show continued balance in the State s 1995-96 Financial Plan, with
estimated receipts reduced by a net $73 million and estimated disbursements
reduced by a net $73 million as compared to the Mid-Year Update. Reductions in
receipts reflect delays in estimated receipts from the sale of State assets, and
other revisions based upon operating results through November 1995. Disbursement
estimates were reduced to reflect lower-than-expected spending through November,
savings from debt refundings, and other items which more than offset projected
increases in disbursements for school aid and tuition assistance. The resulting
General Fund balance of $172 million was unchanged from the Mid-Year Update.

The Governor presented his 1996-97 Executive Budget to the Legislature on
December 15, 1995, one month before the legal deadline. There can be no
assurance that the Legislature will enact the Executive Budget into law or that
the projections set forth in the Executive Budget will not differ materially and
adversely from actual results.

The Governor's Executive Budget projected balance on a cash basis in the
General Fund. It reflected a continuing strategy of substantially reduced State
spending, including programming restructurings, reductions in social welfare
spending, and efficiency and productivity initiatives. In his 1996-97 Executive
Budget, the Governor indicated that the 1996-97 General Fund

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financial plan (based on current law governing spending and revenues) would have
been out of balance by almost $3.9 billion as a result of the underlying
disparity between receipts and disbursements caused by anticipated spending
demands, the effect of current and prior-year tax changes, and the use of
one-time revenues to fund recurring spending in the 1995-96 State Financial
Plan. The Executive Budget proposes to close this gap primarily through a series
of spending reductions and cost containment measures.

To make progress toward addressing recurring budgetary imbalances, the 1996-
97 Executive Budget proposes significant actions to align recurring receipts and
disbursements in future fiscal years. The Governor has proposed closing the
1996-97 fiscal year imbalance primarily through General Fund expenditure
reductions and without increases in taxes or deferrals of scheduled tax
reductions. However, there can be no assurance that the Legislature will enact
the Governor s proposals or that the State s actions will be sufficient to
preserve budgetary balance or to align recurring receipts and disbursements in
future fiscal years. The 1996-97 Executive Budget includes action that will have
an effect on the budget outlook for the State fiscal year 1997-98 and beyond.
The net impact of these and other factors is expected to produce a potential
imbalance in receipts and disbursements in State fiscal year 1997-98, which the
Governor proposes to close with further spending reductions. The Executive
Budget contains projections of a potential imbalance in the 1997-98 fiscal year
of $1.4 billion and in the 1998-99 fiscal year of $2.5 billion, assuming
implementation of the 1996-97 Executive Budget recommendations.

The 1995-96 State Financial Plan and the Financial Plan Updates were based on
a number of assumptions and projections. Because it is not possible to predict
accurately the occurrence of all factors that may affect the 1995-96 State
Financial Plan or the Financial Plan Updates, actual results could differ
materially and adversely from projections made at the outset of a fiscal year.
There can be no assurance that the State will not face substantial potential
budget gaps in future years resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base and the spending
required to maintain State programs at current levels. To address any potential
budgetary imbalance, the State may need to take significant actions to align
recurring receipts and disbursements in future fiscal years.

A significant risk to the 1995-96 State Financial Plan projections arise from
tax legislation under consideration by Congress and the President.
Congressionally-adopted retroactive changes to federal tax treatment of capital
gains would flow through automatically to the State personal income tax. Such
changes, if ultimately enacted, could produce revenue losses in both the 1995-
96 fiscal year and the 1996-97 fiscal year.

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RECENT FINANCIAL RESULTS. The General Fund is the principal operating fund of
the State and is used to account for all financial transactions, except those
required to be accounted for in another fund. It is the State s largest fund and
receives almost all State taxes and other resources not dedicated to particular
purposes.

The State reported a General Fund operating deficit of $1.426 billion for the
1994-95 fiscal year, as compared to an operating surplus of $914 million for the
prior fiscal year. The 1994-95 fiscal year deficit was caused by several
factors, including the use of $1.026 billion of the 1993-94 cash-based surplus
to fund operating expenses in 1994-95 and the adoption of changes in accounting
methodologies by the State Comptroller. These factors were offset by net
proceeds of $315 million in bonds issued by the Local Government Assistance
Corporation. The General Fund is projected to be balanced on a cash basis for
the 1995-96 fiscal year.

Total revenues for 1994-95 were $31,455 billion. Revenues decreased by $173
million over the prior fiscal year, a decrease of less than one percent. Total
expenditures for 1994-95 totaled $33.079 billion, an increase of $2.083 billion,
or 6.7 percent over the prior fiscal year.

The State's financial position on a GAAP (generally accepted accounting
principles) basis as of March 31, 1995 showed an accumulated deficit in its
combined governmental funds of $1.666 billion, reflecting liabilities of $14.778
billion and assets of $13.112 billion.

DEBT LIMITS AND OUTSTANDING DEBT. There are a number of methods by which the
State of New York may incur debt. Under the State Constitution, the State may
not, with limited exceptions for emergencies, undertake long-term general
obligation borrowing (i.e., borrowing for more than one year) unless the
borrowing is authorized in a specific amount for a single work or purpose by the
Legislature and approved by the voters. There is no limitation on the amount of
long-term general obligation debt that may be so authorized and subsequently
incurred by the State.

The State may undertake short-term borrowings without voter approval (i) in
anticipation of the receipt of taxes and revenues, by issuing tax and revenue
anticipation notes, and (ii) in anticipation of the receipt of proceeds from the
sale of duly authorized but unissued general obligation bonds, by issuing bond
anticipation notes. The State may also, pursuant to specific constitutional
authorization, directly guarantee certain obligations of the State of New York's
authorities and public benefit corporations ("Authorities"). Payments of debt
service on New York State general obligation and New York State-guaranteed

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bonds and notes are legally enforceable obligations of the State of New York.

The State employs additional long-term financing mechanisms, lease-purchase
and contractual-obligation financings, which involve obligations of public
authorities or municipalities that are State-supported but are not general
obligations of the State. Under these financing arrangements, certain public
authorities and municipalities have issued obligations to finance the
construction and rehabilitation of facilities or the acquisition and
rehabilitation of equipment, and except to meet their debt service requirements
through the receipt of rental or other contractual payments made by the State.
Although these financing arrangements involve a contractual agreement by the
State to make payments to a public authority, municipality or other entity, the
State s obligation to make such payments is generally expressly made subject to
appropriation by the Legislature and the actual availability of money to the
State for making the payments. These State has also entered into a contractual-
obligation financing arrangement with the Local Government Assistance
Corporation ("LGAC") in an effort to restructure the way the State makes certain
local aid payments.

In 1990, as part of a State fiscal reform program, legislation was enacted
creating LGAC, a public benefit corporation empowered to issue long-term
obligations to fund certain payments to local governments traditionally funded
through New York State s annual seasonal borrowing. The legislation empowered
LGAC to issue its bonds and notes in an amount not in excess of $4.7 billion
(exclusive of certain refunding bonds) plus certain other amounts. Over a period
of years, the issuance of these long-term obligations, which are to be amortized
over no more than 30 years, was expected to eliminate the need for continued
short-term seasonal borrowing. The legislation also dedicated revenues equal to
one-quarter of the four cent State sales and use tax to pay debt service on
these bonds. The legislation also imposed a cap on the annual seasonal borrowing
of the State at $4.7 billion, less net proceeds of bonds issues by LGAC and
bonds issued to provide for capitalized interest, except in cases where the
Governor and the legislative leaders have certified the need for additional
borrowing and provided a schedule for reducing it to the cap. If borrowing above
the cap is thus permitted in any fiscal year, it is required by law to be
reduced to the cap by the fourth fiscal year after the limit was first exceeded.
As of June 1995, LGAC had issued bonds to provide net proceeds of $4.7 billion,
completing the program. The impact of LGAC s borrowing is that the State is able
to meet its cash flow needs in the first quarter of the fiscal year without
relying on short-term seasonal borrowings. The 1995-96 State Financial Plan
includes no spring borrowing nor did the 1994-95 State Financial Plan, which was
the first time in 35 year there was no short-term seasonal borrowing.

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In June 1994, the Legislature passed a proposed constitutional amendment that
would significantly change the long-term financing practices of the State and
its public authorities. The proposed amendment would permit the State, within a
formula-based cap, to issue revenue bonds, which would be debt of the State
secured solely by a pledge of certain State tax receipts (including those
allocated to State funds dedicated for transportation purposes), and not by the
full faith and credit of the State. In addition, the proposed amendment would
(i) permit multiple purpose general obligation bond proposals to be proposed on
the same ballot, (ii) require that State debt be incurred only for capital
projects included in a multi-year capital financing plan, and (iii) prohibit,
after its effective date, lease-purchase and contractual-obligation financing
mechanisms for State facilities.

Before the approved constitutional amendment can be presented to the voters
for their consideration, it must be passed by a separately elected legislature.
The amendment must therefore be passed by the newly elected Legislature in 1995
prior to presentation to the voters in November 1995. The amendment was passed
by the Senate in June 1995, and the Assembly is expected to pass the amendment
shortly. If approved by the voters, the amendment would become effective January
1, 1996.

On January 13, 1992, Standard & Poor's Corporation ("Standard & Poor's")
reduced its ratings on the State's general obligation bonds from A to A- and, in
addition, reduced its ratings on the State's moral obligation, lease purchase,
guaranteed and contractual obligation debt. Standard & Poor's also continued its
negative rating outlook assessment on State general obligation debt. On April
26, 1993, Standard & Poor's revised the rating outlook assessment to stable. On
February 14, 1994, Standard & Poor's raised its outlook to positive and, on
February 28, 1994, confirmed its A- rating. On January 6, 1992, Moody's
Investors Service, Inc. ("Moody's") reduced its ratings on outstanding
limited-liability State lease purchase and contractual obligations from A to
Baa1. On February 28, 1994, Moody's reconfirmed its A rating on the State's
general obligation long-term indebtedness.

The State anticipates that its capital programs will be financed, in part, by
State and public authorities borrowings in 1995-96. The State expects to issue
$248 million in general obligation bonds (including $170 million for purposes of
redeeming outstanding bond anticipation notes) and $186 million in general
obligation commercial paper. The Legislature has also authorized the issuance of
up to $33 million in certificates of participation during the State's 1995-96
fiscal year for equipment purchases and $14 million for capital purposes. These
projections are subject to change if circumstances require.

Principal and interest payments on general obligation bonds and interest
payments on bond anticipation notes and on tax

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and revenue anticipation notes were $793.3 million of the 1994-95 fiscal year,
and are estimated to be $774.4 million for the 1995-96 fiscal year. These
figures do not include interest payable on State General Obligation Refunding
Bonds issued in July 1992 ("Refunding Bonds") to the extent that such interest
was paid from an escrow fund established with the proceeds of such Refunding
Bonds. Principal and interest payments on fixed rate and variable rate bonds
issued by LGAC were $239.4 million for the 1994-95 fiscal year, and are
estimated to be $328.2 million for 1995-96. State lease-purchase rental and
contractual obligation payments for 1994-95, including State installment
payments relating to certificates of participation, were $1.607 billion and are
estimated to be $1.641 billion in 1995-96.

New York State has never defaulted on any of its general obligation
indebtedness or its obligations under lease-purchase or contractual-obligation
financing arrangements and has never been called upon to make any direct
payments pursuant to its guarantees.

LITIGATION. Certain litigation pending against New York State or its officers or
employees could have a substantial or long-term adverse effect on New York State
finances. Among the more significant of these cases are those that involve (1)
the validity of agreements and treaties by which various Indian tribes
transferred title to New York State of certain land in central and upstate New
York; (2) certain aspects of New York State's Medicaid policies, including its
rates, regulations and procedures; (3) action against New York State and New
York City officials alleging inadequate shelter allowances to maintain proper
housing; (4) challenges to the practice of reimbursing certain Office of Mental
Health patient care expenses from the client's Social Security benefits; (5)
alleged responsibility of New York State officials to assist in remedying racial
segregation in the City of Yonkers; (6) challenges by commercial insurers,
employee welfare benefit plans, and health maintenance organizations to the
imposition of 13%, 11% and 9% surcharges on inpatient hospital bills; (7)
challenges to certain aspects of petroleum business taxes; (8) action alleging
damages resulting from the failure by the State's Department of Environmental
Conservation to timely provide certain data; (9) a challenge to the
constitutionality of the treatment of certain moneys held in a Supplemental
Reserve Fund; and (10) a challenge to the constitutionality of a State lottery
game.

Several actions challenging the constitutionality of legislation enacted
during the 1990 legislative session which changed actuarial funding methods for
determining state and local contributions to state employee retirement systems
have been decided against the State. As a result, the Comptroller has developed
a plan to restore the State's retirement systems to prior funding levels. Such
funding is expected to exceed prior levels by $30 million in fiscal 1994-95, $63
million in fiscal 1995-96, $116 million in fiscal 1996-97, $193 million in
fiscal 1997-98, peaking

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at $241 million in fiscal 1998-99. Beginning in fiscal 2001-02, State
contributions required under the Comptroller's plan are projected to be less
than that required under the prior funding method. As a result of the United
States Supreme Court decision in the case of State of Delaware v. State of New
York, on January 21, 1994, the State entered into a settlement agreement with
various parties. Pursuant to all agreements executed in connection with the
action, the State is required to make aggregate payments of $351.4 million, of
which $90.3 million have been made. Annual payments to the various parties will
continue through the State's 2002-03 fiscal year in amounts which will not
exceed $48.4 million in any fiscal year subsequent to the State's 1994-95 fiscal
year.

The legal proceedings noted above involve State finances, State programs and
miscellaneous tort, real property and contract claims in which the State is a
defendant and the monetary damages sought are substantial. These proceedings
could affect adversely the financial condition of the State. Adverse
developments in these proceedings or the initiation of new proceedings could
affect the ability of the State to maintain a balanced 1995-96 State Financial
Plan. An adverse decision in any of these proceedings could exceed the amount of
the 1995-96 State Financial Plan reserve for the payment of judgments and,
therefore, could affect the ability of the State to maintain a balanced 1995-96
State Financial Plan reserve for the payment of judgments and, therefore, could
affect the ability of the State to maintain a balanced 1995-96 State Financial
Plan. In its audited financial statements for the fiscal year ended March 31,
1995, the State reported its estimated liability for awarded and anticipated
unfavorable judgments to be $676 million.

Although other litigation is pending against New York State, except as
described above, no current litigation involves New York State's authority, as a
matter of law, to contract indebtedness, issue its obligations, or pay such
indebtedness when it matures, or affects New York State's power or ability, as a
matter of law, to impose or collect significant amounts of taxes and revenues.

AUTHORITIES. The fiscal stability of New York State is related, in part, to the
fiscal stability of its Authorities, which generally have responsibility for
financing, constructing and operating revenue-producing public benefit
facilities. Authorities are not subject to the constitutional restrictions on
the incurrence of debt which apply to the State itself, and may issue bonds and
notes within the amounts of, and of otherwise restricted by, their legislative
authorization. The State's access to the public credit markets could be
impaired, and the market price of its outstanding debt may be materially and
adversely affected, if any of the Authorities were to default on their
respective obligations, particularly with respect to debt that are State-
supported or State-related. As of September 30, 1994, date of the latest data
available, there were 18 Authorities that had outstanding debt of $100 million
or more. The aggregate

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outstanding debt, including refunding bonds, of these 18 Authorities was $70.3
billion. As of March 31, 1995, aggregate public authority debt outstanding as
State-supported debt was $27.9 billion and as State-related debt was $36.1
billion.

Authorities are generally supported by revenues generated by the projects
financed or operated, such as fares, user fees on bridges, highway tolls and
rentals for dormitory rooms and housing. In recent years, however, New York
State has provided financial assistance through appropriations, in some cases of
a recurring nature, to certain of the 18 Authorities for operating and other
expenses and, in fulfillment of its commitments on moral obligation indebtedness
or otherwise, for debt service. This operating assistance is expected to
continue to be required in future years. In addition, certain statutory
arrangements provide for State local assistance payments otherwise payable to
localities to be made under certain circumstances to certain Authorities. The
State has no obligation to provide additional assistance to localities whose
local assistance payments have been paid to Authorities under these
arrangements. However, in the event that such local assistance payments are so
diverted, the affected localities could seek additional State funds.

NEW YORK CITY AND OTHER LOCALITIES. The fiscal health of the State of New York
may also be impacted by the fiscal health of its localities, particularly the
City of New York, which has required and continues to require significant
financial assistance from New York State. The City depends on State aid both to
enable the City to balance its budget and to meet its cash requirements. The
City has achieved balanced operating results for each of its fiscal years since
1981 as reported in accordance with the then-applicable GAAP.

In 1975, New York City suffered a fiscal crisis that impaired the borrowing
ability of the City and New York State. In that year the City lost access to
public credit markets. The City was not able to sell short-term notes to the
public again until 1979.

In 1975, Standard & Poor's suspended its A rating of City bonds. This
suspension remained in effect until March 1981, at which time the City received
an investment grade listing of BBB from Standard & Poor's. On July 2, 1985,
Standard & Poor's revised its rating of City bonds upward to BBB+ and on
November 19, 1987, to A-. On July 2, 1993, Standard & Poor's reconfirmed its A-
rating of City bonds, continued its negative rating outlook assessment and
stated that maintenance of such rating depended upon the City's making further
progress towards reducing budget gaps in the outlying years. Moody's ratings of
City bonds were revised in November 1981 from B (in effect since 1977) to Ba1,
in November 1983 to Baa, in December 1985 to Baa1, in May 1988 to A and again in
February 1991 to Baa1. On July 10, 1995, Standard & Poor's

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downgraded its rating on the City's $23 billion of outstanding general
obligation bonds to BBB+ from A- , citing to the City's chronic structural
budget problems and weak economic outlook. Standard & Poor's stated that New
York City's reliance on one-time revenue measures to close annual budget gaps, a
dependence on unrealized labor savings, overly optimistic estimates of revenues
and state and federal aid and the City's continued high debt levels also
contributed to its decision to lower the rating.

New York City is heavily dependent on New York State and federal assistance to
cover insufficiencies in its revenues. There can be no assurance that in the
future federal and State assistance will enable the City to make up its budget
deficits. To help alleviate the City's financial difficulties, the Legislature
created the Municipal Assistance Corporation ("MAC") in 1975. MAC is authorized
to issue bonds and notes payable from certain stock transfer tax revenues, from
the City's portion of the State sales tax derived in the City and, subject to
certain prior claims, from State per capita aid otherwise payable by the State
to the City. Failure by the State to continue the imposition of such taxes, the
reduction of the rate of such taxes to rates less than those in effect on July
2, 1975, failure by the State to pay such aid revenues and the reduction of such
aid revenues below a specified level are included among the events of default in
the resolutions authorizing MAC's long-term debt. The occurrence of an event of
default may result in the acceleration of the maturity of all or portion of MAC
s debt. MAC bonds and notes constitute general obligations of MAC and do not
constitue an enforceable obligation or debt of either the State or the City. As
of June 30, 1995, MAC had outstanding an aggregate of approximately $4.882
billion of its bonds. MAC is authorized to issue bonds and notes to refund its
outstanding bonds and notes and to fund certain reserves, without limitation as
to principal amount, and to finance certain capital commitments to certain
authorities in the event the City fails to provide such financing.

Since 1975, the City's financial condition has been subject to oversight and
review by the New York State Financial Control Board (the Control Board) and
since 1978 the City's financial statements have been audited by independent
accounting firms. To be eligible for guarantees and assistance, the City is
required during a control period to submit annually for Control Board approval,
and when a control period is not in effect for Control Board review, a financial
plan for the next four fiscal years covering the City and certain agencies
showing balanced budgets determined in accordance with GAAP. New York State also
established the Office of the State Deputy Comptroller for New York City
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the City satisfied the statutory
requirements for termination of the control period. This means that the Control
Board's powers of approval are suspended, but the Board continues to have
oversight responsibilities.

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<PAGE> 435

From time to time, the Control Board staff, OSDC, the City comptroller and
others issue reports and make public statements regarding the City's financial
condition, commenting on, among other matters, the City's financial plans,
projected revenues and expenditures and actions by the City to eliminate
projected operating deficits. Some of these reports and statements have warned
that the City may have underestimated certain expenditures and overestimated
certain revenues and have suggested that the City may not have adequately
provided for future contingencies. Certain of these reports have analyzed the
City's future economic and social conditions and have questioned whether the
City has the capacity to generate sufficient revenues in the future to meet the
costs of its expenditure increases and to provide necessary services.

The City submitted to the Control Board on July 21, 1995 a fourth quarter
modification to the City's financial plan for the 1995 fiscal year (the 1995
Modification ), which projects a balanced budget in accordance with GAAP for the
1995 fiscal year, after taking into account a discretionary transfer of $75
million. On July 11, 1995, the City submitted to the Control Board the Financial
Plan for the 1996 through 1999 fiscal years (the 1996-1999 Financial Plan ).

The 1996-1999 Financial Plan projected revenues and expenditures for the 1996
fiscal year balanced in accordance with GAAP. The projections for the 1996
fiscal year reflected proposed actions to close a previously projected gap of
approximately $3.1 billion for the 1996 fiscal year. The proposed actions in the
1996-1999 Financial Plan for the 1996 fiscal year included (i) a reduction in
spending of $400 million, primarily affecting public assistance and Medicaid
payment to the City; (ii) expenditure reductions in agencies, totaling $1.2
billion; (iii) transitional labor savings, totaling $600 million; and (iv) the
phase-in of the increased annual pension funding cost due to revisions resulting
from an actuarial audit of the City's pension systems, which would reduce such
costs in the 1996 fiscal year.

The proposed agency spending reductions included the reduction of City
personnel through attrition, government efficiency initiatives, procurement
initiatives and labor productivity initiatives. The substantial agency
expenditure reductions proposed in the 1996-1999 Financial Plan may be difficult
to implement, and the 1996-1999 Financial Plan is subject to the ability of the
City to implement proposed reductions in City personnel and other cost reduction
initiatives. In addition, certain initiatives are subject to negotiation with
the City's municipal unions, and various actions, including proposed anticipated
State aid totaling $50 million are subject to approval by the Governor and the
Legislature.

The 1996-1999 Financial Plan also set forth projections

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for the 1997 through 1999 fiscal years and outlined a proposed gap-closing
program to eliminate projected gaps of $888 million, $1.5 billion and $1.4
billion for the 1997, 1998 and 1999 fiscal years, respectively, after successful
implementation of the $3.1 billion gap-closing program for the 1996 fiscal year.
These actions, a substantial number of which were not specified in detail,
include additional agency spending reductions, reduction in entitlements,
government procurement initiatives, revenue initiatives and the availability of
the general reserve.

Contracts with all of the City's municipal unions either expired in the 1995
fiscal year or will expire in the 1996 fiscal years. The 1996-1999 Financial
Plan provided no additional wage increases for City employees after the 1995
fiscal year. Each 1% wage increase for all union contracts commencing in the
1995 or 1996 fiscal year would cost the City an additional $141 million for the
1996 fiscal year and $161 million each year thereafter above the amounts
provided for in the 1996-1999 Financial Plan.

Although the City has balanced its budget since 1981, estimates of the City's
revenues and expenditures, which are based on numerous assumptions, are subject
to various uncertainties. If expected federal or State aid is not forthcoming,
if unforeseen developments in the economy significantly reduce revenues derived
from economically sensitive taxes or necessitate increased expenditures for
public assistance, if the City should negotiate wage increases for its employees
greater than the amounts provided for in the City's financial plan or if other
uncertainties materialize that reduce expected revenues or increase projected
expenditures, then, to avoid operating deficits, the City may be required to
implement additional actions, including increases in taxes and reductions in
essential City services. The City might also seek additional assistance from New
York State.

The City requires certain amounts of financing for seasonal and capital
spending purposes. The City's current monthly cash flow forecast for the 1996
fiscal year shows a need of $2.4 billion of seasonal financing for the 1996
fiscal year. Seasonal financing requirements for the 1995 fiscal year increased
to $2.2 billion from $1.75 billion and $1.4 billion in the 1994 and 1993 fiscal
years, respectively.

Certain localities, in addition to the City, would have financial problems
leading to requests for additional New York State assistance. The potential
impact on the State of such requests by localities was not included in the
projections of the State's receipts and disbursements in the State's 1995-96
fiscal year.

Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted
in the creation of the Financial Control Board for the City of Yonkers (the
Yonkers Board) by New York State in

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1984. The Yonkers Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the Governor or the Legislature to assist
Yonkers could result in allocation of New York State resources in amounts that
cannot yet be determined.

Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1993, the total indebtedness of all localities in New
York State other than New York City was approximately $17.7 billion. A small
portion (approximately $105 million) of that indebtedness represented borrowing
to finance budgetary deficits and was issued pursuant to enabling New York State
legislation. State law requires the comptroller to review and make
recommendations concerning the budgets of those local government units other
than New York City authorized by State law to issue debt to finance deficits
during the period that such deficit financing is outstanding. Fifteen localities
had outstanding indebtedness for deficit financing at the close of their fiscal
year ending in 1993.

From time to time, federal expenditure reductions could reduce, or in some
cases eliminate, federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities. If
New York State, New York City or any of the Authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within New
York State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining urban
population, increasing expenditures and other economic trends could adversely
affect localities and require increasing New York State assistance in the
future.

SPECIAL CONSIDERATIONS RELATING TO CONNECTICUT MUNICIPAL SECURITIES

The ability of the issuers of Connecticut Municipal Securities to pay the
principal and interest on their obligations may be impacted by a variety of
factors relating to the economy of Connecticut and to the fiscal stability of
issuers of Connecticut Municipal Securities. The latter may include such matters
as the ability of issuers to raise sufficient tax and other revenues to meet
their needs, the availability of aid from other governmental bodies, and the
burdens that may be imposed on issuers by law or necessity. To the extent that
the Fund invests in obligations that are not general obligations of their
issuers, payments of principal and interest will depend on all factors affecting
the revenue sources from which payments thereon are to be derived. The value of
the obligations held by the Fund would be adversely affected not only by any
actual inability of their issuers to pay the principal and interest thereon, but
also by a public perception that such ability is in doubt.

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Investors should be aware that manufacturing has historically been
Connecticut's single most important economic activity. The state's manufacturing
industry is diversified, but from 1970 to 1994 manufacturing employment declined
35.4%. During this period, employment in other non-agricultural establishments
(including government) increased 66.3%, particularly in the service, trade, and
finance categories. In 1994, manufacturing accounted for only 18.5% of total
nonagricultural employment in Connecticut. Defense-related business plays an
important role in the Connecticut economy, and economic activity has been
affected by the volume of defense contracts awarded to Connecticut firms. On a
per capita basis, defense awards in Connecticut have traditionally been among
the highest in the nation, but reductions in defense spending have had a
substantial adverse impact on Connecticut's economy, and the state's largest
defense contractors have announced substantial labor force reductions to occur
over the next several years.

The average unemployment rate (seasonally adjusted) in Connecticut increased
from a low of 3.0% in 1988 to 7.5% in 1992 and, after a number of important
changes in the method of calculation, was reported to be 5.6% in 1994. Pockets
of more significant unemployment and poverty exist in some of Connecticut's
cities and towns, the economic conditions of which are causing them severe
financial problems, resulting in some cases in the reporting of operating and
accumulated deficits. Connecticut is in a recession the depth and duration of
which are uncertain.

The State recorded operating deficits in its General Fund for fiscal 1987-88,
1988-89, 1989-90, and 1990-91 of $115,600,000, $28,000,000, $259,000,000, and
$809,000,000, respectively. In the fall of 1991, the State issued $965,712,000
of Economic Recovery Notes to help fund its accumulated General Fund deficit.
Largely as a result of the enactment in 1991 of a general income tax on resident
and non-resident individuals, trusts, and estates the State's General Fund ended
fiscal 1991-92, 1992-93, 1993-94, and 1994-95 with operating surpluses of
$110,000,000, $113,500,000, $19,700,000, and $80,500,000, respectively.

The General Fund is the main operating fund of the State. The three major
revenue sources for the General Fund are the personal income tax, the sales and
use taxes, and the corporation business tax, all of which are sensitive to
changes in the level of economic activity in the State. In recent years, the
personal income tax enacted in 1991 has superseded the other two as the largest
revenue source for the State's General Fund. Proposals to phase-out the personal
income tax surfaced in the

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1994 general election and such proposals, if enacted, could significantly impact
the financial condition of the State. Motor fuel taxes and other
transportation-related taxes are paid into a Special Transportation Fund while
all other tax revenues are carried in the General Fund.

The repair and maintenance of the State's highways and bridges will require
major expenditures in the near term. The State has adopted legislation that
provides for, among other things, the issuance of special tax obligation bonds,
the proceeds of which will be used to pay for improvements to the State's
transportation system. The bonds are payable solely from motor vehicle and other
transportation-related taxes and fees deposited in the Special Transportation
Fund. However, the amount of revenues is dependent on the occurrence of future
events, including a possible rise in fuel prices, and may thus differ materially
from projected amounts. The cost of this infrastructure program, to be met from
federal, State and local funds, is currently estimated at $11.2 billion. The
State expects to issue $4.2 billion of special tax obligation bonds over a
sixteen-year period commenced July 1, 1984 to finance a major portion of the
State's share of such costs.

The tax revenues of Connecticut municipalities are derived only from ad
valorem taxes on real and tangible personal property. Problems inherent with
these impose practical limitations on the ability of Connecticut municipalities
to raise additional tax revenues. The U.S. Census Bureau reports that, at the
time of the 1990 census, Connecticut's capital city of Hartford was the eighth
poorest city in the nation based on the percentage of its residents living in
poverty; the same report indicates that four of Connecticut's largest cities
ranked among the 130 poorest cities in the nation by the same measure.

ADDITIONAL INVESTMENT LIMITATIONS

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.

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<PAGE> 440

3. Purchase or sell real estate; except that each Taxable Bond Fund may
purchase securities that are secured by real estate, and may purchase
securities of issuers which deal in real estate or interests therein; and
except that the Tax-Exempt Bond Funds may invest in Municipal Securities
secured by real estate or interests therein; however, the Funds will not
purchase or sell interests in real estate limited partnerships.

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 the Tax-Exempt Bond Funds may enter into
municipal bond index futures contracts, and all Funds 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.

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 Tax-Exempt Bond Funds may not invest in industrial revenue bonds
where the payment of principal and interest are the responsibility of a
company (including its predecessors) with less than three years of
continuous operation.

9. The Funds, with the exception of the Short-Term Bond and Corporate
Bond Funds, may not purchase foreign securities, except that the
Intermediate Government Income, High Quality Bond, Tax-Exempt Bond, New
York Municipal Bond, Connecticut Municipal Bond, Massachusetts Municipal
Bond and Rhode Island Municipal Bond Funds may purchase certificates of
deposit, bankers' acceptances, or other similar obligations issued by U.S.
branches of foreign banks, or foreign

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branches of U.S. banks; and provided, however, that the Intermediate
Government Income and High Quality Bond Funds may also purchase
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) subject to fundamental investment limitation No. 8 above, 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

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

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. As described in the
respective Prospectuses, Retail A Shares of the Funds and Retail B Shares of
the Short-Term Bond, High Quality Bond and Tax-Exempt Bond Funds ("CDSC
Funds") are sold to customers ("Customers") of Fleet Brokerage Securities,
Inc., Fleet Securities, Inc., Fleet Financial Group, Inc. ("Fleet Group"), its
affiliates, their correspondent banks, and other qualified banks, savings and
loan associations and broker/dealers ("Institutions"). As described in the
applicable Prospectuses, Retail Shares of the Funds and Retail B Shares of the
CDSC Funds may also be sold to individuals or corporations, who submit a
purchase application to Galaxy, purchasing either for their own accounts or for
the accounts of others ("Direct Investors"). In addition, Trust Shares in the
Funds are offered to investors maintaining qualified accounts at bank and trust

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institutions, including institutions affiliated with Fleet Financial Group,
Inc., and with respect to the Taxable Bond Funds, to participants in
employer-sponsored defined contribution plans. Trust Shares of the Corporate
Bond Fund are also offered to Direct Investors and Customers of Institutions.
Shares of the International Equity Fund are also available for purchase by
officers, directors, or employees of the Institutions described above.

Retail A Shares of the Funds are sold to Direct Investors and Customers at
the public offering price based on a Fund's net asset value plus a front-end
sales charge as described in the applicable Prospectuses. Retail B Shares of the
CDSC Funds are sold to Direct Investors and Customers at the net asset value
next determined after a purchase order is received, but are subject to a
contingent deferred sales charge which is payable on redemption of such shares
as described in the applicable prospectuses.

Effective December 1, 1995, Retail A Shares of the Funds are offered for
sale with a maximum front-end sales charge of 3.75%, with certain exemptions as
described in the applicable Prospectus. An illustration of the computation of
the offering price per share of Retail A Shares of the Funds, using the value of
each Fund's net assets attributable to such Shares and the number of
outstanding Retail A Shares of each Fund at the close of business on October
31, 1995, is as follows:

<TABLE>
<CAPTION>
Intermediate
Short-Term Government Income
Bond Fund Fund
--------------- ---------------------

<S> <C> <C>
Net Assets $ 31,542,310 $ 79,557,772
Outstanding Shares 3,136,057 7,740,020

Net Asset Value Per
Share $ 10.06 $ 10.28

Sales Charge (3.75% of
the offering price) $.39 $ 0.40

Offering to Public $ 10.45 $ 10.68
</TABLE>

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<PAGE> 443

<TABLE>
<CAPTION>
High Quality Tax-Exempt
Bond Fund Bond Fund
------------ ----------
<S> <C> <C>
Net Assets $ 30,092,723 $ 31,608,518
Outstanding Shares 2,830,538 2,932,336

Net Asset Value Per
Share $ 10.63 $ 10.78

Sales Charge (3.75% of
the offering price) $ 0.41 $ 0.42

Offering to Public $ 11.04 $ 11.20
</TABLE>

<TABLE>
<CAPTION>
New York Municipal Connecticut Municipal
Bond Fund Bond Fund
-------------------- ----------------------
<S> <C> <C>
Net Assets $ 42,870,155 $ 18,065,593
Outstanding Shares 3,977,437 1,783,739

Net Asset Value Per
Share $ 10.78 $ 10.13

Sales Charge (3.75% of
the offering price) $ 0.42 $ 0.39

Offering to Public $ 11.20 $ 10.52
</TABLE>

<TABLE>
<CAPTION>
Massachusetts Rhode Island
Municipal Bond Municipal
Fund Bond Fund
---------------- ----------------
<S> <C> <C>
Net Assets $ 16,112,977 $ 10,849,844
Outstanding Shares 1,614,697 1,016,780

Net Asset Value Per
Share $ 9.98 $ 10.67

Sales Charge (3.75% of
the offering price) $ 0.39 $ 0.42

Offering to Public $ 10.37 $ 11.09
</TABLE>

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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
(plus a third series of shares, i.e. Retail B Shares, of the CDSC Funds) are
offered under separate Prospectuses to different categories of investors.

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<PAGE> 445

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 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

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effectively acted upon by shareholders of Galaxy voting without regard to class
or series.

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 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.

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ADDITIONAL INFORMATION CONCERNING TAXES

IN GENERAL

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 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

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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. However, 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 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

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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.

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TAX-EXEMPT BOND, NEW YORK MUNICIPAL BOND, CONNECTICUT MUNICIPAL BOND,
MASSACHUSETTS MUNICIPAL BOND AND RHODE ISLAND MUNICIPAL BOND FUNDS

As stated in the Prospectuses for the Tax-Exempt Bond Funds, an investment in
the respective Fund is not intended to constitute a balanced investment program.
Shares of the Funds would not be suitable for tax-exempt institutions and may
not be suitable for retirement plans qualified under Section 401 of the Code,
H.R. 10 plans and individual retirement accounts because such plans and accounts
are generally tax-exempt and, therefore, not only would the shareholder not gain
any additional benefit from the Funds' dividends being tax-exempt, but such
dividends would be ultimately taxable to the beneficiaries when distributed. In
addition, the Funds may not be an appropriate investment for entities which are
"substantial users" of facilities financed by "private activity bonds" or
"related persons" thereof. "Substantial user" is defined under U.S. Treasury
Regulations to include a non-exempt person who (i) regularly uses a part of such
facilities in his or her trade or business and whose gross revenues derived with
respect to the facilities financed by the issuance of bonds are more than 5% of
the total revenues derived by all users of such facilities, (ii) occupies more
than 5% of the usable area of such facilities or (iii) are persons for whom such
facilities or a part thereof were specifically constructed, reconstructed or
acquired. "Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S corporation and its
shareholders.

In order for the Tax-Exempt Bond Funds to pay exempt-interest dividends for
any taxable year, at the close of each taxable quarter, at least 50% of the
aggregate value of a Fund's portfolio must consist of exempt-interest
obligations. Within 60 days after the close of its taxable year, each Fund will
notify its shareholders of the portion of the dividends paid by the Fund which
constitutes exempt-interest dividends with respect to such taxable year.
However, the aggregate amount of dividends so designated by a Fund cannot exceed
the excess of the amount of interest exempt from tax under Section 103 of the
Code received by the Fund over any amounts disallowed as deductions under
Sections 265 and 171(a)(2) of the Code. The percentage of total dividends paid
by a Fund with respect to any taxable year that qualifies as Federal
exempt-interest dividends will be the same for all shareholders receiving
dividends from the Fund for such year.

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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 disallowed to the extent of the
exempt dividends received with respect to the Shares.

SHORT-TERM BOND AND CORPORATE BOND FUNDS

Income received by the Short-Term Bond and Corporate Bond Funds from sources
within foreign countries may be subject to withholding and other foreign taxes.
The payment of such taxes will reduce the amount of dividends and distributions
paid to a Fund's shareholders. So long as a Fund qualifies as a regulated
investment company, certain distribution requirements are satisfied, and more
than 50% of the value of the Fund's assets at the close of the taxable year
consists of stock or securities of foreign corporations, the Fund may elect, for
U.S. federal income tax purposes, to treat foreign income taxes paid by the Fund
that can be treated as income taxes under U.S. income tax principles as paid by
its shareholders. A Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. If a Fund were to make an election, an
amount equal to the foreign income taxes paid by the Fund would be included in
the income of its shareholders and each shareholder would be entitled either (i)
to credit their portions of this amount against their U.S. tax due, if any, or
(ii) to deduct such portion from their U.S taxable income, if any. Shortly after
any year for which it makes such an election, a Fund will report to its
shareholders, in writing, the amount per share of such foreign tax that must be
included in each shareholder's gross income and the amount which will be
available for deduction or credit. No deduction for foreign taxes may be claimed
by a shareholder who does not itemize deductions. Certain limitations are
imposed to the extent to which the credit (but not the deduction) for foreign
taxes may be claimed.

Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to the limitation that the credit may not exceed
the shareholder's United States tax (determined without regard to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of dividends and distributions
paid by the Fund from its foreign source income will be treated as foreign
source income. A Fund's gains and losses from the sale of securities generally
will be treated as derived from United States sources and certain foreign
currency gains and losses likewise will be treated as derived from United States
sources. The limitation on the foreign tax credit is applied separately to
foreign source "passive income," such as the portion of dividends received from
a Fund which qualifies as foreign source income. Additional limitations apply to
using the foreign tax credit to offset the alternative minimum tax imposed on
corporations and

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individuals. Because of these limitations, shareholders may be unable to claim a
credit for the full amount of their proportionate shares of the foreign income
taxes paid by a Fund.

TAXATION OF CERTAIN FINANCIAL INSTRUMENTS

Generally, futures contracts and options on futures contracts held by the
Funds and certain foreign currency contracts entered into by the Short-Term
Bond and Corporate Bond Funds (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

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short sales, wash sales and loss deferral rules and the requirement to
capitalize interest and 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 which 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

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value at year-end under the mark-to-market rules, unless an 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.

STATE TAXATION

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:

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<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & Trustee President & Director,
Vicks Lithograph & Vicks Lithograph &
Printing Corporation Printing Corporation (book
Commercial Drive manufacturing and commercial
P.O. Box 270 printing); Director, Utica
Yorkville, NY 13495 Fire Insurance Company;
Age 61 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'Neill 1 President, Treasurer Executive Vice President and
Hasbro, Inc. & Trustee CFO, Hasbro, Inc. (toy and
200 Narragansett game manufacturer), since
Park Drive 1987; Trustee, The Galaxy
Pawtucket, RI 02862 VIP Fund; Trustee, Galaxy
Age 54 Fund II; Managing Partner,
KPMG Peat Marwick (accounting
firm), 1986.

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<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
Donald B. Miller Trustee Chairman, Horizon Media,
10725 Quail Covey Road Inc. (broadcast services);
Boynton Beach, FL 33436 Director/Trustee, Lexington
Age 69 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, Inc. The Astra Projects,
One Citizens Plaza Incorporated (land
Providence, RI 02903 development); President,
Age 54 The Astra Ventures,
Incorporated (previously,
Buffinton Box Company
manufacturer of cardboard
boxes); Trustee, The Galaxy
VIP Fund; Trustee, Galaxy
Fund II; Commissioner, Rhode
Island Investment Commission.

Bradford S. Wellman 1 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.
</TABLE>

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Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
W. Bruce McConnel, III Secretary Partner of the law
Philadelphia National firm Drinker Biddle
Bank Building & Reath, Philadelphia,
Broad & Chestnut Sts. Pennsylvania.
Philadelphia, PA 19107
Age 52

Neil Forrest First Data Investor Services
First Data Investor Vice Group, Inc. (1992 to
Services Group, Inc. President present);
4400 Computer Drive and Assistant Vice President,
Westboro, MA 01581 Treasurer Investment Marketing
Age 35 and Strategic Planning,
Manufacturers and Traders
Trust Co. (1990-1992).
Louis Russo
First Data Investor Assistant Vice President, First
Services Group, Inc. Treasurer Data Investor Services
4400 Computer Drive Group, Inc. since 1990;
Westboro, MA 01581 Director, Funds
Age 37 Accounting, Fidelity
Investments from 1988 to
1990.
</TABLE>

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

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 is 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 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

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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.

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 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.

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same extent to which they themselves are entitled to indemnification.

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'Neil $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.

ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS

For the fiscal years ended October 31, 1993, October 31, 1994 and October
31, 1995, Galaxy paid Fleet fees (net of reimbursement and/or waivers) of
$1,772,737, $2,055,130 and $1,467,085, respectively, with respect to the
Intermediate Government Income Fund; $722,296, $862,228 and $783,564,
respectively, with respect to the High Quality Bond Fund; $355,130, $463,521
and $293,801, respectively, with respect to the Short-Term Bond Fund; $273,260,
$725,718, and $568,671 respectively, with respect to

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the Tax-Exempt Bond Fund; and $179,932, $372,534 and $240,943, respectively,
with respect to the New York Municipal 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; $129,168, $175,814 and $130,062 , respectively, with respect to the
Short-Term Bond Fund; $300,152, $300,314 and $238,933 , respectively, with
respect to the Tax-Exempt Bond Fund; and $122,067, $155,369 and $126,783,
respectively, with respect to the New York Municipal 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.

For the fiscal years ended October 31, 1994 and October 31, 1995, Fleet
reimbursed advisory fees of $10,125 and $88,394 and $10,583 and $107,711,
respectively with respect to the Tax-Exempt Bond Fund and New York Municipal
Bond Fund.

For the period March 16, 1993 (commencement of operations) through October 31,
1993 and for the fiscal years ended October 31, 1994 and October 31, 1995, Fleet
received advisory fees (net of reimbursement and/or waivers) of $52, $0 and
$29,758, respectively, with respect to the Connecticut Municipal Bond Fund.

For the period March 16, 1993 (commencement of operations) through October
31, 1993 and for the fiscal years ended October 31, 1994 and October 31, 1995,
Fleet waived advisory fees of $45,359, $172,537 and $125,384, respectively,
with respect to the Connecticut Municipal Bond Fund.

For the fiscal years ended October 31, 1994 and October 31, 1995, Fleet
reimbursed advisory fees of $54,947 and $1,528, with respect to the Connecticut
Municipal Bond Fund.

For the period March 12, 1993 (commencement of operations) through October
31, 1993 and for the fiscal years ended October 31, 1994 and October 31, 1995,
Fleet received advisory fees (net of reimbursement and/or waivers) of $85, $0
and $18,204, respectively, with respect to the Massachusetts Municipal Bond
Fund.

For the period March 12, 1993 (commencement of operations) through October
31, 1993 and for the fiscal years ended October 31, 1994 and October 31,
1995, Fleet waived advisory fees of $45,052, $165,730 and $128,981,
respectively, with respect to the Massachusetts Municipal Bond Fund.

For the fiscal years ended October 31, 1994 and October 31, 1995, Fleet
reimbursed advisory fees of $33,698 and $14,041, with respect to the
Massachusetts Municipal Bond Fund.

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For the period December 12, 1994 (commencement of operations) to October
31, 1995, Fleet received advisory fees (net of waivers) of $171,959 with
respect to the Corporate Bond Fund. For the same period, Fleet waived
advisory fees of $62,531 with respect to the Corporate Bond Fund.

For the period December 20, 1994 (commencement of operations) to October 31,
1995, Fleet received advisory fees (net of waivers) of $0 with respect to the
Rhode Island Municipal Bond Fund.

For the period December 20, 1994 (commencing of operations) through October
31, 1995, Fleet reimbursed advisory fees of $71,657 with respect to the Rhode
Island and Municipal Bond Fund. For the same period, Fleet waived advisory fees
of $32,013 with respect to the Rhode Island Municipal Bond Fund.

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.

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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 Taxable Bond Funds held by defined contribution plans. Pursuant
to an agreement between Fleet Trust Company and FDISG, Fleet Trust Company
will be paid $21.00 per year for each defined contribution plan participant
account. As of October 31, 1995, there were approximately 13,537 defined
contribution plan participant sub-accounts invested in Trust Shares of the
Taxable Bond Funds; thus it is expected that Fleet Trust Company will receive
annually approximately $284,277 for sub-account services. FDISG bears this
expense directly, and shareholders of Trust Shares of the Taxable Bond 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; $49,474, $71,444 and
$57,153, respectively, with respect to the Short-Term Bond Fund; $58,692,
$115,702 and $104,560,

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respectively, with respect to the Tax-Exempt Bond Fund and $31,970, $60,223
and $55,482, respectively, with respect to the New York Municipal Bond Fund.
For the fiscal year ended October 31, 1993, FDISG and/or its predecessors waived
administration fees of $178 with respect to the Tax-Exempt Bond Fund.

For the period March 16, 1993 (commencement of operations) through October 31,
1993 and for the fiscal years ended October 31, 1994 and October 31, 1995, FDISG
and/or its predecessors received administration fees (net of fee waivers) of $0,
$0 and $0, respectively, with respect to the Connecticut Municipal Bond Fund.
For the period March 16, 1993 (commencement of operations) through October 31,
1993 and for the fiscal years ended October 31, 1994 and October 31, 1995, FDISG
and/or its predecessors waived administration fees of $26,643, $51,576 and
$39,479, respectively, with respect to the Connecticut Municipal Bond Fund.

For the period March 12, 1993 (commencement of operations) through October
31, 1993 and for the fiscal years ended October 31, 1994 and October 31, 1995,
FDISG and/or its predecessors received administration fees (net of fee waivers)
of $0, $0 and $0, respectively, with respect to the Massachusetts Municipal Bond
Fund.

For the period March 12, 1993 (commencement of operations) through October 31,
1993 and for the fiscal years ended October 31, 1994 and October 31, 1995, FDISG
and/or its predecessors waived administration fees of $27,030, $50,862 and
$39,900, respectively, with respect to the Massachusetts Municipal Bond Fund.

For the period December 12, 1994 (commencement of operations) to October
31, 1995, FDISG and/or its predecessors received administration fees of
$27,410 with respect to the Corporate Bond Fund.

For the period December 20, 1994 (commencement of operations) to October 31,
1995, FDISG and/or its predecessors received administration fees of $4,850
with respect to the Rhode Island Municipal Bond Fund.

CUSTODIAN AND TRANSFER AGENT

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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 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
and Corporate Bond Funds 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 those Funds held outside the United
States. The assets of the Funds are held under bank custodianship in compliance
with the 1940 Act.

PORTFOLIO TRANSACTIONS

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.

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<PAGE> 465

broker/dealers who provide research, advice or other services such as market
investment literature.

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 $14,757,580 to be repurchased on November 1, 1995 at
$14,757,937; (c) the Corporate Bond Fund held corporate bonds of Chase Manhattan
Corp. in the amount of $306,750 and had entered into repurchase transactions
with Chase Securities, Inc. in the amount of $1,104,311 to be repurchased on
November 1, 1995 at $1,104,487; and (d) 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 "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

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<PAGE> 466

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, 1996, Galaxy had entered into Shareholder Services Agreements only with
Fleet Bank.

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, $4,524, $4,723, $5,577, $2,410 and $2,114 with respect to the High
Quality Bond Fund, Intermediate Government Income Fund, Short-Term Bond Fund,
Tax-Exempt Bond Fund, New York Municipal Bond Fund, Connecticut Municipal Bond
Fund and Massachusetts Municipal Bond Fund, respectively.

For the fiscal year ended October 31, 1995, payments to Service Organizations
totaled $39,826, $122,743, $45,148, $0, $47,093, $60,513, $25,383 and $22,206
with respect to the High Quality Bond Fund,

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<PAGE> 467

Intermediate Government Income Fund, Short-Term Bond Fund, Corporate Bond Fund,
Tax-Exempt Bond Fund, New York Municipal Bond Fund, Connecticut Municipal Bond
Fund and Massachusetts Municipal 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").

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act with respect to Retail B Shares of the Tax-Exempt Bond,
Short-Term Bond and High Quality Bond Funds. This Plan is described in the
applicable Prospectus.

Under the Distribution and Services Plan for Retail B Shares, payments by
Galaxy (i) for distribution expenses may not

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<PAGE> 468

exceed .65% (annualized) of the average daily net assets attributable to such
Funds' outstanding Retail B Shares, (ii) to an Institution for shareholder
liaison services and/or administrative support services may not exceed .25%
(annualized) and .25% (annualized), respectively, of the average daily net
assets attributable to each such Funds' outstanding Retail B Shares which are
owned of record or beneficially by that Institution's Customers for whom the
Institution is the dealer of record or shareholder of record or with whom it has
a servicing relationship. As of the date of this Prospectus, Galaxy intends to
limit the Funds' payments for shareholder liaison and administrative support
services under the Plan to an aggregate fee of not more than .15% (on an
annualized basis) of the average daily net asset value of Retail B Shares owned
of record or beneficially by Customers of Institutions.

Payments for distribution expenses under the Plan are subject to Rule 12b-1
(the "Rule") under the 1940 Act. The Rule defines distribution expenses to
include the cost of "any activity which is primarily intended to result in the
sale of Galaxy shares." The Rule provides, among other things, that an
investment company may bear such expenses only pursuant to a plan adopted in
accordance with the Rule. In accordance with the Rule, the Plan provides that a
report of the amounts expended under the Plan, and the purposes for which such
expenditures were incurred, will be made to the Board of Trustees for its review
at least quarterly. The Plan provides that it may not be amended to increase
materially the costs which Retail B Shares of a Fund may bear for distribution
pursuant to the Plan without shareholder approval, and that any other type of
material amendment must be approved by a majority of the Board of Trustees, and
by a majority of the Trustees who are neither "interested persons" (as defined
in the 1940 Act) of Galaxy nor have any direct or indirect financial interest in
the operation of the Plan or in any related agreements, by vote cast in person
at a meeting called for the purpose of considering such amendments (the
"Disinterested Trustees").

Galaxy's Board of Trustees has concluded that there is a reasonable likelihood
that the Plan will benefit the Funds and holders of Retail B Shares. The Plan is
subject to annual reapproval by a majority of the Disinterested Trustees and is
terminable at any time with respect to any Fund by a vote of a majority of such
Trustees or by vote of the holders of a majority of the Retail B Shares of the
Fund involved. Any agreement entered into pursuant to the Plan with a Service
Organization is terminable with respect to any Fund without penalty, at any
time, by vote of a majority of the Disinterested Trustees, by vote of the
holders of a majority of the Retail B Shares of such Fund, by the Distributor or
by the Service Organization. An agreement will also terminate automatically in
the event of its assignment.

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<PAGE> 469

As long as the Plan is in effect, the nomination of the Trustees who are not
interested persons of Galaxy (as defined in the 1940 Act) must be committed to
the non-interested Trustees.

EXPENSES

DISTRIBUTOR

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.

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<PAGE> 470

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 respective 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, Philadelphia, Pennsylvania
19107, are counsel to Galaxy and will pass upon certain legal matters on its
behalf. The law firm of Willkie Farr & Gallagher, One Citicorp Center, 153 East
53rd Street, New York, New York 10022, serves as special New York counsel to
Galaxy and has reviewed the portion of this Statement of Additional Information
and the Prospectuses with respect to the New York Municipal Bond Fund concerning
New York taxes and the description of special considerations relating to New
York Municipal Securities. The law firm of Day, Berry & Howard, City Place,
Hartford, Connecticut 06103-3499 serves as special Connecticut counsel to Galaxy
and has reviewed the portion of this Statement of Additional Information and the
Prospectuses with respect to the Connecticut Municipal Bond Fund concerning
Connecticut taxes and the description of special considerations relating to
Connecticut Municipal Securities. The law firm of Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624 serves as special
Massachusetts counsel and special Rhode Island counsel to Galaxy and has
reviewed the portion of the Prospectuses with respect to the Massachusetts
Municipal Bond Fund concerning Massachusetts taxes and the description of
special considerations relating to Massachusetts Municipal Securities and the
portion of the Prospectuses with respect to the Rhode Island Municipal Bond Fund
concerning Rhode Island taxes and the description of Special Considerations
relating to Rhode Island Municipal Securities.

PERFORMANCE AND YIELD INFORMATION

Yield and Performance of the Funds

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<PAGE> 471

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 6
YIELD = 2[( - - - - +1 ) - 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.

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<PAGE> 472

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

The "tax-equivalent" yield of the New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode Island Municipal Bond
Funds is computed by: (a) dividing the portion of each Fund's yield (calculated
as above) that is exempt from both federal and state income taxes by one minus a
stated combined federal and state income tax rate; (b) by dividing the portion
of the Fund's yield (calculated as above) that is exempt from federal income tax
only by one minus a stated federal income tax rate; and (c) adding the figures
resulting from (a) and (b) above to that portion, if any, of the yield that is
not exempt from federal income tax. The tax- equivalent yield of the Tax-Exempt
Bond Fund is computed by (a) dividing the portion of the yield (calculated as
above) that is exempt from federal income tax by one minus a stated federal
income tax rate and (b) adding that figure to that portion, if any, of the yield
that is not exempt from federal income tax.

Based on the foregoing calculation, (i) the standard yields for Retail A
Shares of the Intermediate Government Income, High Quality Bond, Short-Term
Bond, Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal Bond ,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds for the 30-
day period ended October 31, 1995 were 5.84%, 5.29%, 4.91%, 4.39%, 4.49%,
4.33%, 4.33% and 5.01%, respectively, and (ii) the

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<PAGE> 473

tax-equivalent yield for Retail A Shares of the Tax-Exempt Bond, New York
Municipal Bond, Connecticut Municipal Bond, Massachusetts Municipal Bond and
Rhode Island Municipal Bond Funds for the 30-day period ended October 31, 1995
were 6.37%, 7.06%, 6.58%, 7.12% and 8.29%, respectively.

Based on the foregoing calculation, (i) the standard yield for Trust Shares of
the Intermediate Government Income, High Quality Bond, Short-Term Bond,
Corporate Bond, Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal
Bond and Massachusetts Municipal Bond Funds for the 30-day period ended
October 31, 1995 were 6.15%, 5.48%, 5.22%, 5.52%, 4.83%, 4.74%, 4.57% and 4.57%,
respectively, and (ii) the tax-equivalent yield for Trust Shares of the
Tax-Exempt Bond, New York Municipal Bond, Connecticut Municipal Bond and
Massachusetts Municipal Bond Funds for the 30-day period ended October 31, 1995
were 6.70%, 7.45%, 6.94% and 7.52%, respectively.

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 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.

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

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<PAGE> 474

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 Retail A Shares of the Intermediate Government
Income Fund for the period September 1, 1988 (inception) to October 31, 1995
was 72.74%. From September 1, 1988 (inception) to October 31, 1995, the
average annual total return for Retail A Shares of the Intermediate
Government Income Fund was 7.93%. For the one-year and five-year periods ended
October 31, 1995, the average annual total returns for Retail A Shares of the
Intermediate Government Income Fund were 12.85% and 8.13%, respectively.

Aggregate total returns for Retail A Shares of the High Quality Bond Fund
from December 14, 1990 (inception) to October 31, 1995 was 52.30%. From
December 14, 1990 (inception) to October 31, 1995, the average annual total
return for Retail A Shares of the High Quality Bond Fund was 8.93%. For the
one-year period ended October 31, 1995, the average annual total return for
Retail A Shares of the High Quality Bond Fund was 18.46%.

Aggregate total returns for Retail A Shares of the Short-Term Bond, Tax-
Exempt Bond and New York Municipal Bond Funds from December 30, 1991 (inception)
to October 31, 1995 were 22.16%, 30.58% and 28.78%, respectively. From December
30, 1991 (inception) to October 31, 1995, average annual total returns for
Retail A Shares of the Short-Term Bond, Tax-Exempt Bond and New York Municipal
Bond Funds were 5.36%, 7.21% and 6.82%, respectively. For the one-year period
ended October 31, 1995, the average annual total returns for Retail A Shares
of the Short-Term Bond, Tax-Exempt Bond and New York Municipal Bond Funds were
9.28%, 13.40% and 14.03%, respectively.

Aggregate total return for Retail A Shares of the Connecticut Municipal Bond
Fund from March 16, 1993 (inception) to October 31, 1995 was 13.83% and for
Retail A Shares of the Massachusetts Municipal Bond Fund from March 12, 1993
(inception) to October 31, 1995 was 12.92%. From March 16, 1993 (inception)
to October 31, 1995, average annual total return for Retail A Shares of the
Connecticut Municipal Bond Fund was 5.14%. From March 12, 1993 (inception) to
October 31, 1995, average annual total return for Retail A Shares of the
Massachusetts Municipal Bond Fund was 4.82%. For the one-year

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period ending October 31, 1995, the average annual total returns for Retail A
Shares of the Connecticut Municipal Bond and Massachusetts Municipal Bond Funds
were 14.94% and 14.52%, respectively.

Aggregate total return for Retail A Shares of the Rhode Island Municipal
Bond Fund from December 20, 1994 (inception) to October 31, 1995 was 11.29%.

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, Tax-Exempt
Bond and New York Municipal Bond Funds from December 30, 1991 (inception) to
October 31, 1995 were 22.49%, 30.84% and 29.01%, respectively. From December 30,
1991 (inception) to October 31, 1995, average annual total returns for Trust
Shares of the Short-Term Bond, Tax-Exempt Bond and New York Municipal Bond Funds
were 5.43%, 7.26%, and 7.03%, respectively. For the one-year period ended
October 31, 1995, the average annual total returns for Trust Shares of the
Short-Term Bond, Tax-Exempt Bond and New York Municipal Bond Funds were 9.55%,
13.62% and 14.23%, respectively.

Aggregate total returns for Trust Shares of the Connecticut Municipal Bond
Fund from March 16, 1993 (inception) to October 31, 1995 was 14.13% and for
Trust Shares of the Massachusetts Municipal Bond Fund from March 12, 1993
(inception) to October 31, 1995 was 13.12%. From March 16, 1993 (inception)
to October 31, 1995, the average annual total return for Trust Shares of the
Connecticut Municipal Bond Fund was 5.25%. From March 12, 1993 (inception) to
October 31, 1995, average annual total return for Trust Shares of the
Massachusetts Municipal Bond Fund was 4.89%. For the one-year period ended
October 31, 1995, the average annual total returns for Trust Shares of the
Connecticut Municipal Bond

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<PAGE> 476

and Massachusetts Municipal Bond Funds were 15.21% and 14.72%, respectively.

Aggregate total return for Trust Shares of the Corporate Bond Fund from
December 12, 1994 (inception) to October 31, 1995 was 13.85%.

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 February 5, 1996, 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, Attention: Mark Roberts, One Corporate Center, Hartford,
Connecticut 06103 (10.15%); Rhode Island Municipal Bond Fund -- Norstar Trust
Company, Gales & Co. Funds Control, Attention: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (43.60%); James R. McCulloch, c/o MICROFIBRE, P.O. Box
1208, Pawtucket, Rhode Island 02860 (8.01%); Tax- Exempt Money Market Fund --
Hope H. Van Beuren, East Main, R.R. 25 Enterprise Center, Middletown, Rhode
Island 02842 (15.10%); Joseph Dimenna, 1049 Fifth Avenue, Apartment P3, New
York, New York 10028 (11.24%); Massachusetts Municipal Money Market Fund --
Olsen & Company, Attention: Corporate Actions of - 0503, One Federal Streets,
Boston, Massachusetts 02110-2003 (45.38%); Shawmut Bank, National Association,
Attention: Maureen Sanborn - Massachusetts Deposit Balancing, 150 Windsor Street
- - MSN 294, Hartford, Connecticut 06120 (7.37%); and Connecticut Municipal Money
Market Fund -- Shawmut Bank, National Association, Attention: Maureen Sanborn -
Massachusetts Deposit Balancing, 150 Windsor Street - MSN 294, Hartford,
Connecticut 06120 (57.55%); Olsen & Company, Attention: Corporate Actions of -
0530, One Federal Street, Boston, Massachusetts 02110 (26.89%).

As of February 5, 1996, 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: High Quality Bond Fund
- -- Fleet Financial Group Inc., Fleet Saving Plus Plan, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (14.41%); Corporate Bond Fund -- Shawmut Bank,
National Association as Trustee, Balanced Fund -- EB c/o Doris Cole, 446 Main
Street, Worcester, Massachusetts 01608, (9.23%); BNE Unified Retirement Trust,
Attention: Ben Branch, Trustee, 21 Merchants Road, 4th Floor, Boston,
Massachusetts 02109 (18.82%); Connecticut Municipal Bond Fund -- Shawmut Bank,
Connecticut, National Association as Agent for Florence Roberts, c/o Anna Maria
Simonelli, 777 Main Street, Hartford, Connecticut 06115 (7.96%); Robert M. Ross,
Jr. (5.13%); Ruthan Wein, 18 Timberland Drive, Farmington, Connecticut 06032
(7.83%); Massachusetts Municipal Bond Fund -- Joseph S. Teller, 8 Kilsyth
Terrace, #21, Brighton, Massachusetts 02146 (6.02%); Phillip H. Tobey c/o Fleet
Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903 (5.18%); Rhode Island
Municipal Bond -- Vera J. Clark, 175 East Avenue, Westerly, Rhode Island 02811
(7.19%); and Tax-Exempt Bond Fund -- Nusco Retiree Health, P.O. Box 270
Hartford, Connecticut 06141 (15.49%); Money Market Fund -- Fleet Financial
Group, Inc., Employees Thrift Plan, c/o Kenneth Weissman, Shawmut National
Corporation, 777 Main Street, Hartford, Connecticut 06115 (5.49%); Tax-Exempt
Fund -- Fleet Bank, Rhode Island custodian for A Banko Inv., Attention: Ann
Celander, 100 Westminster Street, Providence, Rhode Island 02903 (5.53%);
Government Fund -- Brown University Non-Exp Fund RISLA A-Bill, c/o Fleet Bank,
50 Kennedy Plaza, Providence, Rhode Island 02903 (13.11%); U.S. Treasury Fund --
Fleet National Bank of Massachusetts, Schmid, Inc., Debtor in Possession, c/o
Robin Boweman, 1 Federal Street, Boston, Massachusetts 02211 (6.35%); BIC
Corporation Investment Management Account, Robert McDonald, BIC Corporation
Investment Management Account, Attention: Robert McDonald, 500 BIC Drive,
Milford, Connecticut 06460 (5.54%); and Institutional Treasury Money Market Fund
- -- CAI Wireless Systems II, c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode
Island 02903 (21.80%); ASM Escrow Account, Nortek Inc., Attention: Julia Quinn,
c/o 50 Kennedy Plaza, Providence, Rhode Island 02903 (5.19%); Massachusetts
Municipal Money Market Fund -- Shawmut Bank, Connecticut, National Association,
Co-Trustee Francelia Corbett, c/o Peter Vannie, Shawmut Bank, Connecticut,
National Association, Hartford, Connecticut 06155 (7.88%); Growth and Income
Fund -- Shawmut Bank, National Association as Trustee, Balanced Fund - EB c/o
Doris Cote, 446 Main Street, Worcester, Massachusetts 01608 (8.91%); Fleet
Financial Group, Inc., Employees Thrift Plan c/o Kenneth Weissman, 777 Main
Street, Hartford, Connecticut 06115 (19.13%); and Small Cap Value -- Fleet
Financial Group, Inc., Employees Thrift Plan, c/o Kenneth Weissman, Shawmut
National Corporation, 777 Main Street, Hartford, Connecticut 06115 (16.11%);
Shawmut Bank, National Association, Rodgers Corporation as Trustee, Attention:
James Delucia, Shawmut Bank, Connecticut, 157 Church Street, P.O. Box 1909, New
Haven, Connecticut 06509 (5.75%); and Shawmut Bank, Connecticut, as Trustee, SNC
Employees Retirement Plan, c/o Thomas Botticelli, Shawmut Bank, Connecticut, 777
Main Street, Hartford, Connecticut 06115-2001 (31.81%); Equity Value Fund --
Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (7.15%); Equity Growth Fund -- Fleet Financial
Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island
02903 (16.97%); International Equity Fund -- Fleet Financial Group Inc., FFG
Retirement & Pension Equity, 50 Kennedy Plaza, Providence, Rhode Island 02903
(13.41%); Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (6.80%); Asset Allocation Fund -- Fleet Financial
Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Rhode Island 02903
(32.94%); Edward & Angels 401K, 2700 Hospital Trust Tower, Providence, Rhode
Island 02903 (12.15%); and Small Company Equity Fund -- Fleet Financial Group
Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island 03903
(15.45%); BNE Unified Retirement Trust, Attention: Ben Branch, Trustee, 21
Merchants Road, 4th Floor, Boston, Massachusetts 02109 (8.26%).

-61-

<PAGE> 477

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.

-62-

<PAGE> 478

APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

Corporate and Tax-Exempt Bond Ratings

A-1

<PAGE> 479

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.

A-2

<PAGE> 480

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

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> 481

A-4

<PAGE> 482

Tax-Exempt Note Ratings

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> 483

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

A-6

<PAGE> 484

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

B-1

<PAGE> 485

B-2

<PAGE> 486

B-3

<PAGE> 487

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

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

B-4

<PAGE> 488

of securities, in the value of 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.

<TABLE>
<CAPTION>
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> 489

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.

<TABLE>
<CAPTION>
Cash Market Futures Market
------------ ----------------
<S> <C> <C>
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
</TABLE>

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

B-6

<PAGE> 490

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> 491

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.

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> 492

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.

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

<PAGE> 493

GALAXY
EQUITY VALUE
FUND

February 29, 1996

PROSPECTUS
Trust Shares

[LOGO]
<PAGE> 494
TRUST

THE GALAXY FUND

EQUITY VALUE FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 495
===============================================================================

---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Special Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Investment Policies and
Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 16
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
===============================================================================
<PAGE> 496
THE GALAXY FUND

4400 Computer Drive For applications and information
Westboro, Massachusetts 01581-5108 concerning initial purchases
and current performance, call
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 EQUITY VALUE FUND (the "Fund") offered by Galaxy.
The Fund's investment objective is to seek long-term capital appreciation.
Income is secondary to the objective of capital appreciation. The Fund attempts
to achieve this objective by investing, under normal market and economic
conditions, at least 75% of its total assets in common stock, preferred stock
and debt securities convertible into common stock that the Fund's investment
adviser believes are undervalued.
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"), which are offered under a separate
prospectus primarily to individuals or corporations purchasing either for their
own accounts or for the accounts of others and to Fleet Brokerage Corporation,
Fleet Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loans associations
and broker/dealers on behalf of their customers. Trust Shares, 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 services
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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
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
provided 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> 497
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 summary are also
shown.

<TABLE>
<CAPTION>
EQUITY
VALUE
SHAREHOLDER TRANSACTION EXPENSES 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38%
----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.13%
====
</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>
Equity Value Fund . . . . . . . . . . . . . . . . . . . . . . . . $11 $35 $61 $135
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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. 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
relating to the Fund. 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. THE ACTUAL EXPENSES AND RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN.

2
<PAGE> 498
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 Shares of the Fund bear the expenses incurred under Galaxy's Shareholder
Services Plan at an annual rate of up to .30% 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 .95% 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.
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 and
notes thereto contained in the Annual Report to Shareholders and incorporated
by reference into the Statement of Additional Information relating to the Fund.
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, 1991). 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> 499
EQUITY VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994 YEARS ENDED OCTOBER 31,(2) PERIOD 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 . . . . . . . . . . $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41 $ 10.00
-------- -------- -------- -------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income . . . . 0.28 0.19 0.19 0.26 0.37 0.39 0.36 0.03
Net realized and unrealized
gain (loss) on investments 0.24 0.45 2.14 0.33 2.41 (1.37) 1.10 0.38
-------- -------- -------- -------- ------- ------- ------- -------
Total from Investment
Operations . . . . . . 2.52 0.64 2.33 0.59 2.78 (0.98) 1.46 0.41
-------- -------- -------- -------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income . . . . . (0.30) (0.16) (0.20) (0.27) (0.37) (0.38) (0.36) --
Dividends from net realized
capital gains . . . . . . . (1.21) (0.28) (0.42) (0.43) (0.34) (0.70) -- --
-------- -------- -------- -------- ------- ------- ------- -------
Total Dividends: . . . . (1.51) (0.44) (0.62) (0.70) (0.71) (1.08) (0.36) --
-------- -------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in
net asset value . . . . . . . 1.01 (0.20) 1.71 (0.11) 2.07 (2.06) 1.10 0.41
-------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value,
End of Period . . . . . . . . $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41
======== ======== ======== ======== ======= ======= ======= =======
Total Return . . . . . . . . . 21.31% 5.05% 21.18% 5.66% 30.45% (9.43%) 14.19% 4.10%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . $165,330 $154,403 $176,107 $133,578 $99,601 $92,893 $92,366 $75,774
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . 2.10% 1.46% 1.52% 2.24% 3.25% 3.66% 3.25% 1.89%(4)
Operating expenses including
reimbursement/waiver . . . 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.97% 0.95%(4)
Operating expenses excluding
reimbursement/waiver . . . 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.98% 0.95%(4)
Portfolio Turnover Rate . . . . 76% 71% 50% 136% 40% 94% 44% 4%(3)
</TABLE>

- ----------
1 The 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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares".
3 Not Annualized.
4 Annualized.

4
<PAGE> 500
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The investment objective of the Fund, is to seek long-term capital
appreciation. The Fund attempts to achieve its investment objective by
investing primarily in common stock, preferred stock (including convertible
preferred stock) and debt obligations convertible into common stock that Fleet
Investment Advisors Inc., the Fund's investment adviser (the "Investment
Adviser" or "Fleet") believes to be undervalued, as measured by various
financial tests, including one or more of the following: cash flow, return on
equity, return on assets, fixed charge coverage and ratios of market
capitalization to revenues. In addition, the Fund's Investment Adviser
considers the current value of an issuer's fixed assets (including real
estate), cash items, net working capital, indebtedness and historical book
value. The Fund also seeks to purchase stock with a projected price-earnings
ratio below that of the Standard & Poor's 500 Composite Stock Price Index ("S&P
500"). The Investment Adviser invests less than 25% of the value of the Fund's
total assets at the time of purchase in securities of issuers conducting their
principal business activities in the same industry.
Under normal market and economic conditions, the Fund invests at least 75%
of its total assets in common stock, preferred stock and debt securities
convertible into common stock. Debt securities convertible into common stock
are purchased primarily during periods of relative market instability and are
acquired principally for income with the potential for appreciation being a
secondary consideration. Equity investments consist primarily of common stock
of companies having capitalizations that exceed $100 million. Stocks of such
companies generally are listed on a national exchange or are unlisted
securities with an established over-the-counter market. In addition, the Fund
may hold other types of securities in such proportions as, in the opinion of
the Investment Adviser, existing circumstances may warrant, including
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and other high quality "money market" instruments. The Fund
may also hold cash pending investment, during temporary defensive periods or
if, in the opinion of the Investment Adviser, suitable stock or convertible
debt securities are unavailable. The Fund may also invest up to 20% of its
total assets in foreign securities either directly or indirectly through
American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs"). See "Special Risk Considerations" and "Other Investment Policies"
below. The Fund may also write covered call options. See "Other Investment
Policies -- Options" and "Other Investment Policies -- Derivative Securities"
below. See "Other Investment Policies" 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.

SPECIAL RISK CONSIDERATIONS

Market Risk

The Fund invests primarily in equity securities. As with other mutual funds
that invest primarily in equity securities, the Fund is subject to market
risks. That is, the possibility exists that common stocks will decline over
short or even extended periods of time and both the U.S. and certain foreign
equity markets tend to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease.

5
<PAGE> 501
Interest Rate Risk

To the extent that the Fund invests in fixed income securities, its holdings
of such securities are sensitive to changes in interest rates and the interest
rate environment. Generally, the prices of bonds and debt securities fluctuate
inversely with interest rate change.

Foreign Securities

Investments 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 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.
Certain of the risks associated with investments in foreign securities are
heightened with respect to investments in developing countries and fledgling
democracies. The risks of expropriation, nationalization and social, political
and economic instability are greater in those countries than in more developed
capital markets.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

All debt obligations, including convertible bonds, purchased by the Fund are
rated investment grade by Moody's Investors Services, Inc. ("Moody's") ("Aaa,"
"Aa," "A" and "Baa") or Standard & Poor's Ratings Group ("S&P") ("AAA," "AA,"
"A" and "BBB"), or, if not rated, are determined to be of comparable quality by
the Investment Adviser.

U.S. Government Obligations and Money Market Instruments

6
<PAGE> 502
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.
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 U.S.
branches of foreign banks may subject the Fund to additional risk because such
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. Such investments may also
subject the Fund to investment risks similar to those accompanying direct
investments in foreign securities. See "Special Risk Considerations." 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 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."

Repurchase and Reverse Repurchase Agreements

7
<PAGE> 503
considered an illiquid security and will be subject to the 10% 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 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, or 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.

Options

8
<PAGE> 504
by the Fund) and may enter into closing purchase transactions with respect to
such options. Such options must be listed on a national securities exchange and
issued by the Options Clearing Corporation. The aggregate value of the
securities subject to options written by the Fund may not exceed 25% of the
value of its net assets. By writing a covered call option, the Fund forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price, except insofar as the premium represents
such a profit, and it will not be able to sell the underlying security until
the option expires or is exercised or the Fund effects a closing purchase
transaction by purchasing an option of the same series. The use of covered call
options is not a primary investment technique of the Fund, and such options
will normally be written on underlying securities as to which the Investment
Adviser does not anticipate significant short-term capital appreciation. See
"Derivative Securities" below.

American and European Depository Receipts

The Fund may invest in ADRs and EDRs. ADRs are receipts issued in registered
form by a U.S. bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. EDRs are receipts issued in Europe
typically by non-U.S. banks or trust companies and foreign branches of U.S.
banks that evidence ownership of foreign or U.S. securities. ADRs may be listed
on a national securities exchange or may be traded in the over-the-counter
market. EDRs are designed for use in European exchange and over-the-counter
markets. ADRs and EDRs traded in the over-the-counter market which do not have
an active or substantial secondary market will be considered illiquid and
therefore will be subject to the Fund's limitation with respect to such
securities. ADR prices are denominated in U.S. dollars although the underlying
securities are denominated in a foreign currency. Investments in ADRs and EDRs
involve risks similar to those accompanying direct investments in foreign
securities. Certain of these risks are described above under "Special Risk
Considerations."

Foreign Currency Exchange Transactions

Because the Fund may buy and sell securities denominated in currencies other
than the U.S. dollar, and may receive interest, dividends and sale proceeds in
currencies other than the U.S. dollar, the Fund from time to time may enter
into foreign currency exchange transactions to convert the U.S. dollar to
foreign currencies, to convert foreign currencies to the U.S. dollar and to
convert foreign currencies 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. Forward foreign currency exchange contracts are
agreements to exchange one currency for another -- for example, to exchange a
certain amount of U.S. dollars for a certain amount of Japanese yen -- at a
future date and at a specified price. Typically, the other party to a currency
exchange contract will be a commercial bank or other financial institution.
Forward foreign currency exchange contracts also allow the Fund to hedge the
currency risk of portfolio securities denominated in a foreign currency. This
technique permits the assessment of the merits of a security to be considered
separately from the currency risk. By separating the asset and the currency
decision, it is possible to focus on the opportunities presented by the
security apart from the currency risk. Although forward foreign currency
exchange contracts are of short duration, generally between one and twelve
months, the forward foreign currency exchange contracts are rolled over in a
manner consistent with a more long-term currency decision. Because there is a
risk of loss to the Fund if the other party does not complete the transaction,
forward foreign currency exchange contracts will be entered into only with
parties approved by Galaxy's Board of Trustees.
The Fund may maintain "short" positions in forward foreign currency exchange
transactions, which would involve the Fund's agreeing to exchange currency that
it currently does not own for another currency -- for example, to exchange an
amount of Japanese yen that it does not own for a certain amount of U.S.
dollars -- at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is

9
<PAGE> 505
not used to achieve leverage with respect to the Fund's investments, the Fund
would establish with its custodian a segregated account consisting of cash,
U.S. Government securities or other liquid high-grade debt securities equal in
value to the fluctuating market value of the currency as to which the short
position is being maintained. The value of the securities in the segregated
account will be adjusted at least daily to reflect changes in the market value
of the short position. See the Statement of Additional Information for
additional information regarding Foreign Currency Exchange Transactions.

Convertible Securities

The Fund may from time to time, in accordance with its investment policies,
invest in convertible securities. Convertible securities are fixed income
securities which may be exchanged or converted into a predetermined number of
the issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities in which the Fund may invest may
take the form of convertible preferred stock and convertible bonds or
debentures.
Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Convertible securities are
senior to equity securities, and therefore, have a claim to assets of the
corporation prior to the holders of common stock in the case of liquidation.
However, convertible securities are generally subordinated to similar
non-convertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide
a stable stream of income with generally higher yields than common stocks, but
lower than non-convertible securities of similar quality. The Fund will
exchange or convert the convertible securities held in its portfolio into
shares of the underlying common stock in instances in which, in the Investment
Adviser's opinion, the investment characteristics of the underlying common
shares will assist the Fund in achieving its investment objective. Otherwise,
the Fund will hold or trade the convertible securities. In selecting
convertible securities for a Fund, the Investment Adviser evaluates the
investment characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Investment Adviser considers numerous factors,
including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.

Derivative Securities

The Fund may from time to time, in accordance with its investment policies,
purchase certain "derivative" securities. Derivative securities are instruments
that derive their value from the performance of underlying assets, interest
rates, or indices, and include, but are not limited to, options.
Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest rates or indices will decline;
credit risk that the dealer or other counterparty to the transaction will fail
to pay its obligations; volatility and leveraging risk that, if interest rates
change adversely, the value of the derivative security will decline more than
the assets, rates or indices on which it is based; liquidity risk that the Fund
will be unable to sell a derivative security when it wants because of lack of
market depth or market disruption; pricing risk that the value of a derivative
security will not correlate exactly to the value of the underlying assets,
rates or indices on which it is based; and operations risk that loss will occur
as a result of inadequate systems and controls, human error or otherwise. Some
derivative securities are more complex than others, and for those instruments
that have been developed recently, data are lacking regarding their actual
performance over complete market cycles.

10
<PAGE> 506
The Investment Adviser will evaluate the risks presented by the derivative
securities purchased by the Fund, and will determine, in connection with its
day-to-day management of the Fund, how they will be used in furtherance of the
Fund's investment objective. It is possible, however, that the Investment
Adviser's evaluations will prove to be inaccurate or incomplete and, even when
accurate and complete, it is possible that the Fund will, because of the risks
discussed above, incur loss as a result of its investments in derivative
securities. See "Investment Objective and PoliciesDerivative Securities" in the
Statement of Additional Information relating to the Fund for additional
information.

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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover may result in the
realization of substantial net capital gains; distributions derived from such
gains will be treated as ordinary income for Federal income tax purposes. See
"Financial Highlights" and "Taxes -- Federal."

INVESTMENT LIMITATIONS

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 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
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 respective 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

11
<PAGE> 507
of the Fund's 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 its 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 to be 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 the Fund, by the
number of outstanding shares of that series of the Fund.
The assets in the Fund which are traded on a recognized stock exchange are
valued at the last sale price on the securities exchange on which such
securities are primarily traded or at the last sale price on the national
securities market. Securities quoted on the NASD National Market System are
also valued at the last sale price. Other securities traded on over-the-counter
markets are valued on the basis of their closing over-the-counter bid prices.
Securities for which there were no transactions are valued at the average of
the most recent bid and asked prices. Investments in debt securities with
remaining maturities of 60 days or less are valued based upon the amortized
cost method. Restricted securities, securities for which market quotations are
not readily available, and other assets are valued at fair value by the
Investment Adviser under the supervision of Galaxy's Board of Trustees. An
option is generally valued at the last sale price or, in the absence of a last
sale price, the last offer price.
Portfolio securities which are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except when an occurrence subsequent

12
<PAGE> 508
to the time a value was so established is likely to have changed such value,
then the fair value of those securities will be determined through
consideration of other factors by or under the direction of the Board of
Trustees. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. For valuation purposes, quotations of foreign securities in
foreign currency are converted to U.S. dollars equivalent at the prevailing
market rate on the day of valuation.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

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 the Fund'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.

13
<PAGE> 509
Although Galaxy does not impose any minimum initial or subsequent investment
requirements 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 an Institution 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 the 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 of the order by the Distributor. Payment for
redemption orders received by the Distributor on a Business Day will normally
be wired on the following Business Day to the Institution. Payment for
redemption orders 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 sixty 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 and paid
quarterly. 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 its 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.

14
<PAGE> 510
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 Trust Shares.
(Federal income taxes for distributions to an IRA or a qualified retirement
plan are deferred under the Code.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.
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 Trust
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 or 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.
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.
It is expected that the Fund will be subject to foreign withholding taxes
with respect to income received from sources within foreign countries. So long
as more than 50% of the value of the Fund's total assets at the close of any
taxable year consists of stock or securities of foreign corporations, the Fund
may elect, for U.S. Federal income tax purposes, to treat certain foreign taxes
paid by it, including generally any withholding taxes and other foreign income
taxes, as paid by its shareholders. If the Fund makes this election, the amount
of such foreign taxes paid by the Fund will be included in its shareholders'
income pro rata (in addition to taxable distributions actually received by
them), and the shareholders would be entitled (a) to credit their proportionate
amount of such taxes against their U.S. Federal income tax liabilities subject
to certain limitations described in the Statement of Additional Information, or
(b) if they itemize their deductions, to deduct such proportionate amount from
their U.S. income. Because the Fund may not invest more than 20% of its total
assets in the securities of foreign issuers, shareholders of the Fund should
not expect to claim a foreign tax credit or deduction.
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
from those of the Federal income tax law described above.

15
<PAGE> 511
MANAGEMENT OF THE FUND

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 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 Fund, 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, High Quality Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond Fund 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.
The Fund's portfolio manager, G. Jay Evans, is primarily responsible for the
day-to-day management of the Fund's investment portfolio. Mr. Evans has been
with Fleet and its predecessors since 1978 and has been the Fund's portfolio
manager since its inception.
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 fees for the Fund are higher than fees paid by most other mutual
funds, although the Board of Trustees of Galaxy believes that they are 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 all or a portion of
the 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. For the fiscal year ended October 31, 1995, Fleet
received advisory fees at the effective annual rate of .75% of the Fund's
average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

16
<PAGE> 512
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, the
Fund paid administration fees to FDISG at the effective annual rate of .088% of
its 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 the Fund: Class C shares (Trust Shares),
Class C-Special Series 1 shares (Retail A Shares) and Class C-Special 2 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.
Trust Shares, Retail A Shares and Retail B Shares 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 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 of up to .95% 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, Trust Shares, Retail A Shares
and Retail B Shares 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%. Retail B Shares of the Fund are sold with a maximum contingent
deferred sales charge of 5.0%. Retail A Shares and Retail B Shares have certain
exchange and other privileges which are not available with respect to Trust
Shares.

17
<PAGE> 513
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 (irrespective of series designation), 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 the Retail A Shares. The Plan provides that
Galaxy will pay fees for such services at an annual rate of up to .50% of the
average daily net asset value of the Fund's outstanding Retail A Shares
beneficially owned by customers. Institutions may receive up to one-half of
these fees 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 no more
than .30% (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 a schedule of any fees that they may charge
in connection with Customer investments in Retail A Shares.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

18
<PAGE> 514
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. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as 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 purpose of providing
custodial services for the Fund's foreign assets held outside the United
States. FDISG Investor Services Group, Inc. (formerly known as The Shareholder
Services Group, Inc. d/b/a 440 Financial Group) ("FDISG"), a wholly-owned
subsidiary of FDISG Corporation, serves as the Fund's transfer and dividend
disbursing agent. Services performed by these entities for the Fund are
described in the Statement of Additional Information. Communications to FDISG
should be directed to FDISG at P.O. Box 15108, 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
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, S&P 500, an unmanaged index of groups
of common stocks, the Consumer Price Index, or the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30 industrial
companies listed on the New York Stock Exchange.

19
<PAGE> 515
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 dividends 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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 either Galaxy or the Fund means, with respect to the
approval of an investment advisory agreement or 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.

20
<PAGE> 516

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 517

GALAXY
EQUITY GROWTH
FUND

February 29, 1996

PROSPECTUS
Trust Shares

[LOGO]

FN-265 15033 (3/96) PKG. 50
<PAGE> 518
TRUST

THE GALAXY FUND

EQUITY GROWTH FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 519
===============================================================================

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 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
Special Risk Considerations . . . . . . . . 5
Other Investment Policies and
Risk Considerations . . . . . . . . . . . 6
INVESTMENT LIMITATIONS. . . . . . . . . . . . 11
PRICING OF SHARES . . . . . . . . . . . . . . 12
HOW TO PURCHASE AND REDEEM SHARES . . . . . . 13
Distributor . . . . . . . . . . . . . . . . 13
Purchase of Shares. . . . . . . . . . . . . 13
Redemption of Shares. . . . . . . . . . . . 14
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . 14
TAXES . . . . . . . . . . . . . . . . . . . . 15
Federal . . . . . . . . . . . . . . . . . . 15
State and Local . . . . . . . . . . . . . . 15

<CAPTION>
PAGE
----
<S> <C>
MANAGEMENT OF THE FUND. . . . . . . . . . . . 15
Investment Adviser. . . . . . . . . . . . . 16
Authority to Act as Investment Adviser. . . 17
Administrator . . . . . . . . . . . . . . . 17
DESCRIPTION OF GALAXY AND ITS SHARES. . . . . 17
Shareholder Services Plan . . . . . . . . . 18
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . 18
CUSTODIAN AND TRANSFER AGENT. . . . . . . . . 19
EXPENSES. . . . . . . . . . . . . . . . . . . 19
PERFORMANCE AND YIELD INFORMATION . . . . . . 19
MISCELLANEOUS . . . . . . . . . . . . . . . . 20
</TABLE>

===============================================================================
<PAGE> 520

THE GALAXY FUND

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

The Fund's investment objective is to seek long-term capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal market and economic conditions, at least 75% of its total assets in
common stock, preferred stock, common stock warrants and securities convertible
into common stock of companies that the Fund's investment adviser believes have
above-average earnings potential.

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 or corporations purchasing
either for their own accounts or for the accounts of others and to Fleet
Brokerage Corporation, Fleet Securities Inc., Fleet Financial Group, Inc., its
affiliates, their correspondent banks and other qualified banks, savings and
loan 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 services 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
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> 521
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 summary
are also shown.

<TABLE>
<CAPTION>
EQUITY
GROWTH
SHAREHOLDER TRANSACTION EXPENSES 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34%
----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1.09%
====
</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>
Equity Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . $11 $34 $59 $130
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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. 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
relating to the Fund. 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. THE ACTUAL EXPENSES AND RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN.

2
<PAGE> 522
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 at an annual rate of up to .30% 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 .95% 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.

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 and notes thereto contained in the Annual Report to Shareholders and
incorporated by reference into the Statement of Additional Information relating
to the Fund. 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 period ended October 31, 1991). 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> 523
EQUITY GROWTH FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED PERIOD ENDED
1995 1994 OCTOBER 31,(2) OCTOBER 31,
---------------------- ------------------------- ------------
TRUST SHARES 1993 1992 1991(1),(2)
---------------------- ------------------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . $ 14.19 $ 13.76 $ 12.90 $ 11.99 $ 10.00
-------- -------- -------- -------- -------
Income from Investment Operations:
Net Investment Income . . . . . . . . . . . . . . 0.20 0.18 0.15 0.17 0.16
Net realized and unrealized gain
(loss) on investments . . . . . . . . . . . . . 3.28 0.47 0.95 0.91 1.97
-------- -------- -------- -------- -------
Total from Investment
Operations: . . . . . . . . . . . . . . . . 3.48 0.65 1.10 1.08 2.13
-------- -------- -------- -------- -------
Less Dividends:
Dividends from net
investment income . . . . . . . . . . . . . . . (0.20) (0.16) (0.15) (0.17) (0.14)
Dividends from net realized
capital gains . . . . . . . . . . . . . . . . . (0.17) (0.06) (0.09) -- --
-------- -------- -------- -------- -------
Total Dividends: . . . . . . . . . . . . . . (0.37) (0.22) (0.24) (0.17) (0.14)
-------- -------- -------- -------- -------
Net increase (decrease) in net
asset value . . . . . . . . . . . . . . . . . . . 3.11 0.43 0.86 0.91 1.99
-------- -------- -------- -------- -------
Net Asset Value, End of Period . . . . . . . . . . $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99
======== ======== ======== ======== =======
Total Return . . . . . . . . . . . . . . . . . . . 25.08% 4.80% 8.58% 9.10% 21.39%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . $420,016 $362,094 $427,298 $224,630 $92,224
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . 1.31% 1.27% 1.20% 1.37% 1.46%(4)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Portfolio Turnover Rate . . . . . . . . . . . . . . 14% 18% 16% 22% 16%(3)
</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
Trust and Retail Shares. On September 7, 1995, Retail Shares of the
Fund were redesignated "Retail A Shares."

3 Not Annualized.

4 Annualized.

4
<PAGE> 524
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek long-term capital appreciation.
The Fund attempts to achieve its investment objective by investing, under
normal market and economic conditions, at least 75% of its total assets in a
broadly diversified portfolio of equity securities such as common stock,
preferred stock, common stock warrants and securities convertible into common
stock of companies that Fleet Investment Advisors Inc., the Fund's investment
adviser (the "Investment Adviser" or "Fleet") believes will increase future
earnings to a level above the average earnings of similar issuers. Such
companies often retain their earnings to finance current and future growth and,
for this reason, generally pay little or no dividends. Equity securities in
which the Fund invests are selected based on analysis of trends in industries
and companies, earning power, growth features, quality and depth of management,
marketing and manufacturing skills, financial conditions and other investment
criteria. By investing in convertible securities, the Fund will seek the
opportunity, through the conversion feature, to participate in the capital
appreciation of the common stock into which the securities are convertible. See
"Other Investment Policies -- Convertible Securities" below. The Investment
Adviser invests less than 25% of the value of the Fund's total assets at the
time of purchase in securities of issuers conducting their principal business
activities in the same industry.

The Fund may invest up to 20% of its total assets in foreign securities
either directly or indirectly through the purchase of American Depository
Receipts ("ADRs") and European Depository Receipts ("EDRs"). See "Special Risk
Considerations" and "Other Investment Policies" below. In addition, the Fund
may invest in securities issued by foreign branches of U.S. banks and foreign
banks. The Fund may also write covered call options. See "Other Investment
Policies -- Options" and "Other Investment Policies -- Derivative Securities"
below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies" below) and U.S. Government obligations at such times and in such
proportions as, in the opinion of the Investment Adviser, prevailing market or
economic conditions warrant. See "Other Investment Policies" 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.

SPECIAL RISK CONSIDERATIONS

Market Risk

The Fund invests primarily in equity securities. As with other mutual
funds that invest primarily in equity securities, the Fund is subject to market
risks. That is, the possibility exists that common stock will decline over
short or even extended periods of time and both the U.S. and certain foreign
equity markets tend to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease.

5
<PAGE> 525
Interest Rate Risk

To the extent that the Fund invests in fixed income securities, its
holdings of debt securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and debt securities
fluctuate inversely with interest rate change.

Foreign Securities

Although the 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

Certain of the risks associated with investments in foreign securities
are heightened with respect to investments in developing countries and
fledgling democracies. The risks of expropriation, nationalization and social,
political and economic instability are greater in those countries than in more
developed capital markets.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

All debt obligations, including convertible bonds, purchased by the
Fund are rated investment grade by Moody's Investors Service, Inc. ("Moody's")
("Aaa," "Aa," "A" and "Baa") or Standard & Poor's Ratings Group ("S&P") ("AAA,"
"AA," "A" and "BBB"), or, if not rated, are determined to be of comparable
quality by the Investment Adviser.

U.S. Government Obligations and Money Market Instruments

6
<PAGE> 526
faith and credit of the U.S. Treasury; others, such as those of 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.

Investments in obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks may subject the Fund to additional risk because such
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. Such investments may also
subject the Fund to investment risks similar to those accompanying direct
investments in foreign securities. See "Special Risk Considerations." 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.

Repurchase and Reverse Repurchase Agreements

7
<PAGE> 527
considered an illiquid security and will be subject to the 10% 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 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

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, or 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.

Options

Covered Call Options. To further increase return on its portfolio
securities, in accordance with its investment objectives and policies, the Fund
may engage in writing covered call options (options on securities

8
<PAGE> 528
owned by the Fund) and may enter into closing purchase transactions with
respect to such options. Such options must be listed on a national securities
exchange and issued by the Options Clearing Corporation. The aggregate value of
the securities subject to options written by the Fund may not exceed 25% of the
value of its net assets. By writing a covered call option, the Fund forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price, except insofar as the premium represents
such a profit, and it will not be able to sell the underlying security until
the option expires or is exercised or the Fund effects a closing purchase
transaction by purchasing an option of the same series. The use of covered call
options is not a primary investment technique of the Fund, and such options
will normally be written on underlying securities as to which the Investment
Adviser does not anticipate significant short-term capital appreciation. See
"Derivative Securities" below.

American and European Depository Receipts

The Fund may invest in ADRs and EDRs. ADRs are receipts issued in
registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. ADRs and EDRs traded in the over-the-counter market
which do not have an active or substantial secondary market will be considered
illiquid and therefore will be subject to the Fund's limitation with respect to
such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs and EDRs involve risks similar to those accompanying direct investments in
foreign securities. Certain of these risks are described above under "Special
Risk Considerations."

Foreign Currency Exchange Transactions

Forward foreign currency exchange contracts also allow the Fund to
hedge the currency risk of portfolio securities denominated in a foreign
currency. This technique permits the assessment of the merits of a security to
be considered separately from the currency risk. By separating the asset and
the currency decision, it is possible to focus on the opportunities presented
by the security apart from the currency risk. Although forward foreign currency
exchange contracts are of short duration, generally between one and twelve
months, the forward foreign currency exchange contracts are rolled over in a
manner consistent with a more long-term currency decision. Because there is a
risk of loss to the Fund if the other party does not complete the transaction,
forward foreign currency exchange contracts will be entered into only with
parties approved by Galaxy's Board of Trustees.

9
<PAGE> 529
the currency that the Fund has contracted to receive in the exchange. In order
to ensure that the short position is not used to achieve leverage with respect
to the Fund's investments, the Fund would establish with its custodian a
segregated account consisting of cash, U.S. Government securities or other
liquid high-grade debt securities equal in value to the fluctuating market
value of the currency as to which the short position is being maintained. The
value of the securities in the segregated account will be adjusted at least
daily to reflect changes in the market value of the short position. See the
Statement of Additional Information for additional information regarding
Foreign Currency Exchange Transactions.

Convertible Securities

Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Convertible securities are
senior to equity securities, and therefore, have a claim to assets of the
corporation prior to the holders of common stock in the case of liquidation.
However, convertible securities are generally subordinated to similar
non-convertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide a stable stream
of income with generally higher yields than common stocks, but lower than
non-convertible securities of similar quality. The Fund will exchange or
convert the convertible securities held in its portfolio into shares of the
underlying common stock in instances in which, in the Investment Adviser's
opinion, the investment characteristics of the underlying common shares will
assist the Fund in achieving its investment objective. Otherwise, the Fund will
hold or trade the convertible securities. In selecting convertible securities
for a Fund, the Investment Adviser evaluates the investment characteristics of
the convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security, the
Investment Adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.

Derivative Securities

Derivative securities present, to varying degrees, market risk that
the performance of the underlying assets, interest rates or indices will
decline; credit risk that the dealer or other counterparty to the transaction
will fail to pay its obligations; volatility and leveraging risk that, if
interest rates change adversely, the value of the derivative security will
decline more than the assets, rates or indices on which it is based; liquidity
risk that the Fund will be unable to sell a derivative security when it wants
because of lack of market depth or market disruption; pricing risk that the
value of a derivative security will not correlate exactly to the value of the
underlying assets, rates or indices on which it is based; and operations risk
that loss will occur as a result of inadequate systems and controls,

10
<PAGE> 530
human error or otherwise. Some derivative securities are more complex than
others, and for those instruments that have been developed recently, data are
lacking regarding their actual performance over complete market cycles.

The Investment Adviser will evaluate the risks presented by the
derivative securities purchased by the Fund, and will determine, in connection
with its day-to-day management of the Fund, how they will be used in
furtherance of the Fund's investment objective. It is possible, however, that
the Investment Adviser's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Fund will,
because of the risks discussed above, incur loss as a result of its investments
in derivative securities. See "Investment Objective and Policies--Derivative
Securities" in the Statement of Additional Information relating to the Fund for
additional information.

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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover may result in the
realization of substantial net capital gains; distributions derived from such
gains will be 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 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 33% 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 33% of the
value of its respective 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 33% of the value of its 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.

11
<PAGE> 531
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
33% 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 to be 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.

PRICING OF SHARES

The assets in the Fund which are traded on a recognized stock exchange
are valued at the last sale price on the securities exchange on which such
securities are primarily traded or at the last sale price on the national
securities market. Securities quoted on the NASD National Market System are
also valued at the last sale price. Other securities traded on over-the-counter
markets are valued on the basis of their closing over-the-counter bid prices.
Securities for which there were no transactions are valued at the average of
the most recent bid and asked prices. Investments in debt securities with
remaining maturities of 60 days or less are valued based upon the amortized
cost method. Restricted securities, securities for which market quotations are
not readily available, and

12
<PAGE> 532
other assets are valued at fair value by the Investment Adviser under the
supervision of Galaxy's Board of Trustees. An option is generally valued at the
last sale price or, in the absence of a last sale price, the last offer price.

Portfolio securities which are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except when an occurrence subsequent
to the time a value was so established is likely to have changed such value,
then the fair value of those securities will be determined through
consideration of other factors by or under the direction of the Board of
Trustees. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. For valuation purposes, quotations of foreign securities in
foreign currency are converted to U.S. dollars equivalent at the prevailing
market rate on the day of valuation.

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

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 the Fund'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
Trust Share certificates will not be issued.

13
<PAGE> 533
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 requirements 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.

REDEMPTION OF SHARES

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 sixty days'
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

14
<PAGE> 534
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 relieves the
Fund of liability for federal income taxes to the extent the Fund's earnings
are distributed in accordance with the Code.

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 Trust Shares.
(Federal income taxes for distributions to an IRA or a qualified retirement
plan are deferred under the Code.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.

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 Trust
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 or capital gain distribution, you should be aware
that the amount of the forthcoming distribution payment, although in effect a
return of capital to the shareholder, 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.

STATE AND LOCAL

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

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.

15
<PAGE> 535
INVESTMENT ADVISER

The Fund's portfolio manager, Robert G. Armknecht, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Armknecht, an Executive Vice President, has been with Fleet and its
predecessor since 1989 and has been the Fund's portfolio manager since its
inception.

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 fees for the Fund are higher than fees paid by most
other mutual funds, although the Board of Trustees of Galaxy believes that they
are 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 all or a portion
of the 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. For the fiscal year ended October 31,
1995, Fleet received advisory fees at the effective annual rate of .75% of the
Fund's average daily net assets.

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 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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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.

16
<PAGE> 536
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, the
Fund paid FDISG administration fees at the effective annual rate of 0.088% of
its 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 and 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 the Fund: Class H-Series 1 shares
(Trust Shares), Class H-Series 2 shares (Retail A Shares) and Class H-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.

Trust Shares, Retail A Shares and Retail B Shares 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 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 of up to .95% 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, Trust Shares, Retail A Shares
and Retail B Shares 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%. Retail B Shares are sold with a maximum contingent deferred
sales charge of 5.0%. Retail A Shares 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 (irrespective of series
designation) 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.

17
<PAGE> 537
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

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 no more
than .30% (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

18
<PAGE> 538
CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as 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 Service Group, Inc. d/b/a 440 Financial) ("FDISG"), a wholly-owned
subsidiary of First Data Corporation, serves as the Fund's transfer and
dividend disbursing agent. Services performed by these entities for the Fund
are described in the Statement of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 15108, 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

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.

19
<PAGE> 539
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 dividends and capital gain distributions made by the Fund during
the period are reinvested in Fund shares.

Performance and yield 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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.

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 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.

20
<PAGE> 540

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 541

GALAXY
EQUITY INCOME
FUND

February 29, 1996

PROSPECTUS
Trust Shares

FN-263 15029 (3/96) pkg. 50
<PAGE> 542
TRUST

THE GALAXY FUND

EQUITY INCOME FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 543
===============================================================================

---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Special Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Investment Policies and Risk
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 16
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
===============================================================================
<PAGE> 544
THE GALAXY FUND

The Fund's investment objective is to seek current income and capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal market and economic conditions, at least 75% of its total assets in
common stock and securities convertible into common stock.

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 an additional series of shares in the Fund ("Retail A
Shares"), which are offered under a separate prospectus primarily to
individuals or corporations 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 loan associations and broker/dealers on
behalf of their customers. Trust Shares and Retail A Shares 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 Fund" and "Description of Galaxy and
Its Shares" herein.

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 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AN
INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING 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> 545
EXPENSE SUMMARY

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

<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
<S> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31%
----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.06%
====
</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>
Equity Income Fund . . . . . . . . . . . . . . . . . . . . . . . . $11 $33 $57 $127
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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. 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
relating to the Fund. 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. THE ACTUAL EXPENSES AND RATES OF RETURN MAY BE MORE OR LESS
THAN THOSE SHOWN.

<PAGE> 546
FINANCIAL HIGHLIGHTS

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 and
notes thereto contained in the Annual Report to Shareholders and incorporated
by reference into the Statement of Additional Information relating to the Fund.
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.

<PAGE> 547

EQUITY INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED PERIOD ENDED
1995 1994 OCTOBER 31,(2) OCTOBER 31,
------------------------ --------------------------- ------------
TRUST SHARES 1993 1992 1991(1,2)
------------------------ --------------------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $ 12.75 $ 12.85 $ 11.85 $ 11.29 $10.00
-------- -------- --------- -------- ------
Income from Investment Operations:
Net investment income(3). . . . . . . . . 0.36 0.31 0.30 0.30 0.29
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . 2.45 0.07 1.09 0.76 1.26
-------- -------- --------- -------- ------
Total from Investment
Operations: . . . . . . . . . . . . 2.81 0.38 1.39 1.06 1.55
-------- -------- --------- -------- ------
Less Dividends:
Dividends from net investment income . . (0.36) (0.29) (0.28) (0.30) (0.26)
Dividends from net realized
capital gains . . . . . . . . . . . . . (0.21) (0.19) (0.11) (0.20) --
-------- -------- --------- -------- ------
Total Dividends . . . . . . . . . . . (0.57) (0.48) (0.39) (0.50) (0.26)
-------- -------- --------- -------- ------
Net increase (decrease) in net asset value 2.24 (0.10) 1.00 0.56 1.29
-------- -------- --------- -------- ------
Net Asset Value, End of Period . . . . . . $ 14.99 $ 12.75 $ 12.85 $ 11.85 $11.29
======== ======== ========= ======== ======
Total Return . . . . . . . . . . . . . . . 22.81% 3.02% 11.85% 9.71% 15.61%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $87,819 $78,880 $123,970 $21,778 $7,096
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . 2.60% 2.49% 2.34% 2.84% 2.72%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . 0.98% 1.07% 1.16% 1.03% 0.85%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . 1.00% 1.07% 1.22% 1.54% 1.39%(5)
Portfolio Turnover Rate . . . . . . . . . . 21% 31% 27% 18% 77%(4)
</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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."
3 Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the years ended October 31, 1993
and 1992 and for the period ended October 31, 1991 were $0.29, $0.25 and
$0.23, respectively.
4 Not Annualized.
5 Annualized.

<PAGE> 548
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek current income and capital
appreciation. The Fund attempts to achieve its investment objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in common stock and securities convertible into common stock.
Factors generally considered in selecting portfolio securities include current
income and prospects for dividend growth and capital appreciation. However, the
Fund's portfolio can be expected to include securities that offer only growth
potential or only income potential, as well as securities that combine both
these elements. Less than 25% of the value of the Fund's total assets at the
time of purchase will be invested in securities of issuers conducting their
principal business activities in the same industry.
The Fund may invest up to 20% of its total assets in foreign securities
either directly or indirectly through the purchase of American Depository
Receipts ("ADRs") and European Depository Receipts ("EDRs"). See "Special Risk
Considerations" and "Other Investment Policies" below. The Fund may also write
covered call options. For additional information concerning investments in
options and similar securities, see "Other Investment Policies -- Options" and
"Other Investment Policies -- Derivative Securities" below.
As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies" below) and U.S. Government obligations at such times and in such
proportions as, in the opinion of Fleet Investment Advisors Inc., the Fund's
investment adviser (the "Investment Adviser" or "Fleet"), prevailing market or
economic conditions warrant. See "Other Investment Policies" 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 their 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.

SPECIAL RISK CONSIDERATIONS

Market Risk

Interest Rate Risk

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<PAGE> 549
Foreign Securities

Investments 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 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of a Fund's securities in their local markets. Conversely, a decrease in
the value of the U.S. dollar will have the opposite effect of magnifying the
effect of increases and reducing the effect of decreases in the prices of the
Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.
Certain of the risks associated with investments in foreign securities are
heightened with respect to investments in developing countries and fledgling
democracies. The risks of expropriation, nationalization and social, political
and economic instability are greater in those countries than in more developed
capital markets.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

All debt obligations, including convertible bonds, purchased by the Fund are
rated investment grade by Moody's Investor's Service, Inc. ("Moody's") ("Aaa,"
"Aa," "A" and "Baa") or Standard & Poor's Ratings Group ("S&P") ("AAA," "AA,"
"A" and "BBB"), or, if not rated, are determined to be of comparable quality by
the Investment Adviser.

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 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-

6
<PAGE> 550
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.
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 U.S.
branches of foreign banks may subject the Fund to additional risk because such
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. Such investments may also
subject the Fund to investment risks similar to those accompanying direct
investments in foreign securities. See "Special Risk Considerations." 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 and/or the Sub-Adviser
believe 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, 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."

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 and/or the Sub-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
upon 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.
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

7
<PAGE> 551
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, or 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.

Options

8
<PAGE> 552
will not be able to sell the underlying security until the option expires or is
exercised or the Fund effects a closing purchase transaction by purchasing an
option of the same series. The use of covered call options is not a primary
investment technique of the Fund, and such options will normally be written on
underlying securities as to which the Investment Adviser does not anticipate
significant short-term capital appreciation. See "Derivative Securities" below.

American and European Depository Receipts

Foreign Currency Exchange Transactions

9
<PAGE> 553
value of the short position. See the Statement of Additional Information for
additional information regarding Foreign Currency Exchange Transactions.

Convertible Securities

The Fund may from time to time, in accordance with its investment policies,
invest in convertible securities. Convertible securities are fixed income
securities which may be exchanged or converted into a predetermined number of
the issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities in which the Fund may invest may
take the form of convertible preferred stock and convertible bonds or
debentures.
Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Convertible securities are
senior to equity securities, and therefore, have a claim to assets of the
corporation prior to the holders of common stock in the case of liquidation.
However, convertible securities are generally subordinated to similar
non-convertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide a stable stream
of income with generally higher yields than common stocks, but lower than
non-convertible securities of similar quality. The Fund will exchange or
convert the convertible securities held in its portfolio into shares of the
underlying common stock in instances in which, in the Investment Adviser's
opinion, the investment characteristics of the underlying common shares will
assist the Fund in achieving its investment objective. Otherwise, the Fund will
hold or trade the convertible securities. In selecting convertible securities
for a Fund, the Investment Adviser evaluates the investment characteristics of
the convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security, the
Investment Adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.

Derivative Securities

10
<PAGE> 554
will prove to be inaccurate or incomplete and, even when accurate and complete,
it is possible that the Fund will, because of the risks discussed above, incur
loss as a result of its investments in derivative securities. See "Investment
Objective and Policies -- Derivative Securities" in the Statement of Additional
Information relating to the Fund for additional information.

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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover may result in the
realization of substantial net capital gains; distributions derived from such
gains will be treated as ordinary income for Federal income tax purposes. See
"Financial Highlights" and "Taxes -- Federal."

INVESTMENT LIMITATIONS

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 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 33% 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 33% of the
value of its respective 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 33% 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, 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 the Fund's 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 its

11
<PAGE> 555
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 33%
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 to be 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 assets in the Fund which are traded on a recognized stock exchange are
valued at the last sale price on the securities exchange on which such
securities are primarily traded or at the last sale price on the national
securities market. Securities quoted on the NASD National Market System are
also valued at the last sale price. Other securities traded on over-the-counter
markets are valued on the basis of their closing over-the-counter bid prices.
Securities for which there were no transactions are valued at the average of
the most recent bid and asked prices. Investments in debt securities with
remaining maturities of 60 days or less are valued based upon the amortized
cost method. Restricted securities, securities for which market quotations are
not readily available, and other assets are valued at fair value by the
Investment Adviser under the supervision of Galaxy's Board of Trustees. An
option is generally valued at the last sale price or, in the absence of a last
sale price, the last offer price.
Portfolio securities which are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except when an occurrence subsequent

12
<PAGE> 556
to the time a value was so established is likely to have changed such value,
then the fair value of those securities will be determined through
consideration of other factors by or under the direction of the Board of
Trustees. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. For valuation purposes, quotations of foreign securities in
foreign currency are converted to U.S. dollars equivalent at the prevailing
market rate on the day of valuation.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

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 the Fund'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.

13
<PAGE> 557
Although Galaxy does not impose any minimum initial or subsequent investment
requirements with respect to Trust Shares, Institutions or employers 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 Fund may also be available for purchase through
different types of retirement plans offered by an Institution to its Customers.
Information pertaining to such plans is available directly from the
Institution.

REDEMPTION OF SHARES

DIVIDENDS AND DISTRIBUTIONS

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 relieves the Fund of
liability for federal income taxes to the extent the Fund's earnings are
distributed in accordance with the Code.
The policy of the Fund is to distribute as dividends substantially all of
its investment company taxable income

14
<PAGE> 558
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.) Such
ordinary income distributions will qualify for the dividends received deduction
for corporations to the extent of the total qualifying dividends received by
the Fund from domestic corporations for the taxable year.
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 Trust
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 or capital gain distribution, you should be aware
that the amount of the forthcoming distribution payment, although in effect a
return of capital, 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

INVESTMENT ADVISER

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<PAGE> 559
Asset Allocation, Growth and Income, Small Cap Value, Short-Term Bond,
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.
The Fund's portfolio manager, J. Edward Klisiewicz, is primarily responsible
for the day-to-day management of the Fund's investment portfolio. Mr.
Klisiewicz, a Senior Vice President, has been with Fleet and its predecessors
since 1970 and has been the Fund's portfolio manager since its inception.
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 fees for the Funds are higher than fees paid by most other mutual
funds, although the Board of Trustees of Galaxy believes that they are not
higher than the average advisory fees paid by funds with similar investment
objectives and policies.
Fleet may from time to time, in its discretion, waive all or a portion of
the 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. For the fiscal year ended October 31, 1995, Fleet
received advisory fees (after fee waivers) at the effective annual rate of .73%
of the Fund's average daily net assets.

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 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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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

16
<PAGE> 560
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, the Fund paid FDISG administration fees
at the effective annual rate of .088% of its 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 the Fund: Class I-Series 1 shares (Trust
Shares) and Class I-Series 2 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 A
Shares and these other portfolios, which are offered through separate
prospectuses, contact the Distributor at 1-800-628-0414.
Trust Shares and Retail A Shares 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, Trust Shares
and Retail A Shares 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% 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.
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

17
<PAGE> 561
and are intended to supplement the services provided by FDISG as administrator
and transfer agent to the shareholders of record of the Retail A Shares. The
Plan provides that Galaxy will pay fees for such services at an annual rate of
up to .50% of the average daily net asset value of the Fund's outstanding
Retail A Shares beneficially owned by Customers. Institutions may 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 no more
than .30% (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.
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.

18
<PAGE> 562
CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as 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 Fund's transfer and
dividend disbursing agent. Services performed by these entities for the Funds
are described in the Statement of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 15108, 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 yield of the Fund may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
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, S&P 500, an unmanaged index of groups
of common stocks, the Consumer Price Index, or the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30 industrial
companies listed on the New York Stock Exchange.
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.

19
<PAGE> 563
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 dividends and capital gain distributions made by the Fund during
the period are reinvested in Fund shares.
Performance and yield 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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 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.

20
<PAGE> 564

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 565

GALAXY
INTERNATIONAL EQUITY
FUND

February 29, 1996

PROSPECTUS
Trust Shares

[LOGO]

FN-266 15036 (3/96) pkg. 50

<PAGE> 566
TRUST
THE GALAXY FUND

INTERNATIONAL EQUITY FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 567
===============================================================================

---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Special Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Other Investment Policies and Risk
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
When-Issued Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 19
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
===============================================================================
<PAGE> 568
THE GALAXY FUND

4400 Computer Drive
Westboro, Massachusetts 10581-5108

For applications and information
concerning initial purchases
and current performance, call
1-800-628-0414. For
additional purchases,
redemptions, exchanges and
other shareholder services,
call 1-800-628-0413.

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 in each Fund
("Retail A Shares"), which are offered under a separate prospectus primarily to
individuals or corporations 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 and Retail A Shares 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.

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. Wellington Management Company serves as the sub-adviser to the
Fund.

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

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> 569
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 summary
are also shown.

<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY
SHAREHOLDER TRANSACTION EXPENSES 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____
Total Fund Operating Expenses (After Fee Waivers) . . . . . . . . . . . . . . . . . . . . . 1.27%
</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>
International Equity Fund . . . . . . . . . . . . . . . . . . . . . . $13 $40 $66 $151
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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 and/or
expense reimbursements by the Investment Adviser and/or Administrator, Advisory
Fees would be 1.15%, and Total Fund Operating Expenses would be 1.70% 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. THE ACTUAL EXPENSES AND RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN.

2
<PAGE> 570
FINANCIAL HIGHLIGHTS

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 and notes thereto contained in the Annual Report to Shareholders and
incorporated by reference into the Statement of Additional Information relating
to the Fund. Information in the financial highlights for periods prior to the
fiscal year ended October 31, 1994 reflects the 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> 571

INTERNATIONAL EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, YEAR ENDED PERIOD ENDED
1995 1994 OCTOBER 31, OCTOBER 31,
---------------------- ------------------------
TRUST SHARES 1993(2) 1992(1),(2)
---------------------- ------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . $ 13.20 $ 12.13 $ 9.66 $ 10.00

Income from Investment Operations:
Net Investment Income(3) . . . . . . . . . . . 0.16 0.06 0.02 0.06
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . (0.18) 1.02 2.51 (0.40)

Total from Investment Operations: . . (0.02) 1.08 2.53 (0.34)

Less Dividends:
Dividends from net investment income . . . . . (0.04) (0.01) (0.06) --
Dividends from net realized capital gains . . . (0.16) -- -- --

Total Dividends: . . . . . . . . . . (0.20) (0.01) (0.06) --

Net increase (decrease) in net asset value . . . . (0.22) 1.07 2.47 (0.34)

Net Asset Value, End of Period . . . . . . . . . . $ 12.98 $ 13.20 $ 12.1 $ 9.66

Total Return . . . . . . . . . . . . . . . . . . (0.02%) 8.91% 26.36% (3.40%)(4)

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . $89,614 $82,350 $39,246 $12,584
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . 1.36% 0.74% 0.37% 1.19%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . 1.22% 1.43% 1.57% 1.61%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . 1.48% 1.72% 2.04% 2.79%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . 48% 39% 29% 21%(4)
</TABLE>
- ---------------
1 The Fund commenced operations on December 30, 1991.

3 Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the years ended
October 31, 1995, 1994 and 1993 and for the period ended October 31,
1992 were $0.13, $0.04, $0.00 and $0.00, respectively.

4 Not Annualized.

5 Annualized.

4
<PAGE> 572
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL

The Fund's investment objective is to seek long-term capital
appreciation. The Fund attempts to achieve its investment objective by
investing at least 75% of its total assets in equity securities of foreign
issuers. The Fund's assets will be invested at all times in the securities of
issuers located in at least three different foreign countries. Although the
Fund may earn income from dividends, interest and other sources, current income
will not be its primary consideration. The Fund emphasizes established
companies, although it may invest in companies of varying sizes as measured by
assets, sales and capitalization.

The Fund may invest in securities of issuers located in a variety of
different foreign regions and countries, including, but not limited to,
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Hong Kong, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, The
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand and The United Kingdom. More than 25% of the Fund's total
assets may be invested in the securities of issuers located in the same
country. Investment in a particular country of 25% or more of the Fund's total
assets will make the Fund's performance more dependent upon the political and
economic circumstances of a particular country than a mutual fund that is more
widely diversified among issuers in different countries. Criteria for
determining the appropriate distribution of investments among various countries
and regions include prospects for relative economic growth, expected levels of
inflation, government policies influencing business conditions, the outlook for
currency relationships, and the range of investment opportunities available to
international investors.

The Fund invests in common stock and may invest in other securities
with equity characteristics, consisting of trust or limited partnership
interests, preferred stock, rights and warrants. The Fund may also invest in
convertible securities, consisting of debt securities or preferred stock that
may be converted into common stock or that carry the right to purchase common
stock. See "Other Investment Policies -- Convertible Securities" below. The
Fund invests in securities listed on foreign or domestic securities exchanges
and securities traded in foreign or domestic over-the-counter markets, and may
invest in unlisted securities.

Securities issued in certain countries are currently accessible to the
Fund only through investment in other investment companies that are
specifically authorized to invest in such securities. The limitations on the
Fund's investment in other investment companies are described under "Other
Investment Policies -- Investment Company Securities" below.

During temporary defensive periods in response to unusual and adverse
conditions affecting the equity markets, or to meet anticipated day-to-day
operating expenses, the Fund's assets may be invested in short-term debt
instruments. In addition, when the Fund experiences large cash inflows from the
issuance of new shares or the sale of portfolio securities, and desirable
equity securities that are consistent with the Fund's investment objective are
unavailable in sufficient quantities, the Fund may hold short-term investments
for a limited time pending availability of suitable equity securities. The
short-term debt instruments in which the Fund may invest may be denominated in
foreign currencies or U.S. dollars, and include foreign and domestic: (i)
short-term obligations of national governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated "A" or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Group ("S&P"), or if unrated,
determined by Fleet Investment Advisors Inc., the Fund's investment adviser
(the "Investment Adviser" or "Fleet") or by Wellington Management Company, the
Fund's sub-adviser ("Wellington Management" or the "Sub-Adviser") to be of
comparable quality; (iii) commercial paper, including master notes; (iv) bank
obligations, including negotiable certificates of deposit, time deposits,

5
<PAGE> 573
bankers' acceptances, and Euro-currency instruments and securities; and (v)
repurchase agreements. Time deposits with a maturity longer than seven days or
that do not provide for payment within seven days after notice will be limited
to 10% of the Fund's total assets. Issuers of commercial paper, bank
obligations or repurchase agreements in which the Fund invests must have, at
the time of investment, outstanding debt rated A or higher by Moody's or S&P,
or, if they are not rated, the instrument purchased must be determined to be of
comparable quality.

Subject to applicable securities regulations, the Fund may, for the
purpose of hedging its portfolio, purchase and write covered call options on
specific portfolio securities and may purchase and write put and call options
on foreign stock indices listed on foreign and domestic stock exchanges. In
addition, the Fund may invest up to 100% of its total assets in securities of
foreign issuers in the form of American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs"), or Global Depository Receipts ("GDRs") as
described under "Other Investment Policies." Furthermore, the Fund may purchase
and sell securities on a when-issued basis. For temporary defensive purposes,
the Fund may also invest a major portion of its assets in securities of United
States' issuers. Less than 25% of the value of the Fund's total assets at the
time of purchase will be invested in securities of issuers conducting their
principal business activities in the same industry. See "Other Investment
Policies" below regarding additional investment policies of the Fund.

The Investment Adviser and Sub-Adviser will use their 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.

Market Risk

The Fund invests primarily in equity securities. As with other mutual
funds that invest primarily in equity securities, the Fund is subject to market
risks. That is, the possibility exists that common stocks will decline over
short or even extended periods of time and both the U.S. and certain foreign
equity markets tend to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease.

SPECIAL RISK CONSIDERATIONS

Interest Rate Risk

Foreign Securities

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<PAGE> 574
Although the 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

The Fund may only purchase debt securities rated "A" or higher by
Moody's or S&P, or if unrated, determined by the Investment Adviser and/or
Sub-Adviser to be of comparable quality.

U.S. Government Obligations and Money Market Instruments

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 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

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<PAGE> 575
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 U.S.
branches of foreign banks may subject the Fund to additional risk because such
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. Such investments may also
subject the Fund to investment risks similar to those accompanying direct
investments in foreign securities. See "Special Risk Considerations." 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 and/or the Sub-Adviser
believe that the credit risk with respect to the instrument is minimal.

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 and/or the Sub-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
upon 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.

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.

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<PAGE> 576
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 and/or the
Sub-Adviser to be of good standing and only when, in the Investment Adviser's
and/or the Sub-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. The Fund may also purchase shares of investment companies investing
primarily in foreign securities, including so-called "country funds." Country
funds have portfolios consisting exclusively of securities of issuers located
in one foreign country. 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, or any
other investment companies advised by the Investment Adviser or the
Sub-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.

Options

Covered Call Options. To further increase return on their portfolio
securities, in accordance with their investment objectives and policies, the
Fund may engage in writing covered call options (options on securities owned by
the Fund) and may enter into closing purchase transactions with respect to such
options. Such options must be listed on a national securities exchange and
issued by the Options Clearing Corporation. The aggregate value of the
securities subject to options written by a Fund may not exceed 25% of the value
of its net assets. By writing a covered call option, the Fund forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price, except insofar as the premium represents
such a profit, and it will not be able to sell the underlying security until
the option expires or is exercised or the Fund effects a closing purchase
transaction by purchasing an option of the same series. The use of covered call
options is not a primary investment technique of the Fund, and such options
will normally be written on underlying securities as to which the Investment
Adviser and/or the Sub-Adviser does not anticipate significant short-term
capital appreciation. See "Derivative Securities" below.

Options on Foreign Stock Indexes. The Fund may, for the purpose of
hedging its portfolio, subject to applicable securities regulations, purchase
and write put and call options on foreign stock indexes listed on foreign

9
<PAGE> 577
and domestic stock exchanges. A stock index fluctuates with changes in the
market values of the stocks included in the index. Examples of foreign stock
indexes are the Canadian Market Portfolio Index (Montreal Stock Exchange), The
Financial Times - Stock Exchange 100 (London Stock Exchange) and the Toronto
Stock Exchange Composite 300 (Toronto Stock Exchange).

Options on stock indexes are generally similar to options on stock
except that the delivery requirements are different. Instead of giving the
right to take or make delivery of stock at a specified price, an option on a
stock index gives the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of exercise,
multiplied by (b) a fixed "index multiplier." Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. The writer
may offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or the option may expire unexercised.
See "Derivative Securities" below. For additional information relating to
option trading practices and related risks, see the Statement of Additional
Information.

American, European, and Global Depository Receipts

The Fund may invest in ADRs, EDRs and GDRs. ADRs are receipts issued
in registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. GDRs are
receipts structured similarly to EDRs and are marketed globally. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. GDRs are designed for trading in non-U.S. securities
markets. ADRs, EDRs and GDRs traded in the over-the-counter market which do not
have an active or substantial secondary market will be considered illiquid and
therefore will be subject to the Fund's limitation with respect to such
securities. ADR prices are denominated in U.S. dollars although the underlying
securities are denominated in a foreign currency. Investments in ADRs, EDRs and
GDRs involve risks similar to those accompanying direct investments in foreign
securities. Certain of these risks are described above under "Special Risk
Considerations."

Foreign Currency Exchange Transactions

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<PAGE> 578
currency exchange contracts are rolled over in a manner consistent with a more
long-term currency decision. Because there is a risk of loss to the Fund if the
other party does not complete the transaction, forward foreign currency
exchange contracts will be entered into only with parties approved by Galaxy's
Board of Trustees.

The Fund may maintain "short" positions in forward foreign currency
exchange transactions, which would involve the Fund's agreeing to exchange
currency that it currently does not own for another currency -- for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars -- at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
securities equal in value to the fluctuating market value of the currency as to
which the short position is being maintained. The value of the securities in
the segregated account will be adjusted at least daily to reflect changes in
the market value of the short position. See the Statement of Additional
Information for additional information regarding Foreign Currency Exchange
Transactions.

Convertible Securities

Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Convertible securities are
senior to equity securities, and therefore, have a claim to assets of the
corporation prior to the holders of common stock in the case of liquidation.
However, convertible securities are generally subordinated to similar
non-convertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide a stable stream
of income with generally higher yields than common stocks, but lower than
non-convertible securities of similar quality. The Fund will exchange or
convert the convertible securities held in its portfolio into shares of the
underlying common stock in instances in which, in the Investment Adviser's
opinion, the investment characteristics of the underlying common shares will
assist the Fund in achieving its investment objective. Otherwise, the Fund will
hold or trade the convertible securities. In selecting convertible securities
for a Fund, the Investment Adviser and/or Sub-Adviser evaluates the investment
characteristics of the convertible security as a fixed income instrument, and
the investment potential of the underlying equity security for capital
appreciation. In evaluating these matters with respect to a particular
convertible security, the Investment Adviser and/or Sub-Adviser considers
numerous factors, including the economic and political outlook, the value of
the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability
and practices.

Derivative Securities

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<PAGE> 579
Derivative securities present, to varying degrees, market risk that
the performance of the underlying assets, interest rates or indices will
decline; credit risk that the dealer or other counterparty to the transaction
will fail to pay its obligations; volatility and leveraging risk that, if
interest rates change adversely, the value of the derivative security will
decline more than the assets, rates or indices on which it is based; liquidity
risk that the Fund will be unable to sell a derivative security when it wants
because of lack of market depth or market disruption; pricing risk that the
value of a derivative security will not correlate exactly to the value of the
underlying assets, rates or indices on which it is based; and operations risk
that loss will occur as a result of inadequate systems and controls, human
error or otherwise. Some derivative securities are more complex than others,
and for those instruments that have been developed recently, data are lacking
regarding their actual performance over complete market cycles.

The Investment Adviser and/or Sub-Adviser will evaluate the risks
presented by the derivative securities purchased by the Fund, and will
determine, in connection with its day-to-day management of the Fund, how they
will be used in furtherance of the Fund's investment objective. It is possible,
however, that the Investment Adviser's and/or Sub-Adviser's evaluations will
prove to be inaccurate or incomplete and, even when accurate and complete, it
is possible that the Fund will, because of the risks discussed above, incur
loss as a result of its investments in derivative securities. See "Investment
Objective and Policies -- Derivative Securities" in the Statement of Additional
Information relating to the Fund for additional information.

When-Issued Transactions

The Fund may purchase eligible securities on a "when-issued" basis.
When-issued 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 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. When-issued 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.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if
the Investment Adviser and/or the Sub-Adviser believe 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 high rate of portfolio turnover involves
correspondingly greater brokerage commission expenses and other transaction
costs, which must be ultimately borne by the Fund's shareholders. High
portfolio turnover may result in the realization of substantial net capital
gains; distributions derived from such gains will be 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."

12
<PAGE> 580
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 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 33% 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 33% 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 33% 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, securities which are restricted as to transfer in their principal
market, 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 the Fund's 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 its 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
33% 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 to be illiquid if the Investment Adviser
and/or the Sub-Adviser has determined, in accordance with guidelines
established by the Board of Trustees, that an adequate trading market exists
for such securities.

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<PAGE> 581

PRICING OF SHARES

The Fund's portfolio securities which are primarily traded on a
domestic exchange are valued at the last sale price on that exchange or, if
there is no recent sale, at the last current bid quotation. Portfolio
securities which are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value, then the fair value of
those securities will be determined through consideration of other factors by
or under the direction of the Board of Trustees. A security which is listed or
traded on more than one exchange is valued at the quotation on the exchange
determined to be the primary market for such security. Investments in debt
securities having a maturity of 60 days or less are valued based upon the
amortized cost method. All other securities are valued at the last current bid
quotation if market quotations are available, or at fair value as determined in
accordance with policies established in good faith by the Board of Trustees.
For valuation purposes, quotations of foreign securities in foreign currency
are converted to U.S. dollars equivalent at the prevailing market rate on the
day of valuation. An option is generally valued at the last sale price or, in
the absence of a last sale price, the last offer price.

Certain of the securities acquired by the Fund may be traded on
foreign exchanges or over-the-counter markets on days on which the Fund's net
asset value is not calculated. In such cases, the net asset value of the Fund's
shares may be significantly affected on days when investors can neither
purchase nor redeem shares 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

14
<PAGE> 582
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 the Fund'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.

Although Galaxy does not impose any minimum initial or subsequent
investment requirements 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 Fund described in this Prospectus may also be sold
to clients, partners and employees of Wellington Management Company, the
Sub-Adviser to the Fund.

REDEMPTION OF SHARES

15
<PAGE> 583
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 sixty 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 and paid
annually. 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.

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.

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.

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<PAGE> 584
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.

It is expected that the Fund will be subject to foreign withholding
taxes with respect to income received from sources within foreign countries. So
long as more than 50% of the value of the Fund's total assets at the close of
any taxable year consists of stock or securities of foreign corporations, the
Fund may elect, for U.S. federal income tax purposes, to treat certain foreign
taxes paid by it, including generally any withholding taxes and other foreign
income taxes, as paid by its shareholders. If the Fund makes this election, the
amount of such foreign taxes paid by the Fund will be included in its
shareholders' income pro rata (in addition to taxable distributions actually
received by them), and each shareholder would be entitled either (a) to credit
their proportionate amount of such taxes against their U.S. federal income tax
liabilities, subject to certain limitations described in the Statement of
Additional Information, or (b) if they itemize their deductions, to deduct such
proportionate amount from their U.S. income.

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 AND SUB-ADVISER

17
<PAGE> 585
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 (except with respect
to such functions that have been delegated to the Fund's Sub-Adviser as
described below).

The Fund's portfolio managers, David von Hemert and the Global Equity
Strategy Group of Wellington Management Company ("Wellington Management"), a
group of global portfolio managers and senior investment professionals headed
by Trond Skramstad, Senior Vice President of Wellington Management, are
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. von Hemert, a Senior Vice-President, has been with Fleet and its
predecessors since 1980 and has been managing the Fund since August 1994. Mr.
Skramstad has been with Wellington Management, the Fund's Sub-Adviser, since
1993 and has been managing the Fund since January 1995. Prior to his
association with Wellington Management, Mr. Skramstad was a principal with
Scudder, Stevens & Clark.

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 1.15% of the first $50 million of
the Fund's average daily net assets, plus .95% of the next $50 million of such
assets, plus .85% of net assets in excess of $100 million. The fees for the
Fund are higher than fees paid by most other mutual funds, although the Board
of Trustees of Galaxy believes that they are 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 all or a portion
of the 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. For the fiscal year ended October 31,
1995, Fleet received advisory fees (after fee waivers) at the effective annual
rate of .77% of the Fund's average daily net assets.

The advisory agreement between Galaxy and Fleet with respect to the
Fund provides that Fleet will provide a continuous investment program for the
Fund, including research and management with respect to all securities and
investments and cash equivalents in the Fund. In addition, the advisory
agreement authorizes Fleet to engage a sub-adviser to assist it in the
performance of its services. Pursuant to such authorization, Fleet has
appointed Wellington Management, with principal offices at 75 State Street,
Boston, Massachusetts 02109, as the Sub-Adviser to the Fund. Wellington
Management is a professional investment counselling firm which provides
investment services to investment companies, employee benefit plans,
endowments, foundations, and other institutions and individuals. As of December
31, 1995, Wellington Management had discretionary management authority with
respect to approximately $109.2 billion of assets. Wellington Management's
predecessor organizations have provided investment advisory services to
investment companies since 1933 and to investment counselling clients since
1960.

Under its sub-advisory agreement with Fleet, Wellington Management
determines which securities and other investments will be purchased, retained
or sold for the Fund; places orders for the Fund; manages the Fund's overall
cash position; and provides the Investment Adviser with foreign broker research
and a quarterly review of international economic and investment developments.
Fleet, among other things, assists and consults with the Sub-Adviser in
connection with the Fund's continuous investment program; approves lists of
foreign countries recommended by the Sub-Adviser for investment; reviews the
investment policies and restrictions of the Fund and recommends appropriate
changes to the Board of Trustees; and provides the Board of Trustees and the
Sub-Adviser with information concerning relevant economic and political
developments.

For the services provided and the expenses assumed pursuant to the
sub-advisory agreement, Fleet pays a fee

18
<PAGE> 586
to Wellington Management, computed daily and paid quarterly, at the annual rate
of .50% of the first $50 million of the Fund's average daily net assets, plus
.30% of the next $50 million of such assets, plus .20% of all net assets in
excess of $100 million. For the fiscal year ended October 31, 1995, Wellington
Management received sub-advisory fees at the effective annual rate of 0.38% of
the Fund's average daily net assets.

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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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

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, the
Fund paid FDISG administration fees at the effective annual rate of .088% of
the Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

19
<PAGE> 587
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 A Shares and these other portfolios,
which are offered through separate prospectuses, contact the Distributor at
1-800-628-0414.

Trust Shares and Retail A Shares 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, Trust Shares
and Retail A Shares 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% 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

20
<PAGE> 588
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 a schedule of any
fees that they may charge in connection with Customer investments in Retail A
Shares.

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as 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 Fund's transfer and
dividend disbursing agent. Services performed by these entities for the Fund
are described in the Statement of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 15108, 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. The Fund bears its
operating expenses. 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.

21
<PAGE> 589
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 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, the S&P 500, an
unmanaged index of groups of common stocks, the Consumer Price Index, or the
Dow Jones Industrial Average, a recognized unmanaged index of common stocks of
30 industrial companies listed on the New York Stock Exchange. In addition, the
performance of the Fund may be compared to either the Morgan Stanley Capital
International Index or the FT World Actuaries Index.

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 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 dividends 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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.

22
<PAGE> 590
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.

23
<PAGE> 591

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 592
[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 593

GALAXY
SMALL COMPANY EQUITY
FUND

February 29, 1996

PROSPECTUS
TRUST SHARES

[GALAXY LOGO]
<PAGE> 594

TRUST

THE GALAXY FUND

SMALL COMPANY EQUITY FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 595
================================================================================

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 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
Special Risk Considerations . . . . . . . . . . . . . . . 5
Other Investment Policies and Risk
Considerations . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . 11
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . 12
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . 13
Distributor . . . . . . . . . . . . . . . . . . . . . . . 13
Purchase of Shares . . . . . . . . . . . . . . . . . . . 13
Redemption of Shares . . . . . . . . . . . . . . . . . . 14
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . 14
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal . . . . . . . . . . . . . . . . . . . . . . . . . 14
State and Local . . . . . . . . . . . . . . . . . . . . . 15
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . 15
Investment Adviser . . . . . . . . . . . . . . . . . . . 15
Authority to Act as Investment Adviser . . . . . . . . . 16
Administrator . . . . . . . . . . . . . . . . . . . . . . 16
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . 17
Shareholder Services Plan . . . . . . . . . . . . . . . . 17
Affiliate Agreement for Sub-Account
Services . . . . . . . . . . . . . . . . . . . . . . . 18
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . 18
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 19
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . 19
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

================================================================================
<PAGE> 596
THE GALAXY FUND

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

The Fund's investment objective is to seek capital appreciation. The
Fund attempts to achieve this objective by investing primarily in the
securities of companies with capitalizations of $500 million or less that the
Fund's investment adviser believes represent the potential for significant
capital appreciation. Under normal market and economic conditions, the Fund
will invest at least 65% of its assets in the equity securities of companies
with capitalizations of $500 million or less.

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 or corporations purchasing
either for their own accounts or for the accounts of others and to Fleet
Brokerage Corporation, Fleet Securities, Inc., Fleet Financial Group, Inc., its
affiliates, their correspondent banks and other qualified banks, savings and
loans associations and broker/dealers on behalf of their customers. Trust
Shares, 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 services provided to them. See "Financial Highlights,"
"Management of the Fund" and "Description of Galaxy and Its Shares" herein.

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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE 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
provided 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> 597
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 summary
are also shown.

<TABLE>
<CAPTION>
SMALL
COMPANY
SHAREHOLDER TRANSACTION EXPENSES EQUITY 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45%
-----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20%
=====
- ----------
</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>
Small Company Equity Fund . . . . . . . . . . . . . . . . . . . $12 $37 $65 $143
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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. 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
relating to the Fund. 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> 598
FINANCIAL HIGHLIGHTS

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 and
notes thereto contained in the Annual Report to Shareholders and incorporated
by reference into the Statement of Additional Information relating to the Fund.
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> 599
SMALL COMPANY EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993(2) 1992(1,2)
------------ ------------ ----------- -----------
TRUST SHARES TRUST SHARES
------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . $ 12.36 $ 12.41 $ 8.79 $ 10.00
-------- -------- --------- -------
Income from Investment Operations:
Net Investment Income(3) . . . . . . . . . . . . . (0.04) -- (0.04) (0.03)
Net realized and unrealized gain
(loss) on investments . . . . . . . . . . . . . . 4.25 -- 3.66 (1.18)
-------- -------- --------- -------
Total from Investment Operations . . . . . . . 4.21 -- 3.62 (1.21)
-------- -------- --------- -------
Less Dividends:
Dividends from net investment income . . . . . . . -- -- -- --
Dividends from net realized capital gains . . . . . (0.19) (0.05) -- --
-------- -------- --------- -------
Total Dividends . . . . . . . . . . . . . . . . (0.19) (0.05) -- --
-------- -------- --------- -------
Net increase (decrease) in net asset value . . . . . 4.02 (0.05) 3.62 (1.21)
-------- -------- --------- -------
Net Asset Value, End of Period . . . . . . . . . . . $ 16.38 $ 12.36 $ 12.41 $ 8.79
======== ======== ========= =======
Total Return . . . . . . . . . . . . . . . . . . . . 34.73% 0.02% 41.18% (12.10)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . $94,831 $66,462 $55,683 $29,072
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . (0.37)% (0.35)% (0.66)% (0.63)%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . 1.12% 1.27% 1 .18% 1.06%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . 1.12% 1.27% 1 .22% 1.33%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . 54% 35% 57% 87%(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 Trust
and Retail Shares. On September 7, 1995, Retail Shares of the Fund were
redesignated Retail A Shares.

(3) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the period ended
October 31, 1992 was $(0.05).

(4) Not Annualized.

(5) Annualized.

4
<PAGE> 600
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek capital appreciation. The
Fund attempts to achieve its investment objective by investing primarily in the
securities of companies with capitalizations of $500 million or less ("Small
Capitalization Securities") which Fleet Investment Advisors Inc., the Fund's
investment adviser (the "Investment Adviser" or "Fleet"), believes represent
the potential for significant capital appreciation.

Small Capitalization Securities in which the Fund may invest include
common stock, preferred stock, securities convertible into common stock, rights
and warrants. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in the equity securities of companies with
capitalizations of $500 million or less. For temporary defensive purposes, the
Fund may also invest in corporate debt obligations.

The issuers of Small Capitalization Securities tend to be companies
which are smaller or newer than those listed on the New York or American Stock
Exchanges. As a result, Small Capitalization Securities are primarily traded on
the over-the-counter market, although they may also be listed for trading on
the New York or American Stock Exchanges. Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established
companies, they may have limited product lines, markets or financial resources.
As a result, Small Capitalization Securities are often less marketable and may
experience a higher level of price volatility than the securities of larger or
more well-established companies.

The Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through American Depository Receipts
("ADRs") and European Depository Receipts ("EDRs"). See "Special Risk
Considerations" and "Other Investment Policies" below.

The Fund may purchase and write covered call options as a hedge against
changes resulting from market conditions and in the value of the securities
held in the Fund or which it intends to purchase and where the transactions are
economically appropriate for the reduction of risks inherent in the ongoing
management of the Fund. See "Other Investment Policies--Options" and "Other
Investment Policies--Derivative Securities" below.

As a temporary defensive measure, the Fund may invest without
limitation in cash, "money market" instruments (such as those listed under
"Other Investment Policies" below) and U.S. Government obligations at such
times and in such proportions as, in the opinion of the Investment Adviser,
prevailing market or economic conditions warrant. See "Other Investment
Policies" below for information regarding additional investment policies of the
Fund.

SPECIAL RISK CONSIDERATIONS

Interest Rate Risk

To the extent that the Fund invests in fixed income securities, its
holdings of such securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and debt securities
fluctuate inversely with interest rate change.

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Foreign Securities. Investments 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 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Funds are subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

All debt obligations, including convertible bonds, purchased by the
Fund are rated investment grade by Moody's Investor's Service, Inc. ("Moody's")
("Aaa," "Aa," "A" and "Baa") or Standard & Poor's Ratings Group ("S&P") ("AAA,"
"AA," "A" and "BBB"), or, if not rated, are determined to be of comparable
quality by the Investment Adviser.

U.S. Government Obligations and Money Market Instruments

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 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.

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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.

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.

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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, or any other investment companies
advised by the Investment Adviser. Any change by the Fund 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.

Options

Covered Call Options. To further increase return on their portfolio
securities, in accordance with their investment objectives and policies, the
Fund may engage in writing covered call options (options on securities owned by
the Fund) and may enter into closing purchase transactions with respect to such
options. Such options must be listed on a national securities exchange and
issued by the Options Clearing Corporation. The aggregate value of the
securities subject to options written by the Fund may not exceed 25% of the
value of its net assets. By writing a covered call option, the Fund forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price, except insofar as the premium represents
such a profit, and it will not be able to sell the underlying security until
the option expires or is exercised or the Fund effects a closing purchase
transaction by purchasing an option of the same series. The use of covered call
options is not a primary investment technique of the Fund, and such options
will normally be written on underlying securities as to which the Investment
Adviser does not anticipate significant short-term capital appreciation. See
"Derivative Securities" below.

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American and European Depository Receipts

The Fund may invest up to 20% of its total assets in ADRs and EDRs.
ADRs are receipts issued in registered form by a U.S. bank or trust company
evidencing ownership of underlying securities issued by a foreign issuer. EDRs
are receipts issued in Europe typically by non-U.S. banks or trust companies
and foreign branches of U.S. banks that evidence ownership of foreign or U.S.
securities. ADRs may be listed on a national securities exchange or may be
traded in the over-the-counter market. EDRs are designed for use in European
exchange and over-the-counter markets. ADRs and EDRs traded in the
over-the-counter market which do not have an active or substantial secondary
market will be considered illiquid and therefore will be subject to the Fund's
limitation with respect to such securities. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs and EDRs involve risks similar to those
accompanying direct investments in foreign securities. Certain of these risks
are described above under "Special Risk Considerations."

Foreign Currency Exchange Transactions

The Fund may maintain "short" positions in forward foreign currency
exchange transactions, which would involve the Fund's agreeing to exchange
currency that it currently does not own for another currency--for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars--at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
securities equal in value to the fluctuating market value of the currency as to
which the short position is being maintained. The value of the securities in
the segregated account will be adjusted at least daily to reflect changes in
the market value of the short position. See the Statement of Additional
Information relating to the Fund for additional information regarding foreign
currency exchange transactions.

Convertible Securities

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number of the issuer's underlying common stock at the option of the holder
during a specified time period. Convertible securities in which the Fund may
invest may take the form of convertible preferred stock and convertible bonds
or debentures.

Derivative Securities

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest rates or indices will decline;
credit risk that the dealer or other counterparty to the transaction will fail
to pay its obligations; volatility and leveraging risk that, if interest rates
change adversely, the value of the derivative security will decline more than
the assets, rates or indices on which it is based; liquidity risk that the Fund
will be unable to sell a derivative security when it wants because of lack of
market depth or market disruption; pricing risk that the value of a derivative
security will not correlate exactly to the value of the underlying assets,
rates or indices on which it is based; and operations risk that loss will occur
as a result of inadequate systems and controls, human error or otherwise. Some
derivative securities are more complex than others, and for those instruments
that have been developed recently, data are lacking regarding their actual
performance over complete market cycles.

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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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover may result in the
realization of substantial net capital gains; distributions derived from such
gains will be treated as ordinary income for federal income tax purposes. See
"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:

2. Borrow money or issue senior securities, except from
domestic banks for temporary purposes and then in amounts not in excess
of 33% 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 33% 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 33% 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.

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 the Fund's 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 its 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

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example, gas, gas transmission, electric and gas, electric and telephone each
will be considered a separate industry.)

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 to be 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.

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, 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.

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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

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 the Fund'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.

Although Galaxy does not impose any minimum initial or subsequent
investment requirements 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.

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REDEMPTION OF SHARES

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 sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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.

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plan are deferred under the Code.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.

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

INVESTMENT ADVISER

Fleet, with principal offices at 50 Kennedy Plaza, 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 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, Asset
Allocation, Small Cap Value, Growth and Income, Short-Term Bond, 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.

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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.

The Fund's portfolio manager, Stephen D. Barbaro, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Barbaro, a Vice President and Senior Portfolio Manager, has been with Fleet
and its predecessors since 1976 and has been the Fund's portfolio manager since
its inception.

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 fees for the Fund are higher than fees paid by most
other mutual funds, although the Board of Trustees of Galaxy believes that they
are 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 all or a portion
of the 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. For the fiscal year ended October 31,
1995, Fleet received advisory fees (after fee waivers) at the effective annual
rate of .74% of the Fund's average daily net assets.

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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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

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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, the Fund paid FDISG administration fees
at the effective rate of .088% of the Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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.

Trust Shares, Retail Shares and Retail B Shares 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 and
holders of the Fund's Retail B Shares bear the fees described in the prospectus
for such shares that are incurred under Galaxy's Distribution and Services Plan
at an annual rate of up to .95% 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, Trust Shares, Retail A Shares
and Retail B Shares 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 performance.

Retail A Shares of the Fund are sold with a front-end sales charge of
3.75%. Retail B Shares are sold with a maximum contingent deferred sales charge
of 5.00%. Retail A Shares 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

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which 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 FDSIG as administrator and
transfer agent to the shareholders of record of the Retail A Shares. The Plan
provides that Galaxy will pay fees for such services at an annual rate of up to
.50% of the average daily net asset value of the Fund's outstanding Retail A
Shares beneficially owned by Customers. Institutions may provide one or more of
the following services to such Customers: aggregating and processing purchase
and redemption requests and placing net purchase and redemption orders with the
Distributor; processing dividend payments from 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 no more
than .30% (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

CUSTODIAN AND TRANSFER AGENT

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<PAGE> 614
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 Fund's
transfer and dividend disbursing agent. Services performed by these entities
for the Fund are described in the Statement of Additional Information relating
to the Fund. Communications to FDISG should be directed to FDISG at P.O. Box
15108, 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

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.

19
<PAGE> 615
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 dividends 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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.

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.

20
<PAGE> 616
[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 617

GALAXY
ASSET ALLOCATION
FUND

FEBRUARY 29, 1996

PROSPECTUS

TRUST SHARES

FN-262 15028 (3/96) pkg. 50
<PAGE> 618
TRUST

THE GALAXY FUND
Asset Allocation Fund

PROSPECTUS

February 29, 1996
<PAGE> 619
================================================================================

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 MAY NOT
LAWFULLY BE MADE.

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

<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . 5
In General . . . . . . . . . . . . . . . . . . . . . 5
Special Risk Considerations . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . 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> 620
THE GALAXY FUND

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

The Fund's investment objective is to seek a high total return by
providing both a current level of income that is greater than that produced by
the popular stock market averages as well as long-term growth in the value of
the Fund's assets. Due to the Fund's expenses, however, net income distributed
to shareholders may be less than that of the averages. The Fund attempts to
achieve this objective and at the same time reduce volatility by allocating its
assets in varying amounts among short-term obligations, common stocks,
preferred stocks and bonds.

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 all
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals or corporations purchasing
either for their own accounts or for the accounts of others and to Fleet
Brokerage Corporation, Fleet Securities, Inc., Fleet Financial Group, Inc., its
affiliates, their correspondent banks and other qualified banks, savings and
loans associations and broker/dealers on behalf of their customers. Trust
Shares, 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 services 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE 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> 621
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 summary
are also shown.

<TABLE>
<CAPTION>
ASSET
ALLOCATION
SHAREHOLDER TRANSACTION EXPENSES 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .61%
----
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . 1.36%
=====
</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>
Asset Allocation Fund . . . . . . . . . . . . . . . . . . . . $14 $42 $73 $181
</TABLE>

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in 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. 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
relating to the Fund. 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> 622
FINANCIAL HIGHLIGHTS

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 1, 1995. Such financial
highlights should be read in conjunction with the financial statements and
notes thereto contained in the Annual Report to Shareholders and incorporated
by reference into the Statement of Additional Information relating to the Fund.
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> 623
ASSET ALLOCATION FUND(1)
(FOR A SHARE2 OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993(2) 1992(1,2)
----------- ----------- ----------- -----------
TRUST SHARES TRUST SHARES
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $ 10.68 $ 11.15 $ 10.16 $ 10.00
Income from Investment Operations:
Net Investment Income(3) . . . . . . . . . . . . . . . . . . 0.32 0.28 0.25 0.15
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . 2.16 (0.49) 0.99 0.13
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . 2.48 (0.21) 1.24 0.28
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . (0.33) (0.26) (0.25) (0.12)
Dividends from net realized capital gains . . . . . . . . . -- -- -- --
------- ------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . . . . (0.33) (0.26) (0.25) (0.12)
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . . . 2.15 (0.47) 0.99 0.16
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $ 12.83 $ 10.68 $ 11.15 $ 10.16
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 23.68% (1.93%) 12.37% 2.85%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . $76,771 $65,464 $92,348 $11,555
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 2.74% 2.70% 2.59% 2.80%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.26% 1.18% 1.14% 1.11%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.30% 1.18% 1.25% 2.39%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 41% 23% 7% 2%(4)
</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 Trust
Shares and Retail Shares. On September 7, 1995, Retail Shares of the Fund
were redesignated "Retail A Shares."
(3) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the year ended October 31,
1993 and for the period ended October 31, 1992 were $0.24 and $0.08,
respectively.
(4) Not Annualized.
(5) Annualized.

4
<PAGE> 624
INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The investment objective of the Fund is to seek a high total return by
providing both a current level of income that is greater than that provided by
the popular stock market averages as well as long-term growth in the value of
the Fund's assets. Fleet Investment Advisors Inc., the Fund's investment
adviser (the "Investment Adviser" or "Fleet"), interprets the objective to
refer to the Dow Jones Industrial Average (of 30 companies listed on the New
York Stock Exchange) and the S&P 500. Due to the Fund's expenses, net income
distributed to shareholders may be less than that of these averages.

The Fund attempts to achieve its investment objective and at the same
time reduce volatility by allocating its assets among short-term obligations,
common stock, preferred stock and bonds. The proportion of the Fund's assets
invested in each type of security will vary from time to time as a result of
the Investment Adviser's interpretation of economic and market conditions.
However, at least 25% of the Fund's total assets will at all times be invested
in fixed-income senior securities, including debt securities and preferred
stocks. Debt securities purchased by the Fund will be rated at the time of
purchase in one of the four highest rating categories by Standard & Poor's
Ratings Group ("S&P") ("AAA," "AA," "A" and "BBB") or Moody's Investors
Service, Inc. ("Moody's") ("Aaa," "Aa," "A" and "Baa") (or which, if unrated,
are determined by the Investment Adviser to be of comparable quality). Debt
securities rated "BBB" by S&P or "Baa" by Moody's are generally considered to
be investment grade securities although they may have speculative
characteristics and changes in economic conditions or circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher grade debt obligations. In selecting common stock
for purchase by the Fund, the Investment Adviser will analyze the potential for
changes in earnings and dividends for a foreseeable period.

The Fund may also invest up to 20% of its total assets in foreign
securities, either directly or indirectly through American Depository Receipts
("ADRs") and European Depository Receipts ("EDRs"). See "Special Risk
Considerations" and "Other Investment Policies" below. The Fund may write
covered call options, purchase asset-backed securities and mortgage-backed
securities and enter into foreign currency exchange transactions. See "Other
Investment Policies."

As a temporary defensive measure, the Fund may invest without limitation
in cash, "money market" instruments (such as those listed under "Other
Investment Policies" below) and U.S. Government obligations at such times and
in such proportions as, in the opinion of the Investment Adviser, prevailing
market and economic conditions warrant. See "Other Investment Policies" below
for information regarding additional investment policies of the Fund.

SPECIAL RISK CONSIDERATIONS

The Fund invests in equity securities. As with other mutual funds that
invest to a significant degree in equity securities, the Fund is subject to
market risks. That is, the possibility exists that common stocks will decline
over short or even extended periods of time and both the U.S. and certain
foreign equity markets tend to be cyclical, experiencing both periods when
stock prices generally increase and periods when stock prices generally
decrease.

5
<PAGE> 625
Interest Rate Risk

To the extent that the Fund invests in fixed income securities, its
holdings of such securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and debt securities
fluctuate inversely with interest rate change.

Foreign Securities

Although the 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

All debt obligations, including convertible bonds, purchased by the Fund
are rated investment grade by Moody's Investors Service, Inc. ("Moody's")
("Aaa," "Aa," "A" and "Baa") or Standard & Poor's Ratings Group ("S&P") ("AAA,"
"AA," "A" and "BBB"), or, if not rated, are determined to be of comparable
quality by the Investment Adviser.

U.S. Government Obligations and Money Market Instruments

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 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,

6
<PAGE> 626
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.

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, 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 Fund may also purchase
Rule 144A securities. See "Investment Limitations."

Repurchase and Reverse Repurchase Agreements

7
<PAGE> 627
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, or 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.

Options

Covered Call Options. To further increase return on their portfolio
securities, in accordance with its investment objectives and policies, the Fund
may engage in writing covered call options (options on securities owned by the
Fund) and may enter into closing purchase transactions with respect to such
options. Such options must be listed on a national securities exchange and
issued by the Options Clearing Corporation. The aggregate

8
<PAGE> 628
value of the securities subject to options written by the Fund may not exceed
25% of the value of its net assets. By writing a covered call option, the Fund
forgoes the opportunity to profit from an increase in the market price of the
underlying security above the exercise price, except insofar as the premium
represents such a profit, and it will not be able to sell the underlying
security until the option expires or is exercised or the Fund effects a closing
purchase transaction by purchasing an option of the same series. The use of
covered call options is not a primary investment technique of the Fund, and
such options will normally be written on underlying securities as to which the
Investment Adviser does not anticipate significant short-term capital
appreciation. See "Derivative Securities" below.

American and European Depository Receipts

The Fund may invest in ADRs and EDRs. ADRs are receipts issued in
registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. ADRs and EDRs traded in the over-the-counter market
which do not have an active or substantial secondary market will be considered
illiquid and therefore will be subject to the Fund's limitation with respect to
such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs and EDRs involve risks similar to those accompanying direct investments in
foreign securities. Certain of these risks are described above under "Special
Risk Considerations."

Foreign Currency Exchange Transactions

Forward foreign currency exchange contracts also allow the Fund to hedge
the currency risk of portfolio securities denominated in a foreign currency.
This technique permits the assessment of the merits of a security to be
considered separately from the currency risk. By separating the asset and the
currency decision, it is possible to focus on the opportunities presented by
the security apart from the currency risk. Although forward foreign currency
exchange contracts are of short duration, generally between one and twelve
months, the forward foreign currency exchange contracts are rolled over in a
manner consistent with a more long-term currency decision. Because there is a
risk of loss to the Fund if the other party does not complete the transaction,
forward foreign currency exchange contracts will be entered into only with
parties approved by Galaxy's Board of Trustees.

9
<PAGE> 629
a segregated account consisting of cash, U.S. Government securities or other
liquid high-grade debt securities equal in value to the fluctuating market
value of the currency as to which the short position is being maintained. The
value of the securities in the segregated account will be adjusted at least
daily to reflect changes in the market value of the short position. See the
Statement of Additional Information relating to the Fund for additional
information regarding foreign currency exchange transactions.

Asset-Backed Securities

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
("GNMA"), the Federal National Mortgage Association ("FNMA"), and the Federal
Home Loan Mortgage Corporation ("FHLMC"). 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, should it invest 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 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 above under "Other Investment
Policies--Investment Company Securities."

10
<PAGE> 630
Convertible Securities

Derivative Securities

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest rates or indices will decline;
credit risk that the dealer or other counterparty to the transaction will fail
to pay its obligations; volatility and leveraging risk that, if interest rates
change adversely, the value of the derivative security will decline more than
the assets, rates or indices on which it is based; liquidity risk that the Fund
will be unable to sell a derivative security when it wants because of lack of
market depth or market disruption; pricing risk that the value of a derivative
security will not correlate exactly to the value of the underlying assets,
rates or indices on which it is based; and operations risk that loss will occur
as a result of inadequate systems and controls, human error or otherwise. Some
derivative securities are more complex than others, and for those instruments
that have been developed recently, data are lacking regarding their actual
performance over complete market cycles.

11
<PAGE> 631
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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover rate may result in the
realization of substantial net capital gains; distributions derived from such
gains will be 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
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 33% 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
33% 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 33% 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.

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 the Fund's 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 its 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

12
<PAGE> 632
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.)

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 to be 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.

PRICING OF SHARES

13
<PAGE> 633
is generally valued at the last sale price or, in the absence of a last sale
price, the last offer price.

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

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 the Fund'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
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.

14
<PAGE> 634
may also require that Customers maintain minimum account balances with respect
to Trust Shares.

REDEMPTION OF SHARES

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 sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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 its 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

15
<PAGE> 635
Fund of liability for federal income taxes to the extent the Fund's earnings
are distributed in accordance with the Code.

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.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.

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 Trust
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.

STATE AND LOCAL

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

16
<PAGE> 636
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,
Institutional Treasury Money Market, Connecticut Municipal Money Market,
Massachusetts Municipal Money Market, Equity Value, Equity Growth, Equity
Income, International Equity, Small Company Equity, Small Cap Value, Growth and
Income, Short-Term Bond, 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.

The Fund's portfolio manager, Donald Jones, is primarily responsible for
the day-to-day management of the Fund's investment portfolio. Mr. Jones, who
currently serves as Vice President, has been with Fleet and its predecessors as
a portfolio manager since 1988, has been the Fund's portfolio manager since May
1, 1995 and has managed Galaxy's New York Municipal Bond Fund since September
1994.

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 fees for the Fund are higher than fees paid by most other mutual
funds, although the Board of Trustees of Galaxy believes that they are not
higher than 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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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

17
<PAGE> 637
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, the
Fund paid FDISG 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 the Fund: Class N-Series 1 shares
(Trust Shares), Class N-Series 2 shares (Retail A Shares) and Class N-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.

Trust Shares, Retail A Shares and Retail B Shares 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 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 of up to .95% 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, Trust Shares, Retail A Shares
and Retail B Shares 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.

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.

18
<PAGE> 638
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

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 no more
than .30% (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

19
<PAGE> 639
CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as 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 Fund's transfer and
dividend disbursing agent. Services performed by these entities for the Fund
are described in the Statement of Additional Information relating to the Fund.
Communications to FDISG should be directed to FDISG at P.O. Box 15108, 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 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

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.

20
<PAGE> 640
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 dividends 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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 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.

21
<PAGE> 641
GALAXY
SMALL CAP VALUE
FUND

February 29, 1996

PROSPECTUS
Trust Shares

[GALAXY LOGO]
<PAGE> 642

TRUST
THE GALAXY FUND

SMALL CAP VALUE FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 643
================================================================================

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 MAY NOT
LAWFULLY BE MADE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . 5
Special Risk Considerations . . . . . . . . . . . . . 6
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Federal . . . . . . . . . . . . . . . . . . . . . . . 15
State and Local . . . . . . . . . . . . . . . . . . . 16

MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . 16
Investment Adviser . . . . . . . . . . . . . . . . . . 16
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 . . . . . . . . . . . . . . . . . . . . . . 19
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . 20
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . 20
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

================================================================================
<PAGE> 644
THE GALAXY FUND

4400 Computer Drive For applications and information concerning
Westboro, Massachusetts 01581-5180 initial purchases and current performance,
call 1-800-628-0414. For additional
purchases, redemptions, exchanges and
other shareholder services, call
1-800-628-0413.

The Fund's investment objective is to provide long-term capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
companies that have a market value capitalization of up to $1 billion.

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 an additional series of shares in the Fund
("Retail A Shares"), which are offered under a separate prospectus primarily to
individuals or corporations 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 and Retail A Shares 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 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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE 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> 645
EXPENSE SUMMARY

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

<TABLE>
<CAPTION>
SMALL CAP
VALUE
SHAREHOLDER TRANSACTION EXPENSES FUND
- -------------------------------- ---------
<S> <C>
Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Sales Load on Reinvested Dividends . . . . . . . . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . None

<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
<S> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .29%
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . 1.04%
=====
</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>
Small Cap Value Fund . . . . . . . . . . . . . . . . . . $11 $33 $58 $128
</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 the expenses incurred by the Fund during the
last fiscal year, restated to reflect the current fees for the Fund's Trust
Shares that would have been applicable had they been in effect. 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 relating to the Fund. 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> 646
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, Retail A
Shares, which are offered under a separate prospectus. As described below under
"Description of Galaxy and Its Shares," Trust Shares and Retail A 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 .30% of the average daily net asset value of the
Fund's outstanding Retail A Shares, and (ii) Trust Shares and Retail A Shares
bear differing transfer agency expenses.

The Small Capitalization Equity Fund commenced operations on December
14, 1992 as a separate investment portfolio (the "Predecessor Fund") of The
Shawmut Funds, which was organized as a Massachusetts business trust. On
December 4, 1995, the Fund was reorganized as a new portfolio of Galaxy. Prior
to the reorganization, the Predecessor Fund offered and sold two series of
shares of beneficial interest that were similar to the Fund's Trust Shares and
Retail A Shares, respectively.

The financial highlights presented below set forth certain information
concerning the investment results of the Predecessor Fund's Trust Shares (the
series that is similar to the Fund's Trust Shares) for the fiscal years ended
October 30, 1995 and October 31, 1994 and the fiscal period ended October 31,
1993. The information was audited by Price Waterhouse LLP, independent
accountants for the Predecessor Fund, whose report is contained in The Shawmut
Funds' Annual Report to Shareholders and incorporated by reference into the
Statement of Additional Information relating to the Fund. Such financial
highlights should be read in conjunction with the financial statements and
notes thereto contained in The Shawmut Funds' Annual Report to Shareholders and
incorporated by reference into the Statement of Additional Information relating
to the Fund. More information about the performance of the Predecessor Fund is
contained in The Shawmut Funds' Annual Report to Shareholders, which may be
obtained without charge by contacting Galaxy at its telephone numbers or
address provided above.

3
<PAGE> 647

PREDECESSOR SMALL CAP VALUE FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1993(1)
---------------- ---------------- -------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 11.07 $ 11.21 $ 10.00
-------- -------- --------
Income From Investment Operations:
Net investment income (2,3) . . . . . . . . . . . . . . 0.01 0.02 --
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . 2.21 0.17 1.21
-------- -------- --------
Total From Investment Operations: . . . . . . . . 2.22 0.19 1.21
-------- -------- --------
Dividends from net investment income . . . . . . . . . (0.01) (0.01) --
Dividends from net realized capital gains . . . . . . . (0.57) (0.32) --
-------- -------- --------
Total Dividends: . . . . . . . . . . . . . . . . . (0.58) (0.33) --
-------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . 1.64 (0.14) 1.21
-------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 12.71 $ 11.07 $ 11.21
======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . . . . . . 21.52% 1.86% 12.12%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $121,364 $101,905 $100,382
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . 0.07% 0.15% 0.02%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . 1.10% 1.06% 1.01%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . 1.35% 1.34% 1.29%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 32% 29% 29%(4)
</TABLE>
- -----------
(1)The Fund commenced operations on December 14, 1992.
(2)Represents less than $0.01 per share for the year 1993.
(3)Net investment income per share does not reflect tax reclassifications
arising in the current period.
(4)Not Annualized.
(5)Annualized.

4
<PAGE> 648
INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide long-term capital
appreciation. The Fund seeks to achieve its investment objective by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of companies that have a market value capitalization of up to $1
billion.

Small capitalization stocks have historically been more volatile in
price than larger capitalization stocks, such as those included in the S&P 500.
This is because, among other things, smaller companies have a lower degree of
liquidity in the equity market and tend to have a greater sensitivity to
changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Fund will be more volatile than,
and may fluctuate independently of, broad stock market indices such as the S&P
500.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. See "Other Investment Policies--Convertible Securities" below. The
Fund may also buy and sell options and futures contracts and utilize stock
index futures contracts, options, swap agreements, indexed securities, and
options on futures contracts. See "Other Investment Policies--Options and
Futures Contracts", "Other Investment Policies--Stock Index Futures, Swap
Agreements, Indexed Securities and Options" and "Other Investment
Policies--Derivative Securities" below.

The Fund may invest in securities of foreign issuers which are freely
traded on United States securities exchanges or in the over-the-counter market
in the form of American Depository Receipts ("ADRs") and European Depository
Receipts ("EDRs"). Securities of a foreign issuer may present greater risks in
the form of nationalization, confiscation, domestic marketability, or other
national or international restrictions. As a matter of practice, the Fund will
not invest in the securities of a foreign issuer if any such risk appears to
the Investment Adviser to be substantial. See "Special Risk Considerations" and
"Other Investment Policies" below.

As a temporary defensive measure, in such proportions as, in the
judgment of the Investment Adviser, prevailing market conditions warrant, the
Fund may invest in: (i) short-term money market instruments (such as those
listed below under "Other Investment Policies") rated in one of the top two
rating categories by a nationally recognized statistical rating organization,
such as Standard & Poor's Ratings Group ("S&P"), Moody's Investors Service,
Inc. ("Moody's") or Fitch Investors Service, L.P. ("Fitch"); (ii) securities
issued and/or guaranteed as to payment of principal and interest by the U.S.
Government, its agencies, or instrumentalities; and (iii) repurchase
agreements. Additional information about the types of money market instruments
and U.S. Government obligations in which the Small Cap Value Fund is permitted
to invest is contained in the Statement of Additional Information relating to
the Fund. See "Other Investment Policies" below for information regarding
additional investment policies of the Fund.

Fleet Investment Advisors Inc. ("the Investment Adviser" or "Fleet")
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> 649
SPECIAL RISK CONSIDERATIONS

Market Risk

The Fund invests primarily in equity securities. As with other mutual
funds that invest primarily in equity securities, the Fund is subject to market
risks. That is, the possibility exists that common stocks will decline over
short or even extended periods of time and both the U.S. and certain foreign
equity markets tend to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease.

Interest Rate Risk

To the extent that the Fund invests in fixed income securities, its
holdings of such securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and debt securities
fluctuate inversely with interest rate changes.

Foreign Securities

Although the 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
price of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

The Fund may purchase convertible bonds rated "BB" or higher by S&P or
Fitch, or "Ba" or higher by Moody's, at the time of investment. See "Other
Investment Policies--Convertible Securities" below for a discussion of the
risks of investing in convertible bonds rated either "BB" or "Ba". Short-term
money market instruments purchased by the Fund must be rated in one of the top
two rating categories by a nationally recognized statistical rating agency,
such as S&P, Moody's or Fitch.

U.S. Government Obligations and Money Market Instruments

6
<PAGE> 650
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 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.

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.

Repurchase and Reverse Repurchase Agreements

7
<PAGE> 651
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 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.

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. Additional information regarding the Fund's
policies with respect to reverse repurchase agreements is contained in the
Statement of Additional Information relating to this Fund.

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 may be on a long-term or
short-term basis or both, will be made only to borrowers deemed by the
Investment Adviser to be of good standing and only when, in the Investment
Adviser's judgement, 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 other investment companies primarily for the
purpose of investing its short-term cash which has not yet been invested in
other portfolio instruments. However, from time to time, on a temporary basis,
the Fund may invest exclusively in one other investment company similar to the
Fund. 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 Fund,
other investment portfolios of Galaxy, or 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.

Options and Futures Contracts

8
<PAGE> 652
exchanges and options not traded on exchanges. Some options and futures
strategies, including selling futures, buying puts, and writing calls, tend to
hedge the Fund's investments against price fluctuations. Other strategies,
including buying futures, writing puts, and buying calls, tend to increase
market exposure. Options and futures may be combined with each other or with
forward contracts in order to adjust the risk and return characteristics of the
overall strategy.

Options and futures can be volatile investments, and involve certain
risks. If the Investment Adviser applies a hedge at an inappropriate time or
judges market conditions incorrectly, options and futures may lower the Fund's
individual return. The Fund could also experience losses if the prices of its
options and futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of an illiquid
secondary market. See the Statement of Additional Information relating to the
Fund for additional information as to the Fund's policies on options and
futures trading.

The Fund will not hedge more than 20% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. The Fund will
not buy futures or write puts whose underlying value exceeds 20% of its total
assets, and will not buy calls with a value exceeding 5% of its total assets.

Stock Index Futures, Swap Agreements, Indexed Securities and Options.
The Fund may utilize stock index futures contracts, options, swap agreements,
indexed securities, and options on futures contracts, subject to the limitation
that the value of these futures contracts, swap agreements, indexed securities,
and options will not exceed 20% of the Fund's total assets. The Fund will not
purchase options to the extent that more than 5% of the value of its total
assets would be invested in premiums on open put option positions. In addition,
the Fund does not intend to invest more than 5% of the market value of its
total assets in each of the following: futures contracts, swap agreements, and
indexed securities. When the Fund enters into a swap agreement, assets of the
Fund equal to the value of the swap agreement will be segregated by the Fund.

There are several risks accompanying the utilization of futures
contracts. Positions in futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for such contracts. While the
Fund plans to utilize futures contracts only if there exists an active market
for such contracts, there is no guarantee that a liquid market will exist for
the contracts at a specified time. Furthermore, because by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in the
corresponding stock index. The absence of a perfect price correlation between
the futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a distortion of
the relationship between the index and the futures market. In addition, because
the futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in the
futures market could result in price fluctuations.

American and European Depository Receipts

The Fund may invest in ADRs and EDRs. ADRs are receipts issued in
registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. ADRs and EDRs traded in the over-the-counter market
which do not have an active or substantial secondary market will be considered
illiquid and therefore will be subject to the Fund's respective limitations
with respect to such securities. ADR prices are denominated in U.S. dollars
although the underlying securities are denominated

<PAGE> 653
in a foreign currency. Investments in ADRs and EDRs involve risks similar to
those accompanying direct investments in foreign securities. Certain of these
risks are described above under "Special Risk Considerations."

Foreign Currency Exchange Transactions

The Fund may maintain "short" positions in forward foreign currency
exchange transactions, which would involve the Fund's agreeing to exchange
currency that it currently does not own for another currency--for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars--at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
securities equal in value to the fluctuating market value of the currency as to
which the short position is being maintained. The value of the securities in
the segregated account will be adjusted at least daily to reflect changes in
the market value of the short position. See the Statement of Additional
Information relating to the Fund for additional information regarding foreign
currency exchange transactions.

Convertible Securities

10
<PAGE> 654
issuer's common stock. When owned as part of a unit along with warrants, which
are options to buy the common stock, they function as convertible bonds, except
that the warrants generally will expire before the bond's maturity. Convertible
securities are senior to equity securities, and therefore, have a claim to
assets of the corporation prior to the holders of common stock in the case of
liquidation. However, convertible securities are generally subordinated to
similar nonconvertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide a stable stream
of income with generally higher yields than common stocks, but lower than
non-convertible securities of similar quality. The Fund will exchange or
convert the convertible securities held in its portfolio into shares of the
underlying common stock in instances in which, in the Investment Adviser's
opinion, the investment characteristics of the underlying common shares will
assist the Fund in achieving its investment objective. Otherwise, the Fund will
hold or trade the convertible securities. In selecting convertible securities
for the Fund, the Investment Adviser evaluates the investment characteristics
of the convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security, the
Investment Adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.

The Fund may invest in convertible bonds rated "BB" or higher by S&P
or Fitch, or "Ba" or higher by Moody's at the time of investment. Securities
rated "BB" by S&P or Fitch or "Ba" by Moody's provide questionable protection
of principal and interest in that such securities either have speculative
characteristics or are predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. Debt obligations that are not rated, or determined to be,
investment grade are high-yield, high-risk bonds, typically subject to greater
market fluctuations, and securities in the lowest rating category may be in
danger of loss of income and principal due to an issuer's default. To a greater
extent than investment-grade bonds, the value of lower-rated bonds tends to
reflect short-term corporate, economic, and market developments, as well as
investor perceptions of the issuer's credit quality. In addition, lower-rated
bonds may be more difficult to dispose of or to value than high-rated,
lower-yielding bonds. The Investment Adviser will attempt to reduce the risks
described above through diversification of the portfolio and by credit analysis
of each issuer, as well as by monitoring broad economic trends and corporate
and legislative developments. If a convertible bond is rated below "BB" or "Ba"
according to the characteristics set forth here after the Fund has purchased
it, the Fund is not required to eliminate the convertible bond from the
portfolio, but will consider appropriate action. The investment characteristics
of each convertible security vary widely, which allows convertible securities
to be employed for different investment objectives. The Fund does not intend to
invest in such lower-rated bonds during the current fiscal year. A description
of the rating categories is contained in the Appendix to the Statement of
Additional Information relating to the Fund.

Derivative Securities

11
<PAGE> 655
risk that the value of a derivative security will not correlate exactly to the
value of the underlying assets, rates or indices on which it is based; and
operations risk that loss will occur as a result of inadequate systems and
controls, human error or otherwise. Some derivative securities are more complex
than others, and for those instruments that have been developed recently, data
are lacking regarding their actual performance over complete market cycles.

The Investment Adviser will evaluate the risks presented by the
derivative securities purchased by the Fund, and will determine, in connection
with its day-to-day management of the Fund, how they will be used in
furtherance of the Fund's investment objective. It is possible, however, that
the Investment Adviser's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Fund will,
because of the risks discussed above, incur loss as a result of its investments
in derivative securities. See "Investment Objectives and Policies--Derivative
Securities" in the Statement of Additional Information relating to the Fund for
additional information.

When-Issued and Delayed Settlement Transactions

The Fund may purchase eligible securities on a "when-issued" or
"delayed settlement" basis. When-issued 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 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.

The Fund may dispose of a commitment prior to settlement if the
Investment Adviser deems it appropriate to do so. In addition, the Fund may
enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.

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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover may result in the
realization of substantial net capital gains; distributions derived from such
gains will be treated as ordinary income for Federal income tax purposes. See
"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:

12
<PAGE> 656
or pledge securities except, under certain circumstances, the Fund may
borrow up to one-third of the value of its total assets and pledge up
to 10% of the value of its total assets to secure such borrowings; or

2. With respect to 75% of the value of its total assets,
invest more than 5% in securities of any one issuer, other than cash,
cash items, or securities issued or guaranteed by the government of
the United States or, its agencies or instrumentalities and repurchase
agreements collateralized by such securities, or acquire more than 10%
of the outstanding voting securities of any one issuer.

The following investment limitation may be changed by Galaxy's Board
of Trustees without shareholder approval. Shareholders will be notified before
any material change in this limitation becomes effective:

3. The Fund may not invest more than 15% of its net assets in
securities subject to restrictions on resale under the Securities Act
of 1933 (except for commercial paper issued under Section 4(a) of the
Securities Act of 1933 and certain other securities which meet the
criteria for liquidity as established by the Board of Trustees).

In addition, the Fund may not purchase any securities which would
cause 25% or more of the value of a Fund's total assets at the time of purchase
to be invested in the securities of one or more issuers conducting their
principal business activities in the same industry; provided 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.)

The Fund intends to invest in restricted securities. Restricted
securities are any securities in which the Fund may otherwise invest pursuant
to its investment objective and policies, but which are subject to restriction
on resale under federal securities law. The Fund will limit its investments in
illiquid securities, including certain restricted securities not determined by
the Board of Trustees to be liquid, non-negotiable fixed time deposits with
maturities over seven days, over-the-counter options, and repurchase agreements
providing for settlement in more than seven days after notice, to 15% of its
net assets.

PRICING OF SHARES

13
<PAGE> 657
Securities for which there were no transactions are valued at the average of
the most recent bid and asked prices. Investments in debt securities with
remaining maturities of 60 days or less are valued based upon the amortized
cost method. Restricted securities, securities for which market quotations are
not readily available, and other assets are valued at fair value by the
Investment Adviser under the supervision of Galaxy's Board of Trustees. An
option is generally valued at the last sale price or, in the absence of a last
sale price, the last offer price.

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

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 the Fund'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.

14
<PAGE> 658
Although Galaxy does not impose any minimum initial or subsequent
investment requirements with respect to Trust Shares, an Institution 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

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 sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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> 659
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 Trust Shares.
(Federal income taxes for distributions to an IRA or a qualified retirement
plan are deferred under the Code.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.

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.

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

16
<PAGE> 660
Company Equity, Asset Allocation, Growth and Income, Short-Term Bond,
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.

The Fund's portfolio manager, Peter Larson, is primarily responsible
for the day-to-day management of the Fund's investment portfolio. Mr. Larson
served as the portfolio manager of the Predecessor Fund since its inception in
1992. He joined Shawmut Bank in 1963 as an investment officer and was a Vice
President in charge of Shawmut Bank's Small Cap Equity Management product since
inception in 1982.

The Predecessor Fund bore advisory fees during the most recent fiscal
year pursuant to the investment advisory agreement then in effect with Shawmut
Bank, N.A., its former adviser, at the effective annual rate of .77% of its
average daily net assets after fee waivers. Without fee waivers, the
Predecessor Fund would have borne advisory fees at the annual rate of 1.00% of
its average daily net assets.

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 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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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.

17
<PAGE> 661
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 01581-5180, 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.

The Predecessor Fund bore administration fees during its most recent
fiscal year pursuant to the administration agreement then in effect with
Federated Administrative Services, its prior administrator, at the effective
annual rate of .10% of its average daily net assets after fee waivers.

DESCRIPTION OF GALAXY AND ITS SHARES

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 A Shares and these other
portfolios, which are offered through separate prospectuses, contact the
Distributor at 1-800-628-0414.

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.

18
<PAGE> 662
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

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 no more
than .30% (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

19
<PAGE> 663
CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as custodian of the Fund's assets. 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 Fund's transfer and dividend disbursing agent.
Services performed by these entities for the Fund are described in the
Statement of Additional Information relating to the Fund. Communications to
FDISG should be directed to FDISG at P.O. Box 15108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5180.

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 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, the S&P 500, an
unmanaged index of groups of common stocks, the Consumer Price Index, or the
Dow Jones Industrial Average, a recognized unmanaged index of common stocks of
30 industrial companies listed on the New York Stock Exchange.

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.

20
<PAGE> 664
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 dividends 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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.

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.

21
<PAGE> 665
GALAXY
GROWTH AND INCOME
FUND

February 29, 1996

PROSPECTUS

Trust Shares

FN-507 15004 (3/96) pkg. 50
<PAGE> 666
TRUST

THE GALAXY FUND

GROWTH AND INCOME FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 667

================================================================================

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . 2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . 5
Special Risk Considerations . . . . . . . . . . . . 6
Other Investment Policies and Risk
Considerations . . . . . . . . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . 13
PRICING OF SHARES . . . . . . . . . . . . . . . . . . 14
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . 14
Distributor . . . . . . . . . . . . . . . . . . . . 14
Purchase of Shares . . . . . . . . . . . . . . . . 14
Redemption of Shares . . . . . . . . . . . . . . . 15
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . 16
TAXES . . . . . . . . . . . . . . . . . . . . . . . . 16
Federal . . . . . . . . . . . . . . . . . . . . . . 16
State and Local . . . . . . . . . . . . . . . . . . 17
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . 17
Investment Adviser . . . . . . . . . . . . . . . . 17
Authority to Act as Investment Adviser . . . . . . 18
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 . . . . . . . . . . 21
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 22
</TABLE>

================================================================================
<PAGE> 668
THE GALAXY FUND

4400 Computer Drive For applications and information
Westboro, Massachusetts 01581-5180 regarding initial purchases and current
performance, call 1-800-628-0414. For
additional purchases, redemptions,
exchanges and other shareholder services,
call 1-800-628-0413.

The Fund's investment objective is to provide a relatively high total
return through long-term capital appreciation and current income. The Fund
attempts to achieve this objective by investing in a professionally managed,
diversified portfolio consisting primarily of common stocks of companies
believed to have prospects for above-average growth and dividends or of
companies where significant fundamental changes are taking place. Under normal
market and economic conditions, the Fund will invest at least 65% of its assets
in growth and income equity securities. The Fund seeks to achieve a current
dividend yield that exceeds the composite yield of securities included in the
Standard & Poor's 500 Composite Stock Index ("S&P 500").

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 FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE 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> 669
EXPENSE SUMMARY

<TABLE>
<CAPTION>
GROWTH AND
SHAREHOLDER TRANSACTION EXPENSES INCOME FUND
- -------------------------------- -----------
<S> <C>
Sales Load . . . . . . . . . . . . . . . . . . . . . . None
Sales Load on Reinvested Dividends . . . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . None

<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
<S> <C>
Advisory Fees . . . . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . . . . .32%
-----
Total Fund Operating Expenses . . . . . . . . . . . . . 1.07%
=====
</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>
Growth and Income Fund . . . . . . . . . $10 $32 $56 $125
</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 current fees for the Fund's Trust Shares
that would have been applicable had they been in effect. 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 relating to the Fund. 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 descibed 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> 670
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) Retail A Shares of the Fund
bear the expenses incurred under Galaxy's Shareholder Services Plan at an
annual rate of up to .30% 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 .95% 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.

The Growth and Income Equity Fund commenced operations on December 14,
1992 as a separate investment portfolio (the "Predecessor Fund") of The Shawmut
Funds, which was organized as a Massachusetts business trust. On December 4,
1995, the Fund was reorganized as a new portfolio of Galaxy. Prior to the
reorganization, the Predecessor Fund offered and sold two series of shares of
beneficial interest that were similar to the Fund's Trust Shares and Retail A
Shares, respectively.

The financial highlights presented below set forth certain information
concerning the investment results of the Predecessor Fund's Trust Shares (the
series that is similar to the Fund's Trust Shares) for the fiscal years ended
October 31, 1995 and October 31, 1994 and the fiscal period ended October 31,
1993. The information was audited by Price Waterhouse LLP, independent
accountants for the Predecessor Fund, whose report is contained in The Shawmut
Funds' Annual Report to Shareholders dated October 31, 1995. Such financial
highlights should be read in conjunction with the financial statements and
notes thereto contained in The Shawmut Funds' Annual Report to Shareholders and
incorporated by reference into the Statement of Additional Information relating
to the Fund. More information about the performance of the Predecessor Fund is
contained in The Shawmut Funds' Annual Report to Shareholders, which may be
obtained without charge by contacting Galaxy at its telephone numbers or
address provided above.

3
<PAGE> 671
PREDECESSOR GROWTH AND INCOME FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993(1)
----------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 11.15 $ 10.69 $ 10.00
-------- --------- --------
Income from Investment Operations:
Net Investment Income2 . . . . . . . . . . . . . . . . 0.28 0.25 0.18
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . 1.69 0.72 0.69
-------- --------- --------
Total from Investment Operations: . . . . . . . . . 1.97 0.97 0.87
-------- --------- --------
Less Dividends:
Dividends from net investment income . . . . . . . . . (0.28) (0.23) (0.18)
Dividends from net realized capital gains . . . . . . . (0.49) (0.28) --
-------- --------- --------
Total Dividends: . . . . . . . . . . . . . . . . . (0.77) (0.51) (0.18)
-------- --------- --------
Net increase (decrease) net asset value . . . . . . . . . . 1.20 (0.46) 0.69
-------- --------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 12.35 $ 11.15 $ 10.69
======== ========= ========
Total Return . . . . . . . . . . . . . . . . . . . . . . . 18.80% 9.45% 8.80%(4)

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . $189,011 $156,827 $147,090
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . 2.42% 2.31% 2.11%(3)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . 1.07% 1.04% 0.98%(3)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . 1.27% 1.24% 1.25%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 51% 73% 38%(4)
</TABLE>

(1) The Fund commenced operations on December 14, 1992.
(2) Net investment income per share does not reflect tax reclassifications
arising in the current period.
(3) Annualized.
(4) Not Annualized.

4
<PAGE> 672
INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide a relatively high total
return through long-term capital appreciation and current income. The Fund
attempts to achieve this objective by investing in a professionally managed,
diversified portfolio consisting primarily of common stocks of companies with
prospects for above-average growth and dividends or of companies where
significant fundamental changes are taking place. Under normal market
circumstances, the Fund will invest at least 65% of its assets in growth and
income equity securities. The Fund generally looks to achieve a current
dividend yield that exceeds the composite yield of securities included on the
S&P 500.

The Fund invests primarily in growth-oriented equity securities.
Growth-oriented stocks may include issuers with smaller capitalizations. Small
capitalization stocks have historically been more volatile in price than larger
capitalization stocks, such as those included in the S&P 500. This is because,
among other things, smaller companies have a lower degree of liquidity in the
equity market and tend to have a greater sensitivity to changing economic
conditions. Further, in addition to exhibiting greater volatility, these stocks
may, to some degree, fluctuate independently of the stocks of large companies.
That is, the stock of small capitalization companies may decline in price as
the price of large company stocks rises or vice versa. Therefore, investors
should expect that the Fund will be more volatile than, and may fluctuate
independently of, broad stock market indices such as the S&P 500.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. See "Other Investment Policies--Convertible Securities" below. The
Fund may also buy and sell options and futures contracts and utilize stock
index futures contracts, options, swap agreements, indexed securities, and
options on futures contracts. See "Other Investment Policies--Options and
Futures Contracts," "Other Investment Policies--Stock Index Futures, Swap
Agreements, Indexed Securities and Options" and "Other Investment
Policies--Derivative Securities" below.

The Fund may invest in securities of foreign issuers which are freely
traded on United States securities exchanges or in the over-the-counter market
in the form of ADRs and EDRs. Securities of a foreign issuer may present
greater risks in the form of nationalization, confiscation, domestic
marketability, or other national or international restrictions. As a matter of
practice, the Fund will not invest in the securities of foreign issuers if any
such risk appears to the Investment Adviser to be substantial. See "Special
Risk Considerations" and Other Investment Policies" below.

As a temporary defensive measure, in such proportions as, in the
judgment of the Investment Adviser, prevailing market conditions warrant, the
Fund may invest in: (i) short-term money market instruments (such as those
listed below under "Other Investment Policies") rated in one of the top two
rating categories by a nationally recognized statistical rating organization,
such as Standard & Poor's Ratings Group ("S&P"), Moody's Investors Service,
Inc. ("Moody's") or Fitch Investors Services, L.P. ("Fitch"); (ii) securities
issued and/or guaranteed as to payment of principal and interest by the U.S.
Government, its agencies, or instrumentalities; and (iii) repurchase
agreements. Additional information about the types of money market instruments
and U.S. Government obligations in which the Fund is permitted to invest is
contained in the Statement of Additional Information relating to the Fund. See
"Other Investment Policies" below for information regarding additional
investment policies of the Growth and Income Fund.

Fleet Investment Advisors, Inc., the Fund's investment adviser (the
"Investment Adviser" or "Fleet") 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

5
<PAGE> 673
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.

SPECIAL RISK CONSIDERATIONS

Market Risk

The Fund invests primarily in equity securities. As with other mutual
funds that invest primarily in equity securities, the Fund is subject to market
risks. That is, the possibility exists that common stocks will decline over
short or even extended periods of time and both the U.S. and certain foreign
equity markets tend to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease.

Interest Rate Risk

To the extent that the Fund invests in fixed income securities, its
holdings of such securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and debt securities
fluctuate inversely with interest rate changes.

Foreign Securities

Although the 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 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 investments
could reduce the effect of increases and magnify the effect of decreases in the
price of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying
the effect of increases and reducing the effect of decreases in the prices of
the Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

The Fund may purchase convertible bonds rated "BB" or higher by S&P or
Fitch, or "Ba" or higher by Moody's, at the time of investment. See "Other
Investment Policies--Convertible Securities" below for a discussion of the
risks of investing in convertible bonds rated either "BB" or "Ba." Short-term
money market instruments purchased by the Fund must be rated in one of the top
two rating categories by a nationally recognized statistical rating agency,
such as S&P, Moody's or Fitch.

6
<PAGE> 674
U.S. Government Obligations and Money Market Instruments

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 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.

Repurchase and Reverse Repurchase Agreements

7
<PAGE> 675
exceeding one year. Unless a repurchase agreement has a remaining maturity of
seven days or less or may be terminated on demand upon notice of seven days or
less, the repurchase agreement will be considered an illiquid security and
will be subject to the 15% limit described below in Investment Limitation No.
3 under "Investment Limitations."

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 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.

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. Additional information regarding the Fund's
policies with respect to reverse repurchase agreements is contained in the
Statement of Additional Information relating to this Fund.

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 may be on a long-term or
short-term basis or both, will be made only to borrowers deemed by the
Investment Adviser to be of good standing and only when, in the Investment
Adviser's judgement, 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

8
<PAGE> 676
Options and Futures Contracts

Options and Futures Contracts. The Fund may buy and sell options and
futures contracts to manage its exposure to changing interest rates, security
prices and currency exchange rates. The Fund may invest in options and futures
based on any type of security, index, or currency, including options and
futures based on foreign exchanges and options not traded on exchanges. Some
options and futures strategies, including selling futures, buying puts, and
writing calls, tend to hedge the Fund's investments against price fluctuations.
Other strategies, including buying futures, writing puts, and buying calls,
tend to increase market exposure. Options and futures may be combined with each
other or with forward contracts in order to adjust the risk and return
characteristics of the overall strategy.

American and European Depository Receipts

9
<PAGE> 677
in the over-the-counter market. EDRs are designed for use in European exchange
and over-the-counter markets. ADRs and EDRs traded in the over-the-counter
market which do not have an active or substantial secondary market will be
considered illiquid and therefore will be subject to the Fund's respective
limitations with respect to such securities. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs and EDRs involve risks similar to those
accompanying direct investments in foreign securities. Certain of these risks
are described above under "Special Risk Considerations."

Foreign Currency Exchange Transactions

The Fund may maintain "short" positions in forward foreign currency
exchange transactions, which would involve the Fund's agreeing to exchange
currency that it currently does not own for another currency--for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars--at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
securities equal in value to the fluctuating market value of the currency as to
which the short position is being maintained. The value of the securities in
the segregated account will be adjusted at least daily to reflect changes in
the market value of the short position. See the Statement of Additional
Information relating to the Fund for additional information regarding foreign
currency exchange transactions.

Convertible Securities

Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the

10
<PAGE> 678
investment characteristics of fixed income securities until they have been
converted but also react to movements in the underlying equity securities. The
holder is entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to exercise the
conversion privilege. Usable bonds are corporate bonds that can be used in
whole or in part, customarily at full face value, in lieu of cash to purchase
the issuer's common stock. When owned as part of a unit along with warrants,
which are options to buy the common stock, they function as convertible bonds,
except that the warrants generally will expire before the bond's maturity.
Convertible securities are senior to equity securities, and therefore, have a
claim to assets of the corporation prior to the holders of common stock in the
case of liquidation. However, convertible securities are generally subordinated
to similar nonconvertible securities of the same company. The interest income
and dividends from convertible bonds and preferred stocks provide a stable
stream of income with generally higher yields than common stocks, but lower
than non-convertible securities of similar quality. The Fund will exchange or
convert the convertible securities held in its portfolio into shares of the
underlying common stock in instances in which, in the Investment Adviser's
opinion, the investment characteristics of the underlying common shares will
assist the Fund in achieving its investment objective. Otherwise, the Fund will
hold or trade the convertible securities. In selecting convertible securities
for the Fund, the Investment Adviser evaluates the investment characteristics
of the convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security, the
Investment Adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.

Derivative Securities

Derivative securities present, to varying degrees, market risk that
the performance of the underlying assets,

11
<PAGE> 679
interest rates or indices will decline; credit risk that the dealer or other
counterparty to the transaction will fail to pay its obligations; volatility
and leveraging risk that, if interest rates change adversely, the value of the
derivative security will decline more than the assets, rates or indices on
which it is based; liquidity risk that the Fund will be unable to sell a
derivative security when it wants because of lack of market depth or market
disruption; pricing risk that the value of a derivative security will not
correlate exactly to the value of the underlying assets, rates or indices on
which it is based; and operations risk that loss will occur as a result of
inadequate systems and controls, human error or otherwise. Some derivative
securities are more complex than others, and for those instruments that have
been developed recently, data are lacking regarding their actual performance
over complete market cycles.

The Investment Adviser will evaluate the risks presented by the
derivative securities purchased by the Fund, and will determine, in connection
with its day-to-day management of the Fund, how they will be used in
furtherance of the Fund's investment objective. It is possible, however, that
the Investment Adviser's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Fund will,
because of the risks discussed above, incur loss as a result of its investments
in derivative securities. See "Investment Objectives and Policies--Derivative
Securities" in the Statement of Additional Information relating to the Fund for
additional information.

When-Issued and Delayed Settlement Transactions

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 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 involves correspondingly greater brokerage
commission expenses and other transaction costs, which must be ultimately borne
by the Fund's shareholders. High portfolio turnover may result in the
realization of substantial net capital gains; distributions derived from such
gains will be treated as ordinary income for federal income tax purposes. See
"Taxes-- Federal."

12
<PAGE> 680
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. Borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a portfolio
instrument for a percentage of its cash value with an arrangement to
buy it back on a set date) or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its
total assets and pledge up to 10% of the value of its total assets to
secure such borrowings; or

In addition, the Fund may not purchase any securities which would
cause 25% or more of the value of its 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.)

13
<PAGE> 681
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, Presidents' 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.

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

14
<PAGE> 682
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 the Fund'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
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.

Although Galaxy does not impose any minimum initial or subsequent
investment requirements 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.

REDEMPTION OF SHARES

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 sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

15
<PAGE> 683
DIVIDENDS AND DISTRIBUTIONS

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.

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.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.

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.

16
<PAGE> 684
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

The Fund's portfolio manager, Brendan Henebry, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Henebry served as portfolio manager for the Predecessor Funds since its
inception in 1992. He was associated with Shawmut Bank and its predecessor
since 1965 and was a Vice President since 1978. During the past six years he
served as manager of Shawmut Bank's Growth and Income Equity Management Group.

The Predecessor Fund bore advisory fees during the most recent fiscal
year pursuant to the investment advisory agreement then in effect with Shawmut
Bank, N.A., its former adviser, at the effective annual rate of .82% of its
average daily net assets after fee waivers. Without fee waivers, the
Predecessor Fund would have borne advisory fees at the annual rate of 1.00% of
its average daily net assets.

17
<PAGE> 685
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 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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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

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.

DESCRIPTION OF GALAXY AND ITS SHARES

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.

18
<PAGE> 686
Trust Shares, Retail A Shares and Retail B Shares 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 and
holders of the Fund's Retail B Shares bear the fees described in the Prospectus
for such shares that are incurred under Galaxy's Distribution and Services Plan
at an annual rate not to exceed .95% 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, Trust Shares, Retail A
Shares and Retail B Shares 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.

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 (irrespective of series
designation), 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

19
<PAGE> 687
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

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as 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 purposes 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 Fund's transfer and
dividend disbursing agent. Services performed by these entities for the Fund
are described in the Statement of Additional Information relating to the Fund.
Communications to FDISG should be directed to FDISG at P.O. Box 15108, 4400
Computer Drive, Westboro, Massachusetts 01581-5180.

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.

20
<PAGE> 688
PERFORMANCE AND YIELD INFORMATION

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.

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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged 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
materials, 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.

21
<PAGE> 689
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, with respect to the
approval of an investment advisory agreement or a change in an investment
objective or fundamental investment policy, means 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.

22
<PAGE> 690

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 691

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 692

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 693

GALAXY
FUNDS

EQUITY VALUE FUND
EQUITY GROWTH FUND
EQUITY INCOME FUND
INTERNATIONAL EQUITY FUND
SMALL COMPANY EQUITY FUND
ASSET ALLOCATION FUND
SMALL CAP VALUE FUND
GROWTH AND INCOME FUND

FN-041 15038 (3/96) pkg. 50

February 29, 1996
<PAGE> 694
TRUST
THE GALAXY FUND

EQUITY VALUE FUND

EQUITY GROWTH FUND

EQUITY INCOME FUND

INTERNATIONAL EQUITY FUND

SMALL COMPANY EQUITY FUND

ASSET ALLOCATION FUND

SMALL CAP VALUE FUND

GROWTH AND INCOME FUND

PROSPECTUS

FEBRUARY 29, 1996
<PAGE> 695
===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENTS 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 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>
<CAPTION>
PAGE
----
<S> <C>
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Equity Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Equity Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Equity Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
International Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Small Company Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Asset Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Small Cap Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Growth and Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Special Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Investment Policies and Risk
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Investment Adviser and Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Authority to Act as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Description of Galaxy and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Affiliate Agreement for
Sub-Account Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Performance and Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
===============================================================================
<PAGE> 696

THE GALAXY FUND
4400 Computer Drive
Westboro, Massachusetts 01581-5108

For applications and
information concerning initial
purchases and current
performance, call
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 eight series of Galaxy's shares (collectively, the
"Trust Shares"), which represent interests in eight separate diversified
investment portfolios (individually, a "Fund," collectively, the "Funds")
offered to investors by Galaxy, each having its own investment objective and
policies:

The EQUITY VALUE FUND'S investment objective is to seek long-term capital
appreciation. Income is secondary to the objective of capital appreciation. The
Fund attempts to achieve this objective by investing, under normal market and
economic conditions, at least 75% of its total assets in common stock,
preferred stock and debt securities convertible into common stock that the
Fund's investment adviser believes are undervalued.

The EQUITY GROWTH FUND'S investment objective is to seek long-term capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal market and economic conditions, at least 75% of its total assets in
common stock, preferred stock, common stock warrants and securities convertible
into common stock of companies that the Fund's investment adviser believes have
above-average earnings potential.

The EQUITY INCOME FUND'S investment objective is to seek current income and
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal market and economic conditions, at least 75% of its total assets
in common stock and securities convertible into common stock.

The INTERNATIONAL EQUITY FUND'S investment objective is to seek long-term
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal market and economic conditions, at least 75% of its total assets
in equity securities of foreign issuers.

The SMALL COMPANY EQUITY FUND'S investment objective is to seek capital
appreciation. The Fund attempts to achieve this objective by investing
primarily in the securities of companies with capitalizations of $500 million
or less that the Fund's investment adviser believes represent the potential for
significant capital appreciation. Under normal market and economic conditions,
the Fund will invest at least 65% of its assets in the equity securities of
companies with capitalizations of $500 million or less.

The ASSET ALLOCATION FUND'S investment objective is to seek a high total
return by providing both a current level of income that is greater than that
produced by the popular stock market averages as well as long-term growth in
the value of the Fund's assets. Due to the FundGs expenses, however, net
income distributed to shareholders may be less than that of the averages. The
Fund attempts to achieve this objective and at the same time reduce volatility
by allocating its assets in varying amounts among short-term obligations,
common stocks, preferred stocks and bonds.

The SMALL CAP VALUE FUND'S investment objective is to provide long-term
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of companies that have a market value capitalization of up to $1
billion.

The GROWTH AND INCOME FUND'S investment objective is to provide a
relatively high total return through long-term capital appreciation and
current income. The Fund attempts to achieve this objective by investing in a
professionally managed, diversified portfolio consisting primarily of common
stocks of companies believed to have prospects for above-average growth and
dividends or of companies where significant fundamental changes are taking
place. Under normal market and economic conditions, the Fund will invest at
least 65% of its assets in growth and income securities. The Fund seeks to
achieve a current dividend yield that exceeds the composite yield of securities
included in the Standard & Poor's 500 Composite Stock Index ("S&P 500").
<PAGE> 697
This Prospectus describes the 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 each of the Equity Income Fund, International Equity Fund and Small
Cap Value Fund and two additional series of shares, Retail A Shares and Retail
B Shares, in each of the Equity Value Fund, Equity Growth Fund, Small Company
Equity Fund, Asset Allocation Fund and Growth and Income 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 Corporation, Fleet Securities,
Inc., Fleet Financial Group, Inc., its affiliates, their correspondent banks
and other qualified banks, savings and loans associations and broker/dealers on
behalf of their customers. Trust Shares, Retail A Shares and Retail B Shares in
a Fund represent equal pro rata interests in the Fund, except they bear
different expenses that 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 Finaical Distributors, Inc., which is unaffiliated with
Fleet Investment Advisors Inc. and its parent, Fleet Financial Group, Inc., and
affiliates. Wellington Management Company serves as the sub-adviser to the
International Equity Fund.

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 THE 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

2
<PAGE> 698

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 summary are also
shown.
<TABLE>
<CAPTION>
SMALL
EQUITY EQUITY EQUITY INTERNATIONAL COMPANY ASSET SMALL CAP GROWTH AND
VALUE GROWTH INCOME EQUITY EQUITY ALLOCATION VALUE INCOME
SHAREHOLDER TRANSACTION EXPENSES FUND FUND FUND FUND FUND FUND FUND FUND
- -------------------------------- ------ ------ ------ ------------- ------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Load . . . . . . . . . . None None None None None None None None
Sales Load on Reinvested
Dividends . . . . . . . . . None None None None None None None None
Deferred Sales Load . . . . . . None None None None None None None None
Redemption Fees . . . . . . . . None None None None None None None None
Exchange Fees . . . . . . . . . None None None None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------
Advisory Fees (After Fee
Waivers) . . . . . . . . . . .75% .75% .75% .72% .75% .75% .75% .75%
12b-1 Fees . . . . . . . . . . None None None None None None None None
Other Expenses . . . . . . . . .38% .34% .31% .55% .45% .61% .29% .32%
---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses
(After Fee Waivers) . . . . 1.13% 1.09% 1.06% 1.27% 1.20% 1.36% 1.04% 1.07%
===== ==== ==== ==== ==== ==== ==== ====
</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>
Equity Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . $11 $35 $61 $135
Equity Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . $11 $34 $59 $130
Equity Income Fund . . . . . . . . . . . . . . . . . . . . . . . . $11 $33 $57 $127
International Equity Fund . . . . . . . . . . . . . . . . . . . . . $13 $40 $66 $151
Small Company Equity Fund . . . . . . . . . . . . . . . . . . . . . $12 $37 $65 $143
Asset Allocation Fund . . . . . . . . . . . . . . . . . . . . . . $14 $42 $73 $181
Small Cap Value Fund . . . . . . . . . . . . . . . . . . . . . . . $11 $33 $58 $128
Growth and Income Fund . . . . . . . . . . . . . . . . . . . . . . $10 $32 $56 $125
</TABLE>

3
<PAGE> 699
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.

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 each of
the Equity Income Fund, International Equity Fund and Small Cap Value Fund, and
two additional series of shares, Retail A Shares and Retail B Shares, in each
of the Equity Value Fund, Equity Growth Fund, Small Company Equity Fund, Asset
Allocation Fund and Growth and Income 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 at an annual rate of up to
.30% 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 .95% 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.

The financial highlights presented below for the Equity Value, Equity
Growth, Equity Income, International Equity, Small Company Equity and Asset
Allocation 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 and notes thereto contained in
Galaxy's Annual Report to Shareholders and incorporated by reference into the
Statement of Additional Information relating to these Funds. Information in the
financial highlights presented below with respect to these Funds 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 Funds (Retail A Shares of the
Equity Value and Equity Growth Funds were first offered during the fiscal
year/period ended October 31, 1991, and Retail A Shares of the Equity Income
Fund were first offered during the fiscal year ended October 31, 1992). More
information about the performance of the Funds is also contained in Galaxy's
Annual Report to Shareholders, which may be obtained without charge by
contacting Galaxy at its telephone numbers or address provided above.

4
<PAGE> 700
EQUITY VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994 YEARS ENDED OCTOBER 31,(2) PERIOD 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................. $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41 $ 10.00
-------- -------- -------- -------- ------- ------- ------- -------

Income from Investment
Operations:
Net Investment Income..... 0.28 0.19 0.19 0.26 0.37 0.39 0.36 0.03

Net realized and unrealized
gain (loss) on investments 2.24 0.45 2.14 0.33 2.41 (1.37) 1.10 0.38
-------- -------- -------- -------- ------- ------- ------- -------

Total from Investment
Operations:........ 2.52 0.64 2.33 0.59 2.78 (0.98) 1.46 0.41
-------- -------- -------- -------- ------- ------- ------- -------

Less Dividends:
Dividends from net
investment income....... (0.30) (0.16) (0.20) (0.27) (0.37) (0.38) (0.36) --

Dividends from net realized
capital gains........... (1.21) (0.28) (0.42) (0.43) (0.34) (0.70) -- --
-------- -------- -------- -------- ------- ------- ------- -------

Total Dividends:.... (1.51) (0.44) (0.62) (0.70) (0.71) (1.08) (0.36) --
-------- -------- -------- -------- ------- ------- ------- -------

Net increase (decrease) in
net asset value.......... 1.01 0.20 1.71 (0.11) 2.07 (2.06) 1.10 0.41
-------- -------- -------- -------- ------- ------- ------- -------

Net Asset Value, End
of Period................ $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41
======== ======== ======== ======== ======= ======= ======= =======

Total Return................ 21.31% 5.05% 21.18% 5.66% 30.45% (9.43%) 14.19% 4.10%(3)

Ratios/Supplemental Data:
Net Assets, End of
Period (000's)........... $165,330 $154,403 $176,107 $133,578 $99,601 $92,893 $92,366 $75,774

Ratios to average net assets:
Net investment income
including reimbursement/
waiver................. 2.10% 1.46% 1.52% 2.24% 3.25% 3.66% 3.25% 1.89%(4)

Operating expenses including
reimbursement/waiver... 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.97% 0.95%(4)

Operating expenses excluding
reimbursement/waiver.... 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.98% 0.95%(4)

Portfolio Turnover Rate....... 76% 71% 50% 136% 40% 94% 44% 4%(3)

</TABLE>
- ------------
1 The Fund commenced operations on September 1, 1988.
2 For periods prior to the year ended October 31, 1994, the per share amounts
reflect the financial results of both Trust and Retail Shares. On September
7, 1995, Retail Shares of the Fund were redesignated "Retail A Shares."
3 Not Annualized.
4 Annualized.

5
<PAGE> 701

EQUITY GROWTH FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEARS ENDED PERIOD ENDED
1995 1994 OCTOBER 31,(2) OCTOBER 31,
---------------------- ----------------------- -------------
TRUST SHARES 1993 1992 1991(1),(2)
---------------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $ 14.19 $ 13.76 $ 12.90 $ 11.99 $ 10.00
-------- -------- -------- -------- -------
Income from Investment Operations:
Net Investment Income . . . . . . . . . 0.20 0.18 0.15 0.17 0.16
Net realized and unrealized gain
(loss) on investments . . . . . . . 3.28 0.47 0.95 0.91 1.97
-------- -------- -------- -------- -------
Total from Investment
Operations: . . . . . . . . . . 3.48 0.65 1.10 1.08 2.13
-------- -------- -------- -------- -------

Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . (0.20) (0.16) (0.15) (0.17) (0.14)
Dividends from net realized
capital gains . . . . . . . . . . . (0.17) (0.06) (0.09) -- --
-------- -------- -------- -------- -------
Total Dividends: . . . . . . . . (0.37) (0.22) (0.24) (0.17) (0.14)
-------- -------- -------- -------- -------
Net increase (decrease) in net
asset value . . . . . . . . . . . . . . 3.11 0.43 0.86 0.91 1.99
-------- -------- -------- -------- -------

Net Asset Value, End of Period . . . . . . $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99
======== ======== ======== ======== =======
Total Return . . . . . . . . . . . . . . . 25.08% 4.80% 8.58% 9.10% 21.39%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $420,016 $362,094 $427,298 $224,630 $92,224
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . 1.31% 1.27% 1.20% 1.37% 1.46%(4)
Operating expenses including
reimbursement/waiver . . . . . . . 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Operating expenses excluding
reimbursement/waiver . . . . . . . 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Portfolio Turnover Rate . . . . . . . . . . 14% 18% 16% 22% 16%(3)
</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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."
3 Not Annualized.
4 Annualized.

6
<PAGE> 702

EQUITY INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEARS 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 . . $ 12.75 $ 12.85 $ 11.85 $ 11.29 $10.00
------- ------- -------- ------- ------
Income from Investment Operations:
Net Investment Income(3) . . . . . . 0.36 0.31 0.30 0.30 0.29
Net realized and unrealized gain
(loss) on investments . . . . . . 2.45 0.07 1.09 0.76 1.26
------- ------- -------- ------- ------
Total from Investment
Operations: . . . . . . . . . 2.81 0.38 1.39 1.06 1.55
------- ------- -------- ------- ------
Less Dividends:
Dividends from net
investment income . . . . . . . . (0.36) (0.29) (0.28) (0.30) (0.26)
Dividends from net realized
capital gains . . . . . . . . . . (0.21) (0.19) (0.11) (0.20) -
------- ------- -------- ------- ------
Total Dividends: . . . . . . . . (0.57) (0.48) (0.39) (0.50) (0.26)
------- ------- -------- ------- ------
Net increase (decrease) in
net asset value . . . . . . . . . . . 2.24 (0.10) 1.00 0.56 1.29
------- ------- -------- ------- ------
Net Asset Value, End of Period . . . . . $ 14.99 $ 12.75 $ 12.85 $ 11.85 $11.29
======= ======= ======== ======= ======
Total Return . . . . . . . . . . . . . . 22.81% 3.02% 11.85% 9.71% 15.61%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . $87,819 $78,880 $123,970 $21,778 $7,096
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . 2.60% 2.49% 2.34% 2.84% 2.72%(5)
Operating expenses including
reimbursement/waiver . . . . . . 0.98% 1.07% 1.16% 1.03% 0.85%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . 1.00% 1.07% 1.22% 1.54% 1.39%(5)
Portfolio Turnover Rate . . . . . . . . . 21% 31% 27% 18% 77%(4)
</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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."
3 Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the years ended October 31,
1993 and 1992 and for the period ended October 31, 1991 were $0.29, $0.25
and $0.23, respectively.
4 Not Annualized.
5 Annualized.

7
<PAGE> 703

INTERNATIONAL EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
---------------------- YEAR ENDED PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(2) OCTOBER 31, 1992(1,2)
---------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . $ 13.20 $ 12.13 $ 9.66 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income(3) . . . . . . . . . . . . . . . 0.16 0.06 0.02 0.06
Net realized and unrealized
gain (loss) on investments . . . . . . . . . . . . . (0.18) 1.02 2.51 (0.40)
------- ------- ------- -------
Total From Investment Operations . . . . . . (0.02) 1.08 2.53 (0.34)
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . (0.04) (0.01) (0.06) --
Dividends from net realized capital gains . . . . . . (0.16) -- -- --
------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . . . (0.20) (0.01) (0.06) --
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . (0.22) 1.07 2.47 (0.34)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . $ 12.98 $ 13.20 $ 12.13 $ 9.66
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . (0.02%) 8.91% 26.36% (3.40%)(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . $89,614 $82,350 $39,246 $12,584
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . 1.36% 0.74% 0.37% 1.19%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . 1.22% 1.43% 1.57% 1.61%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . 1.48% 1.79% 2.04% 2.79%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 48% 39% 29% 21%(4)
</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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."

3 Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the years ended October 31,
1995, 1994 and 1993 and for the period ended October 31, 1992 were $0.13,
$0.04, $0.00 and $0.00, respectively.

4 Not Annualized.

5 Annualized.

8
<PAGE> 704

SMALL COMPANY EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
-------------------- YEAR ENDED PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(2) OCTOBER 31, 1992(1),(2)
-------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . $ 12.36 $ 12.41 $ 8.79 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income (loss)(3) . . . . . . . . . . . (0.04) -- (0.04) (0.03)
Net realized and unrealized
gain (loss) on investments . . . . . . . . . . . . . 4.25 -- 3.66 (1.18)
------- ------- ------- -------
Total From Investment Operations . . . . . . 4.12 -- 3.62 (1.21)
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . -- -- -- --
Dividends from net realized capital gains . . . . . . (0.19) (0.05) -- --
------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . . . (0.19) (0.05) -- --
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . 4.02 (0.05) 3.62 (1.21)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . $ 16.38 $ 12.36 $ 12.41 $ 8.79
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . 34.73% 0.02% 41.18% (12.10%)(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . $94,831 $66,462 $55,683 $29,072

Ratios to average net assets:
Net investment income (loss) including
reimbursement/waiver . . . . . . . . . . . . . . . (0.37%) (0.35%) (0.66%) (0.63%)(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . 1.12% 1.27% 1.18% 1.06%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . 1.12% 1.27% 1.22% 1.33%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 54% 35% 57% 87%(4)
</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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."

3 Net investment income (loss) per share before reimbursement/waiver of fees
by the Investment Adviser and/or Administrator for the period ended October
31, 1992 was $(0.05).

4 Not Annualized.

5 Annualized.

9
<PAGE> 705

ASSET ALLOCATION FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1995 1994
-------------------------- YEAR ENDED PERIOD ENDED
TRUST SHARES OCTOBER 31, 1993(2) OCTOBER 31, 1992(1)(2)
-------------------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . $ 10.68 $ 11.15 $ 10.16 $ 10.00
-------- -------- -------- --------
Income From Investment Operations:
Net Investment Income(3) . . . . . . . . . . . . . . . 0.32 0.28 0.25 0.15
Net realized and unrealized
gain (loss) on investments . . . . . . . . . . . . . 2.16 (0.49) 0.99 0.13
-------- -------- -------- --------
Total From Investment Operations . . . . . . 2.48 (0.21) 1.24 0.28
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income . . . . . . . . . (0.33) (0.26) (0.25) (0.12)
Dividends from net realized capital gains . . . . . . -- -- -- --
-------- -------- -------- --------
Total Dividends: . . . . . . . . . . . . . . (0.33) (0.26) (0.25) (0.12)
-------- -------- -------- --------
Net increase (decrease) in net asset value . . . . . . . 2.15 (0.47) 0.99 0.16
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . $ 12.83 $ 10.68 $ 11.15 $ 10.16
======== ======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . . . . . 23.68% (1.93%) 12.37% 2.85%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . $76,771 $65,464 $92,348 $11,555
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . 2.74% 2.70% 2.59% 2.80%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . 1.26% 1.18% 1.14% 1.11%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . 1.30% 1.18% 1.25% 2.39%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 41% 23% 7% 2%(4)
</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 Trust and Retail
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."

3 Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the year ended October 31, 1993
and for the period ended October 31, 1992 were $0.24 and $0.08,
respectively.

4 Not Annualized.

5 Annualized.

10
<PAGE> 706

The Small Cap Value Fund and Growth and Income Fund commenced operations on
December 14, 1992 as separate investment portfolios (the "Predecessor Small Cap
Value Fund" and the Predecessor Growth and Income Fund," respectively, and
collectively, the "Predecessor Funds") of The Shawmut Funds' which was
organized as a Massachusetts business trust. On December 4, 1995, the Funds
were reorganized as new portfolios of Galaxy. Prior to the reorganization, the
Predecessor Funds offered and sold two series of shares of beneficial interest
that were similar to the Fund's Trust Shares and Retail A Shares, respectively.

The financial highlights presented below set forth certain information
concerning the investment results of the Predecessor Funds' Trust Shares (the
series that is similar to the Trust Shares of the Small Cap Value and Growth
and Income Funds) for the fiscal years ended October 31, 1995 and October 31,
1994 and the fiscal period ended October 31, 1993. The information was audited
by Price Waterhouse LLP, independent accountants for the Predecessor Funds'
whose report is contained in The Shawmut Funds' Annual Report to Shareholders
for the fiscal year ended October 31, 1995. Such financial highlights should be
read in conjunction with the financial statements and notes thereto contained
in The Shawmut Funds' Annual Report to Shareholders and incorporated by
reference into the Statement of Additional Information relating to the Small
Cap Value and Growth and Income Funds. Additional information about the
performance of the Predecessor Funds is contained in The Shawmut Funds' Annual
Report to Shareholders, which may be obtained without charge by contacting
Galaxy at its telephone numbers or address provided above.

11
<PAGE> 707

PREDECESSOR SMALL CAP VALUE FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1993(1)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . $ 11.07 $ 11.21 $ 10.00
-------- -------- --------
Income From Investment Operations:
Net investment income(2),(3) . . . . . . . . 0.01 0.02 --
Net realized and unrealized gain/(loss)
on investments . . . . . . . . . . . . . . 2.21 0.17 1.21
-------- -------- --------
Total From Investment Operations: . . . 2.22 0.19 1.21
-------- -------- --------
Less Dividends:
Dividends from net investment income(2) . . . (0.01) (0.01) --
Dividends from net realized capital gains . . (0.57) (0.32) --
-------- -------- --------
Total Dividends(2) . . . . . . . . . . (0.58) (0.33) --
-------- -------- --------
Net increase (decrease) in net asset value . . . 1.64 (0.14) 1.21
Net Asset Value, End of Period . . . . . . . . . $ 12.71 $ 11.07 $ 11.21
======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . 21.52% 1.86% 12.12%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $121,364 $101,905 $100,382
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . 0.07% 0.15% 0.02%(4)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . 1.10% 1.06% 1.01%(4)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . 1.35% 1.34% 1.29%(4)
Portfolio Turnover Rate . . . . . . . . . . . . 32% 29% 29%(5)
</TABLE>

- ---------------
1 The Fund commenced operations on December 14, 1992.

2 Represents less than $0.01 per share for the year 1993.

3 Net investment income per share does not reflect tax reclassifications
arising in the current period.

4 Annualized.

5 Not Annualized.

12
<PAGE> 708

PREDECESSOR GROWTH AND INCOME FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1993(1)
---------------- ---------------- -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $ 11.15 $ 10.69 $ 10.00
-------- -------- --------
Income From Investment Operations:
Net investment income(2) . . . . . . . . 0.28 0.25 0.18
Net realized and unrealized gain/(loss)
on investments . . . . . . . . . . . 1.69 0.72 0.69
-------- -------- --------
Total From Investment Operations: 1.97 0.97 0.87
-------- -------- --------
Less Dividends:
Dividends from net investment income . . (0.28) (0.23) (0.18)
Dividends from net realized capital gains (0.49) (0.28) --
-------- -------- --------
Total Dividends . . . . . . . . . (0.77) (0.51) (0.18)
-------- -------- --------
Net increase (decrease) in net asset value 1.20 0.46 0.69
Net Asset Value, End of Period . . . . . . $ 12.35 $ 11.15 $ 10.69
======== ======== ========
Total Return . . . . . . . . . . . . . . . 18.80% 9.45% 8.80%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $189,011 $156,827 $147,090
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . 2.42% 2.31% 2.11%(3)
Operating expenses including
reimbursement/waiver . . . . . . . . 1.07% 1.04% 0.98%(3)
Operating expenses excluding
reimbursement/waiver . . . . . . . . 1.27% 1.24% 1.25%(3)
Portfolio Turnover Rate . . . . . . . . . . 51% 73% 38%(4)
</TABLE>

- ---------------
1 The Fund commenced operations on December 14, 1992.

2 Net investment income per share does not reflect tax reclassifications
arising in the current period.

3 Annualized.

4 Not Annualized

13
<PAGE> 709

INVESTMENT OBJECTIVES AND POLICIES

Fleet Investment Advisors Inc., the Funds' investment adviser (the
"Investment Adviser" or "Fleet"), and, with respect to the International Equity
Fund, Wellington Management Company (the "Sub-Adviser"), will use their 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.

EQUITY VALUE FUND

The investment objective of the Equity Value Fund is to seek long-term
capital appreciation. Income is secondary to the objective of capital
appreciation. The Fund attempts to achieve its investment objective by
investing primarily in common stock, preferred stock (including convertible
preferred stock) and debt obligations convertible into common stock that the
Investment Adviser believes to be undervalued, as measured by various financial
tests, including one or more of the following: cash flow, return on equity,
return on assets, fixed charge coverage and ratios of market capitalization to
revenues. In addition, the Fund's Investment Adviser considers the current
value of an issuer's fixed assets (including real estate), cash items, net
working capital, indebtedness and historical book value. The Fund also seeks to
purchase stock with a projected price-earnings ratio below that of the S&P
500. The Investment Adviser invests less than 25% of the value of the Fund's
total assets at the time of purchase in securities of issuers conducting their
principal business activities in the same industry.

Under normal market and economic conditions, the Fund invests at least 75%
of its total assets in common stock, preferred stock and debt securities
convertible into common stock. Debt securities convertible into common stock
are purchased primarily during periods of relative market instability and are
acquired principally for income with the potential for appreciation being a
secondary consideration. Equity investments consist primarily of common stock
of companies having capitalizations that exceed $100 million. Stocks of such
companies generally are listed on a national exchange or are unlisted
securities with an established over-the-counter market. In addition, the Fund
may hold other types of securities in such proportions as, in the opinion of
the Investment Adviser, existing circumstances may warrant, including
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and other high quality "money market" instruments. The Fund
may also hold cash pending investment, during temporary defensive periods or
if, in the opinion of the Investment Adviser, suitable stock or convertible
debt securities are unavailable. The Fund may also invest up to 20% of its
total assets in foreign securities, either directly or indirectly through
American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs"). See "Special Risk Considerations" and "Other Investment Policies and
Risk Considerations" below. The Fund may also write covered call options. See
"Other Investment Policies and Risk Considerations--Options and Futures
Contracts" and "Other Investment Policies and Risk Considerations--Derivative
Securities" below. See "Other Investment Policies and Risk Considerations"
below for information regarding additional investment policies of the Equity
Value Fund.

EQUITY GROWTH FUND

14
<PAGE> 710
increase future earnings to a level above the average earnings of similar
issuers. Such companies often retain their earnings to finance current and
future growth and, for this reason, generally pay little or no dividends.
Equity securities in which the Fund invests are selected based on analysis of
trends in industries and companies, earning power, growth features, quality and
depth of management, marketing and manufacturing skills, financial conditions
and other investment criteria. By investing in convertible securities, the Fund
will seek the opportunity, through the conversion feature, to participate in
the capital appreciation of the common stock into which the securities are
convertible. The Investment Adviser invests less than 25% of the value of the
Fund's total assets at the time of purchase in securities of issuers conducting
their principal business activities in the same industry.

The Fund may invest up to 20% of its total assets in foreign securities,
either directly or indirectly through the purchase of ADRs and EDRs. See
"Special Risk Considerations" and "Other Investment Policies and Risk
Considerations" below. In addition, the Fund may invest in securities issued by
foreign branches of U.S. banks and foreign banks. The Fund may also write
covered call options. See "Other Investment Policies and Risk
Considerations--Options and Futures Contracts" and "Other Investment Policies
and Risk Considerations--Derivative Securities" below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies and Risk Considerations" below) and U.S. Government obligations at
such times and in such proportions as, in the opinion of the Investment
Adviser, prevailing market or economic conditions warrant. See "Other
Investment Policies and Risk Considerations" below for information regarding
additional investment policies of the Equity Growth Fund.

EQUITY INCOME FUND

The Equity Income Fund's investment objective is to seek current income and
capital appreciation. The Fund attempts to achieve its investment objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in common stock and securities convertible into common stock.
Factors generally considered in selecting portfolio securities include current
income and prospects for dividend growth and capital appreciation. However, the
Fund's portfolio can be expected to include securities that offer only growth
potential or only income potential, as well as securities that combine both
these elements. Less than 25% of the value of the Fund's total assets at the
time of purchase will be invested in securities of issuers conducting their
principal business activities in the same industry.

The Equity Income Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through the purchase of ADRs and
EDRs. See "Special Risk Considerations" and "Other Investment Policies and Risk
Considerations" below. The Fund may also write covered call options. For
additional information concerning investments in options and similar
securities, see "Other Investment Policies and Risk Considerations--Options and
Futures Contracts" and "Other Investment Policies and Risk
Considerations--Derivative Securities" below.

INTERNATIONAL EQUITY FUND

15
<PAGE> 711
foreign issuers. The Fund's assets will be invested at all times in the
securities of issuers located in at least three different foreign countries.
Although the Fund may earn income from dividends, interest and other sources,
current income will not be its primary consideration. The Fund emphasizes
established companies, although it may invest in companies of varying sizes as
measured by assets, sales and capitalization.

The Fund may invest in securities of issuers located in a variety of
different foreign regions and countries, including, but not limited to,
Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany,
Greece, Hong Kong, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, The
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand and The United Kingdom. More than 25% of the Fund's total
assets may be invested in the securities of issuers located in the same
country. Investment in a particular country of 25% or more of the Fund's total
assets will make the Fund's performance more dependent upon the political and
economic circumstances of a particular country than a mutual fund that is more
widely diversified among issuers in different countries. Criteria for
determining the appropriate distribution of investments among various countries
and regions include prospects for relative economic growth, expected levels of
inflation, government policies influencing business conditions, the outlook for
currency relationships, and the range of investment opportunities available to
international investors.

The Fund invests in common stock and may invest in other securities with
equity characteristics, consisting of trust or limited partnership interests,
preferred stock, rights and warrants. The Fund may also invest in convertible
securities, consisting of debt securities or preferred stock that may be
converted into common stock or that carry the right to purchase common stock.
The Fund invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter
markets, and may invest in unlisted securities.

Securities issued in certain countries are currently accessible to the Fund
only through investment in other investment companies that are specifically
authorized to invest in such securities. The limitations on the Fund's
investment in other investment companies are described below under "Other
Investment Policies and Risk Considerations--Investment Company Securities."

During temporary defensive periods in response to unusual and adverse
conditions affecting the equity markets, or to meet anticipated day-to-day
operating expenses, the Fund's assets may be invested in short-term debt
instruments. In addition, when the Fund experiences large cash inflows from the
issuance of new shares or the sale of portfolio securities, and desirable
equity securities that are consistent with the Fund's investment objective are
unavailable in sufficient quantities, the Fund may hold short-term investments
for a limited time pending availability of suitable equity securities. The
short-term debt instruments in which the Fund may invest may be denominated
in foreign currencies or U.S. dollars, and include foreign and domestic:
(i) short-term obligations of national governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated A or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Group ("S&P"), or if unrated,
determined by the Investment Adviser or the Sub-Adviser to be of comparable
quality; (iii) commercial paper, including master notes; (iv) bank obligations,
including negotiable certificates of deposit, time deposits, bankers'
acceptances, and Euro-currency instruments and securities; and (v) repurchase
agreements. Time deposits with a maturity longer than seven days or that do not
provide for payment within seven days after notice will be limited to 10% of
the Fund's total assets. Issuers of commercial paper, bank obligations or
repurchase agreements in which the Fund invests must have, at the time of
investment, outstanding debt rated A or higher by Moody's or S&P, or, if they
are not rated, the instrument purchased must be determined to be of comparable
quality.

16
<PAGE> 712
foreign stock indexes listed on foreign and domestic stock exchanges. In
addition, the Fund may invest up to 100% of its total assets in securities of
foreign issuers in the form of ADRs, EDRs or Global Depository Receipts
("GDRs") as described under "Other Investment Policies and Risk
Considerations." Furthermore, the Fund may purchase and sell securities on a
when-issued basis. For temporary defensive purposes, the Fund may also invest a
major portion of its assets in securities of United States issuers. Less than
25% of the value of the Fund's total assets at the time of purchase will be
invested in securities of issuers conducting their principal business
activities in the same industry. See "Other Investment Policies and Risk
Considerations" below regarding additional investment policies of the Fund.

SMALL COMPANY EQUITY FUND

The Small Company Equity Fund's investment objective is to seek capital
appreciation. The Fund attempts to achieve its investment objective by
investing primarily in the securities of companies with capitalizations of $500
million or less ("Small Capitalization Securities") which the Fund's Investment
Adviser believes represent the potential for significant capital appreciation.

Small Capitalization Securities in which the Fund may invest include common
stock, preferred stock, securities convertible into common stock, rights and
warrants. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in the equity securities of companies with
capitalizations of $500 million or less. For temporary defensive purposes, the
Fund may also invest in corporate debt obligations.

The issuers of Small Capitalization Securities tend to be companies which
are smaller or newer than those listed on the New York or American Stock
Exchanges. As a result, Small Capitalization Securities are primarily traded on
the over-the-counter market, although they may also be listed for trading on
the New York or American Stock Exchanges. Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established
companies, they may have limited product lines, markets or financial resources.
As a result, Small Capitalization Securities are often less marketable and may
experience a higher level of price volatility than the securities of larger or
more well-established companies.

The Fund may invest up to 20% of its total assets in foreign securities,
either directly or indirectly through ADRs and EDRs. See "Special Risk
Considerations" and "Other Investment Policies and Risk Considerations" below.

The Fund may purchase and write covered call options as a hedge against
changes resulting from market conditions and in the value of the securities
held in the Fund or which it intends to purchase and where the transactions are
economically appropriate for the reduction of risks inherent in the ongoing
management of the Fund. See "Other Investment Policies and Risk
Considerations--"Options and Futures Contracts" and "Other Investment Policies
and Risk Considerations--Derivative Securities" below.

ASSET ALLOCATION FUND

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<PAGE> 713
term growth in the value of the Fund's assets. The Investment Adviser
interprets the objective to refer to the Dow Jones Industrial Average (of 30
companies listed on the New York Stock Exchange) and the S&P 500. Due to the
Fund's expenses, net income distributed to shareholders may be less than that
of these averages.

The Fund attempts to achieve its investment objective and at the same time
reduce volatility by allocating its assets among short-term obligations, common
stock, preferred stock and bonds. The proportion of the Fund's assets invested
in each type of security will vary from time to time as a result of the
Investment Adviser's interpretation of economic and market conditions.
However, at least 25% of the Fund's total assets will at all times be invested
in fixed-income senior securities, including debt securities and preferred
stocks. Debt securities purchased by the Fund will be rated at the time of
purchase in one of the four highest rating categories by S&P ("AAA," "AA," "A"
and "BBB") or Moody's ("Aaa," "Aa," "A" and "Baa") (or which, if unrated, are
determined by the Investment Adviser to be of comparable quality). Debt
securities rated "BBB" by S&P or "Baa" by Moody's are generally considered to
be investment grade securities although they may have speculative
characteristics and changes in economic conditions or circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher grade debt obligations. In selecting common stock
for purchase by the Fund, the Investment Adviser will analyze the potential for
changes in earnings and dividends for a foreseeable period.

The Fund may also invest up to 20% of its total assets in foreign
securities, either directly or indirectly through ADRs and EDRs. See "Special
Risk Considerations" and "Other Investment Policies and Risk Considerations"
below. The Fund may write covered call options, purchase asset-backed
securities and mortgage-backed securities and enter into foreign currency
exchange transactions. See "Other Investment Policies and Risk Considerations"
below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies and Risk Considerations" below) and U.S. Government obligations at
such times and in such proportions as, in the opinion of the Investment
Adviser, prevailing market and economic conditions warrant. See "Other
Investment Policies and Risk Considerations" below for information regarding
additional investment policies of the Asset Allocation Fund.

SMALL CAP VALUE FUND

The Small Cap Value Fund's investment objective is to provide long-term
capital appreciation. The Fund attempts to achieve its investment objective by
investing, under normal circumstances, at least 65% of its assets in equity
securities of companies that have a market value capitalization of up to $1
billion.

Small capitalization stocks have historically been more volatile in price
than larger capitalization stocks, such as those included in the S&P 500. This
is because, among other things, smaller companies have a lower degree of
liquidity in the equity market and tend to have a greater sensitivity to
changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Fund will be more volatile than,
and may fluctuate independently of, broad stock market indices such as the S&P
500.

18
<PAGE> 714
Considerations--"Options and Futures Contracts," "Other Investment Policies and
Risk Considerations--"Stock Index Futures, Swap Agreements, Indexed Securities
and Options" and "Other Investment Policies and Risk Considerations--"Derivative
Securities" below.

The Fund may invest in securities of foreign issuers which are freely traded
on United States securities exchanges or in the over-the-counter market in the
form of ADRs and EDRs. Securities of a foreign issuer may present greater risks
in the form of nationalization, confiscation, domestic marketability, or other
national or international restrictions. As a matter of practice, the Fund will
not invest in the securities of a foreign issuer if any such risk appears to
the Investment Adviser to be substantial. See "Special Risk Considerations" and
"Other Investment Policies and Risk Considerations" below.

As a temporary defensive measure, in such proportions as, in the judgment of
the Investment Adviser, prevailing market conditions warrant, the Fund may
invest in: (i) short-term money market instruments (such as those listed below
under "Other Investment Policies and Risk Considerations") rated in one of the
top two rating categories by a nationally recognized statistical rating
organization, such as S&P, Moody's or Fitch Investors Service, L.P. ("Fitch");
(ii) securities issued and/or guaranteed as to payment of principal and
interest by the U.S. Government, its agencies, or instrumentalities; and (iii)
repurchase agreements. Additional information about the types of money market
instruments and U.S. Government obligations in which the Small Cap Value Fund
is permitted to invest is contained in the Statement of Additional Information
relating to the Fund. See "Other Investment Policies and Risk Considerations"
below for information regarding additional investment policies of the Small Cap
Value Fund.

GROWTH AND INCOME FUND

The Growth and Income Fund's investment objective is to provide a relatively
high total return through long-term capital appreciation and current income.
The Fund attempts to achieve this objective by investing in a professionally
managed, diversified portfolio consisting primarily of common stocks of
companies with prospects for above-average growth and dividends or of companies
where significant fundamental changes are taking place. Under normal market
conditions, the Fund will invest at least 65% of its assets in growth and
income equity securities. The Fund seeks to achieve a current dividend yield
that exceeds the composite yield of securities included on the S&P 500.

The Fund invests primarily in growth-oriented equity securities.
Growth-oriented stocks may include issuers with smaller capitalizations. See
"Small Cap Value Fund" above for a description of the risks associated with
investments in small capitalization stocks. Investors should expect that the
Fund will be more volatile than, and may fluctuate independently of, broad
stock market indices such as the S&P 500.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. See "Other Investment Policies and Risk Considerations--Convertible
Securities" below. The Fund may also buy and sell options and futures contracts
and utilize stock index futures contracts, options, swap agreements, indexed
securities, and options on futures contracts. See "Other Investment Policies
and Risk Considerations--Options and Futures Contracts," "Other Investment
Policies and Risk Considerations--Stock Index Futures, Swap Agreements, Indexed
Securities and Options" and "Other Investment Policies and Risk
Considerations--Derivative Securities" below.

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<PAGE> 715
international restrictions. As a matter of practice, the Fund will not invest
in the securities of foreign issuers if any such risk appears to the Investment
Adviser to be substantial. See "Special Risk Considerations" and Other
Investment Policies and Risk Considerations" below.

As a temporary defensive measure, in such proportions as, in the judgment of
the Investment Adviser, prevailing market conditions warrant, the Fund may
invest in: (i) short-term money market instruments (such as those listed below
under "Other Investment Policies") rated in one of the top two rating
categories by a nationally recognized statistical rating organization, such as
S&P, Moody's or Fitch; (ii) securities issued and/or guaranteed as to payment
of principal and interest by the U.S. Government, its agencies, or
instrumentalities; and (iii) repurchase agreements. Additional information
about the types of money market instruments and U.S. Government obligations in
which the Fund is permitted to invest is contained in the Statement of
Additional Information relating to the Fund. See "Other Investment Policies and
Risk Considerations" below for information regarding additional investment
policies of the Growth and Income Fund.

SPECIAL RISK CONSIDERATIONS

Market Risk

Each Fund invests primarily (or with respect to the Asset Allocation Fund,
to a significant degree) in equity securities. As with other mutual funds that
invest primarily or to a significant degree in equity securities, the Funds are
subject to market risks. That is, the possibility exists that common stocks
will decline over short or even extended periods of time and both the U.S. and
certain foreign equity markets tend to be cyclical, experiencing both periods
when stock prices generally increase and periods when stock prices generally
decrease.

Interest Rate Risk

To the extent that the Funds invest in fixed income securities, their
holdings of such securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and debt securities
fluctuate inversely with interest rate changes.

Foreign Securities

Although each of the Funds may invest in securities denominated in foreign
currencies, each Fund values its securities and other assets in U.S. dollars.
As a result, the net asset value of a Fund's shares may fluctuate with U.S.
dollar exchange rates as well as with price changes of the Fund's securities in
the various local markets and currencies. Thus, an increase in the value of the
U.S. dollar compared to the currencies in which a Fund makes its investments
could reduce the effect of increases and magnify the effect of decreases in the
price of a Fund's securities in their local markets. Conversely, a decrease in
the value of the U.S. dollar will have the opposite effect of magnifying the
effect of increases and reducing the effect of decreases in the prices of a
Fund's securities in their local markets. In addition to favorable and
unfavorable currency exchange rate developments, the Funds are subject to the
possible imposition of exchange control regulations or freezes on
convertibility of currency.

20
<PAGE> 716

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Ratings

All debt obligations, including convertible bonds, purchased by the Equity
Value, Equity Growth, Equity Income, Small Company Equity and Asset Allocation
Funds are rated investment grade by Moody's ("Aaa," "Aa," "A" and "Baa") or S&P
("AAA," "AA," "A" and "BBB"), or, if not rated, are determined to be of
comparable quality by the Investment Adviser. The International Equity Fund may
only purchase debt securities rated "A" or higher by Moody's or S&P, or if
unrated, determined by the Investment Adviser or Sub-Adviser to be of
comparable quality. The Small Cap Value and Growth and Income Funds may
purchase convertible bonds rated "BB" or higher by S&P or Fitch, or "Ba" or
higher by Moody's at the time of investment. See "Other Investment Policies and
Risk Considerations--Convertible Securities" below for a discussion of the risks
of investing in convertible bonds rated either "BB" or "Ba." Short-term money
market instruments purchased by the Small Cap Value and Growth and Income Funds
must be rated in one of the top two rating categories by a nationally
recognized statistical rating agency, such as S&P, Moody's or Fitch.

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 other "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 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
("FDIC"), or by a savings and loan association or savings bank which is insured
by the Federal Deposit Insurance Corporation. With respect to each Fund other
than the Small Cap Value and Growth and Income Funds, 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 (i) with respect to the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds, to the obligations of financial institutions
having more than $1 billion in total assets at the time of purchase, and (ii)
with respect to the Small Cap Value and Growth and Income Funds, to the
obligations of financial institutions having capital, surplus and undivided
profits of over $100 million or obligations where the principal amount of the
instrument is insured in full by the FDIC.

21
<PAGE> 717
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 U.S.
branches of foreign banks may subject a Fund to additional risk because such
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. Such investments may also
subject a Fund to investment risks similar to those accompanying direct
investments in foreign securities. See "Special Risk Considerations--Foreign
Securities." A 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 and/or
the Sub-Adviser believe 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."

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 and/or the Sub-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
upon notice of seven days or less, the repurchase agreement will be considered
an illiquid security and will be subject to the 10% limit described below in
Investment Limitation No. 3 under "Investment Limitations" with respect to the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds, and to the 15% limit described below in
Investment Limitation No. 7 under "Investment Limitations" with respect to the
Small Cap Value and Growth and Income Funds.

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. The Funds would pay interest on amounts obtained pursuant to
a reverse repurchase agreement. Additional information regarding the Small Cap
Value and Growth and Income Funds' policies with respect to reverse repurchase
agreements is contained in the Statement of Additional Information relating to
these Funds.

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<PAGE> 718

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
(except in the case of the Small Cap Value and Growth and Income Funds which
may loan their securities on a long-term or short-term basis or both), will be
made only to borrowers deemed by the Investment Adviser and/or the Sub-Adviser
to be of good standing and only when, in the Investment Adviser's and/or the
Sub-Adviser's judgement, 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 Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation 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. The International Equity Fund may also
purchase shares of investment companies investing primarily in foreign
securities, including so-called "country funds." Country funds have portfolios
consisting exclusively of securities of issuers located in one foreign country.
The Small Cap Value and Growth and Income Funds may invest in other investment
companies primarily for the purpose of investing their short-term cash which
has not yet been invested in other portfolio instruments. However, from time to
time, on a temporary basis, the Small Cap Value and Growth and Income Funds may
invest exclusively in one other investment company similar to the respective
Funds. 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. Except as provided
above with respect to the Small Cap Value and Growth and Income Funds,
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 Funds, other investment portfolios of Galaxy, or any other
investment companies advised by the Investment Adviser or the Sub-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.

Options and Futures Contracts

23
<PAGE> 719

International Equity, Small Company Equity and Asset Allocation Funds may not
exceed 25% of the value of their respective net assets. By writing a covered
call option, a Fund forgoes the opportunity to profit from an increase in the
market price of the underlying security above the exercise price, except
insofar as the premium represents such a profit, and it will not be able to
sell the underlying security until the option expires or is exercised or the
Fund effects a closing purchase transaction by purchasing an option of the same
series. The use of covered call options is not a primary investment technique
of these Funds, and such options will normally be written on underlying
securities as to which the Investment Adviser and/or Sub-Adviser does not
anticipate significant short-term capital appreciation.

Options on Foreign Stock Indexes--International Equity Fund. The
International Equity Fund may, for the purpose of hedging its portfolio,
subject to applicable securities regulations purchase and write put and call
options on foreign stock indexes listed on foreign and domestic stock
exchanges. A stock index fluctuates with changes in the market values of the
stocks included in the index. Examples of foreign stock indexes are the
Canadian Market Portfolio Index (Montreal Stock Exchange), The Financial
Times--Stock Exchange 100 (London Stock Exchange) and the Toronto Stock Exchange
Composite 300 (Toronto Stock Exchange).

Options on stock indexes are generally similar to options on stock except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of stock at a specified price, an option on a stock index
gives the holder the right to receive a cash "exercise settlement amount" equal
to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by
(b) a fixed "index multiplier." Receipt of this cash amount will depend upon
the closing level of the stock index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. The writer of the option is obligated, in return
for the premium received, to make delivery of this amount. The writer may
offset its position in stock index options prior to expiration by entering into
a closing transaction on an exchange or the option may expire unexercised. For
additional information relating to option trading practices and related risks,
see the Statement of Additional Information relating to the International
Equity Fund.

Options and Futures Contracts--Small Cap Value and Growth and Income Funds.
The Small Cap Value and Growth and Income Funds may buy and sell options and
futures contracts to manage their exposure to changing interest rates, security
prices and currency exchange rates. The Funds may invest in options and futures
based on any type of security, index, or currency, including options and
futures based on foreign exchanges (see "Options on Foreign Stock
Indexes--International Equity Fund" above) and options not traded on exchanges.
Some options and futures strategies, including selling futures, buying puts,
and writing calls, tend to hedge a Fund's investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of the overall strategy.

Options and futures can be volatile investments, and involve certain risks.
If the Investment Adviser applies a hedge at an inappropriate time or judges
market conditions incorrectly, options and futures may lower a Fund's
individual return. A Fund could also experience losses if the prices of its
options and futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of an illiquid
secondary market. See the Statement of Additional Information relating to the
Small Cap Value and Growth and Income Funds for additional information as to
the Funds' policies on options and futures trading.

The Small Cap Value and Growth and Income Funds will not hedge more than 20%
of their respective total assets by selling futures, buying puts, and writing
calls under normal conditions. The Funds will not buy futures or write puts
whose underlying value exceeds 20% of their respective total assets, and will
not buy calls with a value exceeding 5% of their respective total assets.

24
<PAGE> 720

Stock Index Futures, Swap Agreements, Indexed Securities and Options--Small
Cap Value and Growth and Income Funds. The Small Cap Value and Growth and
Income Funds may utilize stock index futures contracts, options, swap
agreements, indexed securities, and options on futures contracts, subject to
the limitation that the value of these futures contracts, swap agreements,
indexed securities, and options will not exceed 20% of the Funds' respective
total assets. The Funds will not purchase options to the extent that more than
5% of the value of their respective total assets would be invested in premiums
on open put option positions. In addition, the Funds do not intend to invest
more than 5% of the market value of their respective total assets in each of
the following: futures contracts, swap agreements, and indexed securities.
When the Funds enter into a swap agreement, assets of the Fund equal to the
value of the swap agreement will be segregated by that Fund.

There are several risks accompanying the utilization of futures contracts.
Positions in futures contracts may be closed only on an exchange or board of
trade that furnishes a secondary market for such contracts. While the Funds
plan to utilize futures contracts only if there exists an active market for
such contracts, there is no guarantee that a liquid market will exist for the
contracts at a specified time. Furthermore, because by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in the
corresponding stock index. The absence of a perfect price correlation between
the futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a distortion of
the relationship between the index and the futures market. In addition, because
the futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in the
futures market could result in price fluctuations.

American, European and Global Depository Receipts

Each Fund may invest in ADRs and EDRs. The International Equity Fund may
also invest in GDRs. ADRs are receipts issued in registered form by a U.S. bank
or trust company evidencing ownership of underlying securities issued by a
foreign issuer. EDRs are receipts issued in Europe typically by non-U.S. banks
or trust companies and foreign branches of U.S. banks that evidence ownership
of foreign or U.S. securities. GDRs are receipts structured similarly to EDRs
and are marketed globally. ADRs may be listed on a national securities exchange
or may be traded in the over-the-counter market. EDRs are designed for use in
European exchange and over-the-counter markets. GDRs are designed for trading
in non-U.S. securities markets. ADRs, EDRs and GDRs traded in the over-the-
counter market which do not have an active or substantial secondary market will
be considered illiquid and therefore will be subject to the Funds' respective
limitations with respect to such securities. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs, EDRs and GDRs involve risks similar to those
accompanying direct investments in foreign securities. Certain of these risks
are described above under "Special Risk Considerations."

Foreign Currency Exchange Transactions

Because each Fund may buy and sell securities denominated in currencies
other than the U.S. dollar, and may receive interest, dividends and sale
proceeds in currencies other than the U.S. dollar, the Funds from time to time
may enter into foreign currency exchange transactions to convert the U.S.
dollar to foreign currencies, to convert foreign currencies to the U.S. dollar
and to convert foreign currencies to other foreign currencies. A 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. Forward foreign currency exchange
contracts are agreements to exchange one currency for another--for example, to
exchange a certain amount of U.S. dollars for a certain amount of Japanese
yen--at a future date and at a specified price. Typically, the other

25
<PAGE> 721

party to a currency exchange contract will be a commercial bank or other
financial institution.

Forward foreign currency exchange contracts also allow a Fund to hedge the
currency risk of portfolio securities denominated in a foreign currency. This
technique permits the assessment of the merits of a security to be considered
separately from the currency risk. By separating the asset and the currency
decision, it is possible to focus on the opportunities presented by the
security apart from the currency risk. Although forward foreign currency
exchange contracts are of short duration, generally between one and twelve
months, the forward foreign currency exchange contracts are rolled over in a
manner consistent with a more long-term currency decision. Because there is a
risk of loss to a Fund if the other party does not complete the transaction,
forward foreign currency exchange contracts will be entered into only with
parties approved by Galaxy's Board of Trustees.

A Fund may maintain "short" positions in forward foreign currency exchange
transactions, which would involve the Fund's agreeing to exchange currency that
it currently does not own for another currency--for example, to exchange an
amount of Japanese yen that it does not own for a certain amount of U.S.
dollars--at a future date and at a specified price in anticipation of a decline
in the value of the currency sold short relative to the currency that the Fund
has contracted to receive in the exchange. In order to ensure that the short
position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
securities equal in value to the fluctuating market value of the currency as to
which the short position is being maintained. The value of the securities in
the segregated account will be adjusted at least daily to reflect changes in
the market value of the short position. See the Statements of Additional
Information relating to the Funds for additional information regarding foreign
currency exchange transactions.

Asset-Backed Securities--Asset Allocation Fund

The Asset Allocation 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 relating to the Asset Allocation Fund.

Mortgage-Backed Securities--Asset Allocation Fund

The Asset Allocation 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 ("GNMA"), the Federal National Mortgage Association ("FNMA"), and
the Federal Home Loan Mortgage Corporation ("FHLMC"). 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

26
<PAGE> 722
result in some loss of the Fund's principal investment to the extent of the
premium paid. The yield of the Fund, should it invest 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 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 above under "Other Investment Policies and Risk
Considerations--Investment Company Securities."

Convertible Securities

The Funds may from time to time, in accordance with their respective
investment policies, invest in convertible securities. Convertible securities
are fixed income securities which may be exchanged or converted into a
predetermined number of the issuer's underlying common stock at the option of
the holder during a specified time period. Convertible securities may take the
form of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities.

Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Usable bonds are corporate
bonds that can be used in whole or in part, customarily at full face value, in
lieu of cash to purchase the issuer's common stock. When owned as part of a
unit along with warrants, which are options to buy the common stock, they
function as convertible bonds, except that the warrants generally will expire
before the bond's maturity. Convertible securities are senior to equity
securities, and therefore, have a claim to assets of the corporation prior to
the holders of common stock in the case of liquidation. However, convertible
securities are generally subordinated to similar nonconvertible securities of
the same company. The interest income and dividends from convertible bonds and
preferred stocks provide a stable stream of income with generally higher yields
than common stocks, but lower than non-convertible securities of similar
quality. A Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in which, in
the Investment Adviser's opinion, the investment characteristics of the
underlying common shares will assist the Fund in achieving its investment
objective. Otherwise, a Fund will hold or trade the convertible securities. In
selecting convertible securities for a Fund, the Investment Adviser evaluates
the investment characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Investment Adviser considers numerous factors,
including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.

The Small Cap Value and Growth and Income Funds may invest in convertible
bonds rated "BB" or higher by

27
<PAGE> 723

S&P or Fitch, or "Ba" or higher by Moody's at the time of investment.
Securities rated "BB" by S&P or Fitch or "Ba" by Moody's provide questionable
protection of principal and interest in that such securities either have
speculative characteristics or are predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of
the obligation. Debt obligations that are not rated, or determined to be,
investment grade are high-yield, high-risk bonds, typically subject to greater
market fluctuations, and securities in the lowest rating category may be in
danger of loss of income and principal due to an issuer's default. To a greater
extent than investment-grade bonds, the value of lower-rated bonds tends to
reflect short-term corporate, economic, and market developments, as well as
investor perceptions of the issuer's credit quality. In addition, lower-rated
bonds may be more difficult to dispose of or to value than high-rated,
lower-yielding bonds. The Investment Adviser will attempt to reduce the risks
described above through diversification of the portfolio and by credit analysis
of each issuer, as well as by monitoring broad economic trends and corporate
and legislative developments. If a convertible bond is rated below "BB" or "Ba"
according to the characteristics set forth here after a Fund has purchased it,
such Fund is not required to eliminate the convertible bond from the portfolio,
but will consider appropriate action. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The Funds do not intend to invest
in such lower-rated bonds during the current fiscal year. A description of the
rating categories is contained in the Appendix to the Statement of Additional
Information relating to the Small Cap Value and Growth and Income Funds.

Derivative Securities

The Funds may from time to time, in accordance with their respective
investment policies, purchase certain "derivative" securities. Derivative
securities are instruments that derive their value from the performance of
underlying assets, interest rates, or indices, and include, but are not limited
to, put and call options, stock index futures and options, indexed securities
and swap agreements.

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest rates or indices will decline;
credit risk that the dealer or other counterparty to the transaction will fail
to pay its obligations; volatility and leveraging risk that, if interest rates
change adversely, the value of the derivative security will decline more than
the assets, rates or indices on which it is based; liquidity risk that the
Funds will be unable to sell a derivative security when it wants because of
lack of market depth or market disruption; pricing risk that the value of a
derivative security will not correlate exactly to the value of the underlying
assets, rates or indices on which it is based; and operations risk that loss
will occur as a result of inadequate systems and controls, human error or
otherwise. Some derivative securities are more complex than others, and for
those instruments that have been developed recently, data are lacking regarding
their actual performance over complete market cycles.

The Investment Adviser will evaluate the risks presented by the derivative
securities purchased by the Funds, and will determine, in connection with its
day-to-day management of the Funds, how they will be used in furtherance of
each Fund's investment objectives. It is possible, however, that the Investment
Adviser's evaluations will prove to be inaccurate or incomplete and, even when
accurate and complete, it is possible that the Funds will, because of the risks
discussed above, incur loss as a result of their investments in derivative
securities. See "Investment Objectives and Policies--Derivative Securities" in
the Statements of Additional Information relating to the Funds for additional
information.

When-Issued and Delayed Settlement Transactions--International Equity, Small
Cap Value and Growth and Income Funds

28
<PAGE> 724

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 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.

A Fund may dispose of a commitment prior to settlement if the Investment
Adviser deems it appropriate to do so. In addition, a Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Funds may realize short-term profits or losses
upon the sale of such commitments.

Portfolio Turnover

Each Fund may sell a portfolio investment soon after its acquisition if the
Investment Adviser and/or the Sub-Adviser believe 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 involves correspondingly
greater brokerage commission expenses and other transaction costs, which must
be ultimately borne by a Fund's shareholders. High portfolio turnover may
result in the realization of substantial net capital gains; distributions
derived from such gains will be treated as ordinary income for Federal income
tax purposes. See "Taxes--Federal."

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy and
may not be changed with respect to a particular 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 Statements of
Additional Information under "Investment Objectives and Policies."

The Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation Funds may not:

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.

29
<PAGE> 725

with any such borrowing and in amounts not in excess of the lesser of the
dollar amounts borrowed or 10%, with respect to the Equity Value Fund, or
33%, with respect to the Equity Growth, Equity Income, International
Equity, Small Company Equity and Asset Allocation Funds, of the value of a
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 (with respect to the Equity Value Fund),
securities which are restricted as to transfer in their principal market
(with respect to the International Equity Fund), 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.

The Small Cap Value and Growth and Income Funds may not:

5. Borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an arrangement to buy it back on a set
date) or pledge securities except, under certain circumstances, such Funds
may borrow up to one-third of the value of their respective total assets
and pledge up to 10% of the value of their respective total assets to
secure such borrowings.

6. With respect to 75% of the value of their respective total assets,
invest more than 5% in securities of any one issuer, other than cash, cash
items, or securities issued or guaranteed by the government of the United
States or, its agencies or instrumentalities and repurchase agreements
collateralized by such securities, or acquire more than 10% of the
outstanding voting securities of any one issuer.

The following investment policy may be changed by Galaxy's Board of Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective:

7. The Small Cap Value and Growth and Income Funds may not invest more
than 15% of their respective net assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(a) of the Securities Act of 1933
and certain securities which meet the criteria per liquidity as established
by the Board of Trustees).

In addition, the Funds may not purchase any securities which would cause 25%
or more of the value of a Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting their principal
business activities in the same industry; provided 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 Equity Value 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
and each of the Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation Funds intends to limit any borrowings
(including reverse repurchase agreements to not more than 33% of the value of
its total assets at the time of such borrowing).

The Small Cap Value and Growth and Income Funds intend to invest in
restricted securities. Restricted

30
<PAGE> 726

securities are any securities in which a Fund may otherwise invest pursuant to
its investment objective and policies, but which are subject to restriction on
resale under federal securities law. Each Fund will limit its investments in
illiquid securities, including certain restricted securities not determined by
the Board of Trustees to be liquid, non-negotiable fixed time deposits with
maturities over seven days, over-the-counter options, and repurchase agreements
providing for settlement in more than seven days after notice, to 15% of its
net assets.

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 each Fund's 10% limitation (15% with respect to the Small Cap
Value and Growth and Income Funds) on purchases of illiquid instruments
described above, Rule 144A securities will not be considered to be illiquid if
the Investment Adviser and/or the Sub-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). 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 of a 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 a 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.

Valuation of the Equity Value, Equity Growth, Equity Income, Small Company
Equity, Asset Allocation, Small Cap Value and Growth and Income Funds

The assets in the Equity Value, Equity Growth, Equity Income, Small Company
Equity, Asset Allocation, Small Cap Value and Growth and Income Funds which are
traded on a recognized stock exchange are valued at the last sale price on the
securities exchange on which such securities are primarily traded or at the
last sale price on the national securities market. Securities quoted on the
NASD National Market System are also valued at the last sale price. Other
securities traded on over-the-counter markets are valued on the basis of their
closing over-the-counter bid prices. Securities for which there were no
transactions are valued at the average of the most recent bid and asked prices.
Investments in debt securities with remaining maturities of 60 days or less are
valued based upon the amortized cost method. Restricted securities, securities
for which market quotations are not readily available, and other assets are
valued at fair value by the Investment Adviser under the supervision of
Galaxy's Board of Trustees. An option is generally valued at the last sale
price or, in the absence of a last sale price, the last offer price. See
"Valuation of International Equity Fund" below for a description of the
valuation of certain foreign securities held by Equity Value, Equity Growth,
Equity Income, Small Company Equity and the Asset Allocation, Small Company
Equity and Growth and Income Funds.

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<PAGE> 727

Valuation of the International Equity Fund

The International Equity Fund's portfolio securities which are primarily
traded on a domestic exchange are valued at the last sale price on that
exchange or, if there is no recent sale, at the last current bid quotation.
Portfolio securities which are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on
their respective exchanges, except when an occurrence subsequent to the time a
value was so established is likely to have changed such value, then the fair
value of those securities will be determined through consideration of other
factors by or under the direction of the Board of Trustees. A security which is
listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security. Investments in
debt securities having a maturity of 60 days or less are valued based upon the
amortized cost method. All other securities are valued at the last current bid
quotation if market quotations are available, or at fair value as determined in
accordance with policies established in good faith by the Board of Trustees.
For valuation purposes, quotations of foreign securities in foreign currency
are converted to U.S. dollars equivalent at the prevailing market rate on the
day of valuation. An option is generally valued at the last sale price or, in
the absence of a last sale price, the last offer price.

Certain of the securities acquired by the International Equity Fund may be
traded on foreign exchanges or over-the-counter markets on days on which the
Fund's net asset value is not calculated. In such cases, the net asset value of
the Fund's shares may be significantly affected on days when investors can
neither purchase nor redeem shares of the Fund.

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

32
<PAGE> 728

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 Funds 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. 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
requirements 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 an Institution to their
Customers. Information pertaining to such plans is available directly from the
Institution.

Trust Shares of the International Equity Fund described in this Prospectus
may also be sold to clients, partners and employees of Wellington Management
Company, the Sub-Adviser to the International Equity Fund.

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 involuntary, upon sixty days
written notice, if the value of the account is less than $250 as a result of
redemptions.

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<PAGE> 729

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Equity Value, Equity Growth,
Equity Income, Small Company Equity, Asset Allocation, Small Cap Value and
Growth and Income Funds are declared and paid quarterly. Dividends from net
investment income of the International Equity Fund are declared and paid
annually. 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 each series. Net realized capital gains are
distributed at least annually.

TAXES

FEDERAL

Each of the Funds 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.

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 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.) Such ordinary income distributions will
qualify for the dividends received deduction for corporations to the extent of
the total qualifying dividends received by the distributing Fund from domestic
corporations for the taxable year.

Distribution by a 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 Trust Shares. Such
distributions are not eligible for the dividends received deduction.

If you are considering buying shares of a Fund on or just before the record
date of a dividend or 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.

It is expected that the International Equity Fund will be subject to foreign
withholding taxes with respect to

34
<PAGE> 730

income received from sources within foreign countries. So long as more than 50%
of the value of the Fund's total assets at the close of any taxable year
consists of stock or securities of foreign corporations, the Fund may elect,
for U.S. federal income tax purposes, to treat certain foreign taxes paid by
it, including generally any withholding taxes and other foreign income taxes,
as paid by its shareholders. If the Fund makes this election, the amount of
such foreign taxes paid by the Fund will be included in its shareholders'
income pro rata (in addition to taxable distributions actually received by
them), and shareholders would be entitled either (a) to credit their
proportionate amount of such taxes against their U.S. federal income tax
liabilities, subject to certain limitations described in the Statement of
Additional Information relating to the Fund, or (b) if they itemize their
deductions, to deduct such proportionate amount from their U.S. income.
Shareholders of the Equity Value, Equity Growth, Equity Income, International
Equity, Small Company Equity, Asset Allocation, Small Cap Value and Growth and
Income Funds should not expect to claim a foreign tax credit or deduction.

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' Statements of Additional Information
contain the names of and general background information concerning the
Trustees.

INVESTMENT ADVISER AND SUB-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, Short-Term Bond, 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 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 (except with respect to such
functions that have been delegated to the International Equity Fund's Sub-
Adviser as described below).

The Equity Value Fund's portfolio manager, G. Jay Evans, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Evans has been with Fleet and its predecessors since 1978

35
<PAGE> 731

and has been the Fund's portfolio manager since its inception.

The Equity Growth Fund's portfolio manager, Robert G. Armknecht, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Armknecht, an Executive Vice President, has been with Fleet and
its predecessors since 1989 and has been the Fund's portfolio manager since its
inception.

The Equity Income Fund's portfolio manager, J. Edward Klisiewicz, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Klisiewicz, a Senior Vice President, has been with Fleet and its
predecessors since 1970 and has been the Fund's portfolio manager since its
inception.

The International Equity Fund's portfolio managers, David von Hemert and the
Global Equity Strategy Group of Wellington Management Company ("Wellington
Management"), a group of global portfolio managers and senior investment
professionals headed by Trond Skramstad, Senior Vice President of Wellington
Management, are primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. von Hemert, a Senior Vice President, has been
with Fleet and its predecessors since 1980 and has been managing the Fund since
August 1994. Mr. Skramstad has been with Wellington Management, the Fund's
sub-adviser, since 1993 and has been managing the Fund since January 1995.
Prior to his association with Wellington Management, Mr. Skramstad was a
principal with Scudder, Stevens & Clark.

The Small Company Equity Fund's portfolio manager, Stephen D. Barbaro, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Barbaro, a Vice President and Senior Portfolio Manager, has been
with Fleet and its predecessors since 1976 and has been the Fund's portfolio
manager since its inception.

The Asset Allocation Fund's portfolio manager, Donald Jones, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Jones, who currently serves as a Vice President, has been with Fleet and
its predecessors as a portfolio manager since 1988 and has been the Fund's
portfolio manager since May 1, 1995 and has managed Galaxy's New York
Municipal Bond Fund since September 1994.

The Small Cap Value Fund's portfolio manager, Peter Larson, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Larson served as the portfolio manager of the Predecessor Small Cap Value
Fund since its inception in 1992. He joined Shawmut Bank in 1963 as an
investment officer and was a Vice President in charge of Shawmut Bank's Small
Cap Equity Management product since inception in 1982.

The Growth and Income Fund's portfolio manager, Brendan Henebry, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Henebry served as portfolio manager for the Predecessor Growth
and Income Fund since its inception in 1992. He was associated with Shawmut
Bank and its predecessor since 1965 and was a Vice President since 1978. During
the past six years he served as manager of Shawmut Bank's Growth and Income
Equity Management Group.

For the services provided and expenses assumed with respect to the Equity
Value, Equity Growth, Equity Income, Small Company Equity, Asset Allocation,
Small Cap Value and Growth and Income Funds, 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 each of the Funds. For the services
provided and expenses assumed with respect to the International Equity Fund,
the Investment Adviser is entitled to receive advisory fees, computed daily and
paid monthly, at the annual rate of 1.15% of the first $50 million of the
Fund's average daily net assets, plus .95% of the next $50 million of such
assets, plus .85% of net assets in excess of $100 million. The fees for the
Funds are higher than fees paid by most other mutual funds, although the Board
of Trustees of Galaxy believes that they are 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 all or a portion of
the advisory fees payable by the Funds

36
<PAGE> 732

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. For the fiscal year ended October 31, 1995, Fleet received
advisory fees (after fee waivers) at the effective annual rates of 0.75%,
0.75%, 0.73%, 0.77%, 0.74% and 0.72% of the average daily net assets of the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds, respectively.

The Predecessor Small Cap Value and Predecessor Growth and Income Funds bore
advisory fees during their most recent fiscal year pursuant to the investment
advisory agreement then in effect with Shawmut Bank, N.A., their former
adviser, at the effective annual rates of .77% and .82%, respectively, of each
such Predecessor Fund's average daily net assets after fee waivers. Without fee
waivers, each Predecessor Fund would have borne advisory fees at the annual
rate of 1.00% of its average daily net assets.

The advisory agreement between Galaxy and Fleet with respect to the
International Equity Fund provides that Fleet will provide a continuous
investment program for the Fund, including research and management with respect
to all securities and investments and cash equivalents in the Fund. In
addition, the advisory agreement authorizes Fleet to engage a sub-adviser to
assist it in the performance of its services. Pursuant to such authorization,
Fleet has appointed Wellington Management, with principal offices at 75 State
Street, Boston, Massachusetts 02109, as the Sub-Adviser to the International
Equity Fund. Wellington Management is a professional investment counselling
firm which provides investment services to investment companies, employee
benefit plans, endowments, foundations, and other institutions and individuals.
As of December 31, 1995, Wellington Management had discretionary management
authority with respect to approximately $109.2 billion of assets. Wellington
Management's predecessor organizations have provided investment advisory
services to investment companies since 1933 and to investment counselling
clients since 1960.

For the services provided and the expenses assumed pursuant to the
sub-advisory agreement, Fleet pays a fee to Wellington Management, computed
daily and paid quarterly, at the annual rate of .50% of the first $50 million
of the Fund's average daily net assets, plus .30% of the next $50 million of
such assets, plus .20% of all net assets in excess of $100 million. For the
fiscal year ended October 31, 1995, Wellington Management received sub-advisory
fees at the effective annual rate of 0.38% of the International Equity Fund's
average daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

37
<PAGE> 733

Institutions which agree to provide shareholder support services that are banks
or bank affiliates are subject to such banking laws and regulations. Should
legislative, judicial, or administrative action prohibit or restrict the
activities of such companies in connection with their services to the 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

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 of the Portfolios
and .08% of combined 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, the Equity Value, Equity Growth, Equity Income, International Equity,
Small Company Equity and Asset Allocation Funds paid administration fees at the
effective annual rate of 0.088% of each Fund's average daily net assets.

The Predecessor Small Cap Value and Predecessor Growth and Income Funds bore
administration fees during the fiscal year ended October 31, 1995 pursuant to
the agreement then in effect with Federated Administrative Services, their
prior administrator, at the effective annual rate of 0.10% of each such
Predecessor Fund's average daily net assets after fee waivers.

DESCRIPTION OF GALAXY AND ITS SHARES

38
<PAGE> 734

Fund; Class U-Series 1 shares (Trust Shares), Class U-Series 2 shares (Retail A
Shares) and Class U-Series 3 Shares (Retail B Shares), each series representing
interest in the Growth and Income Fund; and Class X-Series 1 shares (Trust
Shares) and Class X-Series 2 shares (Retail A Shares), each series
representing interests in the Small Cap Value 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 representing
interests in 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 the 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 and holders of Retail B Shares of the Equity
Value Fund, Equity Growth Fund, Small Company Equity Fund, Asset Allocation and
Growth and Income Funds 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 .95% of the average daily net asset value of each 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 Equity Value Fund, Equity Growth Fund, Small
Company Equity Fund, Asset Allocation Fund and Growth and Income 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

39
<PAGE> 735

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 .30% (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

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), located at 1 Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as custodian of the Funds' assets. Chase
Manhattan may employ sub-custodians for the Funds upon approval of the Trustees
in accordance with the regulations of the SEC, for the purpose of providing
custodial services for the Funds' 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 these entities for the Funds
are described in the Statements of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 15108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

EXPENSES

40
<PAGE> 736

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 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, S&P 500, an unmanaged
index of groups of common stocks, the Consumer Price Index, or the Dow Jones
Industrial Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the New York Stock Exchange. In addition, the
performance of the International Equity Fund may be compared to either the
Morgan Stanley Capital International Index or the FT World Actuaries Index and
the performance of the Small Company Equity Fund and Small Cap Value Fund may
be compared to the NASDAQ Composite Index, an unmanaged index of
over-the-counter stock prices.

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 Funds may also advertise their 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 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 dividends 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 the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged by

41
<PAGE> 737

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 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
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 either 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 a Fund, or (b) 67% or more of the shares of Galaxy or a Fund present
at a meeting if more than 50% of the outstanding shares of Galaxy or a Fund are
represented at the meeting in person or by proxy.

42
<PAGE> 738

THE GALAXY FUND

4400 Computer Drive
Westboro, Massachusetts 01581-5108

For applications and information concerning initial purchases and current
performance, call 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 relates to eight separate diversified investment
portfolios (individually, a "Fund," collectively, the "Funds") offered to
investors by Galaxy. Each Fund has its own investment objective and policies:

The EQUITY VALUE FUND'S investment objective is to seek long-term
capital appreciation. Income is secondary to the objective of capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal market and economic conditions, at least 75% of its total assets in
common stock, preferred stock and debt securities convertible into common stock
that the Fund's investment adviser believes are undervalued.

The EQUITY GROWTH FUND'S investment objective is to seek long-term
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal market and economic conditions, at least 75% of its total assets
in common stock, preferred stock, common stock warrants and securities
convertible into common stock of companies that the Fund's investment adviser
believes have above-average earnings potential.

The EQUITY INCOME FUND'S investment objective is to seek current
income and capital appreciation. The Fund attempts to achieve this objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in common stock and securities convertible into common stock.

The INTERNATIONAL EQUITY FUND'S investment objective is to seek
long-term capital appreciation. The Fund attempts to achieve this objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in the equity securities of foreign issuers.

The SMALL COMPANY EQUITY FUND'S investment objective is to seek
capital appreciation. The Fund attempts to achieve this objective by investing
primarily in the securities of companies with capitalizations of $500 million
or less that the Fund's investment adviser believes represent the potential for
significant capital appreciation. Under normal market and economic conditions,
the Fund will invest at least 65% of its assets in the equity securities of
companies with capitalizations of $500 million or less.

The ASSET ALLOCATION FUND'S investment objective is to seek a high
total return by providing both a current level of income that is greater than
that produced by the popular stock market averages as well as long-term growth
in the value of the Fund's assets. Due to the Fund's expenses, however, net
income distributed to shareholders may be less than that of the averages. The
Fund attempts to achieve this objective and at the same time reduce volatility
by allocating its assets in varying amounts among short-term obligations,
common stocks, preferred stocks and bonds.

The SMALL CAP VALUE FUND'S investment objective is to provide
long-term capital appreciation. The Fund attempts to achieve this objective by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of companies that have a market value capitalization of up to
$1 billion.

This Prospectus relates to the Retail A Shares representing interests
in each Fund and to the Retail B Shares representing interests in the Equity
Value, Equity Growth, Small Company Equity, Asset Allocation and Growth and
Income Funds (Retail A Shares and Retail B Shares are referred to herein
collectively as "Retail Shares"). Retail A Shares are sold with a front-end
sales charge. Retail B Shares are sold with a contingent deferred sales charge.
Retail Shares are offered to customers ("Customers") of Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Financial Group, Inc., its
affiliates, their correspondent banks, and other qualified banks, savings and
loan associations and broker/dealers ("Institutions"). Retail Shares may also
be purchased directly by individuals, corporations or other entities, who
submit a purchase application to Galaxy, purchasing either for their own
account or for the accounts of others ("Direct Investors"). Galaxy is also
authorized to issue an additional series of shares in each Fund ("Trust
Shares"), which are offered under a separate prospectus primarily 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. Retail A Shares, Retail B
Shares and Trust Shares in a Fund represent equal pro rata interests in the
Fund, except they bear different expenses that 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. Wellington Management Company serves as
the sub-adviser to the International Equity Fund.

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 THE 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> 740

HIGHLIGHTS

Q: What is The Galaxy Fund?

A: Galaxy is an open-end management investment company (commonly known
as a mutual fund) that offers investors the opportunity to invest in different
investment portfolios, each having separate investment objectives and policies.
This Prospectus describes Galaxy's EQUITY VALUE FUND, EQUITY GROWTH FUND,
EQUITY INCOME FUND, INTERNATIONAL EQUITY FUND, SMALL COMPANY EQUITY FUND, ASSET
ALLOCATION FUND, SMALL CAP VALUE FUND AND GROWTH AND INCOME FUND. Prospectuses
for Galaxy's MONEY MARKET, GOVERNMENT, TAX-EXEMPT, U.S. TREASURY, CONNECTICUT
MUNICIPAL MONEY MARKET, MASSACHUSETTS MUNICIPAL MONEY MARKET, INSTITUTIONAL
TREASURY MONEY MARKET, SHORT-TERM BOND, 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 may be obtained by calling 1-800-628-0414.

Q: Who advises the Funds?

A: The Funds are managed by Fleet Investment Advisors Inc. (the
"Investment Adviser" or "Fleet"), an indirect wholly-owned subsidiary of Fleet
Financial Group, Inc. Fleet Financial Group, Inc. is a financial services
company with total assets as of December 31, 1995 of approximately $84.8
billion. Wellington Management Company ("Wellington Management" or the
"Sub-Adviser") serves as the sub-adviser to the International Equity Fund. As
of December 31, 1995, Wellington Management had discretionary management
authority over approximately $109.2 billion of assets. See "Management of the
Funds -- Investment Adviser and Sub-Adviser."

Q: What advantages do the Funds offer?

Q: How can I buy and redeem shares?

A: The Funds are distributed by 440 Financial Distributors, Inc.
Retail Shares of the Funds are sold to individuals, corporations or other
entities, who submit a purchase application to Galaxy, purchasing either for
their own accounts or for the accounts of others ("Direct Investors"). Retail
Shares may also be purchased on behalf of Customers of Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Financial Group, Inc., its
affiliates, their correspondent banks and other qualified banks, savings and
loan associations and broker/dealers ("Institutions"). Retail Shares may also
be purchased by employees of Fleet Financial Group, Inc. and its affiliates
through payroll deductions. Retail A Shares of the Funds may be purchased at
their net asset value plus a maximum initial sales charge of 3.75%. Retail A
Shares are subject to a shareholder servicing fee of up to .30% of the average
daily net asset value of such Shares. Retail B Shares of the Fund may be
purchased at their net asset value subject to a contingent deferred sales
charge ("CDSC"). The CDSC is paid on certain share redemptions made within six
years of the purchase date at the maximum rate of 5.00% of the lower of (i) the
net asset value of the redeemed Shares or (ii) the original purchase price of
the redeemed Shares. Retail B Shares are subject to shareholder servicing and
distribution fees of up to .95% of the average daily net asset value of such
Shares. Share purchase and redemption information for both Direct Investors and
Customers is provided below under "How to Purchase Shares" and "How to Redeem
Shares." Except as provided below under "Investor Programs," the minimum
initial investment for Direct Investors and the minimum initial aggregate
investment for Institutions purchasing on behalf of their Customers is $2,500.
The minimum investment for subsequent purchases is $100. There are no minimum
requirements for investors participating in the Automatic Investment Program
described below. Institutions may require Customers to maintain certain minimum
investments in Retail Shares. See "How to Purchase Shares -- Purchase of
Shares" below.

Q: When are dividends paid?

A: The net investment income of the Equity Value, Equity Growth,
Equity Income, Small Company Equity, Asset Allocation, Small Cap Value and
Growth and Income Funds is declared and paid quarterly. Net realized capital
gains of each Fund are distributed at least annually. Dividends from net
investment income and net realized capital gains of the International Equity
Fund are declared and paid annually. Dividends and distributions are paid in
cash, although shareholders may choose to have dividends and distributions
automatically reinvested in additional Shares of the same series of Shares that
they own without sales or CDSC charges. See "Dividends and Distributions."

Q: What potential risks are presented by the Funds' investment
practices?

A: One or more of the Funds may invest in foreign securities either
directly or indirectly through American Depository Receipts ("ADRs") and
European Depository Receipts ("EDRs") and, in the case of the International
Equity Fund, Global Depository Receipts ("GDRs"). Investments in foreign
securities incur 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 individual companies, less market liquidity, and political
instability. See "Investment Objectives and Policies -- Special Risk
Considerations -- Foreign Securities." The Small Cap Value and Small Company
Equity Funds invest primarily in small capitalization stocks. The Growth and
Income Fund invests primarily in growth-oriented equity securities, which may
include securities of issuers with small capitalizations. As a result, these
Funds may be more volatile than, and may fluctuate independently of, broad
stock market indices. See "Investment Objectives and Policies." The Small Cap
Value and Growth and Income Funds may invest in lower- rated convertible
securities, which are high-yield, high-risk bonds that are typically subject to
greater market fluctuations and may be more difficult to value or dispose of
than higher-rated, lower-yielding bonds. See "Investment Objectives and
Policies -- Other Investment Policies and Risk Considerations -- Convertible

1
<PAGE> 741
Securities." One or more of the Funds may also invest in certain "derivative"
securities, such as put and call options, stock index futures and options,
indexed securities and swap agreements. Derivative securities derive their
value from the performance of underlying assets, interest rates and indices and
as a result entail additional market and credit risks. See "Investment
Objectives and Policies -- Other Investment Policies and Risk Considerations --
Derivative Securities."

Q: What shareholder privileges are offered by the Funds?

A: Retail A Shares of a Fund may be exchanged for Retail A Shares of
any other Galaxy portfolio which offers Retail A Shares and for shares of any
other investment portfolio otherwise advised by Fleet or its affiliates. Retail
B Shares of the Equity Value, Equity Growth, Small Company Equity, Asset
Allocation and Growth and Income Funds may be exchanged for Retail B Shares of
any other Galaxy portfolio which offers Retail B Shares. In either case,
exchanges are not subject to sales or additional CDSC charges. Galaxy offers
Individual Retirement Accounts ("IRAs"), Simplified Employee Pension Plan
("SEP") and Keogh Plan accounts which can be established by contacting Galaxy's
distributor. Retail Shares are also available for purchase through
Multi-Employee Retirement Plan ("MERP") accounts which can be established by
Customers directly with Fleet Brokerage Securities, Inc. or its affiliates.
Galaxy also offers an Automatic Investment Program which allows investors to
automatically invest in Retail Shares of the Funds on a monthly or quarterly
basis, as well as certain other shareholder privileges. See "Investor
Programs."

2
<PAGE> 742

EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction
expenses imposed by the Funds with respect to their Retail A Shares and/or
Retail B Shares, and (ii) the operating expenses for Retail A Shares and/or
Retail B Shares of each Fund. SHAREHOLDER TRANSACTION EXPENSES are charges you
pay when buying or selling shares of the Funds. ANNUAL FUND OPERATING EXPENSES
are paid out of each Fund's assets and include fees for portfolio management,
maintenance of shareholder accounts, general Fund administration, accounting
and other services. Examples based on the summary are also shown.

<TABLE>
<CAPTION>
EQUITY EQUITY EQUITY INTERNATIONAL
VALUE GROWTH INCOME EQUITY
FUND FUND FUND FUND
-------------------- -------------------- --------- -------------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES A SHARES
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
- --------------------

Front End Sales Charge
Imposed on Purchases
(as a percentage of
offering price) ............ 3.75%(1) None 3.75%(1) None 3.75%(1) 3.75%(1)

Sales Charge Imposed on
Reinvested Dividends ....... None None None None None None

Deferred Sales Charge
(as a percentage of original
purchase price or
redemption proceeds,
whichever is lower) ........ None 5.00%(2) None 5.00%(2) None None

Redemption Fees(3) ........... None None None None None None

Exchange Fees ................ None None None None None None

ANNUAL FUND OPERATING
EXPENSES (AS A PERCENTAGE
OF AVERAGE NET ASSETS)
- -------------------------

Advisory Fees (After
Fee Waivers) ............... .75% .75% .75% .75% .75% .72%
12b-1 Fees(4) ................ None .95% None .95% None None
Other Expenses ............... .79% .42% .73% .39% .77% 1.15%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (After Fee
Waivers) ................... 1.54% 2.12% 1.48% 2.09% 1.52% 1.87%
==== ==== ==== ==== ==== ====

</TABLE>

<TABLE>
<CAPTION>
SMALL COMPANY ASSET ALLOCATION SMALL GROWTH
QUITY ALLOCATION CAP VALUE AND INCOME
FUND FUND FUND FUND
-------------------- -------------------- -------- --------------------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES A SHARES B SHARES
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
- --------------------

Front End Sales Charge
Imposed on Purchases
(as a percentage of
offering price) ............ 3.75%(1) None 3.75%(1) None 3.75%(1) 3.75%(1) None

Sales Charge Imposed on
Reinvested Dividends ....... None None None None None None None

Deferred Sales Charge
(as a percentage of original
purchase price or
redemption proceeds,
whichever is lower) ........ None 5.00%(2) None 5.00%(2) None None 5.00%(2)

Redemption Fees(3) ........... None None None None None None None

Exchange Fees ................ None None None None None None None

ANNUAL FUND OPERATING
EXPENSES (AS A PERCENTAGE
OF AVERAGE NET ASSETS)
- -------------------------

Advisory Fees (After
Fee Waivers) ............... .75% .75% .75% .75% .75% .75% .75%
12b-1 Fees(4) ................ None .95% None .95% None None .95%
Other Expenses ............... .83% .46% .79% .45% .56% .53% .36%
---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (After Fee
Waivers) ................... 1.58% 2.16% 1.54% 2.15% 1.31% 1.28% 2.06%
==== ==== ==== ==== ==== ==== ====

</TABLE>

(1) Reduced sales charges may be available. See "How to Purchase Shares --
Applicable Sales Charges -- Retail A Shares."
(2) This amount applies to redemptions made during the first year. The
charge decreases to 4.00%, 3.00%, 3.00%, 2.00% and 1.00% for
redemptions made during the second through sixth years, respectively.
Retail B Shares automatically convert to Retail A Shares after six
years. See "How to Purchase Shares -- Applicable Sales Charges --
Retail B Shares."
(3) Direct Investors are charged a $5.00 fee if redemption proceeds are
paid by wire.
(4) Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers, Inc.

3
<PAGE> 743
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>
Equity Value Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . . . . . $53 $84 $118 $212
Equity Value Fund (Retail B Shares)
Assuming complete redemption at end of period(2) . . . . . . . . . . . . . . $71 $95 $132 $214
Assuming no redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . $21 $65 $112 $214
Equity Growth Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . . . . . $52 $82 $115 $206
Equity Growth Fund (Retail B Shares)
Assuming complete redemption at end of period(2) . . . . . . . . . . . . . . $71 $95 $131 $209
Assuming no redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . $21 $65 $111 $209
Equity Income Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . . . . . $53 $84 $117 $210
International Equity Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . $56 $94 $134 $246
Small Company Equity Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . $53 $85 $120 $216
Small Company Equity Fund (Retail B Shares)
Assuming complete redemption at end of period(2) . . . . . . . . . . . . . . $72 $97 $134 $218
Assuming no redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . $22 $67 $114 $218
Asset Allocation Fund (Retail A Shares)(1) . . . . . . . . . . . . . . . . . . $53 $84 $118 $212
Asset Allocation Fund (Retail B Shares)
Assuming complete redemption at end of period(2) . . . . . . . . . . . . . . $72 $96 $134 $215
Assuming no redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . $22 $66 $114 $215
Small Cap Value Fund (Retail A Shares) . . . . . . . . . . . . . . . . . . . . $51 $77 $106 $187
Growth and Income Fund (Retail A Shares) . . . . . . . . . . . . . . . . . . . $50 $76 $104 $184
Growth and Income Fund (Retail B Shares)
Assuming complete redemption at end of period(2) . . . . . . . . . . . . . . $71 $94 $129 $197
Assuming no redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . $21 $64 $109 $197
</TABLE>
- ---------------
(1) Assumes deduction at time of purchase of maximum applicable front-end
sales charge.
(2) Assumes deduction of maximum applicable contingent deferred sales
charge.
(3) Based on conversion of Retail B Shares to Retail A Shares after six
years.

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 with respect to Retail A Shares of the Funds is based on expenses
incurred by each Fund during the last fiscal year, restated to reflect the
expenses each Fund expects to incur during the current fiscal year on its
Retail A Shares. The information contained in the Expense Summary and Example
with respect to Retail B Shares of the Equity Value, Equity Growth, Small
Company Equity, Asset Allocation and Growth and Income Funds is based on
expenses these Funds expect to incur during the current year on their Retail B
Shares. Without voluntary fee waivers by the Investment Adviser, Advisory Fees
would be 1.15% and Total Fund Operating Expenses would be 2.30% with respect to
Retail A Shares of the International Equity Fund. For more complete
descriptions of these costs and expenses, see "How to Purchase Shares," "How to
Redeem Shares," "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 applicable Statements of Additional Information relating
to the Funds. Any fees that are charged by affiliates of Fleet or other
Institutions directly to their Customer accounts for services related to an
investment in Retail 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.

4
<PAGE> 744

FINANCIAL HIGHLIGHTS

This Prospectus describes the Retail A Shares in each Fund and the
Retail B Shares in the Equity Value, Equity Growth, Small Company Equity, Asset
Allocation and Growth and Income Funds. Galaxy is also authorized to issue
another series of shares in each Fund, Trust Shares. As described below under
"Description of Galaxy and Its Shares," Retail A Shares, Retail B Shares and
Trust Shares represent equal pro rata interests in a Fund, except that (i)
Retail A Shares of the Funds bear the expenses incurred under Galaxy's
Shareholder Services Plan at an annual rate of up to .30% of the average daily
net asset value of each Fund's outstanding Retail A Shares, (ii) Retail B
Shares of the Equity Value, Equity Growth, Small Company Equity, Asset
Allocation and Growth and Income Funds bear the expenses incurred under
Galaxy's Distribution and Services Plan at an annual rate of up to .95% of the
average daily net asset value of each Fund's outstanding Retail B Shares, and
(iii) Retail A Shares, Retail B Shares and Trust Shares bear differing transfer
agency expenses.

The financial highlights presented below for the Equity Value, Equity
Growth, Equity Income, International Equity, Small Company Equity and Asset
Allocation 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 and notes thereto contained in
Galaxy's Annual Report to Shareholders and incorporated by reference into the
Statement of Additional Information relating to these Funds. Information in the
financial highlights presented below with respect to these Funds for periods
prior to the fiscal year ended October 31, 1995 reflects the investment results
of both Retail A Shares and Trust Shares of the Funds (Retail A Shares of the
Equity Value and Equity Growth Funds were first offered during the fiscal
year/period ended October 31, 1991, and Retail A Shares of the Equity Income
Fund were first offered during the fiscal year ended October 31, 1992). During
the periods shown, Retail B Shares were not offered by the Equity Value, Equity
Growth, Small Company Equity, Asset Allocation and Growth and Income Funds.
More information about the performance of the Funds is also contained in
Galaxy's Annual Report to Shareholders, which may be obtained without charge by
contacting Galaxy at its telephone numbers or address provided above.

5
<PAGE> 745

EQUITY VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994 YEAR ENDED OCTOBER 31,(2) PERIOD ENDED
------------- ------------- ----------------------------------------------- OCTOBER 31,
RETAIL SHARES RETAIL SHARES 1993 1992 1991 1990 1989 1988(1),(2)
------------- ------------- ------ ------ ------ ------ ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ..................... $ 13.31 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41 $ 10.00
------- ------- -------- -------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income ......... 0.22 0.18 0.19 0.26 0.37 0.39 0.36 0.03
Net realized and unrealized
gain (loss) on investments.. 2.24 0.45 2.14 0.33 2.41 (1.37) 1.10 0.38
------- ------- -------- -------- ------- ------- ------- -------
Total from Investment
Operations: .......... 2.46 0.63 2.33 0.59 2.78 (0.98) 1.46 0.41
------- ------- -------- -------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income .......... (0.23) (0.16) (0.20) (0.27) (0.37) (0.38) (0.36) --
Dividends from net realized
capital gains .............. (1.21) (0.28) (0.42) (0.43) (0.34) (0.70) -- --
------- ------- -------- -------- ------- ------- ------- -------
Total Dividends ....... (1.44) (0.44) (0.62) (0.70) (0.71) (1.08) (0.36) --
------- ------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in
net asset value ............... 1.02 (0.19) 1.71 (0.11) 2.07 (2.06) 1.10 0.41
------- ------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of Period ... $ 14.33 $ 13.31 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41
======= ======= ======== ======== ======= ======= ======= =======
Total Return ..................... 20.81% 4.97% 21.18% 5.66% 30.45% (9.43%) 14.19% 4.10%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) ................ $96,555 $74,001 $176,107 $133,578 $99,601 $92,893 $92,366 $75,774
Ratios to average net assets:
Net investment income
including reimbursement/
waiver ..................... 1.62% 1.45% 1.52% 2.24% 3.25% 3.66% 3.25% 1.89%(4)
Operating expenses
including reimbursement/
waiver ..................... 1.49% 1.08% 0.97% 0.94% 0.94% 0.95% 0.97% 0.95%(4)
Operating expenses
excluding reimbursement/
waiver ..................... 1.50% 1.11% 0.97% 0.94% 0.94% 0.95% 0.98% 0.94%(4)
Portfolio Turnover Rate .......... 76% 71% 50% 136% 40% 94% 44% 4%(3)
</TABLE>

- ---------------
1 The 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 Not annualized.
4 Annualized.

6
<PAGE> 746
EQUITY GROWTH FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED YEAR ENDED
1995 OCTOBER 31, 1994 OCTOBER 31,(2) PERIOD ENDED
------------- ---------------- --------------------- OCTOBER 31,
RETAIL SHARES RETAIL SHARES 1993 1992 1991(1),(2)
------------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............. $ 14.18 $ 13.76 $ 12.90 $ 11.99 $ 10.00
------- ------- -------- -------- -------
Income from Investment Operations:
Net Investment Income(3) ................... 0.14 0.17 0.15 0.17 0.16
Net realized and unrealized gain (loss)
on investments ........................... 3.28 0.47 0.95 0.91 1.97
------- ------- -------- -------- -------
Total from Investment Operations: .... 3.42 0.64 1.10 1.08 2.13
------- ------- -------- -------- -------
Less Dividends:
Dividends from net investment income ....... (0.14) (0.16) (0.15) (0.17) (0.14)
Dividends from net realized capital gains .. (0.17) (0.06) (0.09) -- --
------- ------- -------- -------- -------
Total Dividends .. (0.31) (0.22) (0.24) (0.17) (0.14)
------- ------- -------- -------- -------
Net increase (decrease) in net asset value ....... 3.11 0.42 0.86 0.91 1.99
------- ------- -------- -------- -------
Net Asset Value, End of Period ................... $ 17.29 $ 14.18 $ 13.76 $ 12.90 $ 11.99
------- ------- -------- -------- -------
Total Return ..................................... 24.54% 4.72% 8.58% 9.10% 21.39%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ................ $98,911 $70,338 $427,298 $224,630 $92,224
Ratios to average net assets:
Net investment income including
reimbursement/waiver ..................... 0.85% 1.22% 1.20% 1.37% 1.46%(5)
Operating expenses including
reimbursement/waiver ..................... 1.45% 0.98% 0.97% 0.95% 0.83%(5)
Operating expenses excluding
reimbursement/waiver ..................... 1.47% 0.99% 0.97% 0.95% 0.83%(5)
Portfolio Turnover Rate .......................... 14% 18% 16% 22% 16%(4)
</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."
3 Net investment income per share before reimbursement/waiver of fees
by the Investment Adviser and/or administrator for the year ended
October 31, 1995 was $0.13.
4 Not Annualized.
5 Annualized.

7
<PAGE> 747

EQUITY INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED YEAR ENDED
1995 OCTOBER 31, 1994 OCTOBER 31,(2) PERIOD ENDED
------------- ---------------- ----------------------- OCTOBER 31,
RETAIL SHARES RETAIL SALES 1993 1992 1991(2)
------------- ------------ -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . $12.74 $ 12.85 $ 11.85 $ 11.29 $10.00
------- ------- -------- ------- -----
Income from Investment Operations:
Net Investment Income(3) . . . . . . . . . . . 0.28 0.30 0.30 0.30 0.29
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . 2.47 0.07 1.09 0.76 1.26
------- ------- -------- ------- ------
Total from Investment Operations: 2.75 0.37 1.39 1.06 1.55
------- ------- -------- ------- ------
Less Dividends:
Dividends from net investment income . . . . . (0.30) (0.29) (0.28) (0.30) (0.26)
Dividends from net realized capital gains. . . (0.21) (0.19) (0.11) (0.20) --
------- ------- -------- ------- ------
Total Dividends. . . . . . . . . . . . (0.51) (0.48) (0.39) (0.50) (0.26)
------- ------- -------- ------- ------
Net increase (decrease) in net asset value . . . . . 2.24 (0.11) 1.00 0.56 1.29
------- ------- -------- ------- ------
Net Asset Value, End of Period . . . . . . . . . . . $ 14.98 $ 12.74 $ 12.85 $ 11.85 $11.29
======= ======= ======== ======= ======
Total Return . . . . . . . . . . . . . . . . . . . . 22.23% 2.94% 11.85% 9.71% 15.61%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . $81,802 $63,532 $123,970 $21,778 $7,096
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . 2.08% 2.45% 2.34% 2.84% 2.72%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 1.49% 1.11% 1.16% 1.03% 0.85%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 1.51% 1.12% 1.22% 1.54% 1.39%(5)
Portfolio Turnover Rate. . . . . . . . . . . . . . . 21% 31% 27% 18% 77%(4)
</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."
3 Net investment income per share before reimbursement/waiver of fees
by the Investment Adviser and/or Administrator for the years ended
October 31, 1993 and 1992 and for the period ended October 31, 1991
were $0.29, $0.25 and $0.23, respectively.
4 Not Annualized.
5 Annualized.

8
<PAGE> 748
INTERNATIONAL EQUITY FUND1
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 YEAR ENDED PERIOD ENDED
---------------- ---------------- OCTOBER 31, OCTOBER 31,
RETAIL SHARES RETAIL SHARES 1993(2) 1992(1,2)
---------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 13.20 $ 12.13 $ 9.66 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income(3) . . . . . . . . . . . . . . . . 0.11 0.06 0.02 0.06
Net realized and unrealized gain (loss) on investments . (0.21) 1.02 2.51 (0.40)
------- ------- ------- -------
Total From Investment Operations: . . . . . . . . (0.10) 1.08 2.53 (0.34)
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . (0.02) (0.01) (0.06) --
Dividends from net realized capital gains . . . . . . . (0.16) -- -- --
------- ------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . (0.18) (0.01) (0.06) --
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . (0.28) 1.07 2.47 (0.34)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 12.92 $ 13.20 $ 12.13 $ 9.66
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . (0.64)% 8.91% 26.36% (3.40)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $30,104 $32,887 $39,246 $12,584
Ratios to average net assets:
Net investment income including reimbursement/waiver . . 0.84% 0.69% 0.37% 1.19%(5)
Operating expenses including reimbursement/waiver . . . 1.76% 1.49% 1.57% 1.61%(5)
Operating expenses excluding reimbursement/waiver . . . 2.03% 1.79% 2.04% 2.79%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 48% 39% 29% 21%(4)
</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 before reimbursement/waiver of fees
by the Investment Adviser and/or Administrator for the years ended
October 31, 1995, 1994 and 1993 and for the period ended October 31,
1992 were $0.08, $0.03, $0.00 and $0.00, respectively.
4 Not Annualized.
5 Annualized.

9
<PAGE> 749
SMALL COMPANY EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 YEAR ENDED PERIOD ENDED
-------------- ---------------- OCTOBER 31, OCTOBER 31,
RETAIL SHARES RETAIL SHARES 1993(2) 1992(1)(2)
------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 12.35 $ 12.41 $ 8.79 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income (loss)(3). . . . . . . . . . . . . (0.09) (0.01) (0.04) (0.03)
------- ------- ------- -------
Net realized and unrealized gain (loss) on investments . 4.21 -- 3.66 (1.18)
------- ------- ------- -------
Total From Investment Operations: . . . . . . . . 4.12 (0.01) 3.62 (1.21)
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . -- -- -- --
Dividends from net realized capital gains . . . . . . . (0.19) (0.05) -- --
------- ------- ------- -------
Total Dividends: . . . . . . . . . . . . . . . . (0.19) (0.05) -- --
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . 3.93 (0.06) 3.62 (1.21)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 16.28 $ 12.35 $ 12.41 $ 8.79
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . 34.01% (0.06)% 41.18% (12.10)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $45,668 $30,845 $55,683 $29,072
Ratios to average net assets:
Net investment income (loss) including
reimbursement/waiver . . . . . . . . . . . . . . . . (0.85)% (0.40)% (0.66)% (0.63)%(5)
Operating expenses including reimbursement/waiver . . . 1.60% 1.31% 1.18% 1.06%(5)
Operating expenses excluding reimbursement/waiver . . . 1.64% 1.34% 1.22% 1.33%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 54% 35% 57% 87%(4)
</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 (loss) per share before reimbursement/waiver of
fees by the Investment Adviser and/or Administrator for the period
ended October 31, 1992 was $(0.05).
4 Not Annualized.
5 Annualized.

10
<PAGE> 750

ASSET ALLOCATION FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 YEAR ENDED PERIOD ENDED
---------------- ---------------- OCTOBER 31, OCTOBER 31,
RETAIL SHARES RETAIL SHARES 1993(2) 1992(1),(2)
---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 10.67 $ 11.15 $ 10.16 $ 10.00
------- ------- ------- -------
Income From Investment Operations:
Net Investment Income(3) . . . . . . . . . . . . . . . . 0.30 0.27 0.25 0.15
Net realized and unrealized gain (loss) on investments . 2.16 (0.49) 0.99 0.13
------- ------- ------- -------
Total From Investment Operations: . . . . . . . . 2.46 (0.22) 1.24 0.28
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . (0.31) (0.26) (0.25) (0.12)
Dividends from net realized capital gains . . . . . . . -- -- -- --
------- ------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . (0.31) (0.26) (0.25) (0.12)
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . 2.15 (0.48) 0.99 0.16
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 12.82 $ 10.67 $ 11.15 $ 10.16
======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . . 23.42% (2.02)% 12.37% 2.85%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $76,368 $73,574 $92,348 $11,555
Ratios to average net assets:
Net investment income including reimbursement/waiver . . 2.52% 2.66% 2.59% 2.80%(5)
Operating expenses including reimbursement/waiver . . . 1.48% 1.21% 1.14% 1.11%(5)
Operating expenses excluding reimbursement/waiver . . . 1.50% 1.22% 1.25% 2.39%(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 41% 23% 7% 2%(4)
</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 before reimbursement/waiver of fees
by the Investment Adviser and/or Administrator for the year ended
October 31, 1993 and for the period ended October 31, 1992 were
$0.24 and $0.08, respectively.
4 Not Annualized.
5 Annualized.

11
<PAGE> 751
The Small Cap Value Fund and Growth and Income Fund commenced
operations on December 14, 1992 as separate investment portfolios (the
"Predecessor Small Cap Value Fund" and the "Predecessor Growth and Income
Fund," respectively, and collectively, the "Predecessor Funds") of The Shawmut
Funds, which was organized as a Massachusetts business trust. On December 4,
1995, the Funds were reorganized as new portfolios of Galaxy. Prior to the
reorganization, the Predecessor Funds offered and sold two series of shares of
beneficial interest that were similar to the Funds' Retail A Shares and Trust
Shares, respectively.

The financial highlights presented below set forth certain information
concerning the investment results of the Predecessor Funds' Investment Shares
(the series that is similar to the Retail A Shares of the Small Cap Value and
Growth and Income Funds) for the fiscal years ended October 31, 1995 and
October 31, 1994 and the fiscal period ended October 31, 1993. The information
was audited by Price Waterhouse LLP, independent accountants for the
Predecessor Funds, whose report thereon is contained in The Shawmut Funds'
Annual Report to Shareholders for the fiscal year ended October 31, 1995. Such
financial highlights should be read in conjunction with the financial
statements and notes thereto contained in The Shawmut Funds' Annual Report to
Shareholders and incorporated by reference into the Statement of Additional
Information relating to the Small Cap Value and Growth and Income Funds.
Additional information about the performance of the Predecessor Funds is
contained in The Shawmut Funds' Annual Report to Shareholders, which may be
obtained without charge by contacting Galaxy at its telephone numbers or
address provided above.

PREDECESSOR SMALL CAP VALUE FUND
(FOR A INVESTMENT SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993(1)(2)
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . $ 11.06 $ 11.21 $ 10.52
-------- -------- --------
Income from Investment Operations:
Net investment income(3) . . . . . . . . . . . . . . . . . . . . . (0.02) (0.01) (0.008)
Net realized gain (loss) on investments . . . . . . . . . . . . . 2.21 0.18 0.698
-------- -------- --------
Total from Investment Operations: . . . . . . . . . . . . . 2.19 0.17 0.690
-------- -------- --------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . -- -- --
Dividends from net realized gains . . . . . . . . . . . . . . . . (0.57) (0.32) --
-------- -------- --------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . . (0.57) (0.32) --
-------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . . . . . . 1.62 (0.15) 0.69
-------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . $ 12.68 $ 11.06 $ 11.21
======== ======== ========

Total Return(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.27% 1.64% 6.56%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . . . $27,546 $19,764 $15,014
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . . . . (0.19)% (0.10)% (0.19)%(6)
Operating expenses including reimbursement/waiver . . . . . . . . 1.35% 1.31% 1.33%(6)
Operating expenses excluding reimbursement/waiver . . . . . . . . 1.85% 1.84% 1.87%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . 32% 29% 29%(5)
</TABLE>

- ---------------
1 The Fund commenced operations on December 14, 1992.
2 The Fund began offering Investment Shares on February 12, 1993.
3 Net investment income per share does not reflect tax reclassifications
arising in the current period.
4 Calculation does not include sales charge for Investment Shares.
5 Not Annualized.
6 Annualized.

12
<PAGE> 752
PREDECESSOR GROWTH AND INCOME FUND
(FOR A INVESTMENT SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993(1),(2)
---------- ----------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . $ 11.15 $ 10.69 $ 10.23
------- ------- -------
Income from Investment Operations:
Net investment income(3) . . . . . . . . . . . . . . . . . . . . . 0.24 0.22 0.15
Net realized gain (loss) on investments . . . . . . . . . . . . . 1.70 0.72 0.48
------- ------- -------
Total from Investment Operations: . . . . . . . . . . . . . 1.94 0.94 0.63
------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . (0.25) (0.20) (0.17)
Dividends from net realized gains . . . . . . . . . . . . . . . . (0.49) (0.28) --
------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . . . . . . . (0.74) (0.48) (0.17)
------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . . . . . . 1.20 0.46 0.46
------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . $ 12.35 $ 11.15 $ 10.69
======= ======= =======
Total Return(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.52% 9.12% 6.20%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . . . $51,078 $22,244 $16,280
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . . . . 2.10% 2.06% 1.77%(6)
Operating expenses including reimbursement/waiver . . . . . . . . 1.32% 1.29% 1.25%(6)
Operating expenses excluding reimbursement/waiver . . . . . . . . 1.77% 1.74% 1.78%(6)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . 51% 73% 38%(5)
</TABLE>

13
<PAGE> 753

INVESTMENT OBJECTIVES AND POLICIES

The Investment Adviser, and, with respect to the International Equity
Fund, the Investment Adviser and the Sub-Adviser, will use their 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.

EQUITY VALUE FUND

Under normal market and economic conditions, the Fund invests at least
75% of its total assets in common stock, preferred stock and debt securities
convertible into common stock. Debt securities convertible into common stock
are purchased primarily during periods of relative market instability and are
acquired principally for income with the potential for appreciation being a
secondary consideration. Equity investments consist primarily of common stock
of companies having capitalizations that exceed $100 million. Stocks of such
companies generally are listed on a national exchange or are unlisted
securities with an established over-the-counter market. In addition, the Fund
may hold other types of securities in such proportions as, in the opinion of
the Investment Adviser, existing circumstances may warrant, including
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and other high quality "money market" instruments. The Fund
may also hold cash pending investment, during temporary defensive periods or
if, in the opinion of the Investment Adviser, suitable stock or convertible
debt securities are unavailable. The Fund may also invest up to 20% of its
total assets in foreign securities, either directly or indirectly through
American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs"). See "Special Risk Considerations" and "Other Investment Policies and
Risk Considerations" below. The Fund may also write covered call options. See
"Other Investment Policies and Risk ConsiderationsOptions and Futures
Contracts" and "Other Investment Policies and Risk Considerations -- Derivative
Securities" below. See "Other Investment Policies and Risk Considerations"
below for information regarding additional investment policies of the Equity
Value Fund.

EQUITY GROWTH FUND

The Equity Growth Fund's investment objective is to seek long-term
capital appreciation. The Fund attempts to achieve its investment objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in a broadly diversified portfolio of equity securities such as
common stock, preferred stock, common stock warrants and securities convertible
into common stock of companies that Fleet believes will increase future
earnings to a level above the average earnings of similar issuers. Such
companies often retain their earnings to finance current and future growth and,
for this reason, generally pay little or no dividends. Equity securities in
which the Fund invests are selected based on analysis of trends in industries
and companies, earning power, growth features, quality and depth of management,
marketing and manufacturing skills, financial conditions and other investment
criteria. By investing in convertible securities, the Fund will seek the
opportunity, through the conversion feature, to participate in the capital
appreciation of the common stock into which the securities are convertible. The
Investment Adviser invests less than 25% of the value of the Fund's total
assets at the time of purchase in securities of issuers conducting their
principal business activities in the same industry.

The Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through the purchase of ADRs and
EDRs. See "Special Risk Considerations" and "Other Investment Policies and Risk
Considerations" below. In addition, the Fund may invest in securities issued by
foreign branches of U.S. banks and foreign banks. The Fund may also write
covered call options. See "Other Investment Policies and Risk Considerations --
Options and Futures Contracts" and "Other Investment Policies and Risk
ConsiderationsDerivative Securities" below.

As a temporary defensive measure, the Fund may invest without
limitation in cash, "money market" instruments (such as those listed under
"Other Investment Policies and Risk Considerations" below) and U.S. Government
obligations at such times and in such proportions as, in the opinion of the
Investment Adviser, prevailing market or economic conditions warrant. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Equity Growth Fund.

14
<PAGE> 754

EQUITY INCOME FUND

The Equity Income Fund's investment objective is to seek current
income and capital appreciation. The Fund attempts to achieve its investment
objective by investing, under normal market and economic conditions, at least
75% of its total assets in common stock and securities convertible into common
stock. Factors generally considered in selecting portfolio securities include
current income and prospects for dividend growth and capital appreciation.
However, the Fund's portfolio can be expected to include securities that offer
only growth potential or only income potential, as well as securities that
combine both these elements. Less than 25% of the value of the Fund's total
assets at the time of purchase will be invested in securities of issuers
conducting their principal business activities in the same industry.

The Equity Income Fund may invest up to 20% of its total assets in
foreign securities, either directly or indirectly through the purchase of ADRs
and EDRs. See "Special Risk Considerations" and "Other Investment Policies and
Risk Considerations" below. The Fund may also write covered call options. For
additional information concerning investments in options and similar
securities, see "Other Investment Policies and Risk Considerations -- Options
and Futures Contracts" and "Other Investment Policies and Risk Considerations
- -- Derivative Securities" below.

As a temporary defensive measure, the Fund may invest without
limitation in cash, "money market" instruments (such as those listed under
"Other Investment Policies and Risk Considerations" below) and U.S. Government
obligations at such times and in such proportions as, in the opinion of the
Investment Adviser, prevailing market or economic conditions warrant. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Equity Income Fund.

INTERNATIONAL EQUITY FUND

The International Equity Fund's investment objective is to seek
long-term capital appreciation. The Fund attempts to achieve its investment
objective by investing at least 75% of its total assets in equity securities of
foreign issuers. The Fund's assets will be invested at all times in the
securities of issuers located in at least three different foreign countries.
Although the Fund may earn income from dividends, interest and other sources,
current income will not be its primary consideration. The Fund emphasizes
established companies, although it may invest in companies of varying sizes as
measured by assets, sales and capitalization.

The Fund invests in common stock and may invest in other securities
with equity characteristics, consisting of trust or limited partnership
interests, preferred stock, rights and warrants. The Fund may also invest in
convertible securities, consisting of debt securities or preferred stock that
may be converted into common stock or that carry the right to purchase common
stock. The Fund invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter
markets, and may invest in unlisted securities.

Securities issued in certain countries are currently accessible to the
Fund only through investment in other investment companies that are
specifically authorized to invest in such securities. The limitations on the
Fund's investment in other investment companies are described below under
"Other Investment Policies and Risk Considerations -- Investment Company
Securities."

During temporary defensive periods in response to unusual and adverse
conditions affecting the equity markets, or to meet anticipated day-to-day
operating expenses, the Fund's assets may be invested in short-term debt
instruments. In addition, when the Fund experiences large cash inflows from the
issuance of new shares or the sale of portfolio securities, and desirable
equity securities that are consistent with the Fund's investment objective are
unavailable in sufficient quantities, the Fund may hold short-term investments
for a limited time pending availability of suitable equity securities. The
short-term debt instruments in which the Fund may invest may be denominated in
foreign currencies or U.S. dollars, and include foreign and domestic: (i)
short-term obligations of national governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated A or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Group ("S&P"), or if unrated,
determined by the Investment Adviser or the Sub-Adviser to be of comparable
quality; (iii) commercial paper, including master notes; (iv) bank obligations,
including negotiable certificates of deposit, time deposits, bankers'
acceptances, and Euro-currency instruments and securities; and (v) repurchase
agreements. Time deposits with a maturity longer than seven days or that do not
provide for payment within seven days after notice will be limited to 10% of
the Fund's total assets. Issuers of commercial paper, bank obligations or
repurchase agreements in which the Fund invests must have, at the time of
investment, out-

15
<PAGE> 755
standing debt rated A or higher by Moody's or S&P, or, if they are not rated,
the instrument purchased must be determined to be of comparable quality.

Subject to applicable securities regulations, the Fund may, for the
purpose of hedging its portfolio, purchase and write covered call options on
specific portfolio securities and may purchase and write put and call options
on foreign stock indexes listed on foreign and domestic stock exchanges. In
addition, the Fund may invest up to 100% of its total assets in securities of
foreign issuers in the form of ADRs, EDRs or GDRs as described under "Other
Investment Policies and Risk Considerations." Furthermore, the Fund may
purchase and sell securities on a when-issued basis. For temporary defensive
purposes, the Fund may also invest a major portion of its assets in securities
of United States issuers. Less than 25% of the value of the Fund's total assets
at the time of purchase will be invested in securities of issuers conducting
their principal business activities in the same industry. See "Other Investment
Policies and Risk Considerations" below regarding additional investment
policies of the Fund.

SMALL COMPANY EQUITY FUND

The Small Company Equity Fund's investment objective is to seek
capital appreciation. The Fund attempts to achieve its investment objective by
investing primarily in the securities of companies with capitalizations of $500
million or less ("Small Capitalization Securities") which the Fund's Investment
Adviser believes represent the potential for significant capital appreciation.

The Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through ADRs and EDRs. See "Special
Risk Considerations" and "Other Investment Policies and Risk Considerations"
below.

The Fund may purchase and write covered call options as a hedge
against changes resulting from market conditions and in the value of the
securities held in the Fund or which it intends to purchase and where the
transactions are economically appropriate for the reduction of risks inherent
in the ongoing management of the Fund. See "Other Investment Policies and Risk
Considerations -- Options and Futures Contracts" and "Other Investment Policies
and Risk ConsiderationsDerivative Securities" below.

As a temporary defensive measure, the Fund may invest without
limitation in cash, "money market" instruments (such as those listed under
"Other Investment Policies and Risk Considerations" below) and U.S. Government
obligations at such times and in such proportions as, in the opinion of the
Investment Adviser, prevailing market or economic conditions warrant. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Small Company Equity Fund.

ASSET ALLOCATION FUND

The investment objective of the Asset Allocation Fund is to seek a
high total return by providing both a current level of income that is greater
than that provided by the popular stock market averages as well as long-term
growth in the value of the Fund's assets. The Investment Adviser interprets the
objective to refer to the Dow Jones Industrial Average (of 30 companies listed
on the New York Stock Exchange) and the S&P 500. Due to the Fund's expenses,
net income distributed to shareholders may be less than that of these averages.

The Fund attempts to achieve its investment objective and at the same
time reduce volatility by allocating its assets among short-term obligations,
common stock, preferred stock and bonds. The proportion of the Fund's assets
invested in each type of security will vary from time to time as a result of
the Investment Adviser's interpretation of economic and market conditions.
However, at least 25% of the Fund's total assets will at all times be invested
in fixed-income senior securities, including debt securities and preferred
stocks. Debt securities purchased by the Fund will be rated at the time of
purchase in one of the four highest rating categories by S&P ("AAA," "AA," "A"
and "BBB") or Moody's ("Aaa," "Aa," "A" and "Baa") (or which, if unrated, are
determined by the Investment Adviser to be of comparable quality). Debt
securities rated "BBB" by S&P or "Baa" by Moody's are generally considered to
be investment grade securities although they may have speculative
characteristics and changes in economic conditions or circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher grade debt obligations. In selecting common stock
for purchase by the Fund, the Investment Adviser will analyze the potential for
changes in earnings and dividends for a foreseeable period.

The Fund may also invest up to 20% of its total assets in foreign
securities, either directly or indirectly through ADRs and EDRs. See "Special
Risk Considerations" and "Other Investment

16
<PAGE> 756
Policies and Risk Considerations" below. The Fund may write covered call
options, purchase asset-backed securities and mortgage-backed securities and
enter into foreign currency exchange transactions. See "Other Investment
Policies and Risk Considerations" below.

As a temporary defensive measure, the Fund may invest without
limitation in cash, "money market" instruments (such as those listed under
"Other Investment Policies and Risk Considerations" below) and U.S. Government
obligations at such times and in such proportions as, in the opinion of the
Investment Adviser, prevailing market and economic conditions warrant. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Asset Allocation Fund.

SMALL CAP VALUE FUND

The Small Cap Value Fund's investment objective is to provide
long-term capital appreciation. The Fund attempts to achieve its investment
objective by investing, under normal circumstances, at least 65% of its assets
in equity securities of companies that have a market value capitalization of up
to $1 billion.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. See "Other Investment Policies and Risk ConsiderationsConvertible
Securities" below. The Fund may also buy and sell options and futures contracts
and utilize stock index futures contracts, options, swap agreements, indexed
securities, and options on futures contracts. See "Other Investment Policies
and Risk Considerations -- Options and Futures Contracts," "Other Investment
Policies and Risk Considerations -- Stock Index Futures, Swap Agreements,
Indexed Securities and Options" and "Other Investment Policies and Risk
ConsiderationsDerivative Securities" below.

The Fund may invest in securities of foreign issuers which are freely
traded on United States securities exchanges or in the over-the- counter market
in the form of ADRs and EDRs. Securities of a foreign issuer may present
greater risks in the form of nationalization, confiscation, domestic
marketability, or other national or international restrictions. As a matter of
practice, the Fund will not invest in the securities of a foreign issuer if any
such risk appears to the Investment Adviser to be substantial. See "Special
Risk Considerations" and "Other Investment Policies and Risk Considerations"
below.

As a temporary defensive measure, in such proportions as, in the
judgment of the Investment Adviser, prevailing market conditions warrant, the
Fund may invest in: (i) short-term money market instruments (such as those
listed below under "Other Investment Policies") rated in one of the top two
rating categories by a nationally recognized statistical rating organization,
such as S&P, Moody's or Fitch Investors Service, L.P. ("Fitch"); (ii)
securities issued and/or guaranteed as to payment of principal and interest by
the U.S. Government, its agencies, or instrumentalities; and (iii) repurchase
agreements. Additional information about the types of money market instruments
and U.S. Government obligations in which the Small Cap Value Fund is permitted
to invest is contained in the Statement of Additional Information relating to
the Fund. See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Small Cap Value
Fund.

GROWTH AND INCOME FUND

The Growth and Income Fund's investment objective is to provide a
relatively high total return through long-term capital appreciation and current
income. The Fund attempts to achieve this objective by investing in a
professionally managed, diversified portfolio consisting primarily of common
stocks of companies with prospects for above-average growth and dividends or of
companies where significant fundamental changes are taking place. Under normal
market conditions, the Fund will invest at least 65% of its assets in growth
and income equity securities. The Fund seeks to achieve a current dividend
yield that exceeds the composite yield of securities included on the S&P 500.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. See "Other Investment Policies and Risk ConsiderationsConvertible
Securities" below. The Fund may also buy and sell options and futures contracts
and utilize stock index futures contracts, options, swap agreements, indexed
securities, and options on futures contracts. See "Other Investment Policies
and Risk Considerations -- Options and Futures Contracts," "Other Investment
Policies and Risk Considerations--Stock Index Futures, Swap Agreements, Indexed
Securities and Options" and "Other Investment Policies and Risk
ConsiderationsDerivative Securities" below.

The Fund may invest in securities of foreign issuers which are

17
<PAGE> 757
freely traded on United States securities exchanges or in the over-the-counter
market in the form of ADRs and EDRs. Securities of a foreign issuer may present
greater risks in the form of nationalization, confiscation, domestic
marketability, or other national or international restrictions. As a matter of
practice, the Fund will not invest in the securities of foreign issuers if any
such risk appears to the Investment Adviser to be substantial. See "Special
Risk Considerations" and Other Investment Policies and Risk Considerations"
below.

As a temporary defensive measure, in such proportions as, in the
judgment of the Investment Adviser, prevailing market conditions warrant, the
Fund may invest in: (i) short-term money market instruments (such as those
listed below under "Other Investment Policies and Risk Considerations") rated
in one of the top two rating categories by a nationally recognized statistical
rating organization, such as S&P, Moody's or Fitch; (ii) securities issued
and/or guaranteed as to payment of principal and interest by the U.S.
Government, its agencies, or instrumentalities; and (iii) repurchase
agreements. Additional information about the types of money market instruments
and U.S. Government obligations in which the Fund is permitted to invest is
contained in the Statement of Additional Information relating to the Fund. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Growth and Income Fund.

SPECIAL RISK CONSIDERATIONS

MARKET RISK

Each Fund invests primarily (or with respect to the Asset Allocation
Fund, to a significant degree) in equity securities. As with other mutual funds
that invest primarily or to a significant degree in equity securities, the
Funds are subject to market risks. That is, the possibility exists that common
stocks will decline over short or even extended periods of time and both the
U.S. and certain foreign equity markets tend to be cyclical, experiencing both
periods when stock prices generally increase and periods when stock prices
generally decrease.

INTEREST RATE RISK

FOREIGN SECURITIES

Although each of the Funds may invest in securities denominated in
foreign currencies, each Fund values its securities and other assets in U.S.
dollars. As a result, the net asset value of a Fund's shares may fluctuate with
U.S. dollar exchange rates as well as with price changes of the Fund's
securities in the various local markets and currencies. Thus, an increase in
the value of the U.S. dollar compared to the currencies in which a Fund makes
its investments could reduce the effect of increases and magnify the effect of
decreases in the price of a Fund's securities in their local markets.
Conversely, a decrease in the value of the U.S. dollar will have the opposite
effect of magnifying the effect of increases and reducing the effect of
decreases in the prices of a Fund's securities in their local markets. In
addition to favorable and unfavorable currency exchange rate developments, the
Funds are subject to the possible imposition of exchange control regulations or
freezes on convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

RATINGS

All debt obligations, including convertible bonds, purchased by the
Equity Value, Equity Growth, Equity Income, Small Company Equity and Asset
Allocation Funds are rated investment grade by Moody's ("Aaa," "Aa," "A" and
"Baa") or S&P ("AAA," "AA," "A" and "BBB"), or, if not rated, are determined to
be of comparable quality by the Investment Adviser. The International Equity
Fund may only purchase debt securities rated "A" or higher by Moody's or S&P,
or if unrated, determined by the Investment Adviser or Sub-Adviser to be of
comparable quality. The Small Cap Value and Growth and Income Funds may
purchase convertible bonds rated "BB" or higher by S&P or Fitch, or "Ba" or
higher by Moody's at the time of investment. See "Other Investment Policies --
Convertible Securities" below for a discussion of the risks of investing in
convertible bonds rated either "BB" or "Ba." Short-term money market
instruments purchased by the Small Cap Value and Growth and Income Funds must
be rated in one of the top two rating categories by a nationally recognized
statistical rating agency, such as S&P, Moody's or Fitch.

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<PAGE> 758

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 other "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 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 ("FDIC"), or by a savings and loan association or savings bank
which is insured by the Federal Deposit Insurance Corporation. With respect to
each Fund other than the Small Cap Value and Growth and Income Funds, 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
(i) with respect to the Equity Value, Equity Growth, Equity Income,
International Equity, Small Company Equity and Asset Allocation Funds, to the
obligations of financial institutions having more than $1 billion in total
assets at the time of purchase, and (ii) with respect to the Small Cap Value
and Growth and Income Funds, to the obligations of financial institutions
having capital, surplus and undivided profits of over $100 million or
obligations where the principal amount of the instrument is insured in full by
the FDIC.

Investments in obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks may subject a Fund to additional risk because such
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. Such investments may also
subject a Fund to investment risks similar to those accompanying direct
investments in foreign securities. See "Special Risk Considerations -- Foreign
Securities." A 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 and/or
the Sub-Adviser believe 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."

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 and/or the Sub-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
upon notice of seven days or less, the repurchase agreement will be considered
an illiquid security and will be subject to the 10% limit described below in
Investment Limitation No. 3 under "Investment Limitations" with respect to the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds, and to the 15% limit described below in
Investment Limitation No. 7 under "Investment Limitations" with respect to the
Small Cap Value and Growth and Income Funds.

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<PAGE> 759
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. The Funds would pay interest on amounts obtained pursuant
to a reverse repurchase agreement. Additional information regarding the Small
Cap Value and Growth and Income Funds' policies with respect to reverse
repurchase agreements is contained in the Statement of Additional Information
relating to these Funds.

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 (except
in the case of the Small Cap Value and Growth and Income Funds which may loan
their securities on a long-term or short-term basis or both), will be made only
to borrowers deemed by the Investment Adviser and/or the Sub-Adviser to be of
good standing and only when, in the Investment Adviser's and/or the
Sub-Adviser's judgement, 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 Equity Value, Equity Growth, Equity Income, International Equity,
Small Company Equity and Asset Allocation 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. The International Equity Fund may also
purchase shares of investment companies investing primarily in foreign
securities, including so-called "country funds." Country funds have portfolios
consisting exclusively of securities of issuers located in one foreign country.
The Small Cap Value and Growth and Income Funds may invest in other investment
companies primarily for the purpose of investing their short-term cash which
has not yet been invested in other portfolio instruments. However, from time to
time, on a temporary basis, the Small Cap Value and Growth and Income Funds may
invest exclusively in one other investment company similar to the respective
Funds. 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. Except as provided
above with request to the Small Cap Value and Growth and Income Funds,
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 Funds, other investment portfolios of Galaxy, or any other
investment companies advised by the Investment Adviser or the Sub-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.

OPTIONS AND FUTURES CONTRACTS

Covered Call Options -- Equity Value, Equity Growth, Equity Income,
International Equity, Small Company Equity and Asset Allocation Funds. To
further increase return on their portfolio securities, in accordance with their
respective investment objectives and policies, the Equity Value, Equity Growth,
Equity Income, International Equity, Small Company Equity and Asset Allocation
Funds may engage in writing covered call options (options on securities owned
by a Fund) and may enter into closing purchase transactions with respect to
such options. Such options must be listed on a national securities exchange and
issued by the Options Clearing Corporation. The aggregate value of the
securities subject to options written by the Equity Value, Equity Growth,
Equity Income, International Equity, Small Company Equity and Asset Allocation
Funds may not exceed 25% of the value of their respective net assets. By
writing a covered call option, a Fund forgoes the opportunity to profit from an
increase in the market price of the underlying security above the exercise
price, except insofar as the premium represents such a profit, and it will not
be able to sell the underlying security until the option expires or is
exercised or the Fund effects a closing purchase

20
<PAGE> 760
transaction by purchasing an option of the same series. The use of covered call
options is not a primary investment technique of these Funds, and such options
will normally be written on underlying securities as to which the Investment
Adviser and/or Sub-Adviser does not anticipate significant short-term capital
appreciation.

Options on Foreign Stock Indexes -- International Equity Fund. The
International Equity Fund may, for the purpose of hedging its portfolio,
subject to applicable securities regulations purchase and write put and call
options on foreign stock indexes listed on foreign and domestic stock
exchanges. A stock index fluctuates with changes in the market values of the
stocks included in the index. Examples of foreign stock indexes are the
Canadian Market Portfolio Index (Montreal Stock Exchange), The Financial Times
- --Stock Exchange 100 (London Stock Exchange) and the Toronto Stock Exchange
Composite 300 (Toronto Stock Exchange).

Options on stock indexes are generally similar to options on stock
except that the delivery requirements are different. Instead of giving the
right to take or make delivery of stock at a specified price, an option on a
stock index gives the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of exercise,
multiplied by (b) a fixed "index multiplier." Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. The writer
may offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or the option may expire unexercised.
For additional information relating to option trading practices and related
risks, see the Statement of Additional Information relating to the
International Equity Fund.

Options and Futures Contracts -- Small Cap Value and Growth and Income
Funds. The Small Cap Value and Growth and Income Funds may buy and sell options
and futures contracts to manage their exposure to changing interest rates,
security prices and currency exchange rates. The Funds may invest in options
and futures based on any type of security, index, or currency, including
options and futures based on foreign exchanges (see "Options on Foreign Stock
IndexesInternational Equity Fund" above) and options not traded on exchanges.
Some options and futures strategies, including selling futures, buying puts,
and writing calls, tend to hedge a Fund's investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of the overall strategy.

Options and futures can be volatile investments, and involve certain
risks. If the Investment Adviser applies a hedge at an inappropriate time or
judges market conditions incorrectly, options and futures may lower a Fund's
individual return. A Fund could also experience losses if the prices of its
options and futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of an illiquid
secondary market. See the Statement of Additional Information relating to the
Small Cap Value and Growth and Income Funds for additional information as to
the Funds' policies on options and futures trading.

The Small Cap Value and Growth and Income Funds will not hedge more
than 20% of their respective total assets by selling futures, buying puts, and
writing calls under normal conditions. The Funds will not buy futures or write
puts whose underlying value exceeds 20% of their respective total assets, and
will not buy calls with a value exceeding 5% of their respective total assets.

Stock Index Futures, Swap Agreements, Indexed Securities and Options
- -- Small Cap Value and Growth and Income Funds. The Small Cap Value and Growth
and Income Funds may utilize stock index futures contracts, options, swap
agreements, indexed securities, and options on futures contracts, subject to
the limitation that the value of these futures contracts, swap agreements,
indexed securities, and options will not exceed 20% of the Funds' respective
total assets. The Funds will not purchase options to the extent that more than
5% of the value of their respective total assets would be invested in premiums
on open put option positions. In addition, the Funds do not intend to invest
more than 5% of the market value of their respective total assets in each of
the following: futures contracts, swap agreements, and indexed securities.
When the Funds enter into a swap agreement, assets of the Fund equal to the
value of the swap agreement will be segregated by that Fund.

There are several risks accompanying the utilization of futures
contracts. Positions in futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for such contracts. While the
Funds plan to utilize futures contracts only if there exists an active market
for such contracts, there is no guarantee that a liquid market will exist for
the contracts at a specified time. Furthermore, because by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in the
corresponding stock index. The absence of a perfect price correlation between
the futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a distortion of
the relationship between the index and the futures market. In addition, because
the futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in the
futures market could result in price fluctuations.

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<PAGE> 761
AMERICAN, EUROPEAN AND GLOBAL DEPOSITORY RECEIPTS

Each Fund may invest in ADRs, EDRs and GDRs. ADRs are receipts issued
in registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. GDRs are
receipts structured similarly to EDRs and are marketed globally. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. GDRs are designed for trading in non-U.S. securities
markets. ADRs, EDRs and GDRs traded in the over-the-counter market which do not
have an active or substantial secondary market will be considered illiquid and
therefore will be subject to the Funds' respective limitations with respect to
such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs, EDRs and GDRs involve risks similar to those accompanying direct
investments in foreign securities. Certain of these risks are described above
under "Special Risk Considerations."

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Because each Fund may buy and sell securities denominated in
currencies other than the U.S. dollar, and may receive interest, dividends and
sale proceeds in currencies other than the U.S. dollar, the Funds from time to
time may enter into foreign currency exchange transactions to convert the U.S.
dollar to foreign currencies, to convert foreign currencies to the U.S. dollar
and to convert foreign currencies to other foreign currencies. A 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. Forward foreign currency exchange
contracts are agreements to exchange one currency for another -- for example,
to exchange a certain amount of U.S. dollars for a certain amount of Japanese
yen -- at a future date and at a specified price. Typically, the other party to
a currency exchange contract will be a commercial bank or other financial
institution.

Forward foreign currency exchange contracts also allow a Fund to hedge
the currency risk of portfolio securities denominated in a foreign currency.
This technique permits the assessment of the merits of a security to be
considered separately from the currency risk. By separating the asset and the
currency decision, it is possible to focus on the opportunities presented by
the security apart from the currency risk. Although forward foreign currency
exchange contracts are of short duration, generally between one and twelve
months, the forward foreign currency exchange contracts are rolled over in a
manner consistent with a more long-term currency decision. Because there is a
risk of loss to a Fund if the other party does not complete the transaction,
forward foreign currency exchange contracts will be entered into only with
parties approved by Galaxy's Board of Trustees.

A Fund may maintain "short" positions in forward foreign currency
exchange transactions, which would involve the Fund's agreeing to exchange
currency that it currently does not own for another currency -- for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars -- at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
securities equal in value to the fluctuating market value of the currency as to
which the short position is being maintained. The value of the securities in
the segregated account will be adjusted at least daily to reflect changes in
the market value of the short position. See the Statements of Additional
Information relating to the Funds for additional information regarding foreign
currency exchange transactions.

ASSET-BACKED SECURITIES -- ASSET ALLOCATION FUND

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<PAGE> 762
MORTGAGE-BACKED SECURITIES -- ASSET ALLOCATION FUND

The Asset Allocation 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 ("GNMA"), the Federal National Mortgage Association ("FNMA"), and
the Federal Home Loan Mortgage Corporation ("FHLMC"). 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, should it invest 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 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 above under "Other Investment Policies and
Risk Considerations -- Investment Company Securities."

CONVERTIBLE SECURITIES

Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Usable bonds are corporate
bonds that can be used in whole or in part, customarily at full face value, in
lieu of cash to purchase the issuer's common stock. When owned as part of a
unit along with warrants, which are options to buy the common stock, they
function as convertible bonds, except that the warrants generally will expire
before the bond's maturity. Convertible securities are senior to equity
securities, and therefore, have a claim to assets of the corporation prior to
the holders of common stock in the case of liquidation. However, convertible
securities are generally subordinated to similar nonconvertible securities of
the same company. The interest income and dividends from convertible bonds and
preferred stocks provide a stable stream of income with generally higher yields
than common stocks, but lower than non-convertible securities of similar
quality. A Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in which, in
the Investment Adviser's opinion, the investment characteristics of the
underlying common shares will assist the Fund in achieving its investment
objective. Otherwise, a Fund will hold or trade the convertible securities. In
selecting convertible securities for a Fund, the Investment Adviser evaluates
the investment characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Investment Adviser considers numerous factors,
including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.

The Small Cap Value and Growth and Income Funds may invest in
convertible bonds rated "BB" or higher by S&P or Fitch, or "Ba" or higher by
Moody's at the time of investment. Securities rated "BB" by S&P or Fitch or
"Ba" by Moody's provide questionable protection of principal and interest in
that such securities either have speculative characteristics or are
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. Debt obligations that
are not rated, or determined to be, investment grade are high-yield, high-risk
bonds, typically subject to greater market fluctuations, and securities in the
lowest rating category may be in danger of loss of income and principal due to
an issuer's default. To a greater extent than investment-grade bonds, the value
of lower-

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<PAGE> 763
rated bonds tends to reflect short-term corporate, economic, and market
developments, as well as investor perceptions of the issuer's credit quality.
In addition, lower-rated bonds may be more difficult to dispose of or to value
than high-rated, lower-yielding bonds. The Investment Adviser will attempt to
reduce the risks described above through diversification of the portfolio and
by credit analysis of each issuer, as well as by monitoring broad economic
trends and corporate and legislative developments. If a convertible bond is
rated below "BB" or "Ba" according to the characteristics set forth here after
a Fund has purchased it, such Fund is not required to eliminate the convertible
bond from the portfolio, but will consider appropriate action. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives. The
Funds do not intend to invest in such lower-rated bonds during the current
fiscal year. A description of the rating categories is contained in the
Appendix to the Statement of Additional Information relating to the Small Cap
Value and Growth and Income Funds.

DERIVATIVE SECURITIES

Derivative securities present, to varying degrees, market risk that
the performance of the underlying assets, interest rates or indices will
decline; credit risk that the dealer or other counterparty to the transaction
will fail to pay its obligations; volatility and leveraging risk that, if
interest rates change adversely, the value of the derivative security will
decline more than the assets, rates or indices on which it is based; liquidity
risk that the Funds will be unable to sell a derivative security when it wants
because of lack of market depth or market disruption; pricing risk that the
value of a derivative security will not correlate exactly to the value of the
underlying assets, rates or indices on which it is based; and operations risk
that loss will occur as a result of inadequate systems and controls, human
error or otherwise. Some derivative securities are more complex than others,
and for those instruments that have been developed recently, data are lacking
regarding their actual performance over complete market cycles.

The Investment Adviser will evaluate the risks presented by the
derivative securities purchased by the Funds, and will determine, in connection
with its day-to-day management of the Funds, how they will be used in
furtherance of each Fund's investment objectives. It is possible, however, that
the Investment Adviser's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Funds will,
because of the risks discussed above, incur loss as a result of their
investments in derivative securities. See "Investment Objectives and Policies
Derivative Securities" in the Statements of Additional Information relating to
the Funds for additional information.

WHEN-ISSUED AND DELAYED SETTLEMENT TRANSACTIONS -- INTERNATIONAL EQUITY,
SMALL CAP VALUE AND GROWTH AND INCOME FUNDS

The International Equity, Small Cap Value and Growth and Income Funds
may purchase eligible securities on a "when-issued" basis. The Small Cap Value
and Growth and Income Funds may also purchase eligible securities on a "delayed
settlement" basis. When-issued 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 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 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.

A Fund may dispose of a commitment prior to settlement if the
Investment Adviser deems it appropriate to do so. In addition, a Fund may enter
into transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Funds may realize short-term profits or losses
upon the sale of such commitments.

PORTFOLIO TURNOVER

Each Fund may sell a portfolio investment soon after its acquisition
if the Investment Adviser and/or the Sub-Adviser believe 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 involves correspondingly greater brokerage commission expenses and
other transaction costs, which must be ultimately borne by a Fund's
shareholders. High portfolio turnover may result in the realization of
substantial net capital gains; distributions derived from such gains will be
treated as ordinary income for federal income tax purposes. See "Taxes --
Federal."

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<PAGE> 764
INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy
and may not be changed with respect to a particular 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 applicable
Statements of Additional Information under "Investment Objectives and
Policies."

The Equity Value, Equity Growth, Equity Income, International Equity,
Small Company Equity and Asset Allocation Funds may not:

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%, with
respect to the Equity Value Fund, or 33%, with respect to the Equity
Growth, Equity Income, International Equity, Small Company Equity and Asset
Allocation Funds, of the value of its total assets at the time of such
borrowing (provided that the Funds may borrow pursuant to reverse
repurchase agreements in accordance with their investment policies and in
amounts not in excess of 10%, with respect to the Equity Value Fund, or
33%, with respect to the Equity Growth, Equity Income, International
Equity, Small Company Equity and Asset Allocation Funds, of the value of
their respective 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%, with respect to the Equity Value Fund, or 33%, with
respect to the Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation Funds, of the value of a 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 (with respect to the Equity Value Fund),
securities which are restricted as to transfer in their principal market
(with respect to the International Equity Fund), 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.

The Small Cap Value and Growth and Income Funds may not:

The following investment policy may be changed by Galaxy's Board of
Trustees without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective:

7. The Small Cap Value and Growth and Income Funds may not invest
more than 15% of their respective net assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(a) of the Securities Act of 1933
and certain securities which meet the criteria per liquidity as established
by the Board of Trustees).

In addition, the Funds may not purchase any securities which would
cause 25% or more of the value of a Fund's total assets at the time of purchase
to be invested in the securities of one or more issuers conducting their
principal business activities in the same industry; provided 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 Equity Value
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 and each of the Equity Growth, Equity Income, International Equity,
Small Company Equity and Asset Allocation Funds intends to limit any borrowings
(including reverse repurchase agreements) to not more than 33% of the value of
its total assets at the time of such borrowing.

The Small Cap Value and Growth and Income Funds intend to invest in
restricted securities. Restricted securities are any securities in which a Fund
may otherwise invest pursuant to its investment objective and policies, but
which are subject to restriction on resale under federal securities law. Each
Fund will limit its investments in illiquid securities, including certain
restricted securities not determined by the Board of Trustees to be liquid,
non-negotiable fixed time deposits with maturities over seven days,
over-the-counter options, and repurchase agreements providing for settlement in
more than seven days after notice, to 15% of its net assets.

25
<PAGE> 765
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 each Fund's 10% limitation (15% with respect
to the Small Cap Value and Growth and Income Funds) on purchases of illiquid
instruments described above, Rule 144A securities will not be considered to be
illiquid if the Investment Adviser and/or the Sub-Adviser has determined, in
accordance with guidelines established by the Board of Trustees, that an
adequate trading market exists for such securities.

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). 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 the shares of that series of the
Fund, by the number of outstanding shares of the Fund.

VALUATION OF THE EQUITY VALUE, EQUITY GROWTH, EQUITY INCOME, SMALL COMPANY
EQUITY, ASSET ALLOCATION, SMALL CAP VALUE AND GROWTH AND INCOME FUNDS

The assets in the Equity Value, Equity Growth, Equity Income, Small
Company Equity, Asset Allocation, Small Cap Value and Growth and Income Funds
which are traded on a recognized stock exchange are valued at the last sale
price on the securities exchange on which such securities are primarily traded
or at the last sale price on the national securities market. Securities quoted
on the NASD National Market System are also valued at the last sale price.
Other securities traded on over-the-counter markets are valued on the basis of
their closing over-the-counter bid prices. Securities for which there were no
transactions are valued at the average of the most recent bid and asked prices.
Investments in debt securities with remaining maturities of 60 days or less are
valued based upon the amortized cost method. Restricted securities, securities
for which market quotations are not readily available, and other assets are
valued at fair value by the Investment Adviser under the supervision of
Galaxy's Board of Trustees. An option is generally valued at the last sale
price or, in the absence of a last sale price, the last offer price. See
"Valuation of International Equity Fund" below for a description of the
valuation of certain foreign securities held by the Equity Value, Equity
Growth, Equity Income, Small Company Equity, Asset Allocation, Small Cap Value
and Growth and Income Funds.

VALUATION OF THE INTERNATIONAL EQUITY FUND

The International Equity Fund's portfolio securities which are
primarily traded on a domestic exchange are valued at the last sale price on
that exchange or, if there is no recent sale, at the last current bid
quotation. Portfolio securities which are primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on their respective exchanges, except when an occurrence
subsequent to the time a value was so established is likely to have changed
such value, then the fair value of those securities will be determined through
consideration of other factors by or under the direction of the Board of
Trustees. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. Investments in debt securities having a remaining maturity of 60
days or less are valued based upon the amortized cost method. All other
securities are valued at the last current bid quotation if market quotations
are available, or at fair value as determined in accordance with policies
established in good faith by the Board of Trustees. For valuation purposes,
quotations of foreign securities in foreign currency are converted to U.S.
dollars equivalent at the prevailing market rate on the day of valuation. An
option is generally valued at the last sale price or, in the absence of a last
sale price, the last offer price.

Certain of the securities acquired by the International Equity Fund
may be traded on foreign exchanges or over-the-counter markets on days on which
the Fund's net asset value is not calculated. In such cases, the net asset
value of the Fund's shares may be significantly affected on days when investors
can neither purchase nor redeem shares of the Fund.

26
<PAGE> 766

HOW TO PURCHASE 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.

GENERAL

Investments in Retail A Shares of the Funds are subject to a front-end
sales charge. Investments in Retail B Shares of the Equity Value, Equity
Growth, Small Company Equity, Asset Allocation and Growth and Income Funds are
subject to a back-end sales charge. This back-end sales charge declines over
time and is known as a "contingent deferred sales charge."

Investors should read "Characteristics of Retail A Shares and Retail B
Shares" and "Factors to Consider When Selecting Retail A Shares or Retail B
Shares" below before deciding between the two.

The Distributor has established several procedures to enable different
types of investors to purchase Retail Shares of the Funds. The Retail Shares
described in this Prospectus may be purchased by individuals or corporations
who submit a purchase application to Galaxy, purchasing directly either for
their own accounts or for the accounts of others ("Direct Investors"). Retail
Shares may also be purchased by Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks and other qualified banks, savings and loan associations
and broker/dealers ("Institutions") on behalf of their customers ("Customers").
Purchases by Direct Investors may take place only on days on which the
Distributor and Galaxy's custodian and Galaxy's transfer agent are open for
business ("Business Days"). If an Institution accepts a purchase order from a
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 Distributor's procedures. Retail Shares of the Funds will be issued only in
exchange for monetary consideration as described below.

PURCHASE PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Purchase orders for Retail Shares are placed by Customers of
Institutions through their Institutions. The Institution is responsible for
transmitting Customer purchase orders to the Distributor 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. Retail Shares purchased by Institutions on behalf of their
Customers will normally be held of record by the Institution and beneficial
ownership of Retail Shares will be recorded by the Institution and reflected in
the account statements provided to its Customers. Galaxy's transfer agent may
establish an account of record for each Customer of an Institution reflecting
beneficial ownership of Retail Shares. Depending on the terms of the
arrangement between a particular Institution and Galaxy's transfer agent,
confirmations of Retail Share purchases and redemptions and pertinent account
statements will either be sent by Galaxy's transfer agent directly to a
Customer with a copy to the Institution, or will be furnished directly to the
Customer by the Institution. Other procedures for the purchase of Retail Shares
established by Institutions in connection with the requirements of their
Customer accounts may apply. Customers wishing to purchase Retail Shares
through their Institution should contact such entity directly for appropriate
purchase instructions.

PURCHASE PROCEDURES -- DIRECT INVESTORS

Purchases by Mail. Retail Shares may be purchased by completing a
purchase application and mailing it, together with a check payable to each Fund
in which a Direct Investor wishes to invest, to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5180

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling the Distributor at
1-800-628-0414.

Subsequent investments in an existing account in any Fund may be made
at any time by sending a check for a minimum of $100 payable to the Fund in
which the additional investment is being made to Galaxy at the address above
along with either (a) the detachable form that regularly accompanies
confirmation of a prior transaction, (b) a subsequent order form that may be
obtained from the Distributor, or (c) a letter stating the amount of the
investment, the name of the Fund and the account number in which the investment
is to be made. If a Direct Investor's check does not clear, the purchase will
be canceled.

27
<PAGE> 767
must telephone the Distributor at 1-800-628-0413 to place an order and for
instructions. Federal funds and registration instructions should be wired
through the Federal Reserve System to:

Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
Shareholder Name
Shareholder Account Number

Direct Investors making initial investments by wire must promptly
complete a purchase application and forward it to The Galaxy Fund, P.O. Box
15108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108. Applications
may be obtained by calling the Distributor at 1-800-628- 0414. Redemptions will
not be processed until the application in proper form has been received by the
Distributor. Direct Investors making subsequent investments by wire should
follow the instructions above.

OTHER PURCHASE INFORMATION

Investment Minimums. Except as provided in "Investor Programs" below,
the minimum initial investment by a Direct Investor, or initial aggregate
investment by an Institution investing on behalf of its Customers, is $2,500.
The minimum investment for subsequent purchases is $100. The minimum investment
requirement with respect to IRAs, SEPs, MERPs and Keogh Plans (see below under
"Retirement Plans") is $500 ($250 for spousal IRA accounts). There are no
minimum investment requirements for investors participating in the Automatic
Investment Program described below. Customers may agree with a particular
Institution to varying minimum initial and minimum subsequent purchase
requirements with respect to their accounts.

Retail Shares of the International Equity Fund described in this
Prospectus may be sold to clients, partners and employees of Wellington
Management Company, the Sub-Adviser to the International Equity Fund.

Effective Time of Purchases. A purchase order for Retail Shares
received and accepted by the Distributor from an Institution or a Direct
Investor on a Business Day prior to the close of regular trading hours on the
Exchange (currently, 4:00 p.m. Eastern Time) will be executed at the net asset
value per share determined on that date, 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 third Business Day following the receipt of
such order. Such order will be executed on the day on which the purchase price
is received in proper form. 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 or Direct Investor submitting the order. Payment for orders which
are not received or accepted will be returned. If an Institution accepts a
purchase order from a 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 above procedures.

APPLICABLE SALES CHARGE -- RETAIL A SHARES

The public offering price for Retail A Shares of the Funds is the sum
of the net asset value of the Retail A Shares purchased plus any applicable
front-end sales charge. The sales charge is assessed as follows:

<TABLE>
<CAPTION>
TOTAL SALES CHARGE REALLOWANCE TO DEALERS
------------------------------- --------------------
AS A % OF AS A % OF AS A % OF
OFFERING PRICE NET ASSET OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE VALUE PER SHARE PER SHARE
- -------------------- ------------ -------------- --------------------
<S> <C> <C> <C>
Less than $50,000 . . . . . . . . . . . . . . . . . 3.75 3.90 3.75
$50,000 but less than $100,000 . . . . . . . . . . 3.50 3.63 3.50
$100,000 but less than $250,000 . . . . . . . . . . 3.00 3.09 3.00
$250,000 but less than $500,000 . . . . . . . . . . 2.50 2.56 2.50
$500,000 but less than $1,000,000 . . . . . . . . . 2.00 2.04 2.00
$1,000,000 but less than $3,000,000 . . . . . . . . 1.00 1.01 1.00
$3,000,000 and over . . . . . . . . . . . . . . . . 0.50 0.50 0.50
</TABLE>

Further reductions in the sales charges shown above are also possible.
See "Quantity Discounts" below.

28
<PAGE> 768
the Distributor, pay fees to qualifying dealers for certain services or
activities which are primarily intended to result in sales of Retail A Shares
of a Fund. If any such program is made available to any dealer, it will be made
available to all dealers on the same terms and conditions. Payments made under
such programs will be made by the Distributor out of its own assets and not out
of the assets of the Fund. These programs will not change the price of Retail
A Shares or the amount that the Funds will receive from such sales.

In certain situations or for certain individuals, the front-end sales
charge for Retail A Shares of the Funds may be waived either because of the
nature of the investor or the reduced sales effort required to attract such
investments. In order to receive the sales charge waiver, an investor must
explain the status of his or her investment at the time of purchase. No sales
charge is assessed on the following types of transactions and/or investors:

* reinvestment of dividends and distributions;

* IRA, SEP and Keogh Plan accounts;

* purchases by persons who were beneficial owners of shares of the
Funds or any of the other portfolios offered by Galaxy or any other funds
advised by Fleet or its affiliates before December 1, 1995;

* purchases by directors, officers and employees of the Funds'
Distributor and of broker-dealers having agreements with the Funds' Distributor
pertaining to the sale of Retail A Shares to the extent permitted by such
organizations;

* investors who purchase pursuant to a "wrap fee" program offered by
any broker-dealer or other financial institution or financial planning
organization;

* purchases by members of Galaxy's Board of Trustees;

* purchases by officers, directors, employees and retirees of Fleet
Financial Group, Inc. and any of its affiliates; and

* any purchase of Retail A Shares pursuant to the Reinstatement
Privilege described below.

QUANTITY DISCOUNTS

Direct Investors or Customers may be entitled to reduced sales
charges through Rights of Accumulation, a Letter of Intent or a combination of
investments, as described below, even if the Direct Investor or Customer does
not wish to make an investment of a size that would normally qualify for a
quantity discount.

In order to obtain quantity discount benefits, a Direct Investor or
Customer must notify Galaxy's administrator, First Data Investor Services
Group, Inc. (formerly known as The Shareholder Services Group, Inc. d/b/a 440
Financial) ("FDISG") at the time of purchase that he or she would like to take
advantage of any of the discount plans described below. Upon such notification,
the investor will receive the lowest applicable sales charge. Quantity
discounts may be modified or terminated at any time and are subject to
confirmation of a Direct Investor's or Customer's holdings through a check of
appropriate records. For more information about quantity discounts, please
contact the Distributor or your Institution.

Rights of Accumulation. A reduced sales charge applies to any purchase
of Retail A Shares of any portfolio of Galaxy that is sold with a sales charge
("Eligible Fund") where a Direct Investor's or Customer's then current
aggregate investment in Retail A Shares is $50,000 or more. "Aggregate
investment" means the total of: (a) the dollar amount of the then current
purchase of shares of an Eligible Fund; and (b) the value (based on current
net asset value) of previously purchased and beneficially owned shares of any
Eligible Fund on which a sales charge has been paid. If, for example, a Direct
Investor or Customer beneficially owns shares of one or more Eligible Funds
with an aggregate current value of $49,000 on which a sales charge has been
paid and subsequently purchases shares of an Eligible Fund having a current
value of $1,000, the sales charge applicable to the subsequent purchase would
be reduced to 3.50% of the offering price. Similarly, with respect to each
subsequent investment, all shares of Eligible Funds that are beneficially
owned by the investor at the time of investment may be combined to determine
the applicable sales charge.

Letter of Intent. By completing the Letter of Intent included as part
of the Account Application, a Direct Investor or Customer becomes eligible for
the reduced sales charge applicable to the total number of Eligible Fund Retail
A shares purchased in a 13-month period pursuant to the terms and under the
conditions set forth below and in the Letter of Intent. To compute the
applicable sales charge, the offering price of Retail A shares of an Eligible
Fund on which a sales charge has been paid and that are beneficially owned by a
Direct Investor or Customer on the date of submission of the Letter of Intent,
may be used as a credit toward completion of the Letter of Intent. However, the
reduced sales charge will be applied only to new purchases.

FDISG will hold in escrow Retail A Shares equal to 5% of the amount
indicated in the Letter of Intent for payment of a higher sales charge if a
Direct Investor or Customer does not purchase the full amount indicated in the
Letter of Intent. The escrow will be released when a Direct Investor or
Customer fulfills the terms of the Letter of Intent by purchasing the specified
amount. If purchases qualify for a further sales charge reduction, the sales
charge will be adjusted to reflect a Direct Investor's or Customer's total
purchases. If total purchases are less than the amount specified, a Direct
Investor or Customer will be requested to remit an amount equal to the
difference between the sales charge actually paid and the sales charge
applicable to the total purchases. If such remittance is not received within 20
days, FDISG, as attorney-in-fact pursuant to the terms of the Letter of Intent
and at the Distributor's direction, will redeem an appropriate number of Retail
A shares held in escrow to realize the difference. Signing a Letter of Intent
does not bind a Direct Investor or Customer to purchase the full amount
indicated at the sales charge in effect at the time of signing, but a Direct
Investor or Customer must complete the intended purchase in accordance with the
terms of the Letter of Intent to obtain the reduced sales charge. To apply, a
Direct Investor or Customer must indicate his or her intention to do so under a
Letter of Intent at the time of purchase.

Qualification for Discounts. For purposes of applying the Rights of
Accumulation and Letter of Intent privileges described above, the scale of
sales charges applies to the combined pur

29
<PAGE> 769
chases made by any individual and/or spouse purchasing securities for his, her
or their own account or for the account of any minor children, or the aggregate
investments of a trustee or custodian of any qualified pension or
profit-sharing plan established (or the aggregate investment of a trustee or
other fiduciary) for the benefit of the persons listed above.

Reinstatement Privilege. Direct Investors and Customers may reinvest
all or any portion of their redemption proceeds in Retail A Shares of the Funds
or in Retail A Shares of another portfolio of Galaxy within 90 days of the
redemption trade date without paying a sales load. Retail A Shares so
reinvested will be purchased at a price equal to the net asset value next
determined after the Transfer Agent receives a reinstatement request and
payment in proper form.

APPLICABLE SALES CHARGES -- RETAIL B SHARES

The public offering price for Retail B Shares of the Equity Value,
Equity Growth, Small Company Equity, Asset Allocation and Growth and Income
Funds is the net asset value of the Retail B Shares purchased. Although Direct
Investors and Customers pay no front-end sales charge on purchases of Retail B
Shares, such shares are subject to a contingent deferred sales charge at the
rates set forth below if they are redeemed within six years of purchase.
Securities dealers, brokers, financial institutions and other industry
professionals will receive commissions from the Distributor in connection with
sales of Retail B Shares. These commissions may be different than the
reallowances on placement fees paid to dealers in connection with sales of
Retail A Shares. The contingent deferred sales charge on Retail B Shares is
based on the lesser of the net asset value of the Shares on the redemption date
or the original cost of the Shares being redeemed. As a result, no sales charge
is imposed on any increase in the principal value of a Direct Investor's or
Customer's Retail B Shares. In addition, a contingent deferred sales charge
will not be assessed on Retail B Shares purchased through reinvestment of
dividends or capital gains distributions.

The amount of any contingent deferred sales charge Direct Investors
and Customers must pay depends on the number of years that elapse between the
purchase date and the date such Retail B Shares are redeemed. Solely for
purposes of this determination, all payments during a month will be aggregated
and deemed to have been made on the first day of the month.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- --------------------- -------------------
<S> <C>
Less than one . . . . . . . . . . . . . . . 5.00%
More than one but less than two . . . . . . 4.00%
More than two but less than three . . . . . 3.00%
More than three but less than four . . . . 3.00%
More than four but less than five . . . . . 2.00%
More than five but less than six . . . . . 1.00%
After six . . . . . . . . . . . . . . . . . None
</TABLE>

When a Direct Investor or Customer redeems his or her Retail B Shares,
the redemption request is processed to minimize the amount of the contingent
deferred sales charge that will be charged. Retail B Shares are redeemed first
from those shares that are not subject to a contingent deferred sales charge
(i.e., Retail B Shares that were acquired through reinvestment of dividends or
distributions or that qualify for other deferred sales charge exemptions) and
after that from the Retail B Shares that have been held the longest.

Exemptions from the Contingent Deferred Sales Charge. Certain types of
redemptions may also qualify for an exemption from the contingent deferred
sales charge. To receive exemptions (i), (vi) or (viii) listed below, a Direct
Investor or Customer must explain the status of his or her redemption at the
time Retail B Shares are redeemed. The contingent deferred sales charge with
respect to Retail B Shares is assessed on: (i) exchanges described under
"Investor Programs -- Exchange Privilege" below; (ii) redemptions in connection
with required (or, in some cases, discretionary) distributions to participants
or beneficiaries of an employee pension, profit-sharing or other trust or
qualified retirement or Keogh plan, individual retirement account or custodial
account maintained pursuant to Section 403(b)(7) of the Internal Revenue Code
of 1986, as amended (the "Code"); (iii) redemptions in connection with required
(or, in some cases, discretionary) distributions to participants in qualified
retirement or Keogh plans, individual retirement accounts or custodial accounts
maintained pursuant to Section 403(b)(7) of the Code due to death, disability
or the attainment of a specified age; (iv) redemptions effected pursuant to a
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of Retail B Shares held in the account is less than the minimum account
size; (v) redemptions in connection with the combination of a Fund with any
other investment company registered under the 1940 Act by merger, acquisition
of assets, or by any other transaction; (vi) redemptions in connection with the
death or disability of a shareholder; (vii) redemptions resulting from a
tax-free return of an

30
<PAGE> 770
excess contribution pursuant to Section 408(d)(4) or (5) of the Code; or (viii)
any redemption of Retail B Shares held by Direct Investors or Customers,
provided the Direct Investor or Customer was the beneficial owner of shares of
a Fund (or any of the other portfolios offered by Galaxy or otherwise advised
by Fleet or its affiliates) before December 1, 1995.

CHARACTERISTICS OF RETAIL A SHARES AND RETAIL B SHARES

The primary difference between Retail A Shares and Retail B Shares
lies in their sales charge structures and shareholder servicing/distribution
expenses. A Direct Investor or Customer should understand that the purpose and
function of the sales charge structures and shareholder servicing/distribution
arrangements for both Retail A Shares and Retail B Shares are the same.

Retail B Shares of the Equity Value, Equity Growth, Small Company
Equity, Asset Allocation and Growth and income Funds are sold at net asset
value without an initial sales charge. Normally, however, a deferred sales
charge is paid if the Shares are redeemed within six years of investment. (See
"Applicable Sales Charges -- Retail B Shares.") Retail B Shares of a Fund are
subject to ongoing shareholder servicing and distribution fees at an annual
rate of up to .95% of the Fund's average daily net assets attributable to its
Retail B Shares. These ongoing fees, which are higher than those charged on
Retail A Shares, will cause Retail B Shares to have a higher expense ratio and
pay lower dividends than Retail A Shares.

Six years after purchase, Retail B Shares of the Equity Value, Equity
Growth, Small Company Equity, Asset Allocation and Growth and Income Funds will
convert automatically to Retail A Shares of the Funds. The purpose of the
conversion is to relieve a holder of Retail B Shares of the higher ongoing
expenses charged to those shares, after enough time has passed to allow the
Distributor to recover approximately the amount it would have received if a
front-end sales charge had been charged. The conversion from Retail B Shares to
Retail A Shares takes place at net asset value, as a result of which a Direct
Investor or Customer receives dollar-for-dollar the same value of Retail A
Shares as he or she had of Retail B Shares. The conversion occurs six years
after the beginning of the calendar month in which the Shares are purchased. As
a result of the conversion, the converted shares are relieved of the
distribution and shareholder servicing fees borne by Retail B Shares, although
they are subject to the shareholder servicing fees borne by Retail A Shares.

FACTORS TO CONSIDER WHEN SELECTING RETAIL A SHARES OR RETAIL B SHARES

Before purchasing Retail A Shares or Retail B Shares of the Equity
Value, Equity Growth, Small Company Equity, Asset Allocation and Growth and
Income Funds, Direct Investors and Customers should consider whether, during
the anticipated periods of their investments in the particiular Funds, the
accumulated distribution and shareholder servicing fees and potential
contingent deferred sales charge on Retail B Shares prior to conversion would
be less than the initial sales charge and accumulated shareholder servicing
fees on Retail A Shares purchased at the same time, and to what extent such
differential would be offset by the higher yield of Retail A Shares. In this
regard, to the extent that the sales charge for Retail A Shares is waived or
reduced by one of the methods described above, investments in Retail A Shares
become more desirable. An investment of $250,000 or more in Retail B Shares
would not be in most shareholders' best interest. Shareholders should consult
their financial advisers and/or brokers with reference to the advisability of
purchasing Retail B Shares in amounts exceeding $250,000.

Although Retail A Shares are subject to a shareholder servicing fee,
they are not subject to the higher distribution and shareholder servicing fee
applicable to Retail B Shares. For this reason, Retail A Shares can be expected
to pay correspondingly higher dividends per Share. However, because initial
sales charges are deducted at the time of purchase, purchasers of Retail A
Shares (that do not qualify for exemptions from or reductions in the initial
sales charge) would have less of their purchase price initially invested in
these Funds than purchasers of Retail B Shares in the Funds.

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Customers expecting to redeem during this six-year period should compare the
cost of the contingent deferred sales charge plus the aggregate annual Retail B
Shares' distribution and shareholder servicing fees to the cost of the initial
sales charge and shareholder servicing fees on the Retail A Shares. Over time,
the expense of the annual distribution and shareholder servicing fees on the
Retail B Shares may equal or exceed the initial sales charge and annual
shareholder servicing fee applicable to Retail A Shares. For example, if net
asset value remains constant, the aggregate distribution and shareholder
servicing fees with respect to Retail B Shares of a Fund would equal or exceed
the initial sales charge and aggregate shareholder servicing fees of Retail A
Shares approximately six years after purchase. In order to reduce such fees for
investors that hold Retail B Shares for more than six years, Retail B Shares
will be automatically converted to Retail A Shares as described above at the
end of such six-year period.

HOW TO REDEEM SHARES

GENERAL

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Distributor. Proceeds from the
redemptions of Retail B Shares of the Equity Value, Equity Growth, Small
Company Equity, Asset Allocation and Growth and Income Funds will be reduced by
the amount of any applicable contingent deferred sales charge. Galaxy reserves
the right to transmit redemption proceeds within seven days after receiving the
redemption order if, in its judgement, an earlier payment could adversely
affect a Fund.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

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

Payments for redemption orders received by the Distributor on a
Business Day will normally be wired on the fifth Business Day to the
Institutions.

Direct Investors may redeem all or part of their Retail Shares in
accordance with any of the procedures described below.

REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Retail Shares may be redeemed by a Direct Investor
by submitting a written request for redemption to:

The Galaxy Fund
P.O. Box 15108
4400 Computer Drive
Westboro, MA 01581-5180

A written redemption request must (i) state the number and series of
shares (i.e. Retail A or Retail B) to be redeemed, (ii) identify the
shareholder account number and tax identification number, and (iii) be signed
by each registered owner exactly as the shares are registered. A redemption
request for an amount in excess of $50,000, or for any amount where (i) the
proceeds are to be sent elsewhere than the address of record (excluding the
transfer of assets to a successor custodian), (ii) the proceeds are to be sent
to an address of record which has changed in the preceding 90 days, or (iii)
the check is to be made payable to someone other than the registered owner(s),
must be accompanied by signature guarantees. The guarantor of a signature must
be a bank that is a member of the FDIC, a trust company, a member firm of a
national securities exchange or any other eligible guarantor institution. The
Distributor will not accept guarantees from notaries public. The Distributor
may require additional supporting documents for redemptions made by
corporations, executors, administrators, trustees and guardians. A redemption
request will not be deemed to be properly received until the Distributor
receives all required documents in proper form. The Funds ordinarily will make
payment for Retail Shares redeemed by mail within five Business Days after
proper receipt by the Distributor of the redemption request. Questions with
respect to the proper form for redemption requests should be directed to the
Distributor at 1-800-628-0413.

Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling 1-800-628-0413 and instructing the Distributor to mail a check for
redemption proceeds of up to $50,000 to the address of record. A redemption
request for an amount in excess of $50,000 or for any amount where (i) the
proceeds are to be sent elsewhere than the address of record (excluding the
transfer of assets to a successor custodian), (ii) the proceeds are to be sent
to an address of record which has changed in the preceding 90 days, or (iii)
the check is to be made payable to someone other than the registered owner(s),
must be accompanied by signature guarantees. (See "Redemption by Mail.")

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem
Retail Shares by instructing the Distributor by wire or telephone to wire the
redemption proceeds of $1,000 or more directly to a Direct Investor's account
at any commercial bank in the United States. The Distributor charges a $5.00
fee for each wire redemption and the fee is deducted from the redemption
proceeds. The redemption proceeds must be paid to the same bank and account as
designated on the application or in written instructions subsequently received
by the Distributor. To request redemp

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<PAGE> 772
tion of Retail Shares by wire, Direct Investors should call the Distributor at
1-800-628-0413.

In order to arrange for redemption by wire after an account has been
opened or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to Galaxy at the address listed above
under "Redemption by Mail." Such requests must be signed by the investor and
accompanied by a signature guarantee (see "Redemption by Mail" above for
details regarding signature guarantees). Further documentation may be
requested from corporations, executors, administrators, trustees, or guardians.
If, due to temporary adverse conditions, investors are unable to effect
telephone transactions, investors are encouraged to follow the procedures for
transactions by wire or mail which are described above.

Galaxy reserves the right to refuse a wire or telephone redemption if
it believes it is advisable to do so. Procedures for redeeming Retail Shares by
wire or telephone may be modified or terminated at any time by Galaxy or the
Distributor. In attempting to confirm that telephone instructions are genuine,
Galaxy will use such procedures as are considered reasonable, including
recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security number, address and/or bank). If Galaxy fails to follow established
procedures for the authentication of telephone instructions, it may be liable
for losses due to unauthorized or fraudulent telephone transactions.

No redemption by a Direct Investor in any Fund will be processed until
Galaxy has received a completed application with respect to the Direct
Investor's account.

OTHER REDEMPTION INFORMATION

Except as provided under "Investor Programs" below, Galaxy reserves
the right to redeem accounts (other than retirement plan accounts)
involuntarily, upon 60 days' written notice, if the account's net asset value
falls below $250 as a result of redemptions. In addition, if an investor has
agreed with a particular Institution to maintain a minimum balance in his or
her account at the Institution with respect to Retail Shares of a Fund, and the
balance in such account falls below that minimum, the Customer may be obliged
by the Institution to redeem all of his or her shares.

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

Direct Investors and Customers of Institutions may, after appropriate
prior authorization, exchange Retail A Shares of a Fund having a value of at
least $100 for Retail A Shares of any of the other Funds or portfolios offered
by Galaxy or for shares of any other investment portfolios otherwise advised by
Fleet or its affiliates in which the Direct Investor or Customer maintains an
existing account, provided that such other shares may legally be sold in the
state of the investor's residence. Direct Investors and Customers of
Institutions may exchange Retail B Shares of the Equity Value, Equity Growth,
Small Company Equity, Asset Allocation, and Growth and Income Funds for Retail
B Shares of the Short-Term Bond, High Quality Bond and Tax-Exempt Bond Funds
offered by Galaxy, provided that such other Retail B Shares may legally be sold
in the state of the investor's residence.

The minimum initial investment to establish an account in another
eligible Fund by exchange, except for the Institutional Treasury Money Market
Fund, is $2,500, unless at the time of the exchange the Direct Investor or
Customer elects, with respect to the Fund into which the exchange is being
made, to participate in the Automatic Investment Program described below, in
which event there is no minimum initial investment requirement, or in the
College Investment Program described below, in which event the minimum initial
investment is generally $100. The minimum initial investment to establish an
account by exchange in the Institutional Treasury Money Market Fund is $2
million.

An exchange involves a redemption of all or a portion of the Retail
Shares of a Fund and the investment of the redemption proceeds in Retail Shares
of another Fund or portfolio offered by Galaxy or, with respect to Retail A
Shares otherwise advised by Fleet or its affiliates. The redemption will be
made at the per share net asset value next determined after the exchange
request is received. The Retail Shares of a Fund or portfolio to be acquired
will be purchased at the per share net asset value next determined after
acceptance of the exchange request, plus any applicable sales charge.

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<PAGE> 773
Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in any of the
Funds. For further information regarding Galaxy's exchange privilege, Direct
Investors should call FDISG at 1-800-628-0413. Customers of Institutions
should call their Institution for such information. Customers exercising the
exchange privilege into other eligible Funds should request and review those
Funds' prospectuses prior to making an exchange (call 1-800-628-0414 for a
prospectus). Telephone all exchanges to 1-800-628-0413. See "How to Purchase
and Redeem Shares -- Redemption Procedures -- Direct Investors -- Redemption by
Wire" above for a description of Galaxy's policy regarding telephone
instructions.

In order to prevent abuse of this privilege to the disadvantage of
other shareholders, Galaxy reserves the right to terminate the exchange
privilege of any shareholder who requests more than three exchanges a year.
Galaxy will determine whether to do so based on a consideration of both the
number of exchanges that any particular shareholder or group of shareholders
has requested and the time period over which their exchange requests have been
made, together with the level of expense to Galaxy which will result from
effecting additional exchange requests. The exchange privilege may be modified
or terminated at any time. At least 60 days' notice of any material
modification or termination will be given to shareholders except where notice
is not required under the regulations of the SEC.

Galaxy does not charge any exchange fee. However, Institutions may
charge such fees with respect to either all exchange requests or with respect
to any request which exceeds the permissible number of free exchanges during a
particular period. Customers of Institutions should contact their Institution
for applicable information.

For federal income tax purposes, an exchange of shares is a taxable
event and, accordingly, a capital gain or loss may be realized by an investor.
Before making an exchange request, the Customer should consult a tax or other
financial adviser to determine the tax consequences.

RETIREMENT PLANS

Retail Shares of the Funds are available for purchase in connection
with the following tax-deferred prototype retirement plans:

Individual Retirement Accounts ("IRAs") (including "roll-overs" from
existing retirement plans), a retirement-savings vehicle for qualifying
individuals. The minimum initial investment for an IRA account is $500 ($250
for a spousal account).

Simplified Employee Pension Plans ("SEPs"), a form of retirement plan
for sole proprietors, partnerships and corporations. The minimum initial
investment for a SEP account is $500.

Multi-Employee Pension Plans ("MERPs"), a retirement vehicle
established by employers for their employees which is qualified under Section
401(k) and 403(b) of the Internal Revenue Code. The minimum initial investment
for a MERP is $500.

Keogh Plans, a retirement vehicle for self-employed individuals. The
minimum initial investment for a Keogh Plan is $500.

Investors purchasing Retail Shares pursuant to a retirement plan are
not subject to the minimum investment provisions described above under "How to
Purchase and Redeem Shares - Other Purchase Information." Detailed information
concerning eligibility and other matters related to these plans and the form of
application is available from Galaxy's Distributor (call 1-800-628-0413) with
respect to IRAs, SEPs and Keogh Plans and from Fleet Brokerage Securities, Inc.
(call 1-800-221-8210) with respect to MERPs.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Automatic Investment Program permits a Direct Investor to purchase
Retail Shares of a Fund (minimum of $50 per transaction) each month or each
quarter. Provided the Direct Investor's financial institution allows automatic
withdrawals, Retail Shares are purchased by transferring funds from a Direct
Investor's checking, bank money market, NOW or savings account designated by
the Direct Investor. The account designated will be debited in the specified
amount, and Retail Shares will be purchased, on a monthly or quarterly basis,
on any Business Day designated by a Direct Investor. If the designated day
falls on a weekend or holiday, the purchase will be made on the Business Day
closest to the designated day. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated.

The Systematic Withdrawal Plan permits a Direct Investor to
automatically redeem Retail Shares on a monthly, quarterly, semi-annual, or
annual basis on any Business Day designated by a Direct Investor, if the
account has a starting value of at least $10,000. If the designated day falls
on a weekend or holiday, the redemption will be made on the Business Day
closest to the designated day. Proceeds of the redemption will be sent to the
shareholder's address of record or financial institution within five Business
Days of the redemption. If redemptions exceed purchases and dividends, the
number of shares in the account will be reduced. Investors may terminate the
Systematic Withdrawal Plan at any time upon written notice to the Transfer
Agent (but not less than five days before a payment date). There is no charge
for this service. Purchases of additional Retail A Shares concurrently with
withdrawals are ordinarily not advantageous because of the sales charge
involved in the additional purchases. The maintenance of a Systematic
Withdrawal Plan may also be disadvantageous for holders of Retail B Shares due
to the effect of the contingent deferred sales charge.

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<PAGE> 774
PAYROLL DEDUCTION PROGRAM

The Payroll Deduction Program provides Direct Investors with a
convenient, systematic way to purchase Fund shares by deducting a minimum
amount of $25 per pay period from their paycheck. To be eligible for the
Program, the payroll department of a Direct Investor's employer must have the
capability to forward transactions directly through the Automated Clearing
House (ACH), or indirectly through a third party payroll processing company
that has access to the ACH. A Direct Investor must complete and submit a Galaxy
Payroll Deduction Application to his or her employer's payroll department,
which will arrange for the specified amount to be debited from the Direct
Investor's paycheck each pay period. Retail Shares of Galaxy will be purchased
within three days after the debit occurred. If the designated day falls on a
weekend or non-Business Day, the purchase will be made on the Business Day
closest to the designated day. A Direct Investor should allow between two or
four weeks for the Payroll Deduction Program to be established after submitting
an application to the employer's payroll department.

COLLEGE INVESTMENT PROGRAM

The College Investment Program (the "College Program") permits a
Direct Investor to open an account with Galaxy and purchase Retail Shares of
the Fund with a minimum amount of $100 for initial or subsequent investments,
except that if the Direct Investor purchases Retail Shares through the
Automatic Investment Program, the minimum per transaction is $50. The College
Program is designed to assist Direct Investors who want to finance a college
savings plan. See "Investor Programs -- Automatic Investment Program and
Systematic Withdrawal Plan" for information on the Automatic Investment
Program. Galaxy reserves the right to redeem accounts participating in the
College Program involuntarily, upon 60 days' written notice, if the account's
net asset value falls below the applicable minimum initial investment as a
result of redemptions. See "How to Purchase and Redeem Shares -- Other
Redemption Information" above for further information.

Direct Investors in the College Program will receive consolidated
monthly statements of their accounts. Detailed information concerning College
Program accounts and applications may be obtained from the Distributor (call
1-800-628-0413).

DIRECT DEPOSIT PROGRAM

Direct Investors receiving social security benefits are eligible for
the Direct Deposit Program. This Program enables a Direct Investor to purchase
Retail Shares of a Fund by having social security payments automatically
deposited into his or her Fund account. There is no minimum deposit
requirement. For instructions on how to enroll in the Direct Deposit Program,
Direct Investors should call the Distributor at 1-800-628-0413. Death or legal
incapacity will terminate a Direct Investor's participation in the Program. A
Direct Investor may elect at any time to terminate his or her participation by
notifying in writing the Social Security Administration. Further, Galaxy may
terminate a Direct Investor's participation upon 30 days' notice to the Direct
Investor.

INFORMATION SERVICES

GALAXY INFORMATION CENTER -- 24 HOUR INFORMATION SERVICE

The Galaxy Information Center provides Fund performance and investment
information 24 hours a day, seven days a week. To access the Galaxy Information
Center, just call 1-800-628-0414.

VOICE RESPONSE SYSTEM

The Voice Response System provides Direct Investors automated access
to Fund and account information as well as the ability to make telephone
exchanges and redemptions. These transactions are subject to the terms and
conditions described under Investor Programs. To access the Voice Response
System, just call 1-800-FOR-GLXY (367-4599) from any touch-tone telephone and
follow the recorded instructions.

GALAXY SHAREHOLDER SERVICES

For account information and recent exchange transactions, Direct
Investors can call Galaxy Shareholder Services Monday through Friday, between
the hours of 9:00 a.m. to 5:00 p.m. (Eastern Time) at 1-800-628-0413.

Galaxy also offers a TDD service for the hearing impaired. Just call
1-800-696-6515, 24 hours a day, seven days a week.

Direct Investors residing outside the United States can contact Galaxy
by calling 1-508-855-5237.

Investment returns and principal values will vary with market
conditions so that an investor's Retail Shares, when redeemed, may be worth
more or less than their original cost. Past performance is no guarantee of
future results. Unless otherwise indicated, total return figures include
changes in share price, and reinvestment of dividends and capital gains
distributions, if any.

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<PAGE> 775
DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Equity Value, Equity
Growth, Equity Income, Small Company Equity, Asset Allocation, Small Cap Value
and Growth and Income Funds are declared and paid quarterly. Dividends from net
investment income of the International Equity Fund are declared and paid
annually. 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 and Direct
Investors may elect to have their dividends reinvested in additional Retail
Shares of the same series of a Fund at the net asset value of such Retail
Shares on the ex-dividend date. Such election, or any revocation thereof, must
be communicated in writing to Galaxy's transfer agent (see "Custodian and
Transfer Agent" below) and will become effective with respect to dividends paid
after its receipt.

TAXES

FEDERAL

Each of the Funds qualified during its last taxable year and intends
to continue to qualify as a "regulated investment company" under 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.

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 the
Fund's shareholders who are not currently exempt from federal income taxes,
whether such dividends are received in cash or reinvested in additional Retail
Shares. (Federal income taxes for distributions to an IRA or a qualified
retirement plan are deferred under the Code.) Such ordinary income
distributions will qualify for the dividends received deduction for
corporations to the extent of the total qualifying dividends received by the
distributing Fund from domestic corporations for the taxable year.

Distribution by a 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 Retail
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 dividend or capital gain distribution, you should be aware
that the amount of the forthcoming distribution payment, although in effect a
return of capital to the shareholder, 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.

It is expected that the International Equity Fund will be subject to
foreign withholding taxes with respect to income received from sources within
foreign countries. So long as more than 50% of the value of the Fund's total
assets at the close of any taxable year consists of stock or securities of
foreign corporations, the Fund may elect, for U.S. federal income tax
purposes, to treat certain foreign taxes paid by it, including generally any
withholding taxes and other foreign income taxes, as paid by its shareholders.
If the Fund makes this election, the amount of such foreign taxes paid by the
Fund will be included in its shareholders' income pro rata (in addition to
taxable distributions actually received by them), and shareholders would be
entitled either (a) to credit their proportionate amount of such taxes against
their U.S. federal income tax liabilities, subject to certain limitations
described in the Statement of Additional Information relating to the Fund, or
(b) if they itemize their deductions, to deduct such proportionate amount from
their U.S. income. Shareholders of the Equity Value, Equity Growth, Equity
Income, Small Company Equity, Asset Allocation, Small Cap Value and Growth and
Income Funds should not expect to claim a foreign tax credit or deduction.

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

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<PAGE> 776
MANAGEMENT OF THE FUNDS

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

INVESTMENT ADVISER AND SUB-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, Short-Term Bond, 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 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 (except with respect
to such functions that have been delegated to the International Equity Fund's
Sub-Adviser as described below).

The International Equity Fund's portfolio managers, David von Hemert
and the Global Equity Strategy Group of Wellington Management Company
("Wellington Management"), a group of global portfolio managers and senior
investment professionals headed by Trond Skramstad, Senior Vice President of
Wellington Management, are primarily responsible for the day-to-day management
of the Fund's investment portfolio. Mr. von Hermert, a Senior Vice President,
has been with Fleet and its predecessors since 1980 and has been managing the
Fund since August, 1994. Mr. Skramstad has been with Wellington Management,
the Fund's sub-adviser, since January, 1995. Prior to his association with
Fleet, Mr. Skramstad was a principal with Scudder, Stevens & Clark.

The Small Company Equity Fund's portfolio manager, Stephen D. Barbaro,
is primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Barbaro, a Vice President and Senior Portfolio Manager, has been
with Fleet and its predecessors since 1976 and has been the Fund's portfolio
manager since its inception.

The Asset Allocation Fund's portfolio manager, Donald Jones, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Jones, who currently serves as a Vice President, has been with
Fleet and its predecessors as a portfolio manager since 1988, has been the
Fund's portfolio manager since May 1, 1995 and has managed Galaxy's New York
Municipal Bond Fund since September 1994.

The Small Cap Value Fund's portfolio manager, Peter Larson, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Larson served as the portfolio manager of the Predecessor Small
Cap Value Fund since its inception in 1992. He joined Shawmut Bank in 1963 as
an investment officer and was a Vice President in charge of Shawmut Bank's
Small Cap Equity Management product since inception in 1982.

For the services provided and expenses assumed with respect to the
Equity Value, Equity Growth, Equity Income, Small Company Equity, Asset
Allocation, Small Cap Value and Growth and Income Funds, 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 each of the Funds. For
the services provided and expenses assumed with respect to the International
Equity Fund, the Investment Adviser is entitled to receive advisory fees,
computed daily and paid monthly, at the annual rate of 1.15% of the first $50
million of the Fund's average daily net assets, plus .95% of the next $50
million of such assets, plus .85% of net assets in excess of $100 million. The
fees for the

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Funds are higher than fees paid by most other mutual funds, although the Board
of Trustees of Galaxy believes that they are 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. For the fiscal year ended October 31, 1995, Fleet received
advisory fees (after fee waivers) at the effective annual rates of 0.75%,
0.75%, 0.73%, 0.77%, 0.74% and 0.72% of the average daily net assets of the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds, respectively.

The Predecessor Small Cap Value and Predecessor Growth and Income
Funds bore advisory fees during their most recent fiscal year pursuant to the
investment advisory agreement then in effect with Shawmut Bank, N.A., their
former adviser, at the effective annual rates of .77% and .82%, respectively,
of average daily net assets after fee waivers. Without fee waivers, each
Predecessor Fund would have borne advisory fees at the annual rate of 1.00% of
its average daily net assets.

The advisory agreement between Galaxy and Fleet with respect to the
International Equity Fund provides that Fleet will provide a continuous
investment program for the Fund, including research and management with respect
to all securities and investments and cash equivalents in the Fund. In
addition, the advisory agreement authorizes Fleet to engage a sub-adviser to
assist it in the performance of its services. Pursuant to such authorization,
Fleet has appointed Wellington Management with principal offices at 75 State
Street, Boston, Massachusetts 02109, as the Sub-Adviser to the International
Equity Fund. Wellington Management is a professional investment counselling
firm which provides investment services to investment companies, employee
benefit plans, endowments, foundations, and other institutions and individuals.
As of December 31, 1995, Wellington Management had discretionary management
authority with respect to approximately $109.2 billion of assets. Wellington
Management's predecessor organizations have provided investment advisory
services to investment companies since 1933 and to investment counselling
clients since 1960.

For the services provided and the expenses assumed pursuant to the
sub-advisory agreement, Fleet pays a fee to Wellington Management, computed
daily and paid quarterly, at the annual rate of .50% of the first $50 million
of the Fund's average daily net assets, plus .30% of the next $50 million of
such assets, plus .20% of all net assets in excess of $100 million. For the
fiscal year ended October 31, 1995, Wellington Management received sub-advisory
fees at the effective rate of 0.38% of the International Equity Fund's average
daily net assets.

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 agree to provide shareholder support
services that are banks or bank affiliates are subject to such banking laws and
regulations. Should legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with their services to
the 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 Retail 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

FDISG generally assists the Funds in their administration and
operation. FDISG also serves as administrator to the other

38
<PAGE> 778
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 of the Portfolios 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, the Equity Value,
Equity Growth, Equity Income, International Equity, Small Company Equity and
Asset Allocation Funds paid FDISG administration fees at the effective annual
rate of 0.88% of each Fund's average daily net assets.

The Predecessor Small Cap Value and Predecessor Growth and Income
Funds bore administration fees during their most recent fiscal year pursuant to
the administration agreement then in effect with Federated Administrative
Services, their prior administrator, at the effective annual rate of 0.10% of
each such Predecessor 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 the series in the Funds as
follows: Class C shares (Trust Shares), Class C-Special Series 1 shares
(Retail A Shares) and Class C-Special Series 2 shares (Retail B Shares), each
series representing interests in the Equity Value Fund; Class G-Series 1 shares
(Trust Shares) and Class G-Series 2 shares (Retail A Shares), both series
representing interests in the International Equity Fund; Class H-Series 1
shares (Trust Shares), Class H-Series 2 shares (Retail A Shares) and Class
H-Series 3 shares (Retail B Shares), each series representing interests in the
Equity Growth Fund; Class I-Series 1 shares (Trust Shares) and Class I-Series 2
shares (Retail A Shares), both series representing interests in the Equity
Income Fund; Class K-Series 1 shares (Trust Shares), Class K-Series 2 shares
(Retail A Shares) and Class K-Series 3 shares (Retail B Shares), each series
representing interests in the Small Company Equity Fund; Class N-Series 1
shares (Trust Shares), Class N-Series 2 shares (Retail A Shares) and Class
N-Series 3 shares (Retail B Shares), each series representing interests in the
Asset Allocation Fund; Class U-Series 1 shares (Trust Shares), Class U-Series 2
shares (Retail A Shares) and Class U-Series 3 shares (Retail B Shares), each
series representing interest in the Growth and Income Fund; and Class X-Series
1 shares (Trust Shares) and Class X-Series 2 shares (Retail A Shares), each
series representing interests in the Small Cap Value 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
representing interests in other portfolios of Galaxy. For information regarding
the Funds' Trust 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
Equity Value, Equity Growth, Small Company Equity, Asset Allocation and Growth
and Income Funds bear the fees that are paid under Galaxy's Distribution and
Services Plan described below. 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.

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 (irrespective of series
designation), 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

39
<PAGE> 779
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 Statements 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 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 .30% (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.

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule
12b-1 under the 1940 Act with respect to Retail B Shares of the Equity Value,
Equity Growth, Small Company Equity, Asset Allocation and Growth and Income
Funds. Under the Distribution and Services Plan, Galaxy may pay (a) the
Distributor or another person for expenses and activities intended to result in
the sale of Retail B Shares, including the payment of commissions to
broker-dealers and other industry professionals who sell Retail B Shares and
the direct or indirect cost of financing such payments, (b) Institutions for
shareholder liaison services, which means personal services for holders of
Retail B Shares and/or the maintenance of shareholder accounts, such as
responding to customer inquiries and providing information on accounts, and (c)
Institutions for administrative support services, which include but are not
limited to (i) transfer agent and sub-transfer agent services for beneficial
owners of Retail B Shares; (ii) aggregating and processing purchase and
redemption orders; (iii) providing beneficial owners with statements showing
their positions in Retail B Shares; (iv) processing dividend payments; (v)
providing sub-accounting services for Retail B Shares held beneficially; (vi)
forwarding shareholder communications, such as proxies, shareholder reports,
dividend and tax notices, and updating prospectuses to beneficial owners; and
(vii) receiving, translating and transmitting proxies executed by beneficial
owners.

Under the Distribution and Services Plan for Retail B Shares, payments
by Galaxy (i) for distribution expenses may not exceed the annualized rate of
.65% of the average daily net assets attributable to each such Fund's
outstanding Retail B Shares, and (ii) to an Institution for shareholder liaison
services and/or administrative support services may not exceed the annual rates
of .25% and .25%, respectively, of the average daily net assets attributable to
the Funds' outstanding Retail B Shares which are owned of record or
beneficially by that Institution's Customers for whom the Institution is the
dealer of record or shareholder of record or with whom it has a servicing
relationship. As of the date of this Prospectus, Galaxy intends to limit the
Funds' payments for shareholder liaison and administrative support services
under the Plan to an aggregate fee of not more than .30% (on an annualized
basis) of the average daily net asset value of Retail B Shares owned of record
or beneficially by Customers of Institutions.

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-accounting 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.

40
<PAGE> 780
CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, N.A. ("Chase Manhattan"), 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 International Equity Fund and
Asset Allocation Fund upon approval of the Trustees in accordance with the
regulations of the SEC, for the purpose of providing custodial services for the
Funds' 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 these entities for the Funds are described in the
applicable Statements of Additional Information. Communications to FDISG
should be directed to FDISG at P.O. Box 15108, 4400 Computer Drive, Westboro,
Massachusetts 01581.

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 including: 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 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 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, S&P 500, an unmanaged
index of groups of common stocks, the Consumer Price Index, or the Dow Jones
Industrial Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the New York Stock Exchange. In addition, the
performance of the International Equity Fund may be compared to the Morgan
Stanley Capital International Index or the FT World Actuaries Index and the
performance of the Small Company Equity Fund and Small Cap Value Fund may be
compared to the NASDAQ Composite Index, an unmanaged index of over-the-counter
stock prices.

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 Funds may also advertise their 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 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 reflect
the maximum front-end sales load charged by Retail A Shares of the Funds and
the applicable contingent deferred sales charge for Retail B Shares of the
Equity Value, Equity Growth, Small Company Equity, Asset Allocation and Growth
and Income Funds and assume that dividends and capital gain distributions made
by a Fund during the period are reinvested in Fund shares.

The Funds may also advertise total return data without reflecting the
sales charge imposed on the purchase of Retail A Shares in accordance with the
rules of the Securities and Exchange Commission. Quotations that do not reflect
the sales charge will be higher than quotations that do reflect the sales
charge.

41
<PAGE> 781
teed fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged by Institutions with respect to
accounts of Customers that have invested in Retail Shares of a Fund will not be
included in calculations of yield and performance.

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 either Galaxy, a particular Fund or a particular
series of shares 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, such Fund or
such series of shares, or (b) 67% or more of the shares of Galaxy, such Fund or
such series of shares present at a meeting if more than 50% of the outstanding
shares of Galaxy, such Fund or such series of shares are represented at the
meeting in person or by proxy.

42
<PAGE> 782
===============================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENTS 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 THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . 14
Equity Value Fund . . . . . . . . . . . . . . . . . . . . . 14
Equity Growth Fund . . . . . . . . . . . . . . . . . . . . 14
Equity Income Fund . . . . . . . . . . . . . . . . . . . . 15
International Equity Fund . . . . . . . . . . . . . . . . . 15
Small Company Equity Fund . . . . . . . . . . . . . . . . . 16
Asset Allocation Fund . . . . . . . . . . . . . . . . . . . 16
Small Cap Value Fund . . . . . . . . . . . . . . . . . . . 17
Growth and Income Fund . . . . . . . . . . . . . . . . . . 17
Special Risk Considerations . . . . . . . . . . . . . . . . 18
Other Investment Policies and
Risk Considerations . . . . . . . . . . . . . . . . . . . 18
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . 25
PRICING OF SHARES . . . . . . . . . . . . . . . . . . . . . . 26
HOW TO PURCHASE SHARES. . . . . . . . . . . . . . . . . . . . 27
Distributor . . . . . . . . . . . . . . . . . . . . . . . . 27
General . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Purchase Procedures--Customers of
Institutions . . . . . . . . . . . . . . . . . . . . . . 27
Purchase Procedures--Direct Investors . . . . . . . . . . . 27
Other Purchase Information . . . . . . . . . . . . . . . . 28
Applicable Sales Charge--Retail A Shares . . . . . . . . . 28
Quantity Discounts . . . . . . . . . . . . . . . . . . . . 29
Applicable Sales Charges--Retail B Shares . . . . . . . . . 30
Characteristics of Retail A Shares and
Retail B Shares . . . . . . . . . . . . . . . . . . . . . 31
Factors to Consider When Selecting Retail A
Shares or Retail B Shares . . . . . . . . . . . . . . . . 31
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . 32
General . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Redemption Procedures--Customers of
Institutions . . . . . . . . . . . . . . . . . . . . . . 32
Redemption Procedures--Direct Investors . . . . . . . . . . 32
Other Redemption Information . . . . . . . . . . . . . . . 33
INVESTOR PROGRAMS . . . . . . . . . . . . . . . . . . . . . . 33
Exchange Privilege . . . . . . . . . . . . . . . . . . . . 33
Retirement Plans . . . . . . . . . . . . . . . . . . . . . 34
Automatic Investment Program
and Systematic Withdrawal Plan . . . . . . . . . . . . . 34
Payroll Deduction Program . . . . . . . . . . . . . . . . . 35
College Investment Program . . . . . . . . . . . . . . . . 35
Direct Deposit Program . . . . . . . . . . . . . . . . . . 35
INFORMATION SERVICES . . . . . . . . . . . . . . . . . . . . 35
Galaxy Information Center--24 Hour
Information Service . . . . . . . . . . . . . . . . . . . 35
Voice Response System . . . . . . . . . . . . . . . . . . . 35
Galaxy Shareholder Services . . . . . . . . . . . . . . . . 35
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . 36
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . 36
State and Local . . . . . . . . . . . . . . . . . . . . . . 36
MANGAEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . 37
Investment Adviser and Sub Adviser . . . . . . . . . . . . 37
Authority to Act as Investment Adviser . . . . . . . . . . 38
Administrator . . . . . . . . . . . . . . . . . . . . . . . 38
DESCRIPTION OF GALAXY AND ITS SHARES . . . . . . . . . . . . 39
Shareholder Services Plan . . . . . . . . . . . . . . . . . 39
Distribution and Services Plan . . . . . . . . . . . . . . 40
Affiliate Agreement for Sub-Account Services . . . . . . . 40
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . 41
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 41
PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . 41
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>

[LOGO]

50% Recycled Paper
10% Post-Consumer Waste
<PAGE> 783

THE GALAXY FUND

Statement of Additional Information

Equity Value Fund

Equity Growth Fund

Equity Income Fund

International Equity Fund

Small Company Equity Fund

Asset Allocation Fund

February 29, 1996

<PAGE> 784

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectuses (the "Prospectuses") for the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds 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. (formerly known
as The Shareholder Services Group, Inc. d/b/a 440 Financial) 4400 Computer
Drive, Westboro, Massachusetts 01581-5108 or by calling Galaxy at
1-800-628-0414.

<PAGE> 785

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
THE GALAXY FUND 1
INVESTMENT OBJECTIVES AND POLICIES 1
Variable and Floating Rate Obligations 1
Bank Obligations 1
Asset-Backed Securities 1
Repurchase Agreements; Reverse Repurchase Agreements;
Loans of Portfolio Securities 2
U.S. Government Securities 3
Derivative Securities 3
Option Writing 3
Options on Foreign Stock Indexes -- International
Equity Fund 5
Foreign Currency Exchange Transactions 5
Additional Investment Limitations 6
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 8
DESCRIPTION OF SHARES 10
ADDITIONAL INFORMATION CONCERNING TAXES 13
In General 13
Taxation of Certain Financial Instruments 17
State Taxation 19
TRUSTEES AND OFFICERS 19
Shareholder and Trustee Liability 23
ADVISORY, SUB-ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS 24
Custodian and Transfer Agent 28
PORTFOLIO TRANSACTIONS 28
SHAREHOLDER SERVICES PLAN 30
DISTRIBUTION AND SERVICES PLAN 32
EXPENSES 34
DISTRIBUTOR 34
AUDITORS 34
COUNSEL 35
PERFORMANCE AND YIELD INFORMATION 35
MISCELLANEOUS 39
FINANCIAL STATEMENTS 39
APPENDIX A A-1

</TABLE>

<PAGE> 786

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 six of those investment
portfolios: the Equity Value Fund, Equity Growth Fund, Equity Income Fund,
International Equity Fund, Small Company Equity Fund and Asset Allocation Fund
(the "Funds"). This Statement of Additional Information provides additional
investment information with respect to the 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 in accordance
with their investment objectives and policies 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 the Funds 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.
Investments by the International Equity Fund in time deposits with maturities
longer than seven days are limited to no more than 10% of the Fund's total
assets.

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

<PAGE> 787

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 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 a 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.

REPURCHASE AGREEMENTS; REVERSE REPURCHASE AGREEMENTS; LOANS OF PORTFOLIO
SECURITIES

The Funds 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

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<PAGE> 788

are considered to be loans by a Fund under the Investment Company Act of 1940,
as amended (the "1940 Act").

The Funds 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.

U.S. GOVERNMENT SECURITIES

DERIVATIVE SECURITIES

OPTION WRITING

The Funds may write listed covered call options. A listed call option gives
the purchaser of the option the right to buy from a clearing corporation, and
obligates the writer to sell to the clearing corporation, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is consideration for undertaking the obligations under the option
contract. If an option expires unexercised, the writer realizes a gain in the
amount of the premium. Such a gain may be offset by a decline in the market
price of the underlying security during the option period.

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<PAGE> 789

A Fund may terminate its obligation to sell prior to the expiration date of
the option by executing a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
security, exercise price and expiration date) as the option previously written.
Such a purchase does not result in the ownership of an option. A closing
purchase transaction will ordinarily be effected to realize a profit on an
outstanding call option, to prevent an underlying security from being called, to
permit the sale of the underlying security or to permit the writing of a new
call option containing different terms on such underlying security. The cost of
such a liquidating purchase plus transaction costs may be greater than the
premium received upon the original option, in which event the writer will have
incurred a loss in the transaction. An option position may be closed out only on
an exchange that provides a secondary market for an option of the same series.
There is no assurance that a liquid secondary market on an exchange will exist
for any particular option. A covered option writer, unable to effect a closing
purchase transaction, will not be able to sell the underlying security until the
option expires or the underlying security is delivered upon exercise. The writer
in such circumstances will be subject to the risk of market decline of the
underlying security during such period. A Fund will write an option on a
particular security only if Fleet or, with respect to the International Equity
Fund, Wellington Management Company ("Wellington Management" or the
"Sub-Adviser") believe that a liquid secondary market will exist on an
exchange for options of the same series, which will permit the Fund to make a
closing purchase transaction in order to close out its position.

When a Fund writes an option, an amount equal to the net premium (the
premium less the commission) received by the Fund is included as a deferred
credit in the liability section of the Fund's statement of assets and
liabilities. The amount of the deferred credit will be subsequently marked-to-
market to reflect the current value of the option written. The current value of
the traded option is the last sale price or, in the absence of a sale price, the
average of the closing bid and asked prices. If an option expires on the
stipulated expiration date or if a Fund enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold), and the
deferred credit related to such option will be eliminated. If an option is
exercised, the Fund may deliver the underlying security from its portfolio and
purchase the underlying security in the open market. In either event, the
proceeds of the sale will be increased by the net premium originally received,
and the Fund will realize a 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

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<PAGE> 790

income tax purposes, and losses on closing purchase transactions are treated as
short-term capital losses.

OPTIONS ON FOREIGN STOCK INDEXES -- INTERNATIONAL EQUITY FUND

The effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the portion of
the securities portfolio of the International Equity Fund correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Fund realizes a gain or loss from the purchase or
writing of options on an index is dependent upon movements in the level of stock
prices in the stock market generally or, in the case of certain indexes, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock indexes will
be subject to the Sub-Adviser's ability to predict correctly movements in the
direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks. There can be no assurance that such judgment will be accurate
or that the use of these portfolio strategies will be successful. The Fund will
engage in stock index options transactions that are determined to be consistent
with its efforts to control risk.

When the Fund writes an option on a stock index, the Fund will establish a
segregated account with its custodian or with a foreign sub-custodian in which
the Fund will deposit cash or cash equivalents or a combination of both in an
amount equal to the market value of the option, and will maintain the account
while the option is open.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Because the Funds 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 Funds 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. A 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 a Fund to
purchase or sell a specific currency at a specified price and future date, which
may be any fixed number of

-5-

<PAGE> 791

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 a Fund's portfolio
securities or in foreign exchange rates, or prevent loss if the prices of these
securities should decline.

The Funds 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 a Fund's long-term investment decisions, the
Funds 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 a 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 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

Each Fund may not:

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<PAGE> 792

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.

3. Purchase or sell real estate; except that each Fund may purchase
securities that are secured by real estate, and the Funds may purchase
securities of issuers which deal in real estate or interests therein;
however, the Funds will not purchase or sell interests in real estate
limited partnerships.

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 the 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; provided, however, each Fund may write covered
call options with respect to its portfolio securities that are traded on a
national securities exchange, and may enter into closing purchase
transactions with respect to such options if, at the time of the writing
of such options, the aggregate value of the securities subject to the
options written by the Fund does not exceed 25% of the value of its total
assets; and further provided that the Funds, with the exception of the
Equity Value Fund, may purchase put and call options to the extent
permitted by their investment objectives and policies.

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 the Funds may acquire such securities in accordance with the
1940 Act.

-7-

<PAGE> 793

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) covered call options written by the Funds will not exceed (at the time
when written) 25% of the net (rather than total) assets of the Fund. See
Investment Limitation No. 5 above;

(B) 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

(C) 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

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. As described in the
respective Prospectuses, Retail A Shares of the Funds and Retail B Shares of
the Equity Value, Equity Growth, Asset Allocation and Small Company Equity
Funds ("CDSC Funds") are sold to customers ("Customers") of Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Financial Group, Inc.
(collectively the "Fleet Group"), its affiliates, their correspondent banks, and
other qualified banks, savings and loan associations and broker/dealers
("Institutions"). As described in the applicable Prospectuses, Retail A Shares
of the Funds and Retail B Shares of the CDSC Funds may also be sold to
individuals or corporations, who submit a purchase application to Galaxy,
purchasing either for their own accounts or for the accounts of others ("Direct
Investors"). In addition, Trust Shares in the Funds are offered to investors
maintaining qualified accounts at bank and trust institutions, including
institutions affiliated

-8-

<PAGE> 794

with Fleet Financial Group, Inc. and to participants in employer-sponsored
deferred contribution plans. Shares of the International Equity Fund are also
available for purchase by officers, directors, or employees of the Institutions
described above and by clients, partners and employees of the Sub-Adviser.

Retail A Shares of the Funds are offered for sale with a maximum front-end
sales charge of 3.75%, with certain exemptions as described in the applicable
Prospectus. An illustration of the computation of the offering price per share
of Retail A Shares of the Funds, using the value of each Fund's net assets
attributable to such Shares and the number of outstanding Retail A Shares of
each Fund at the close of business on October 31, 1995, is as follows:

<TABLE>
<CAPTION>
Equity Value Equity Growth
Fund Fund
<S> <C> <C>
Net Assets $96,554,645 $98,910,921
Outstanding Shares 6,739,100 5,720,754

Net Asset Value Per Share $14.33 $17.29

Sales Charge (3.75% of
the offering price) $0.56 $0.67

Offering to Public $14.89 $17.96
</TABLE>

<TABLE>
<CAPTION>
Equity International
Income Fund Equity Fund
<S> <C> <C>
Net Assets $81,801,730 $30,104,247
Outstanding Shares 5,459,241 2,330,961

Net Asset Value Per Share $14.98 $12.92

Sales Charge (3.75% of
the offering price) $0.58 $0.50

Offering to Public $15.56 $13.42
</TABLE>

-9-

<PAGE> 795
<TABLE>
<CAPTION>
Small Company Asset
Equity Fund Allocation Fund
<S> <C> <C>
Net Assets $45,667,587 $76,367,475
Outstanding Shares 2,805,047 5,954,778

Net Asset Value Per Share $16.28 $12.82

Sales Charge (3.75% of
the offering price) $0.63 $0.50

Offering to Public $16.91 $13.32
</TABLE>

If the Board of Trustees determines that conditions exist which 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 require any information reasonably necessary to ensure that a
redemption has been duly authorized.

DESCRIPTION OF SHARES

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<PAGE> 796

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
(plus a third series of shares, i.e. Retail B Shares, of the 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.

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<PAGE> 797

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 if it is clear that
the interests of each Fund in the matter 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.

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<PAGE> 798

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
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

Each Fund of Galaxy 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.

<PAGE> 799

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 that are not directly related to a Fund's principal business of investing
in stock or securities, or 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. However, 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

-14-

<PAGE> 800

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 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 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.

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<PAGE> 801

Income received by the Funds from sources within foreign countries may be
subject to withholding and other foreign taxes. The payment of such taxes will
reduce the amount of dividends and distributions paid to a Fund's shareholders.
So long as a Fund qualifies as a regulated investment company, certain
distribution requirements are satisfied, and more than 50% of the value of the
Fund's assets at the close of the taxable year consists of stock or securities
of foreign corporations, the Fund may elect, for U.S. federal income tax
purposes, to treat foreign income taxes paid by the Fund that can be treated as
income taxes under U.S. income tax principles as paid by its shareholders. A
Fund may qualify for and make this election in some, but not necessarily all, of
its taxable years. If a Fund were to make an election, an amount equal to the
foreign income taxes paid by the Fund would be included in the income of its
shareholders and each shareholder would be entitled either (i) to credit their
portions of this amount against their U.S. tax due, if any, or (ii) to deduct
such portion from their U.S taxable income, if any. Shortly after any year for
which it makes such an election, a Fund will report to its shareholders, in
writing, the amount per share of such foreign tax that must be included in each
shareholder's gross income and the amount which will be available for deduction
or credit. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Certain limitations are imposed on the extent to
which the credit (but not the deduction) for foreign taxes may be claimed.

-16-

<PAGE> 802

received from a Fund which qualifies as foreign source income. Additional
limitations apply to using the foreign tax credit to offset the alternative
minimum tax imposed on corporations and individuals. Because of these
limitations, shareholders may be unable to claim a credit for the full amount of
their proportionate shares of the foreign income taxes paid by a Fund.

TAXATION OF CERTAIN FINANCIAL INSTRUMENTS

Generally, certain foreign currency contracts entered into by the Funds
(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 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

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<PAGE> 803

carrying charges may not be allowed. Notwithstanding the rules described above,
with respect to certain foreign currency contracts that are properly
identified as such, a Fund may make an election that will exempt (in whole or in
part) those identified 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 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 which 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, Global 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

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<PAGE> 804

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.

STATE TAXATION

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:

-19-

<PAGE> 805

<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & Trustee President & Director,
Vicks Lithograph & Vicks Lithograph &
Printing Corporation Printing Corporation (book
Commercial Drive manufacturing and commercial
P.O. Box 270 printing); Director, Utica
Yorkville, NY 13495 Fire Insurance Company;
Age 61 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'Neill 1 President, Treasurer Executive Vice President and
Hasbro, Inc. & Trustee CFO, Hasbro, Inc. (toy and
200 Narragansett game manufacturer), since
Park Drive 1987; Trustee, The Galaxy
Pawtucket, RI 02862 VIP Fund; Managing Partner,
Age 54 KPMG Peat Marwick
(accounting firm), 1986;
(Trustee, Galaxy Fund II.

-20-

<PAGE> 806

<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- -----------------------
<S> <C> <C>
Donald B. Miller Trustee Chairman, Horizon Media,
10725 Quail Covey Road Inc. (broadcast services);
Boynton Beach, FL 33436 Director/Trustee, Lexington
Age 69 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, Inc. The Astra Projects,
One Citizens Plaza Incorporated (land
Providence, RI 02903 development); President,
Age 54 The Astra Ventures,
Incorporated (previously,
Buffinton Box Company -
manufacturer of cardboard
boxes); Commissioner, Rhode
Island Investment
Commission; Trustee, The
Galaxy VIP Fund; Trustee,
Galaxy Fund II

-21-

<PAGE> 807

Neil Forrest Vice First Data Investor Services
Services Group, Inc. President Group, Inc. (1992 to
4400 Computer Drive and Assistant present);
Westboro, MA Treasurer Manufacturers and Traders
01581-5108 Trust Co. (1990-1992).
Age 35

Louis Russo
First Data Investor Assistant Vice President, First
Services Group, Inc. Treasurer Data Investor Services
4400 Computer Drive Group, Inc. since 1990;
Westboro, MA Director, Funds
01581-5108 Accounting, Fidelity
Age 43 Investments from 1988 to
1990.

</TABLE>

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

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 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 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 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) ("FDISG") 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.

-22-

<PAGE> 808

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

<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'Neil $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, Galaxy VIP Fund and Galaxy
Fund II.

SHAREHOLDER AND TRUSTEE LIABILITY

The Declaration of Trust states further that no trustee, officer or agent of
Galaxy shall be personally liable for or on

-23-

<PAGE> 809

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.

ADVISORY, SUB-ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS

For the services provided and expenses assumed by Fleet, Galaxy paid Fleet for
the fiscal years ended October 31, 1993, October 31, 1994 and October 31,
1995 advisory fees of $1,154,923, $1,570,179 and $1,797,623, respectively,
with respect to the Equity Value Fund; and $2,490,033, $3,192,753 and
$3,406,615, respectively, with respect to the Equity Growth Fund. For the
fiscal years ended October 31, 1994 and October 31, 1995, Fleet reimbursed
advisory fees of $5,146 and $2,347, respectively, with respect to the Equity
Value Fund; and $3,877 and $9,296, respectively, with respect to the Equity
Growth Fund.

-24-

<PAGE> 810

For the fiscal years ended October 31, 1993, October 31, 1994 and October
31, 1995, Galaxy paid Fleet advisory fees (net of waivers and/or reimbursements)
of $491,504, $1,008,936 and $1,097,887, respectively, with respect to the
Equity Income Fund. For the fiscal year ended October 31, 1993 , Fleet waived
advisory fees of $43,784 with respect to the Equity Income Fund and for the
fiscal years ended October 31, 1994 and October 31, 1995, Fleet reimbursed
advisory fees of $6,173 and $24,627, respectively, with respect to the Equity
Income Fund.

For the fiscal years ended October 31, 1993, October 31, 1994 and October
31, 1995, Fleet received advisory fees (net of waivers and/or
reimbursements) of $257,288, $585,753 and $807,983, respectively, with respect
to the Small Company Equity Fund; and $293,324, $978,630 and $982,310,
respectively, with respect to the Asset Allocation Fund. For the fiscal year
ended October 31, 1993, Fleet waived advisory fees of $45,826 with respect
to the Asset Allocation Fund; and for the fiscal years ended October 31,
1993, October 31, 1994 and October 31, 1995, Fleet reimbursed advisory fees
of $14,168, $7,017 and $11,087, respectively, with respect to the Small
Company Equity Fund; and $4,413, $6,171 and $37,161, respectively, with respect
to the Asset Allocation Fund.

For the fiscal years ended October 31, 1993, October 31, 1994 and October 31,
1995, Fleet received advisory fees (net of waivers and/or reimbursements) of
$137,209, $658,583 and $850,924, respectively, with respect to the
International Equity Fund. During the same periods, Fleet waived advisory fees
of $86,928, $232,756 and $291,265, respectively, with respect to the
International Equity Fund. For the fiscal years ended October 31, 1993 and
October 31, 1994, Fleet reimbursed advisory fees of $8,434 and $3,042,
respectively, with respect to the International Equity Fund.

-25-

<PAGE> 811

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 FDISG, Fleet Trust Company will be
paid $21.00 per year for each defined contribution plan participant account. As
of October 31, 1995, there were approximately 49,321 defined contribution
plan participant sub-accounts invested in Trust Shares; thus it is expected that
Fleet Trust Company will receive annually approximately $1,035,741 million for
sub-account services. FDISG 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.

Wellington Management, with principal offices at 75 State Street, Boston,
Massachusetts 02109, serves as Sub-Adviser to the International Equity Fund.
Wellington Management is a professional investment counselling firm that
provides investment services to investment companies, employee benefit plans,
endowments, foundations, and other institutions and individuals. As of December
31, 1995, Wellington Management had discretionary management authority with
respect to approximately $109.2 billion of assets. The Sub- Adviser's
predecessor organizations have provided investment advisory services to
investment companies since 1933 and to investment counseling clients since 1960.

Under its sub-advisory agreement with Fleet, Wellington Management determines
which securities and other investments will be purchased, retained or sold for
the International Equity Fund; places orders for the Fund; manages the Fund's
overall cash position; and provides the Investment Adviser with foreign broker
research and a quarterly review of international economic and investment
developments. Fleet, among other things, assists and consults with the Sub-
Adviser

-26-

<PAGE> 812

in connection with the International Equity Fund's continuous investment
program; approves lists of foreign countries recommended by the Sub-Adviser for
investment; reviews the Fund's investment policies and restrictions and
recommends appropriate changes to the Board of Trustees; and provides the Board
of Trustees and Sub-Adviser with information concerning relevant economic and
political developments. Wellington Management will provide services under this
agreement in accordance with the Fund's investment objectives, policies and
restrictions. Unless sooner terminated by the Investment Adviser or Board of
Trustees upon sixty days' written notice, the sub-advisory agreement will
continue in effect from year to year as long as such continuance is approved at
least annually as described above. For the fiscal years ended October 31,
1993, October 31, 1994 and October 31, 1995, Wellington Management received
sub-advisory fees of $101,118, $350,844 and $423,376, with respect to the
International Equity Fund.

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, 440 Financial, a
wholly-owned subsidiary of First Data Corporation, 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 received administration fees of $116,305, $176,963 and
$210,049, respectively, with respect to the Equity Value Fund; $253,935,
$357,466 and $398,623, respectively, with respect to the Equity Growth Fund;
$56,602, $116,740 and $130,993, respectively, with respect to the Equity
Income Fund; $15,460, $71,393 and $97,015, respectively, with respect to the
International Equity Fund; $27,580, $66,941 and $95,582, respectively, with
respect to the Small Company Equity Fund; and $35,350, $110,982 and $118,968,
respectively, with respect to the Asset Allocation Fund.

-27-

<PAGE> 813

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 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 Funds 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 those Funds held outside
the United States. The assets of the Funds are held under bank custodianship in
compliance with the 1940 Act.

PORTFOLIO TRANSACTIONS

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. Transactions in
equity securities on U.S. stock exchanges for the Funds involve the payment
of negotiated brokerage commissions. On U.S. stock exchanges on which
commissions are negotiated, the cost of transactions may vary among different
brokers. Transactions in the over-the-counter market are generally principal
transactions

-28-

<PAGE> 814

with dealers and the costs of such transactions involve dealer spreads rather
than brokerage commissions. With respect to over-the-counter transactions, the
Adviser and Sub-Adviser will normally deal directly with the dealers who make a
market in the securities involved except in those circumstances where better
prices and execution are available elsewhere or as described below.

For the fiscal years ended October 31, 1993, October 31, 1994 and October
31, 1995, the Equity Value Fund paid brokerage commissions aggregating
$258,628, $492,387 and $588,613, respectively; the Equity Growth Fund paid
brokerage commissions aggregating $176,092, $151,586 and $192,433,
respectively; the Equity Income Fund paid brokerage commissions of $88,213,
$158,677 and $108,082, respectively; the Asset Allocation Fund paid brokerage
commissions aggregating $72,345, $101,007 and $101,436, respectively; the
Small Company Equity Fund paid brokerage commissions aggregating $38,869 ,
$107,265 and $109,014, respectively; and the International Equity Fund paid
brokerage commissions aggregating $130,374, $424,413 and $341,377,
respectively.

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 or Wellington Management 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 or Wellington
Management may effect transactions in portfolio securities with broker/dealers
who provide research, advice or other services such as market investment
literature.

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, Wellington Management, FDISG, 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 the Company has acquired during its most recent fiscal year. At
October 31, 1995, (a) the Equity Value Fund had entered into a repurchase
transaction with Chase Securities,

-29-

<PAGE> 815

Inc. in the amount of $35,269,896 to be repurchased on November 1, 1995 at
$35,275,530; (b) the Equity Growth Fund had entered into a repurchase
transaction with Chase Securities, Inc. in the amount of $82,007,104 to be
repurchased on November 1, 1995 at $82,020,202; (c) the Equity Income Fund had
entered into a repurchase transaction with Chase Securities, Inc. in the
amount of $20,502,040 to be repurchased on November 1, 1995 at $20,505,315;
(d) the International Equity Fund had entered into a repurchase transaction with
Lehman Brothers, Inc. in the amount of $7,683,000 to be repurchased on
November 1, 1995 at $7,684,251; (e) the Small Company Equity Fund had entered
into a repurchase transaction with Chase Securities, Inc. in the amount of
$8,211,404 to be repurchased on November 1, 1995 at $8,212,716; and (f) the
Asset Allocation Fund had entered into a repurchase transaction with Chase
Securities, Inc. in the amount of $13,893,939 to be repurchased on November 1,
1995 at $13,896,159. At October 31, 1995, the Equity Value Fund held common
stock of Merrill Lynch & Co. in the amount of $2,136,750; and the Equity
Income Fund held common stock of Chase Manhattan Corp. in the amount of
$1,140,000. Chase Manhattan Bank, N.A., the parent of Chase Securities, Inc.,
Lehman Brothers, Inc. and Merrill Lynch, Pierce, Fenner & Smith are considered
"regular brokers or dealers" of Galaxy.

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 or Wellington Management. 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 or Wellington Management 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 or Wellington Management 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 except the Institutional Treasury
Money Market 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.

-30-

<PAGE> 816

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 divedends 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 such 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 the
Shareholder Services Plan), payments to Service Organizations totaled $18,507,
$17,565, $15,985, $8,151, $7,152 and $18,946 with respect to Retail A Shares of
the Equity Value Fund, Equity Growth Fund, Equity Income Fund, International
Equity Fund, Small Company Equity Fund and Asset Allocation Fund,
respectively.

For the fiscal year ended October 31, 1995, payments to Service Organizations
totaled $245,304, $237,326, $203,471, $93,434, $102,102 and $205,546 with
respect to Retail A Shares of the Equity Value, Equity Growth, Equity Income,
International

-31-

<PAGE> 817

Equity, Small Company Equity and Asset Allocation Funds, respectively.

DISTRIBUTION AND SERVICES PLAN

Under the Distribution and Services Plan for Retail B Shares, payments by
Galaxy (i) for distribution expenses may not exceed .65% (annualized) of the
average daily net assets attributable to such Funds' outstanding Retail B
Shares, (ii) to an Institution for shareholder liaison services and/or
administrative support services may not exceed .25% (annualized) and .25%
(annualized), respectively, of the average daily net assets attributable to each
such Funds' outstanding Retail B Shares which are owned of record or
beneficially by that Institution's Customers for whom the Institution is the
dealer of

-32-

<PAGE> 818

record or shareholder of record or with whom it has a servicing relationship. As
of the date of this Prospectus, Galaxy intends to limit the Funds' payments for
shareholder liaison and administrative support services under the Plan to an
aggregate fee of not more than .30% (on an annualized basis) of the average
daily net asset value of Retail B Shares owned of record or beneficially by
Customers of Institutions.

Payments for distribution expenses under the Plan are subject to Rule 12b-1
(the "Rule") under the 1940 Act. The Rule defines distribution expenses to
include the cost of "any activity which is primarily intended to result in the
sale of Galaxy shares." The Rule provides, among other things, that an
investment company may bear such expenses only pursuant to a plan adopted in
accordance with the Rule. In accordance with the Rule, the Plan provides that a
report of the amounts expended under the Plan, and the purposes for which such
expenditures were incurred, will be made to the Board of Trustees for its
review at least quarterly. The Plan provides that it may not be amended to
increase materially the costs which Retail B Shares of a Fund may bear for
distribution pursuant to the Plan without shareholder approval, and that any
other type of material amendment must be approved by a majority of the Board of
Trustees, and by a majority of the Trustees who are neither "interested
persons" (as defined in the 1940 Act) of Galaxy nor have any direct or indirect
financial interest in the operation of the Plan or in any related agreements,
by vote cast in person at a meeting called for the purpose of considering such
amendments (the "Disinterested Trustees").

Galaxy's Board of Trustees has concluded that there is a reasonable
likelihood that the Plan will benefit the Funds and holders of Retail B Shares.
The Plan is subject to annual reapproval by a majority of the Disinterested
Trustees and is terminable at any time with respect to any Fund by a vote of a
majority of such Trustees or by vote of the holders of a majority of the Retail
B Shares of the Fund involved. Any agreement entered into pursuant to the Plan
with a Service Organization is terminable with respect to any Fund without
penalty, at any time, by vote of a majority of the Disinterested Trustees, by
vote of the holders of a majority of the Retail B Shares of such Fund, by the
Distributor or by the Service Organization. An agreement will also terminate
automatically in the event of its assignment.

As long as the Plan is in effect, the nomination of the Trustees who are not
interested persons of Galaxy (as defined in the 1940 Act) must be committed to
the non-interested Trustees.

-33-

<PAGE> 819

EXPENSES

DISTRIBUTOR

AUDITORS

-34-

<PAGE> 820

Prospectuses and the financial statements for the Funds contained in Galaxy's
Annual Report 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.

PERFORMANCE AND YIELD INFORMATION

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.

-35-

<PAGE> 821

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

With respect to 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, the standard yields for Retail A
Shares of the Equity Growth, Equity Value, Equity Income, Small Company Equity,
Asset Allocation and International Equity Funds for the 30-day period ended
October 31, 1995 were (0.12%), 0.08%, 0.31%, (1.22%), 0.69% and (5.92%),
respectively.

Based on the foregoing calculation, the standard yields for Trust Shares of
the Equity Growth, Equity Value, Equity Income, Small Company Equity, Asset
Allocation and International Equity Funds for the 30-day period ended October
31, 1995 were 0.29%, 0.52%, 0.81%, (0.82%), 0.92% and 0.15%, respectively.

-36-

<PAGE> 822

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 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.

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

Aggregate total return for Retail A Shares of the Equity Value Fund for
the period September 1, 1988 (inception) to October 31, 1995 was 128.03%. From
September 1, 1988 (inception) to October 31, 1995, average annual total
returns for Retail A Shares of the Equity Value Fund was 12.19%. For the
one-year and five-year periods ending October 31, 1995, the average annual total
returns for Retail A Shares of the Equity Value Fund were 20.81% and 16.20%,
respectively.

-37-

<PAGE> 823

Aggregate total returns for Retail A Shares of the Equity Growth and Equity
Income Funds from December 14, 1990 (inception) to October 31, 1995 were 87.55%
and 78.49%, respectively. From December 14, 1990 (inception) to October 31,
1995, average annual total returns for Retail A Shares of the Equity Growth and
Equity Income Funds were 13.64% and 12.51%, respectively. For the one-year
period ending October 31, 1995, the average annual total returns for Retail A
Shares of the Equity Growth and Equity Income Funds were 24.54% and 22.23%,
respectively.

Aggregate total returns for Retail A Shares of the Small Company Equity, Asset
Allocation and International Equity Funds from December 30, 1991 (inception) to
October 31, 1995 were 66.21%, 39.77% and 32.08%, respectively. From December
30, 1991 (inception) to October 31, 1995, average annual total returns for
Retail A Shares of the Small Company Equity, Asset Allocation and International
Equity Funds were 14.17%, 9.13% and 7.53%, respectively. For the one-year
period ending October 31, 1995, the average annual total returns for Retail A
Shares of the Small Company Equity, Asset Allocation and International Equity
Funds were 34.01%, 23.42% and (0.64%), respectively.

Aggregate total return for Trust Shares of the Equity Value Fund for the
period September 1, 1988 (inception) to October 31, 1995 was 129.15%. From
September 1, 1988 (inception) to October 31, 1995, average annual total return
for Trust Shares of the Equity Value Fund was 12.27%. For the one-year and
five-year periods ending October 31, 1995, the average annual total return for
Trust Shares of the Equity Value Fund were 21.31% and 16.31%, respectively.

Aggregate total returns for Trust Shares of the Equity Growth and Equity
Income Funds from December 14, 1990 (inception) to October 31, 1995 were 88.49%
and 79.48%, respectively. From December 14, 1990 (inception) to October 31,
1995, average annual total returns for Trust Shares of the Equity Growth and
Equity Income Funds were 13.76% and 12.63%, respectively. For the one-year
period ending October 31, 1995, the average annual total returns for Trust
Shares of the Equity Growth and Equity Income Funds were 25.08% and
22.81%, respectively.

Aggregate total returns for Trust Shares of the Small Company Equity, Asset
Allocation and International Equity Funds from December 30, 1991 (inception) to
October 31, 1995 were 67.23%, 40.19% and 32.91%, respectively. From December 30,
1991 (inception) to October 31, 1995, average annual total returns for Trust
Shares of the Small Company Equity, Asset Allocation and International Equity
Funds were 14.36%, 9.21% and 7.70%, respectively. For the one-year period ending
October 31, 1995, the average annual total returns for Trust Shares of the
Small Company Equity, Asset Allocation and International Equity Funds were
34.73%, 23.68% and (0.02%), respectively.

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<PAGE> 824

MISCELLANEOUS

As of February 5, 1996, 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: Tax-Exempt
Money Market Fund -- Hope H. Van Beuren, East Main, R.R. 25 Enterprise Center,
Middletown, Rhode Island 02842 (15.10%); Joseph Dimenna, 1049 Fifth Avenue,
Apartment P3, New York, New York 10028 (11.24%); Massachusetts Municipal Money
Market Fund -- Clement McIver, Jr., c/o Methods Machine Tool, 65 Union Avenue,
Sudbury, Massachussetts 01776 (5.00%); Olsen & Company, Attention: Corporate
Actions of - 0503, One Federal Street, Boston, Massachusetts 02110-2003
(45.38%); Shawmut Bank, National Association, Attention: Maureen Sanborn -
Massachusetts Deposit Balancing, 150 Windsor Street - MSN 294, Hartford,
Connecticut 06120 (7.37%); and Connecticut Municipal Money Market Fund --
Shawmut Bank, National Association, Attention: Maureen Sanborn - Massachusetts
Deposit Balancing, 150 Windsor Street - MSN 294, Hartford, Connecticut 06120
(57.55%); Olsen & Company, Attention: Corporate Actions of - 0530, One Federal
Street, Boston, Massachusetts 02110 (26.89%); Short-Term Bond Fund -- Womat
Leasing, MSN 217, Attention: Mark Roberts, One Corporate Center, Hartford,
Connecticut 06103-3220 (10.15%); Rhode Island Municipal Bond Fund -- Norstar
Trust Company, Gales & Co., Funds Control, Attention: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (43.60%); James R. McCulloch, c/o MICROFIBRE,
P.O. Box 1208, Pawtucket, Rhode Island 02860 (8.01%);

As of February 5, 1996, 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: Equity Value Fund --
Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (7.15%); Equity Growth Fund -- Fleet Financial
Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island
02903 (16.97%); International Equity Fund -- Fleet Financial Group Inc., FFG
Retirement & Pension Equity, 50 Kennedy Plaza, Providence, Rhode Island 02903
(13.41%); Fleet Financial Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza,
Providence, Rhode Island 02903 (6.80%); Asset Allocation Fund -- Fleet Financial
Group Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Rhode Island 02903
(32.49%); Edward & Angels 401K, 2700 Hospital Trust Tower, Providence, Rhode
Island 02903 (12.15%); and Small Company Equity Fund -- Fleet Financial Group
Inc., Fleet Savings Plus Plan, 50 Kennedy Plaza, Providence, Rhode Island 02903
(15.45%); BNE Unified Retirement Trust, Attention: Ben Branch, Trustee, 21
Merchants Road, 4th Floor, Boston, Massachusetts 02109 (8.26%); Money Market
Fund -- Fleet Financial Group, Inc., Employees Thrift Plan, c/o Kenneth
Weissman, Shawmut National Corporation, 777 Main Street, Hartford, Connecticut
06115 (5.49%); Tax-Exempt Fund -- Fleet Bank, Rhode Island, Custodian for A
Banko Inv., Attention: Ann Celander, 100 Westminster Street, Providence, Rhode
Island 02903 (5.53%); Government Fund -- Brown University Non-Exp Fund RISLA
A-Bill, c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903
(13.11%); U.S. Treasury Fund -- Fleet National Bank of Massachusettes, Schmid,
Inc., Debtor in Possession, c/o Robin Boweman, One Federal Street, Boston,
Massachusetts, 02211 (6.35%); BIC Corporation Investment Management Accountant,
Robert McDonald, BIC Corporation Investment Management Account, Attention:
Robert McDonald, 500 BIC Drive Milford, Connecticut 06460 (5.54%); and
Institutional Treasury Money Market Fund -- CAI Wireless Systems II, c/o Fleet
Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903 (21.80%); AMS Escrow
Account, Nortek Inc., Attention: Julia Quinn, c/o 50 Kennedy Plaza, Providence,
Rhode Island 02903 (5.19%); Massachusetts Municipal Money Market Fund -- Shawmut
Bank, Connecticut, National Association, Co-Trustee Francelia Corbett, c/o Peter
Vannie, Shawmut Bank, Connecticut, National Association, Hartford, Connecticut
06155 (7.88%); Growth and Income Fund -- Shawmut Bank, National Association as
Trustee, Balanced Fund - EB c/o Doris Cote, 446 Main Street, Worcester,
Massachusetts 01608 (8.91%); Fleet Financial Group, Inc., Employees Thrift Plan
c/o Kenneth Weissman, 777 Main Street, Hartford, Connecticut 06115 (19.13%); and
Small Cap Value -- Fleet Financial Group, Inc., Employees Thrift Plan, c/o
Kenneth Weissman, Shawmut National Corporation, 777 Main Street, Hartford,
Connecticut 06115 (16.11%); Shawmut Bank, National Association, Rogers
Corporation as Trustee, Attention: James Delucia, Shawmut Bank, Connecticut, 157
Church Street, P.O. Box 1909, New Haven, Connecticut 06509 (5.75%); and Shawmut
Bank, Connecticut, as Trustee, SNC Employees Retirement Plan, c/o Thomas
Botticelli, Shawmut Bank, Connecticut, 777 Main Street, Hartford, Connecticut
06115-2001 (31.61%); High Quality Bond Fund -- Fleet Saving Plus Plan, Fleet
Financial Group Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (14.41%);
Corporate Bond Fund -- Shawmut Bank, National Association as Trustee, Balanced
Fund -- EB c/o Doris Cote, 446 Main Street, Worcester, Massachusetts 01608
(9.23%); BNE Unified Retirement Trust, Attention: Ben Branch, Trustee, 21
Merchants Road, 4th Floor, Boston, Massachusetts 02109 (18.82%); Connecticut
Municipal Bond Fund -- Shawmut Bank, Connecticut, as Agent for Florence Roberts,
c/o Anna Maria Simonelli, 777 Main Street, Hartford, Connecticut 06115-2001
(7.96%); Robert M. Ross, Jr. c/o, Fleet Bank, 50 Kennedy Plaza, Providence,
Rhode Island 02903 (5.13%); Ruthan Wein, 18 Timberland Drive, Farmington,
Connecticut 06032 (7.83%); Massachusetts Municipal Bond Fund -- Joseph S.
Teller, 8 Kilsyth Terrace, #21, Brighton, Massachusetts 02146 (6.02%); Phillip
H. Tobey, c/o Fleet Bank, 50 Kennedy Plaza, Providence, Rhode Island 02903
(5.18%); Rhode Island Municipal Bond -- Vera J. Clark, 175 East Avenue,
Westerly, Rhode Island 02811 (7.19%); and Tax-Exempt Bond Fund -- Nusco Retiree
Health, P.O. Box 270 Hartford, Connecticut 06141 (15.49%).

FINANCIAL STATEMENTS

Galaxy's Annual Report to Shareholders with respect to the Funds for the
fiscal year ended October 31, 1995 has been filed with the Securities and
Exchange Commission. The financial statements in such Annual Report (the
"Financial Statements") are incorporated into this Statement of Additional
Information by reference. The Financial Statements included in the Annual
Report 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 Report and is incorporated herein
by reference. The Financial Statements in such Annual Report have been
incorporated herein in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

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<PAGE> 825

APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

Corporate and Tax-Exempt Bond Ratings

A-1

<PAGE> 826

A-2

<PAGE> 827

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

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> 828

A-4

<PAGE> 829

Tax-Exempt Note Ratings

An 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> 830
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