GALAXY FUND /DE/, 497, 1997-03-10

GALAXY FUND /DE/
497, 1997-03-10

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<PAGE> 1

TRUST

THE GALAXY FUND

MONEY MARKET FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 2

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
BY FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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
Variable and Floating Rate
Instruments...................... 7
Repurchase and Reverse Repurchase
Agreements....................... 7
Securities Lending.................. 8
Guaranteed Investment Contracts..... 8
Asset-Backed Securities............. 8
INVESTMENT LIMITATIONS................ 8
PRICING OF SHARES..................... 10
HOW TO PURCHASE AND REDEEM SHARES..... 11
Distributor......................... 11
Purchase of Shares.................. 11

<CAPTION>
PAGE
----
<S> <C>
Redemption of Shares................ 12
DIVIDENDS AND DISTRIBUTIONS........... 12
TAXES................................. 12
Federal............................. 12
State and Local..................... 13
Miscellaneous....................... 13
MANAGEMENT OF THE FUND................ 13
Investment Adviser.................. 13
Authority to Act as Investment
Adviser.......................... 14
Administrator....................... 14
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 15
Shareholder Services Plan........... 16
Affiliate Agreement for Sub-Account
Services......................... 16
CUSTODIAN AND TRANSFER AGENT.......... 16
EXPENSES.............................. 17
PERFORMANCE AND YIELD
INFORMATION......................... 17
MISCELLANEOUS......................... 18
</TABLE>

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<PAGE> 3

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For an application and information regarding
Westboro, Massachusetts 01581-5180 purchases, redemptions, exchanges and other
shareholder services or for current
performance, call 1-800-628-0414.
</TABLE>

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes a series of Galaxy's shares ("Trust Shares") which
represent interests in the MONEY MARKET FUND (the "Fund") offered by Galaxy.
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 primarily 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 (referred to herein collectively as "Retail
Shares"), which are offered under a separate prospectus. Retail A Shares are
offered primarily to individuals, corporations or other entities purchasing
either for their own accounts or for the accounts of others and to FIS
Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities, Inc.,
Fleet Enterprises, 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. Retail B Shares are not offered for
purchase and are available only to the holders of Retail B Shares in Galaxy's
Short-Term Bond, High Quality Bond, Tax-Exempt Bond, Equity Value, Equity
Growth, Small Company Equity, Asset Allocation and Growth and Income Funds who
wish to exchange their Retail B Shares in such Funds for Retail B Shares in the
Fund. Trust Shares, Retail A Shares and Retail B Shares represent equal pro rata
interests in the Fund, except that they bear different expenses and charges. See
"Financial Highlights," "Management of the Fund" and "Description of Galaxy and
Its Shares" herein.
The Fund is advised by Fleet Investment Advisors Inc. ("Fleet") and
sponsored and distributed by First Data Distributors, Inc., which is
unaffiliated with Fleet 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 number 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 28, 1997
<PAGE> 4

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 OPERATING EXPENSES MONEY
(AS A PERCENTAGE OF AVERAGE NET ASSETS) MARKET 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 investors 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 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 EXAMPLE 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> 5

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. The Fund also offers an additional series of shares,
Retail B Shares. This Prospectus describes the Trust Shares in the Fund. Retail
A Shares and Retail B Shares in the Fund are offered under a separate
prospectus. 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 .10% of the average daily net asset value of the Fund's outstanding Retail
A Shares, (ii) Retail B Shares of the Fund are subject to a contingent deferred
sales charge and bear the expenses incurred under Galaxy's Distribution and
Services Plan at an annual rate of up to .75% 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. 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 relating to the Fund for the fiscal year
ended October 31, 1996 (the "Annual Report"). Such financial highlights should
be read in conjunction with the financial statements contained in the Annual
Report 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, 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 which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

3
<PAGE> 6

MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
------------------
1996 1995 YEARS ENDED OCTOBER 31, PERIOD ENDED
---------------- -------------------------------------------------------------------- OCTOBER 31,
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
------------------ -------- -------- -------- -------- -------- -------- -------- ------------
<S> <C> <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 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations
Net investment
income(3,4)........... 0.05 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 0.05 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) (0.05) (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) (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return(6)........... 5.00% 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)................. $924,222 $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... 4.89% 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% 0.55% 0.64% 0.63% 0.58% 0.59% 0.59% 0.58% 0.59% 0.52%(8)
Operating expenses
excluding
reimbursement/waiver... 0.58% 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 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
Fleet and/or the Fund's 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 Fleet and/or the Fund's administrator for
the years ended October 31, 1996 and 1995 were $0.05 and $0.05,
respectively.
(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 Fleet 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> 7

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
("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 with 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.

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.

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 the only Rating Agency that has
issued a rating with respect to such security or issuer 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.

5
<PAGE> 8

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 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 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

6
<PAGE> 9

banks or foreign branches of U.S. banks will be made only when Fleet believes
that the credit risk with respect to the instrument is minimal.

Commercial paper may include securities issued by corporations without
registration under the Securities Act of 1933, as amended, (the "1933 Act") in
reliance on the so-called "private placement" exemption in Section 4(2)
("Section 4(2) Paper"). Section 4(2) Paper is restricted as to disposition under
the federal securities laws in that any resale must similarly be made in an
exempt transaction. Section 4(2) Paper is normally resold to other institutional
investors through or with the assistance of investment dealers which make a
market in Section 4(2) Paper, thus providing liquidity. The Fund may also
purchase Rule 144A securities. See "Investment Limitations."

VARIABLE AND FLOATING RATE INSTRUMENTS

Securities purchased by the Fund 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. 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.

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 only be entered into with financial
institutions such as banks and broker/dealers that are deemed to be creditworthy
by Fleet 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. 5 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 the Fund
at not less than the agreed upon repurchase price. If the seller defaulted on
its repurchase obligation, the Fund would suffer a loss to the extent that the
proceeds from a sale of the underlying securities (including accrued interest)
were less than the repurchase price (including accrued interest) under the
agreement. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action.

7
<PAGE> 10

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
Fleet to be of good standing and only when, in Fleet'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.

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

8
<PAGE> 11

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 (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 that the Fund may
borrow 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.

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, by
domestic banks or by U.S. branches of foreign banks that are subject to the same
regulation as domestic 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 borrowings, including reverse repurchase agreements, to not more than 10%
of the value of its total assets at time of such borrowings.

With respect to Investment Limitation No. 5 above, the Fund intends to
limit its investments in illiquid securities to not more than 10% of the value
of its net assets.

9
<PAGE> 12

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 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.
Except with respect to Investment Limitation No. 2 above, 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 1933 Act 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
Fund's 10% limitation on purchases of illiquid instruments, Rule 144A securities
will not be considered to be illiquid if Fleet 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 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), 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. 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.

10
<PAGE> 13

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Fund are sold on a continuous basis by Galaxy's distributor,
First Data Distributors, Inc. ("FD Distributors"), a wholly-owned subsidiary of
First Data Investor Services Group, Inc. FD Distributors is a registered
broker/dealer with principal offices located at 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans are
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. Each Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per share 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 FD Distributors 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 (in the case of
employer-sponsored defined contribution 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.

11
<PAGE> 14

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

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an 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 FD Distributors. Payment for redemption
orders received by FD Distributors 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.

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 respective Institutions.

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

12
<PAGE> 15

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 Statement of Additional Information contains the
names of and general background information concerning the Trustees.

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 at December 31, 1996 of $85 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, Government, U.S.
Treasury, Tax-Exempt, Connecticut Municipal Money Market, Massachusetts
Municipal Money Market, Equity Value, Equity Growth, Equity Income,
International Equity, Small Company Equity, Asset

13
<PAGE> 16

Allocation, Small Cap Value, Growth and Income, 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.

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 Bank or other subsidiaries of Fleet
Financial Group, Inc. in consideration for administrative and shareholder
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, 1996, Fleet received advisory fees (after fee waivers) at the
effective annual rate of 0.37% of the Fund's average daily net assets. In
addition to fee waivers during the fiscal year ended October 31, Fleet also
reimbursed the Fund for certain operating expenses; however, but Fleet does not
expect to continue such reimbursement in the current fiscal year.

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 such banking laws and regulations do not prohibit such a
bank holding company 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. Fleet, the
custodian and Institutions 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
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

First Data Investor Services Group, Inc. ("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.

14
<PAGE> 17

.075% of combined average daily net assets over $5 billion. Prior to September
5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Fund. For the fiscal year ended October 31, 1996, the Fund paid
FDISG administration fees at the effective annual rate of .085% 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 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 .75% of
the average daily net asset value of the Fund's outstanding Retail B Shares.
Currently, these payments are not made with respect to the Fund's Trust Shares.
In addition, shares of each series in the Fund bear differing transfer agency
expenses. Standardized yield 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. Retail B
Shares of the Money Market Fund acquired in an exchange of Retail B Shares of
another portfolio offered by Galaxy are subject to a maximum contingent deferred
sales charge of 5.0% and automatically convert to Retail A Shares six years
after the date of purchase of such exchanged Retail B Shares. Retail A and
Retail B Shares have certain exchange and other privileges which are not
available with respect to Trust Shares.

Each Share of Galaxy (irrespective of series designation) has a par value
of $.001, represents an equal proportionate interest in the related investment
portfolio 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
investment portfolio 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, 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.

15
<PAGE> 18

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 FD
Distributors; 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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 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 Bank 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, 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

16
<PAGE> 19

First Data Investor Services Group, Inc. ("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 5108, 4400 Computer Drive, Westboro, Massachusetts
01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their 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 fees; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 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. Yield data
will be calculated separately for Trust Shares, Retail A Shares and Retail B
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.

17
<PAGE> 20

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 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 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.

18
<PAGE> 21

GALAXY
MONEY MARKET
FUND

February 28, 1997

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

[GALAXY LOGO]

FN-270 15021 (3/97)
<PAGE> 22

TRUST

THE GALAXY FUND

GOVERNMENT FUND

PROSPECTUS

FEBRUARY 28, 1997
<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.................. 9
Redemption of Shares................ 9
DIVIDENDS AND DISTRIBUTIONS........... 10

<CAPTION>
PAGE
----
<S> <C>
TAXES................................. 10
Federal............................. 10
State and Local..................... 11
Miscellaneous....................... 11
MANAGEMENT OF THE FUND................ 11
Investment Adviser.................. 11
Authority to Act as Investment
Adviser.......................... 12
Administrator....................... 12
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 13
Shareholder Services Plan........... 13
Affiliate Agreement for Sub-Account
Services......................... 14
CUSTODIAN AND TRANSFER AGENT.......... 14
EXPENSES.............................. 14
PERFORMANCE AND YIELD INFORMATION..... 15
MISCELLANEOUS......................... 15
</TABLE>

================================================================================
<PAGE> 24

THE GALAXY FUND

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

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 primarily 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 FIS Securities Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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. ("Fleet") and
sponsored and distributed by First Data Distributors, Inc., which is
unaffiliated with Fleet and its parent, Fleet Financial Group, Inc. and
affiliates.

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 number 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.
------------------------------------

FEBRUARY 28, 1997
<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 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 investors 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 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 EXAMPLE 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

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 relating to the Fund for the fiscal year
ended October 31, 1996 (the "Annual Report"). Such financial highlights should
be read in conjunction with the financial statements contained in the Annual
Report 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 long-term
perspective of the Fund's financial history. More information about the
performance of the Fund is also contained in the Annual Report which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

3
<PAGE> 27

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

YEARS ENDED
OCTOBER 31,
------------------
1996 1995 YEARS ENDED OCTOBER 31,(1) PERIOD ENDED
-------- -------- -------------------------------------------------------------------- OCTOBER 31,
TRUST SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
------------------ -------- -------- -------- -------- -------- -------- -------- ------------
<S> <C> <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 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment
income(3,4)........... 0.05 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 0.05 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) (0.05) (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) (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return(6)........... 4.95% 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)................. $733,759 $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... 4.85% 5.27% 3.36% 2.79% 3.67% 6.05% 7.80% 8.59% 6.73% 6.38%(8)
Operating expenses
including
reimbursement/waiver... 0.52% 0.53% 0.54% 0.55% 0.53% 0.56% 0.56% 0.60% 0.60% 0.53%(8)
Operating expenses
excluding
reimbursement/waiver... 0.53% 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
Fleet and/or the Fund's 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
Fleet and/or the Fund's administrator for Trust Shares for the fiscal years
ended October 31, 1996 and 1995 were $0.05 and $0.05, respectively.
(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 Fleet 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 ("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 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 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.

5
<PAGE> 29

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

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

"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 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.

6
<PAGE> 30

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) it may purchase or hold debt
instruments in accordance with its investment objective and policies, (ii)
it 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.

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

7
<PAGE> 31

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.

With respect to Investment Limitation No. 5 above, the Fund intends to
limit its investments in illiquid securities to not more than 10% of the value
of its net assets.

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 funds. Subject to Investment Limitation No. 2 above, the Fund will
determine the effective maturity of its investments according to Rule 2a-7.
Except with respect to Investment Limitation No. 2 above, 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), 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. 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

8
<PAGE> 32

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contributions plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. Each Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 FD Distributors 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 (in the case of
employer-sponsored deferred contribution plans, their employer) for further
information concerning the types of eligible Customer accounts and the related
purchase and redemption procedures.

REDEMPTION OF SHARES

9
<PAGE> 33

to FD Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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 its earnings are distributed in
accordance with the Code.

10
<PAGE> 34

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.

STATE AND LOCAL

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

MISCELLANEOUS

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 at December 31, 1996 of $85 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, Money Market,
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, Small Cap Value,
Growth and Income, 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.

11
<PAGE> 35

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 Bank or other subsidiaries of Fleet
Financial Group, Inc. in consideration for administrative and shareholder
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, 1996, Fleet received advisory fees (after fee waivers) at the
effective annual rate of 0.39% of the Fund's average daily net assets. In
addition to fee waivers, during the fiscal year ended October 31, 1996, Fleet
also reimbursed the Fund for certain operating expenses; however, Fleet does not
expect to continue such reimbursement in the current fiscal year.

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

First Data Investor Services Group, Inc. ("FD"), located at 4400 Computer
Drive, Westboro, Massachusetts 01581-5108, serves as the Fund's administrator.
FD is a wholly-owned subsidiary of First Data Corporation.

FD generally assists the Fund in its administration and operation. FD also
serves as administrator to the other portfolios of Galaxy. Effective September
5, 1996, for the services provided to the Fund, FD is entitled to receive
administration fees, computed daily and paid monthly, at the annual rate of .09%
of the first $2.5 billion of 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 .075% of
combined average daily net assets over $5 billion. Prior to September 5, 1996,
FD was 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 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, FD also receives a separate annual fee from each Portfolio
for certain fund accounting services. From time to time, FD may waive
voluntarily all or a portion of the administration fee payable to it by the
Fund. For the fiscal year ended

12
<PAGE> 36

October 31, 1996, the Fund paid FD administration fees at the effective rate of
.085% 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 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 any sales charge and have
certain exchange and other privileges which are not available with respect to
Trust Shares.

Shareholders are entitled to one vote for each full Share held, and
fractional votes for 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 Series 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 FD
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
subaccounting; and providing periodic mailing

13
<PAGE> 37

to Customers. Such services are intended to supplement the services provided by
FD 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 to 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

FD has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank performs certain sub-account and administrative
functions ("Sub-Account Services") on a per account basis with respect to Trust
Shares of the Fund held by defined contribution plans, including: maintaining
records reflecting separately with respect to each plan participant's
sub-account all purchases and redemption of Trust Shares and the dollar value of
Trust Shares in each sub-account; crediting to each participant's sub-account
all dividends and distributions with respect to that sub-account; and
transmitting to each participant a periodic statement regarding the sub-account
as well as any proxy materials, reports and other material Fund communications.
Fleet Bank is compensated by FD for the Sub-Account Services and in connection
therewith the transfer agency fees payable by Trust Shares of the Fund to FD
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, 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.
("FD"), 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 FD should be directed to FD at P.O. Box 5108, 4400 Computer
Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FD 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 FD); Securities and Exchange Commission fees; state
securities 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; costs of independent pricing services;

14
<PAGE> 38

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.

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.

15
<PAGE> 39

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

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<PAGE> 41

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<PAGE> 42

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<PAGE> 43
GALAXY
GOVERNMENT
FUND

February 28, 1997

PROSPECTUS
Trust Shares

[logo]

FN-269 15020 (3/97)

<PAGE> 44

TRUST

THE GALAXY FUND

U.S. TREASURY FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 45

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

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
"When-Issued" Securities............ 6
INVESTMENT LIMITATIONS................ 6
PRICING OF SHARES..................... 7
HOW TO PURCHASE AND REDEEM SHARES..... 8
Distributor......................... 8
Purchase of Shares.................. 8
Redemption of Shares................ 9
DIVIDENDS AND DISTRIBUTIONS........... 9
TAXES................................. 10
Federal............................. 10

<CAPTION>
PAGE
-----
<S> <C>
State and Local..................... 10
Miscellaneous....................... 10
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> 46

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 primarily 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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, 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 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 number 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.
------------------------------------

FEBRUARY 28, 1997
<PAGE> 47

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>
U.S.
ANNUAL FUND OPERATING EXPENSES 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 investors 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 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 EXAMPLE 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> 48

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 relating to the Fund for the fiscal year
ended October 31, 1996 (the "Annual Report"). Such financial highlights should
be read in conjunction with the financial statements contained in the Annual
Report 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 which may be obtained
without charge by contacting Galaxy at its telephone number or address provided
above.

3
<PAGE> 49

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

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEARS ENDED PERIOD ENDED
------------------- OCTOBER 31,(1) OCTOBER 31,
1996 1995 1994 1993 1992 1991(1,2)
-------------------
TRUST SHARES ------------------------------- -----------
-------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations
Net investment income(3)............... 0.05 0.05 0.03 0.03 0.04 0.04
Net realized and unrealized gain (loss)
on investments....................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from Investment
Operations:.................... 0.05 0.05 0.03 0.03 0.04 0.04
-------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income... (0.05) (0.05) (0.03) (0.03) (0.04) (0.04)
Dividends from net realized capital
gains................................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Dividends:................. (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ========
Total Return(4).......................... 4.80% 5.18% 3.30% 2.75% 3.69% 4.51%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000s)......... $354,331 $271,036 $466,993 $447,960 $482,416 $ 170,177
Ratios to average net assets:
Net investment income including
reimbursement/waiver................. 4.69% 5.06% 3.24% 2.71% 3.51% 4.26%(6)
Operating expenses including
reimbursement/waiver................. 0.53% 0.55% 0.56% 0.55% 0.49% 0.27%(6)
Operating expenses excluding
reimbursement/waiver................. 0.53% 0.55% 0.56% 0.55% 0.55% 0.65%(6)
</TABLE>

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

(1) Prior to November 1, 1994, the Fund offered a simple series of shares. As
of such date, 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 Fleet and/or the
Fund's 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
contributions of $1 million from Fleet 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> 50

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.

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--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

5
<PAGE> 51

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.

"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 Funds 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
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 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.

6
<PAGE> 52

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.

5. Invest more than 10% of the value of the 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. 5 above, the Fund intends to
limit its investments in illiquid securities to not more than 10% of the value
of its net assets.

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 funds. Subject to Investment Limitation No. 2 above, the Fund will
determine the effective maturity of its investments according to Rule 2a-7.
Except with respect to Investment Limitation No. 2 above, the Fund may change
these operating policies to require 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), 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.

7
<PAGE> 53

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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. Each Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 FD Distributors 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.

8
<PAGE> 54

for further information concerning the types of eligible Customer accounts and
the related purchase and redemption procedures.

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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

9
<PAGE> 55

TAXES

FEDERAL

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.

10
<PAGE> 56

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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, 1996 of $85 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, Money Market,
Government, Tax-Exempt, Connecticut Municipal Money Market, Massachusetts
Municipal 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, High Quality
Bond, Corporate 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 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 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 Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and shareholder support services which they provide to beneficial shareholders.
For the fiscal year ended October 31, 1996, Fleet received advisory fees at the
effective annual rate of 0.40% of the Fund's average daily net assets. During
the fiscal year ended October 31, 1996, Fleet reimbursed the Fund for certain
operating expenses; however, Fleet does not expect to continue such
reimbursements in the current fiscal year.

AUTHORITY TO ACT AS INVESTMENT ADVISER

11
<PAGE> 57

any resulting change in the Funds' 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. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Fund. For the fiscal year ended October 31, 1996, the Fund paid
FDISG administration fees at the effective rate of .085% of its average daily
net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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.

12
<PAGE> 58

such dividends and distributions out of the income earned on the assets
belonging to such investment portfolio 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 FD Distributors; 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."

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank is compensated by FDISG for the Sub-Account Services and in
connection

13
<PAGE> 59

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, 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.
("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 First Data should be directed to First Data at P.O. Box 5108,
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 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; costs 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 reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leasing bank and thrift institutions
in the top five standard metropolitan statistical areas. 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 the "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.

14
<PAGE> 60

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 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 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.

15
<PAGE> 61

[This Page Intentionally Left Bank]
<PAGE> 62

[This Page Intentionally Left Bank]
<PAGE> 63

[This Page Intentionally Left Bank]
<PAGE> 64

GALAXY
U.S. TREASURY
FUND

February 28, 1997

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

[GALAXY LOGO]

FN-268 15015 (3/97)
<PAGE> 65

TRUST

THE GALAXY FUND

MONEY MARKET FUND

GOVERNMENT FUND

U.S. TREASURY FUND

TAX-EXEMPT FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 66

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

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 FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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
Variable and Floating Rate
Instruments...................... 13
Repurchase and Reverse Repurchase
Agreements....................... 14
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

<CAPTION>
PAGE
----
<S> <C>
INVESTMENT LIMITATIONS................ 16
PRICING OF SHARES..................... 18
HOW TO PURCHASE AND REDEEM SHARES..... 19
Distributor......................... 19
Purchase of Shares.................. 19
Redemption of Shares................ 20
DIVIDENDS AND DISTRIBUTIONS........... 20
TAXES................................. 21
Federal............................. 21
State and Local..................... 22
Miscellaneous....................... 22
MANAGEMENT OF THE FUNDS............... 22
Investment Adviser.................. 22
Authority to Act as Investment
Adviser.......................... 23
Administrator....................... 23
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 24
Shareholder Services Plan........... 25
Affiliate Agreement for Sub-Account
Services......................... 25
CUSTODIAN AND TRANSFER AGENT.......... 26
EXPENSES.............................. 26
PERFORMANCE AND YIELD INFORMATION..... 26
MISCELLANEOUS......................... 27
</TABLE>

================================================================================
<PAGE> 67

THE GALAXY FUND

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.

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.

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.
<PAGE> 68

This Prospectus describes Trust Shares in each Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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, Retail A Shares, in the Government, U.S.
Treasury and Tax-Exempt Funds, and two additional series of shares, Retail A
Shares and Retail B Shares, in the Money Market Fund. Retail A 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 FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Enterprises, 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. Retail B
Shares in the Money Market Fund are not offered for purchase and are available
only to the holders of Retail B Shares in Galaxy's Short-Term Bond, High Quality
Bond, Tax-Exempt Bond, Equity Value, Equity Growth, Small Company Equity, Asset
Allocations and Growth and Income Funds who wish to exchange their Retail B
Shares in such Funds for Retail B Shares in the Money Market Fund. Trust Shares,
Retail A Shares and Retail B Shares in a Fund represent equal pro rata interests
in the Fund, except they bear different expenses which reflect the difference in
the range of services provided to them. See "Financial Highlights," "Management
of the Funds" and "Description of Galaxy and Its Shares."

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

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 number 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.
------------------------------

FEBRUARY 28, 1997

2
<PAGE> 69

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- U.S. TAX-
ANNUAL FUND OPERATING EXPENSES MARKET MENT TREASURY EXEMPT
(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 investors 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 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 EXAMPLE 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> 70

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. The Money Market Fund also offers an additional
series of shares, Retail B Shares. This Prospectus describes the Trust Shares in
the Funds. Retail A Shares in the Funds and Retail B shares in the Money Market
Fund are offered under a separate prospectus. As described below under
"Description of Galaxy and Its Shares", Trust Shares, Retail A Shares and Retail
B 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, (ii) Retail B Shares
of the Money Market Fund bear the expenses incurred under Galaxy's Distribution
and Services Plan for Retail B Shares at an annual rate of up to .75% of the
average daily net asset value of the Money Market 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 relating to the Funds for the fiscal year
ended October 31, 1996 (the "Annual Report"). Such financial highlights should
be read in conjunction with the financial statements contained in the Annual
Report and incorporated by reference into the Statement of Additional
Information relating to the Funds. 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 which
may be obtained without charge by contacting Galaxy at its telephone number or
address provided above.

4
<PAGE> 71

MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31, PERIOD
------------------- ENDED
1996 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> <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 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
Investment
Operations:
Net
investment
income(3,4)... 0.05 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 0.05 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) (0.05) (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) (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return(6).... 5.00% 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)...... $924,222 $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
reimburse-
ment/waiver.. 4.89% 5.30% 3.38% 2.74% 3.74% 6.24% 7.82% 8.73% 6.92% 6.27%(8)
Operating
expenses
including
reimburse-
ment/waiver.. 0.55% 0.55% 0.64% 0.63% 0.58% 0.59% 0.59% 0.58% 0.59% 0.52%(8)
Operating
expenses
excluding
reimburse-
ment/waiver.. 0.58% 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 Fleet
and/or the Fund's 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 Fleet
and/or the Fund's administrator for Trust Shares for the years ended October
31, 1996 and 1995 were $0.05 and $0.05, respectively.
(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 Fleet 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> 72

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

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
-------------------
1996 1995 PERIOD ENDED
YEAR 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> <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 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
Investment
Operations:
Net investment
income(3,4).......... 0.05 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 0.05 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 (0.05) (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) (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return(6).............. 4.95% 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).............. $733,759 $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.. 4.85% 5.27% 3.36% 2.79% 3.67% 6.05% 7.80% 8.59% 6.73% 6.38%(8)
Operating
expenses
including
reimbursement/waiver.. 0.52% 0.53% 0.54% 0.55% 0.53% 0.56% 0.56% 0.60% 0.60% 0.53%(8)
Operating
expenses
excluding
reimbursement/waiver.. 0.53% 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 Fleet
and/or the Fund's administrator for the 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 before reimbursement/waiver of fees by Fleet
and/or the Fund's administrator for the Trust Shares for the fiscal years
ended October 31, 1996 and 1995 were $0.05 and $0.05, respectively.
(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 Fleet 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.

6
<PAGE> 73

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

<TABLE>
<CAPTION>
YEARS ENDED
OCTOBER 31,
-------------------
1996 1995 YEARS ENDED OCTOBER 31,(1) PERIOD ENDED
------------------- ------------------------------ OCTOBER 31,
TRUST SHARES 1994 1993 1992 1991(1,2)
------------------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(3)................ 0.05 0.05 0.03 0.03 0.04 0.04
Net realized and unrealized gain (loss)
on investments........................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from Investment
Operations:.................... 0.05 0.05 0.03 0.03 0.04 0.04
-------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income.... (0.05) (0.05) (0.03) (0.03) (0.04) (0.04)
Dividends from net realized capital
gains................................. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Dividends:................. (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ========
Total Return(4)........................... 4.80% 5.18% 3.30% 2.75% 3.69% 4.51%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $354,331 $271,036 $466,993 $447,960 $482,416 $170,177
Ratios to average net assets:
Net investment income including
reimbursement/waiver.................. 4.69% 5.06% 3.24% 2.71% 3.51% 4.26%(6)
Operating expenses including
reimbursement/waiver.................. 0.53% 0.55% 0.56% 0.55% 0.49% 0.27%(6)
Operating expenses excluding
reimbursement/waiver.................. 0.53% 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 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 Fleet and/or the
Fund's 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 Fleet 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> 74

TAX-EXEMPT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
-------------------
1996 1995
YEAR 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> <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).......... 0.03 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 0.03 0.02 0.02 0.03 0.04 0.05 0.06 0.02
-------- -------- -------- -------- -------- -------- -------- -------- -------
Less Dividends:
Dividends from net
investment income.... (0.03) (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.02)
Dividends from net
realized capital
gains................ -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------
Total Dividends:... (0.03) (0.03) (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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== =======
Total Return............. 2.97% 3.29% 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)....... $184,307 $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.............. 2.92% 3.24% 2.12% 1.92% 2.64% 4.37% 5.37% 5.82% 5.42%(6)
Operating expenses including
reimbursement/waiver... 0.54% 0.55% 0.58% 0.59% 0.57% 0.60% 0.60% 0.58% 0.32%(6)
Operating expenses excluding
reimbursement/waiver... 0.54% 0.56% 0.58% 0.59% 0.57% 0.60% 0.61% 0.61% 0.72%(6)
</TABLE>

8
<PAGE> 75

INVESTMENT OBJECTIVES AND POLICIES

IN GENERAL

Fleet Investment Advisors Inc., the Funds' investment adviser ("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 the only Rating Agency that has
issued a rating with respect to such security or issuer 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 with respect to such security 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 Fleet 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 with financial institutions such as
banks and broker/dealers. These instruments have remaining maturities of one

9
<PAGE> 76

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

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 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."

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.

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 net 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 Fleet,

10
<PAGE> 77

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 net 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 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 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.

11
<PAGE> 78

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.

Commercial paper may include securities issued by corporations without
registration under the Securities Act of 1933, as amended, (the "1933 Act") in
reliance on the so-called "private placement" exemption in Section 4(2)
("Section 4(2) Paper"). Section 4(2) Paper is restricted as to disposition under
the federal securities laws in that any resale must similarly be made in an
exempt transaction. Section 4(2) Paper is normally resold to other institutional
investors through or with the assistance of investment dealers which make a
market in Section 4(2) Paper, thus providing 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.

12
<PAGE> 79

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.

Municipal Securities purchased by the Tax-Exempt Fund in some cases may be
insured as to the timely payment of principal and interest. There is no
guarantee, however, that the insurer will meet its obligations in the event of a
default in payment by the issuer. In other cases, Municipal Securities may be
backed by letters of credit or guarantees issued by domestic or foreign banks or
other financial institutions which are not subject to federal deposit insurance.
Adverse developments affecting the banking industry generally or a particular
bank or financial institution that has provided its credit a guarantee with
respect to a Municipal Security held by the Tax-Exempt Fund, including a change
in the credit quality of any such bank or financial institution, could result in
a loss to the Fund and adversely effect the value of its Shares. As described
above under "Money Market Instruments," letters of credit and guarantees issued
by foreign banks and financial institutions involve certain risks in addition to
those similar instruments issued by domestic banks and financial institutions.

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.
Fleet 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.

VARIABLE AND FLOATING RATE INSTRUMENTS

13
<PAGE> 80

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. Substantial holdings of variable and floating
rate instruments could reduce portfolio liquidity.

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 Fleet 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 Fleet to be of good standing and only
when, in Fleet'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

14
<PAGE> 81

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--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, 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) 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
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

15
<PAGE> 82

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 Fleet 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.

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.

In addition, the Tax-Exempt Fund may not:

4. Borrow money or issue senior securities, except that each Fund may
borrow 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

16
<PAGE> 83

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 that each Fund may
borrow 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 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 its 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 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 Money Market, Government and
U.S. Treasury Funds 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, with respect to the Money Market Fund, by domestic
banks or by U.S. branches of foreign banks that are subject to the same
regulation as domestic banks; (b) with respect to the Money Market Fund,
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) with respect to the Money Market Fund,
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.

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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.

With respect to Investment Limitations No. 5 and 8 above, each Fund intends
to limit its investments in illiquid securities to not more than 10% of the
value of its net assets.

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 relating to the Funds 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 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. Except with
respect to Investment Limitation No. 2 above, a Fund may change these operating
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 1933 Act 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
Funds' 10% limitation on purchases of illiquid instruments, Rule 144A securities
will not be considered to be illiquid if Fleet 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), 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.

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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. 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,
First Data Distributors, Inc. ("FD Distributors"), a wholly-owned subsidiary of
First Data Investor Services Group, Inc. FD Distributors is a registered
broker/dealer with principal offices located at 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily 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 (such institutions and plans are referred to herein
collectively as "Institutions"). Trust Shares sold to such investors
("Customers") will be held of record by Institutions. The Institution is
responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 FD Distributors 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.

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<PAGE> 86

should contact their Institution (in the case of employer-sponsored defined
contribution plans, their employer) for further information concerning the types
of eligible Customer accounts and the related purchase and redemption
procedures.

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

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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.

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<PAGE> 87

The crediting and payment of dividends to Customers will be in accordance with
the procedures governing such Customer's accounts at their respective
Institutions.

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.

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.

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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

MANAGEMENT OF THE FUNDS

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

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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, 1996 of $85 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, Small Cap Value, Growth and Income, 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.

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<PAGE> 89

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 Bank
or other subsidiaries of Fleet Financial Group, Inc. in consideration for
administrative and shareholder 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, 1996, Fleet received advisory fees (after fee
waivers) at the effective annual rates of .37%, .39%, .40%, and .40% of the
average daily net assets of the Money Market Fund, Government Fund, Tax-Exempt
Fund and U.S. Treasury Fund, respectively. In addition to fee waivers, during
the fiscal year ended October 31, 1996, Fleet also reimbursed the Funds for
certain operating expenses; however, Fleet does not expect to continue such
reimbursements in the current fiscal year.

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 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

First Data Investor Services Group, Inc. ("FDISG"), located at 4400
Computer Drive, Westboro, Massachusetts 01581-5108, serves as the Funds'
administrator. FDISG is a wholly-owned subsidiary of First Data Corporation.

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<PAGE> 90

of .09% of the first $2.5 billion of 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, the Money
Market, Government, Tax-Exempt and U.S. Treasury Funds paid FDISG administration
fees at the effective annual rate of .085% 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 Money Market 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 of up to .75% of the
average daily net asset value of such 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 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. Retail B
Shares of the Money Market Fund acquired in an exchange of Retail B Shares of
the CDSC Funds are subject to a maximum contingent deferred sales charge of 5.0%
and automatically convert to Retail A Shares six years after the date of
purchase of such exchanged Retail B Shares. Retail A and Retail B Shares have
certain exchange and other privileges which are not available with respect to
Trust Shares.

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such dividends and distributions out of the income earned on the assets
belonging to such investment portfolio 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 FD Distributors; 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 subaccounting; 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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank is compensated by FDISG for

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<PAGE> 92

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, 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.
("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 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their 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 fees; costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 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

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(R), 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. Yield data will be calculated separately for
Trust Shares, Retail A Shares and/or Retail B Shares of the Funds.

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<PAGE> 93

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.

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.

27
<PAGE> 94

[This Page Intentionally Left Bank]
<PAGE> 95

[This Page Intentionally Left Bank]
<PAGE> 96

[This Page Intentionally Left Bank]
<PAGE> 97
GALAXY FUNDS

MONEY MARKET FUND

GOVERNMENT FUND

U.S. TREASURY FUND

TAX-EXEMPT FUND

[LOGO]

FN-061 15041 (3/97) February 28, 1997
<PAGE> 98

THE GALAXY FUND

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

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus relates to 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 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 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
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's portfolio securities
will generally have remaining maturities of not more than thirteen months. 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
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's portfolio securities will generally have remaining
maturities of not more than thirteen months. The Fund is a non-diversified
investment portfolio under the 1940 Act.

THE CONNECTICUT MUNICIPAL MONEY MARKET FUND AND THE MASSACHUSETTS MUNICIPAL
MONEY MARKET FUND ARE CONCENTRATED IN SECURITIES ISSUED BY, OR ENTITIES WITHIN,
THE STATE OF CONNECTICUT AND THE COMMONWEALTH OF MASSACHUSETTS, RESPECTIVELY,
AND EACH SUCH FUND MAY INVEST A SIGNIFICANT PERCENTAGE OF ITS ASSETS IN A SINGLE
ISSUER. THEREFORE, INVESTMENT IN THESE FUNDS MAY BE RISKIER THAN AN INVESTMENT
IN OTHER TYPES OF MONEY MARKET FUNDS.

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 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.

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 FOR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE> 99

This Prospectus describes (i) Retail A Shares in the Money Market,
Government, U.S. Treasury and Tax-Exempt Funds, (ii) Retail B Shares in the
Money Market Fund, and (iii) Shares in the Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds (which presently issue only one
series of shares). Such Retail A Shares, Retail B Shares and Shares are referred
to herein collectively as "Retail Shares." Retail Shares (other than Retail B
Shares in the Money Market Fund) are offered to customers ("Customers") of FIS
Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities, Inc.,
Fleet Enterprises, Inc., Fleet Financial Group, Inc., its affiliates, their
correspondent banks, and other qualified banks, savings and loan associations
and broker/dealers ("Institutions"). Retail Shares (other than Retail B Shares
in the Money Market Fund) 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"). Retail B Shares in the Money Market Fund are not offered for
purchase and are available only to the holders of Retail B Shares in Galaxy's
Short-Term Bond, High Quality Bond, Tax-Exempt Bond, Equity Value, Equity
Growth, Small Company Equity, Asset Allocation, and Growth and Income Funds (the
"CDSC Funds") who wish to exchange their Retail B Shares in such CDSC Funds for
Retail B Shares in the Money Market Fund. Retail B Shares bear distribution fees
and are assessed a contingent deferred sales charge ("CDSC") upon redemption.

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, Retail B Shares and Trust Shares in a Fund
represent equal pro rata interests in the Fund, except that they bear different
expenses and charges. 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 First Data Distributors, Inc., which is
unaffiliated with Fleet Investment Advisors Inc. and its parent, Fleet Financial
Group, Inc., and affiliates.

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 number 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.

FEBRUARY 28, 1997
<PAGE> 100

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,
GOVERNMENT FUND, U.S. TREASURY FUND, TAX-EXEMPT FUND, CONNECTICUT MUNICIPAL
MONEY MARKET FUND and 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,
SMALL CAP VALUE, GROWTH AND INCOME, 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 may be obtained by calling 1-800-628-0414.

Q: Who advises the Funds?

A: The Funds are advised by Fleet Investment Advisors Inc. ("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,
1996 of approximately $85 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 First Data Distributors, Inc. Retail Shares
(other than Retail B Shares in the Money Market Fund) may be purchased on behalf
of customers ("Customers") of FIS Securities, Inc., Fleet Brokerage Securities,
Inc., Fleet Securities, Inc., Fleet Enterprises, Inc., Fleet Financial Group,
Inc., its affiliates, their correspondent banks and other qualified banks,
savings and loan associations and broker/dealers ("Institutions"). Retail Shares
(other than Retail B Shares in the Money Market Fund) 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"). Retail B Shares in the Money Market Fund are not
offered for purchase and are available only to holders of Retail B Shares in
certain of Galaxy's portfolios who wish to exchange their Retail B Shares in
such portfolios for Retail B Shares in the Money Market Fund. Retail B Shares
carry higher operating expenses than other Retail Shares, and are subject to a
contingent deferred sales charge. Six years after the date of purchase of the
exchanged Retail B Shares, Retail B Shares of the Money Market Fund will
automatically convert to Retail A Shares. 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: Dividends from net investment income of each Fund are 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 A Shares of the Money Market, Government,
Tax-Exempt and U.S. Treasury Funds and Shares of the Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds having a value of at least
$100 for Retail A Shares of any other portfolio offered by Galaxy or otherwise
advised by Fleet or its affiliates

1
<PAGE> 101

in which the investor has an existing account. Retail B Shares of the Money
Market Fund may be exchanged for Retail B Shares of any other Galaxy portfolio
which offers Retail B Shares. 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, Inc. 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."

2
<PAGE> 102

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>
MONEY MONEY GOVERN- U.S. TAX- CONNECTICUT MASSACHUSETTS
MARKET MARKET MENT TREASURY EXEMPT MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND MONEY MARKET MONEY MARKET
(RETAIL A (RETAIL B (RETAIL A (RETAIL A (RETAIL A FUND FUND
SHARES) SHARES) SHARES) SHARES) SHARES (SHARES) (SHARES)
--------- --------- --------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
- ----------------------------------------
Maximum Front-End Sales Charge Imposed
on Purchases (as a percentage of
offering price)....................... None None None None None None None
Maximum Deferred Sales Charge (as a
percentage of offering price)......... None 5.00%(1) None None None None None
Sales Charges Imposed on Reinvested
Dividends............................. None None None None None None None
Redemption Fees(2)...................... 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........................... .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees.............................. None .75%(3) None None None None None
Other Expenses (After Fee Waivers and
Expense Reimbursements)............... .39% .29% .36% .31% .28% .22% .22%
Total Fund Operating Expenses (After Fee
Waivers and Expense Reimbursements)... .79% 1.44% .76% .71% .68% .62% .62%
</TABLE>

- ----------------------------------
(1) This amount applies to redemptions of Retail B Shares of the Money Market
Fund received in an exchange transaction for Retail B Shares of a CDSC Fund
during the first year after purchase of such Retail B Shares of a CDSC Fund.
The charge decreases to 4.00%, 3.00%, 2.00% and 1.00% for redemptions made
during the second through sixth years, respectively, after purchase of such
Retail B Shares of a CDSC Fund.
(2) Direct Investors are charged a $5.00 fee if redemption proceeds are paid by
wire.
(3) 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>
Money Market Fund (Retail A Shares)..................................... $ 8 $25 $43 $ 96
Money Market Fund (Retail B Shares)
Assuming complete redemption at end of period(1)...................... $ 64 $76 $97 $136(2)
Assuming no redemption................................................ $ 14 $46 $77 $136(2)
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>

- ----------------------------------
(1) Assumes the deduction of the maximum applicable contingent deferred sales
charge upon the redemption of Retail B Shares of the Money Market Fund
received in an exchange transaction for Retail B Shares in a CDSC Fund. See
"Description of Galaxy and Its Shares."
(2) Based on the conversion of Retail B Shares to Retail A Shares after six
years (applies to Retail B Shares received in an exchange transaction for
Retail B Shares of a CDSC Fund). See "How to Purchase and Redeem
Shares--Purchase of Shares."

3
<PAGE> 103

The Expense Summary and Example are intended to assist investors 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 with respect to Retail A Shares of the Money Market, Government, U.S.
Treasury and Tax-Exempt Funds and Shares of the Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds 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. The information contained in the Expense Summary and Example with
respect to Retail B Shares of the Money Market Fund is based on expenses the
Fund expects to incur during the current fiscal year with respect to such
Shares. Without voluntary fee waivers and/or expense reimbursements by Fleet,
Other Expenses would be .29%, .32% and .43% and Total Fund Operating Expenses
would be .69%, .72% and .83% for Retail A Shares/Shares of the Tax-Exempt Fund,
Connecticut Municipal Money Market Fund and Massachusetts Municipal Money Market
Fund, respectively, and Other Expenses would be .54% and Total Fund Operating
Expenses would be 1.69% for Retail B Shares of the Money Market Fund. 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 respective 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 EXAMPLE 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> 104

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 and the Retail B Shares of the Money Market Fund. Trust
Shares in these Funds are offered under a separate prospectus. Retail A Shares,
Retail B 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, (ii)
Retail B Shares of the Money Market Fund are subject to a contingent deferred
sales charge and bear the expenses incurred under Galaxy's Distribution and
Services Plan at an annual rate of up to .75% of the average daily net asset
value of such Fund's outstanding Retail B Shares, and (iii) Retail A Shares,
Retail B 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 relating to the Funds for the fiscal year ended
October 31, 1996 (the "Annual Report"). Such financial highlights should be read
in conjunction with the financial statements contained in the Annual Report and
incorporated by reference into the Statement of Additional Information relating
to these Funds. During the periods shown, Retail B Shares were not offered by
the Money Market Fund. More information about the performance of each of these
Funds is also contained in the Annual Report, which may be obtained without
charge by contacting Galaxy at its telephone number or address provided above.

5
<PAGE> 105

MONEY MARKET FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,(1)
---------------------------------------------------------------------------------------
1996 1995
---------- --------
RETAIL A RETAIL
SHARES SHARES 1994 1993 1992 1991 1990 1989
---------- -------- -------- -------- -------- -------- -------- --------
<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).......... 0.05 0.05 0.03 0.03 0.04 0.06 0.08 0.09
Net realized and unrealized gain
(loss) on investments............. -- -- -- -- -- -- -- --
---------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations:................... 0.05 0.05 0.03 0.03 0.04 0.06 0.08 0.09
---------- -------- -------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income.. (0.05) (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09)
Dividends from net realized capital
gains(5)............................ -- -- -- -- -- -- -- --
---------- -------- -------- -------- -------- -------- -------- --------
Total Dividends:................ (0.05) (0.05) (0.03) (0.03) (0.04) (0.06) (0.08) (0.09)
---------- -------- -------- -------- -------- -------- -------- --------
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(6)......................... 4.78% 5.23% 3.35% 2.78% 4.07% 6.40% 8.11% 9.09%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $1,159,312 $580,762 $797,399 $577,558 $590,911 $415,541 $444,303 $410,121
Ratios to average net assets:
Net investment income including
reimbursement/waiver................ 4.67% 5.12% 3.38% 2.74% 3.74% 6.24% 7.82% 8.73%
Operating expenses including
reimbursement/waiver................ 0.77% 0.74% 0.64% 0.63% 0.58% 0.59% 0.59% 0.58%
Operating expenses excluding
reimbursement/waiver................ 0.80% 0.76% 0.64% 0.63% 0.58% 0.59% 0.59% 0.59%

PERIOD
ENDED
OCTOBER 31,
1988 1987(1,2)
-------- -----------
<S> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.00 $ 1.00
-------- --------
Income from Investment Operations:
Net investment income(3,4).......... 0.07 0.06
Net realized and unrealized gain
(loss) on investments............. -- --
-------- --------
Total from Investment
Operations:................... 0.07 0.06
-------- --------
Less Dividends:
Dividends from net investment income.. (0.07) (0.06)
Dividends from net realized capital
gains(5)............................ -- --
-------- --------
Total Dividends:................ (0.07) (0.06)
-------- --------
Net increase (decrease) in net asset
value................................. -- --
-------- --------
Net Asset Value, End of Period.......... $ 1.00 $ 1.00
======== ========
Total Return(6)......................... 7.08% 6.09%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $210,712 $ 192,400
Ratios to average net assets:
Net investment income including
reimbursement/waiver................ 6.92% 6.27%(8)
Operating expenses including
reimbursement/waiver................ 0.59% 0.52%(8)
Operating expenses excluding
reimbursement/waiver................ 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 Fleet
and/or the Fund's administrator for the fiscal 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 Fleet and/or the Fund's administrator for
the fiscal years ended October 31, 1996 and 1995 were $0.05 and $0.05,
respectively.
(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 Fleet 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.

6
<PAGE> 106

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,(1)
------------------------------------------------------------------------------------------------
1996 1995 PERIOD
-------- -------- ENDED
RETAIL A RETAIL OCTOBER 31,
SHARES SHARES 1994 1993 1992 1991 1990 1989 1988 1987(1,2)
-------- -------- -------- -------- -------- -------- -------- -------- -------- -----------
<S> <C> <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 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
Investment
Operations:
Net investment
income(3,4)... 0.05 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 0.05 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) (0.05) (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) (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return(6)...... 4.72% 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)........ $326,411 $320,795 $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.............4.62% 5.11% 3.36% 2.79% 3.67% 6.05% 7.80% 8.59% 6.73% 6.38%(8)
Operating
expenses
including
reimbursement/
waiver...............0.75% 0.73% 0.54% 0.55% 0.53% 0.56% 0.56% 0.60% 0.60% 0.53%(8)
Operating
expenses
excluding
reimbursement/
waiver...............0.76% 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 Fleet
and/or the Fund's 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 Fleet and/or the Fund's administrator for
the fiscal years ended October 31, 1996 and 1995 were $0.05 and $0.05,
respectively.
(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 Fleet 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.

7
<PAGE> 107

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,(1)
------------------------------------------------------------
1996 1995
-------- -------- PERIOD ENDED
RETAIL A RETAIL OCTOBER 31,
SHARES SHARES 1994 1993 1992 1991(1,2)
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(3)........................ 0.05 0.05 0.03 0.03 0.04 0.04
Net realized and unrealized gain (loss) on
investments................................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from Investment Operations:........ 0.05 0.05 0.03 0.03 0.04 0.04
-------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income............ (0.05) (0.05) (0.03) (0.03) (0.04) (0.04)
Dividends from net realized capital gains....... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Dividends:......................... (0.05) (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 $ 1.00
======== ======== ======== ======== ======== ========
Total Return(4)................................... 4.63% 4.99% 3.30% 2.75% 3.69% 4.51%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $443,230 $318,621 $466,993 $447,960 $482,416 $170,177
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......................... 4.53% 4.90% 3.24% 2.71% 3.51% 4.26%(6)
Operating expenses including
reimbursement/waiver.......................... 0.69% 0.73% 0.56% 0.55% 0.49% 0.27%(6)
Operating expenses excluding
reimbursement/waiver.......................... 0.69% 0.73% 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 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 Fleet and/or the
Fund's administrator for the fiscal 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 Fleet 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.

8
<PAGE> 108

TAX-EXEMPT FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,(1)
--------------------------------------------------------------------------------------------
1996 1995 PERIOD
-------- -------- ENDED
RETAIL A RETAIL OCTOBER 31,
SHARES SHARES 1994 1993 1992 1991 1990 1989 1988(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)...... 0.03 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 0.03 0.02 0.02 0.03 0.04 0.05 0.06 0.02
------- ------- ------- ------- ------- ------- ------- ------- ------
Less Dividends:
Dividends from net
investment
income........... (0.03) (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.02)
Dividends from net
realized capital
gains............ -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------
Total
Dividends:... (0.03) (0.03) (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 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======
Total Return......... 2.82% 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).... $117,548 $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......... 2.78% 3.12% 2.12% 1.92% 2.64% 4.37% 5.37% 5.82% 5.42%(6)
Operating
expenses
including
reimbursement/
waiver......... 0.68% 0.68% 0.58% 0.59% 0.57% 0.60% 0.60% 0.58% 0.32%(6)
Operating
expenses
excluding
reimbursement/
waiver......... 0.69% 0.71% 0.58% 0.59% 0.57% 0.60% 0.61% 0.61% 0.72%(6)
</TABLE>

9
<PAGE> 109

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, the 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 (i) the investment results of the Shares of the Connecticut Municipal
Money Market and Massachusetts Municipal Money Market Funds for the fiscal year
ended October 31, 1996 and (ii) 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 about the Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds for the
fiscal year ended October 31, 1996 has been audited by Coopers & Lybrand L.L.P.,
Galaxy's independent accountants, whose report is contained in Galaxy's Annual
Report to Shareholders relating to the Funds dated October 31, 1996 (the "Annual
Report"). The information about the Predecessor Connecticut Municipal Money
Market and Predecessor 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 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 (the
"Shawmut Annual Report"). The financial highlights should be read in conjunction
with the financial statements and notes thereto contained in the Annual Report
and the Shawmut Annual Report and incorporated by reference into the Statement
of Additional Information relating to the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds. More information about the
performance of the Funds is contained in the Annual Report which may be obtained
without charge by contacting Galaxy at its telephone number or address provided
above.

10
<PAGE> 110

CONNECTICUT MUNICIPAL MONEY MARKET FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996(2) 1995 1994 1993(1)
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------
Income from Investment Operations
Net investment income(3,4,5)........................ 0.03 0.03 0.02 --
Net realized and unrealized gain (loss) on
investments...................................... -- -- -- --
-------- ------- ------- ------
Total from Investment Operations:(3)........ 0.03 0.03 0.02 --
-------- ------- ------- ------
Less Dividends:
Dividends from net investment income(3)............. (0.03) (0.03) (0.02) --
Dividends from net realized gains................... -- -- -- --
-------- ------- ------- ------
Total Dividends:(3)......................... (0.03) (0.03) (0.02) --
-------- ------- ------- ------
Net increase (decrease) in net asset value............ -- -- -- --
-------- ------- ------- ------
Net Asset Value, End of Period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======
Total Return(6)....................................... 2.83% 2.94% 1.83% 0.14%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $ 110,544 $71,472 $80,663 $6,582
Ratios to average net assets:
Net investment income including
reimbursement/waiver............................. 2.79% 2.88% 1.99% 2.12%(8)
Operating expenses including reimbursement/waiver... 0.64% 0.82% 0.78% 0.36%(8)
Operating expenses excluding reimbursement/waiver... 0.73% 1.29% 1.50% 5.82%(8)
</TABLE>

- ----------------------------------
(1) The Fund commenced operations on October 4, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of Galaxy with a single series of shares. Prior to the reorganization, the
Predecessor Fund offered and sold two series of shares, Investment Shares
and Trust Shares. In connection with the reorganization, the shareholders of
the Predecessor Fund exchanged shares of each series for Shares in the Fund.
(3) Represents less than $0.01 per share for year 1993.
(4) Net investment income per share before reimbursement/waiver of fees by Fleet
and/or other parties for the fiscal year ended October 31, 1996 was $0.03.
(5) Net investment income per share before reimbursement/waiver of fees by other
parties for the fiscal years ended October 31, 1995 and 1994 and the period
ended October 31, 1993 were $0.03, $0.01 and $0.00, respectively,
(unaudited).
(6) Calculation does not include sales charge for Investment Shares of the
Predecessor Fund.
(7) Not Annualized.
(8) Annualized.

11
<PAGE> 111

MASSACHUSETTS MUNICIPAL MONEY MARKET FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996(3) 1995(2) 1994(2) 1993(1,2)
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------
Income from Investment Operations
Net investment income(4,5,6)........................ 0.03 0.03 0.02 --
Net realized gain and unrealized (loss) on
investments...................................... -- -- -- --
------- ------- ------- ------
Total from Investment Operations:(4)........ 0.03 0.03 0.02 --
------- ------- ------- ------
Less Dividends:
Dividends from net investment income(4)............. (0.03) (0.03) (0.02) --
Dividends from net realized gains................... -- -- -- --
------- ------- ------- ------
Total Dividends:(4)......................... (0.03) (0.03) (0.02) --
------- ------- ------- ------
Net increase (decrease) in net asset value............ -- -- -- --
------- ------- ------- ------
Net Asset Value, End of Period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======
Total Return.......................................... 2.83% 3.21% 1.99% 0.12%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $47,066 $40,326 $31,516 $1,237
Ratios to average net assets:
Net investment income including
reimbursement/waiver............................. 2.78% 3.16% 2.00% 2.75%(8)
Operating expenses including reimbursement/waiver... 0.62% 0.57% 0.53% 0.11%(8)
Operating expenses excluding reimbursement/waiver... 0.83% 1.06% 1.21% 35.42%(8)
</TABLE>

- ----------------------------------
(1) The Fund commenced operations on October 5, 1993 as a separate investment
portfolio (the "Predecessor Fund) of The Shawmut Funds.
(2) The Predecessor Fund sold its shares without class designation.
(3) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of Galaxy. Prior to the reorganization, the Predecessor Fund offered and
sold one series of shares. In connection with the reorganization, the
shareholders of the Predecessor Fund exchanged shares for Shares in the
Fund.
(4) Represents less than $0.01 per share for year 1993.
(5) Net investment income per share before reimbursement/waiver of fees by Fleet
and/or other parties for the fiscal year ended October 31, 1996 was $0.03
(6) Net investment income per share before reimbursement/waiver of fees by other
parties for the fiscal years ended October 31, 1995 and 1994 and period
ended October 31, 1993 were $0.03, $0.01 and ($0.01), respectively,
(unaudited).
(7) Not Annualized.
(8) Annualized.

12
<PAGE> 112

INVESTMENT OBJECTIVES AND POLICIES

IN GENERAL

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
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 the only Rating Agency that has
issued a rating with respect to such security or issuer 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 with respect to such security 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, Fleet 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, Fleet
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. Fleet also considers other
relevant information in its evaluation of unrated short-term securities.

MONEY MARKET FUND

GOVERNMENT FUND

13
<PAGE> 113

U.S. TREASURY FUND

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.

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

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 net 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 Fleet's opinion, 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.

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, its political subdivisions, or public instrumentalities, state or
local authorities, districts or similar public entities created under
Connecticut law, and obligations of territories and possessions of the United
States 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 both 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

14
<PAGE> 114

(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 Fleet 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 subdivision, 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 Fleet 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

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 10
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. Some U.S. Government obligations may be issued
as variable or floating rate instruments.

15
<PAGE> 115

MONEY MARKET INSTRUMENTS

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

Commercial paper may include securities issued by corporations without
registration under the Securities Act of 1933, as amended, (the "1933 Act") in
reliance on the so-called "private placement" exemption in Section 4(2)
("Section 4(2) Paper"). Section 4(2) Paper is restricted as to disposition under
the federal securities laws in that any resale must similarly be made in an
exempt transaction. Section 4(2) Paper is normally resold to other institutional
investors through or with the assistance of investment dealers which make a
market in Section 4(2) Paper, thus providing liquidity. The Money Market and
each Tax-Exempt Money Market Fund may also purchase Rule 144A securities. See
"Investment Limitations" below.

MUNICIPAL SECURITIES

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 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

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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.

Municipal Securities purchased by the Tax-Exempt Money Market Funds in some
cases may be insured as to the timely payment of principal and interest. There
is no guarantee, however, that the insurer will meet its obligations in the
event of a default in payment by the issuer. In other cases, Municipal
Securities may be backed by letters of credit or guarantees issued by domestic
or foreign banks or other financial institutions which are not subject to
federal deposit insurance. Adverse developments affecting the banking industry
generally or a particular bank or financial institution that has provided its
credit or guarantee with respect to a Municipal Security held by a Tax-Exempt
Money Market Fund, including a change in the credit quality of any such bank or
financial institution, could result in a loss to the Fund and adversely affect
the value of its shares. As described above under "Money Market Instruments,"
letters of credit and guarantees issued by foreign banks and financial
institutions involve certain risks in addition to those of similar instruments
issued by domestic banks and financial institutions.

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.
Fleet 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.

VARIABLE AND FLOATING RATE INSTRUMENTS

Securities purchased by the Funds 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. 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.

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 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

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conditions, subject to such Fund's 20% overall limit on taxable obligations.

SECURITIES LENDING--MONEY MARKET AND GOVERNMENT FUNDS

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.

ASSET-BACKED SECURITIES--MONEY MARKET FUND

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.

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

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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 Fleet 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 issuers or guarantors 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.

The State of Connecticut and various of its municipalities are challenged
by financial difficulties. For the four fiscal years ended June 30, 1991, the
General Fund experienced operating deficits but, for the five fiscal years ended
June 30, 1996, the General Fund recorded operation surpluses. During the same
period, the State's budgeted expenditures more than doubled from approximately
$4,300,000,000 for the 1986-87 fiscal year to approximately $9,200,000,000 the
1996-97 fiscal year. In 1991, legislation was enacted by the State authorizing
the State Treasurer to issue Economic Recovery Notes to fund the General Fund's
accumulated deficit. The notes were to be payable no later than June 30, 1996,
but payment of the remaining notes scheduled to occur during the 1995-96 fiscal
year was rescheduled to be made over the four fiscal years ending June 30, 1999.
As a result of 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

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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 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.

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:

In addition, the Tax-Exempt Fund may not:

4. Borrow money or issue senior securities, except that the Fund may
borrow 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.

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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:

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.

In addition to the foregoing limitations, (a) the Money Market, Government
and U.S. Treasury Funds 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 (i) there is no
limitation with respect to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or, with respect to the Money
Market Fund by domestic banks or by U.S. branches of foreign banks that are
subject to the same regulation as domestic banks; (ii) with respect to the Money
Market Fund, 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 (iii) with respect to the Money
Market Fund, 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); and (b) the Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds 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 there is no limitation with respect to obligations 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.

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 Limitations No. 5 and 8 above, each of the Money
Market, Government, U.S. Treasury and Tax-Exempt Funds intends to limit its
investments in illiquid securities to not more than 10% of the value of its net
assets.

If a percentage limitation is satisfied at the time of investment, a later
increase in such percentage resulting from a

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<PAGE> 121

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 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 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. Except with
respect to Investment Limitation No. 2 above, 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 1933 Act 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 Fleet 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 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 a Fund's 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,
First Data Distributors, Inc. ("FD Distributors"), a wholly-owned subsidiary of
First Data Investor Services Group, Inc. FD Distributors is a registered broker/
dealer with principal offices located at 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

PURCHASE OF SHARES

FD Distributors has established several procedures to enable different
types of investors to purchase Retail Shares of the Funds. Retail Shares (other
than Retail B Shares of the Money Market Fund) may be purchased by FIS
Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities, Inc.,
Fleet Enterprises, 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").
Retail Shares (other than Retail B Shares of the Money Market 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 may take place only on days
on which FD Distributors, 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 FD Distributors on a Business Day in accordance with
FD Distributors' procedures.

Retail B Shares of the Money Market Fund are not offered for purchase and
are available only to the holders of Retail B Shares of certain of Galaxy's
portfolios who wish to exchange

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their Retail B Shares of such Funds for Retail B Shares of the Money Market
Fund. See "Investor Programs--Exchange Privilege." Six years after the date of
purchase of the exchanged Retail B Shares, Retail B Shares of the Money Market
Fund will automatically convert to Retail A Shares. The purpose of the
conversion is to relieve the holders of Retail B Shares of the higher operating
expenses charged to Retail B Shares. The conversion from Retail B Shares to
Retail A Shares will take place at the net asset value of each series of Shares
at the time of the conversion. Upon such conversion, an investor would hold
Retail A Shares subject to the operating expenses for Retail A Shares discussed
below. Upon each conversion of Retail B Shares that were not acquired through
reinvestment of dividends or distributions, a proportionate amount of Retail B
Shares that were acquired through reinvestment of dividends or distributions
will likewise automatically convert to Retail A Shares.

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 FD Distributors and for wiring required funds in
payment to Galaxy's custodian on a timely basis. FD Distributors 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 particular 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 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 FD Distributors 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 FD
Distributors, 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. ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, a Direct Investor must
telephone FD Distributors at 1-800-628-0414 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 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108. Applications may be obtained
by calling FD Distributors at 1-800-628-0414. Redemptions will not be processed
until the application in proper form has been received by FD Distributors.
Direct Investors making subsequent investments by wire should follow the
instructions above.

OTHER PURCHASE INFORMATION

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and Keogh Plans (see below under "Retirement Plans") is $500 (including 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 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 FD Distributors 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 FD Distributors on a Business Day in accordance with the above
procedures.

REDEMPTION OF SHARES

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by FD Distributors, except that proceeds
from the redemption of Retail B Shares of the Money Market Fund will be reduced
by the amount of any applicable contingent deferred sales charge. When redeeming
Retail Shares of the Money Market Fund, Customers of Institutions and Direct
Investors should indicate whether they are redeeming Retail A Shares or Retail B
Shares of the Fund. If a Customer or Direct Investor owns both Retail A Shares
and Retail B Shares of the Money Market Fund, the Retail A Shares will be
redeemed first unless the Customer or Direct Investor indicates otherwise.
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

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 5108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the name of the Fund and the
number and series, if applicable, 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. FD Distributors will not accept guarantees from notaries public. FD
Distributors 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 FD Distributors
receives all required documents in proper form. The Funds ordinarily will make
payment for Retail Shares redeemed by mail within three Business Days after
proper receipt by FD Distributors of the redemption request. Questions with
respect to the proper form for redemption requests should be directed to FD
Distributors at 1-800-628-0414.

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Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling 1-800-628-0414 and instructing FD Distributors 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" above for
details regarding signature guarantees.

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 FD Distributors by wire or telephone to wire
redemption proceeds of $1,000 or more directly to the Direct Investor's account
at any commercial bank in the United States. FD Distributors 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 FD
Distributors.

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 FD Distributors by 11:00 a.m. (Eastern Time) on the day of
redemption. Retail Shares 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 FD
Distributors at 1-800-628-0414.

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 FD
Distributors. 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 FD Distributors 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 Retail Shares.

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.

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INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

Direct Investors and Customers of Institutions may, after appropriate prior
authorization, exchange Retail A Shares (Shares in the case of the Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds) 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 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 Money Market Fund for Retail B Shares of Galaxy's Short-Term Bond,
High Quality Bond, Tax Exempt Bond, Equity Value, Equity Growth, Small Company
Equity, Asset Allocation, and Growth and Income Funds in which the Direct
Investor or Customer maintains an existing account, provided that the Retail B
Shares acquired in the exchange may legally be sold in the state of the
investor's residence.

Unless an exception applies, a front-end sales charge will be charged in
connection with exchanges of Retail A Shares of a Fund for Retail A Shares of
Galaxy's non-money market portfolios. 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 a new account in another
eligible fund by exchange, 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 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 net asset value per Share 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 any of the
Funds. For further information regarding Galaxy's exchange privilege, Direct
Investors should call FD Distributors at 1-800-628-0414. Customers of
Institutions should call their Institution for such information. Customers
exercising the exchange privilege into other eligible funds should request and
review the prospectuses for these funds prior to making an exchange. Telephone
1-800-628-0414 for a prospectus or to make an exchange. See "How to Purchase and
Redeem Shares--Redemption Procedures--Direct Investors--Redemption by Wire"
above for a description of Galaxy's policy regarding telephone transactions.

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. 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 respective Institutions
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, a Customer or Direct 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
(including 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.

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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 FD Distributors (call
1-800-628-0414) 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 (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
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 three 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 Galaxy's transfer agent (but not less than five days
before a payment date). There is no charge for this service. The maintenance of
a Systematic Withdrawal Plan may be disadvantageous for holders of Retail B
Shares of the Money Market Fund due to the effect of the contingent deferred
sales charge.

COLLEGE INVESTMENT PROGRAM

The College Investment Program (the "College Program") permits an 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
investor purchases Retail Shares through the Automatic Investment Program, the
minimum per transaction is $50. The College Program is designed to assist
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 FD Distributors (call
1-800-628-0414).

CHECKWRITING

Checkwriting is available for Direct Investors. A charge for use of the
checkwriting privilege may be imposed by Galaxy. There is no limit as 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 FD
Distributors 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

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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, 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.

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 1-800-628-0414.

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.

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. Net investment income
for dividend purposes is determined separately for each series of Shares of a
Fund and consists of all accrued income, whether taxable or tax-exempt, plus
discount earned on the Fund's assets attributable to each series of Shares, less
amortization of premium on such assets and accrued expenses attributable to each
series of Shares of the Fund. 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 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 the same series 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

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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 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, its political
subdivisions, or public instrumentalities, state or local authorities, districts
or similar 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 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.

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<PAGE> 129

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.

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' Statements of Additional Information
contain the names of and general background information concerning the Trustees.

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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, 1996 of $85 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, Small Cap Value, Growth and Income, 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.

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 Bank or other subsidiaries of Fleet Financial Group, Inc. in consideration
for administrative and shareholder 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, 1996, Fleet received
advisory fees (after fee waivers) at the effective annual rates of .37%, .39%,
.40% and .40% of the average daily net assets of the Money Market Fund,
Government Fund, Tax-Exempt Fund and U.S. Treasury Fund, respectively. For the
period from December 4, 1995 through October 31, 1996, Fleet received advisory
fees at the effective annual rate of .40% of the average daily net assets of
each of the Connecticut Municipal Money Market Fund and Massachusetts Municipal
Money Market Fund. In addition to fee waivers, during the fiscal year ended
October 31, 1996, Fleet also reimbursed the Funds for certain operating
expenses, which reimbursement may be revised or discontinued at any time.

The Predecessor Connecticut Municipal Money Market and Predecessor
Massachusetts Municipal Money Market Funds bore advisory fees during the period
from November 1, 1995 through December 3, 1995 pursuant to the investment
advisory agreement then in effect with Shawmut Bank, N.A., their former adviser,
at the effective annual rate of .50% of each such Predecessor Fund's average
daily net assets.

AUTHORITY TO ACT AS INVESTMENT ADVISER

30
<PAGE> 130

banking laws and regulations do not prohibit such a bank holding company 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. Fleet, the custodian and Institutions that
are banks or bank affiliates are subject to such banking laws and regulations.

ADMINISTRATOR

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, the Money
Market, Government, Tax-Exempt and U.S. Treasury Funds paid FDISG administration
fees at the effective annual rate of .085% of each Fund's average daily net
assets. For the period from December 4, 1995 through October 31, 1996, the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds paid FDISG administration fees at the effective annual rate of .085% 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 the
period from November 1, 1995 through December 3, 1995 pursuant to the
administration agreement then in effect with Federated Administrative Services,
their prior administrator, at the effective annual rate of .15% 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 series in the Funds as follows: Class A
Shares (Retail A Shares), Class A--Special Series 1 Shares (Trust Shares) and
Class A--Special Series 2 Shares (Retail B Shares), each 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 FD
Distributors 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 under Galaxy's Shareholder Services Plan described below and
holders of Retail B Shares of the Money Market 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 quotations are computed separately for each series of shares. The
difference in the expenses paid by the respective series will affect their
performance.

31
<PAGE> 131

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 (Shares of the Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds) in consideration for
payment of up to .25% (on an annualized basis) of the average daily net asset
value of Retail A 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 FD Distributors; 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
Statements of Additional Information under "Shareholder Services Plan."

Although the Shareholder Services Plan has been approved with respect to
Retail A Shares of the Funds (Shares of the Connecticut Municipal Money Market
and Massachusetts Municipal Money Market 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 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 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 to their Customers 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 Money Market Fund.
Under the Distribution and Services Plan, Galaxy may pay (a) FD Distributors 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 the Money Market 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 Money Market 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
Money Market Fund's payments for shareholder liaison and administrative support
services under the Plan to an aggregate fee of not more than .10% (on an
annualized basis) of the average daily net asset value of Retail B Shares owned
of record or beneficially by Customers of Institutions.

32
<PAGE> 132

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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, 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.
("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 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

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 indexes 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 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. Yield data will be calculated separately for
Trust Shares, Retail A Shares and/or Retail B Shares of the Money Market,
Government, U.S. Treasury and Tax-Exempt 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 the "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, 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.

33
<PAGE> 133

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 Retail Shares of a Fund will not be included in calculations of
yield.

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,
a 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.

34
<PAGE> 134

[This Page Intentionally Left Blank]
<PAGE> 135

[This Page Intentionally Left Blank]
<PAGE> 136

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 BY FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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............ 13
In General.................................. 13
Quality Requirements........................ 13
Money Market Fund........................... 13
Government Fund............................. 13
U.S. Treasury Fund.......................... 14
Tax-Exempt Fund............................. 14
Connecticut Municipal Money Market Fund..... 14
Massachusetts Municipal Money Market Fund... 15
INVESTMENTS, STRATEGIES AND RISKS............. 15
U.S. Government Obligations................. 15
Money Market Instruments.................... 16
Municipal Securities........................ 16
Tender Option Bonds......................... 17
Variable and Floating Rate Instruments...... 17
Repurchase and Reverse Repurchase
Agreements............................... 17
Securities Lending--Money Market and
Government Funds......................... 18
Guaranteed Investment Contracts--Money
Market Fund.............................. 18
Asset-Backed Securities--Money Market
Fund..................................... 18
Investment Company Securities--Tax-Exempt
Money Market Funds....................... 18
Other Investment Policies of the Tax-Exempt
Money Market Funds....................... 18
Certain Investment Policies of the U.S.
Treasury and Government Funds............ 19
Connecticut Investment Risks................ 19
Massachusetts Investment Risks.............. 20
INVESTMENT LIMITATIONS........................ 20
PRICING OF SHARES............................. 22
HOW TO PURCHASE AND REDEEM SHARES............. 22
Distributor................................. 22
Purchase of Shares.......................... 22
Purchase Procedures--Customers of
Institutions............................. 23

<CAPTION>
PAGE
----
<S> <C>
Purchase Procedures--Direct Investors....... 23
Other Purchase Information.................. 23
Redemption of Shares........................ 24
Redemption Procedures--Customers of
Institutions............................. 24
Redemption Procedures--Direct Investors..... 24
Other Redemption Information................ 25
INVESTOR PROGRAMS............................. 26
Exchange Privilege.......................... 26
Retirement Plans............................ 26
Automatic Investment Program and Systematic
Withdrawal Plan.......................... 27
College Investment Program.................. 27
Checkwriting................................ 27
Direct Deposit Program...................... 27
INFORMATION SERVICES.......................... 28
Galaxy Information Center--24 Hour
Information Service...................... 28
Voice Response System....................... 28
Galaxy Shareholder Services................. 28
DIVIDENDS AND DISTRIBUTIONS................... 28
TAXES......................................... 28
Federal..................................... 28
State and Local............................. 29
Miscellaneous............................... 30
MANAGEMENT OF THE FUNDS....................... 30
Investment Adviser.......................... 30
Authority to Act as Investment Adviser...... 30
Administrator............................... 31
DESCRIPTION OF GALAXY AND ITS SHARES.......... 31
Shareholder Services Plan................... 32
Distribution and Services Plan.............. 32
Affiliate Agreement for Sub-Account
Services................................. 33
CUSTODIAN AND TRANSFER AGENT.................. 33
EXPENSES...................................... 33
PERFORMANCE AND YIELD INFORMATION............. 33
MISCELLANEOUS................................. 34
</TABLE>

(LOGO)
50% Recycled Paper
FN-172 (3/97) 10% Post-Consumer Waste
<PAGE> 137

THE GALAXY FUND

INSTITUTIONAL TREASURY MONEY MARKET FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 138

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
HIGHLIGHTS.............................. 2
EXPENSE SUMMARY......................... 3
FINANCIAL HIGHLIGHTS.................... 4
INVESTMENT OBJECTIVE AND POLICIES....... 6
TYPES OF OBLIGATIONS AND OTHER
INVESTMENT INFORMATION................ 6
Treasury Obligations.................. 6
"When-Issued" Securities.............. 6
INVESTMENT LIMITATIONS.................. 6
PRICING OF SHARES....................... 7
HOW TO PURCHASE AND REDEEM SHARES....... 8
Distributor........................... 8
Purchase of Shares.................... 8
Purchase Procedures................... 8
Other Purchase Information............ 8
Redemption Procedures................. 9
Other Redemption Information.......... 9

<CAPTION>
PAGE
<S> <C>
EXCHANGE PRIVILEGE...................... 9
DIVIDENDS AND DISTRIBUTIONS............. 10
TAXES................................... 10
Federal............................... 10
State and Local....................... 11
Miscellaneous......................... 11
MANAGEMENT OF THE FUND.................. 11
Investment Adviser.................... 11
Authority to Act as Investment
Adviser............................ 12
Administrator......................... 12
DESCRIPTION OF GALAXY AND ITS SHARES.... 13
CUSTODIAN AND TRANSFER AGENT............ 13
EXPENSES................................ 13
PERFORMANCE AND YIELD INFORMATION....... 13
MISCELLANEOUS........................... 14
</TABLE>

================================================================================
<PAGE> 139

THE GALAXY FUND

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 sponsored and
distributed by First Data 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 FIS Securities, Inc., Fleet Brokerage Securities
Inc., Fleet Securities, Inc., Fleet Enterprises, Inc., Fleet Financial Group,
Inc., its affiliates, their correspondent banks, and other qualified banks,
savings and loan associations and broker/dealers ("Institutions").

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 number 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.

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 28, 1997
<PAGE> 140

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, Small Cap Value, Growth and Income, 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. 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. ("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,
1996 of approximately $85 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 First Data Distributors, Inc., a subsidiary
of First Data Investor Services Group, Inc. ("FDISG"). Shares may be purchased
on behalf of Customers of FIS Securities, Inc., Fleet Brokerage Securities Inc.,
Fleet Securities, Inc., Fleet Enterprises, 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: Dividends from net investment income of the Fund are 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 shares may legally be sold in the state of the investor's residence.

2
<PAGE> 141

EXPENSE SUMMARY

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

<TABLE>
<CAPTION>
INSTITUTIONAL
TREASURY
ANNUAL FUND OPERATING EXPENSES MONEY MARKET
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FUND
- ----------------------------------------------------------------------------- ------------
<S> <C>
Advisory Fees (After Fee Waivers)............................................ .10%
12b-1 Fees................................................................... None
Other Expenses (After Fee Waivers and Expense Reimbursements)................ .10%
----
Total Fund Operating Expenses (After Fee Waivers and Expense
Reimbursements)............................................................ .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>
Institutional Treasury Money Market Fund................. $2 $ 6 $11 $ 25
</TABLE>

The Expense Summary and Example are intended to assist investors 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 Fleet and/or FDISG,
"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.

THE FOREGOING EXAMPLE 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> 142

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 relating to the Fund for the fiscal year ended October 31, 1996
(the "Annual Report"). Such financial highlights should be read in conjunction
with the financial statements contained in the Annual Report and incorporated by
reference into the Statement of Additional Information. More information about
the performance of the Fund is contained in the Annual Report, which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

4
<PAGE> 143

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

<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED OCTOBER 31, OCTOBER 31,
------------------------------ ------------
1996 1995 1994 1993(1)
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(2).......................... 0.05 0.05 0.04 0.02
Net realized and unrealized gain(loss) on
investments.................................... -- -- -- --
-------- -------- -------- --------
Total from Investment Operations:......... 0.05 0.05 0.04 0.02
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income.............. (0.05) (0.05) (0.04) (0.02)
Dividends from net realized capital gains......... -- -- -- --
-------- -------- -------- --------
Total Dividends:.......................... (0.05) (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 $ 1.00
======== ======== ======== ========
Total Return........................................ 5.12% 5.53% 3.56% 1.59%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $500,927 $506,692 $326,225 $158,890
Ratios to average net assets:
Net investment income including
reimbursement/waiver........................... 5.00% 5.38% 3.63% 2.85%(4)
Operating expenses including
reimbursement/waiver........................... 0.19% 0.17% 0.17% 0.14%(4)
Operating expenses excluding
reimbursement/waiver........................... 0.33% 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 Fleet
and/or the Fund's administrator for the years ended October 31, 1996, 1995
and 1994 and for the period ended October 31, 1993 were $0.05, $0.05, $0.04
and $0.01, respectively.
(3) Not Annualized.
(4) Annualized.

5
<PAGE> 144

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.

INVESTMENT LIMITATIONS

6
<PAGE> 145

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 that the Fund may
borrow 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 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 in excess of 5% of its total assets are outstanding.

4. Invest more than 10% of the value of its total assets in illiquid
securities.

With respect to Investment Limitation No. 4 above, the Fund intends to
limit investments in illiquid securities to not more than 10% of the value of
its net assets.

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), 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. 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.

7
<PAGE> 146

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

PURCHASE OF SHARES

Shares may be purchased by FIS Securities, Inc., Fleet Brokerage Securities
Inc., Fleet Securities, Inc., Fleet Enterprises, 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 FD
Distributors, 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 FD Distributors on a Business Day in accordance with FD
Distributors' 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 FD Distributors and for wiring required funds in payment to
Galaxy's custodian on a timely basis. FD Distributors 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 a particular 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 vary
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 FD
Distributors 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

8
<PAGE> 147

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. 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 FD Distributors 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 their respective
Institutions. It is the responsibility of an Institution to transmit redemption
orders to FD Distributors and credit its Customers' accounts with the redemption
proceeds on a timely basis. No charge for wiring redemption payments to an
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 (the "1940
Act"). 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 by exchange in another portfolio offered by Galaxy or otherwise
advised by Fleet or its affiliates 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.

9
<PAGE> 148

Customers of Institutions should call their particular Institution. Customers
exercising the exchange privilege into other eligible funds should request and
review the prospectuses for these funds prior to making an exchange. Telephone
1-800-628-0414 for a prospectus or to make an exchange.

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, an 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 the 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.

TAXES

FEDERAL

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

10
<PAGE> 149

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.

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.

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

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 at December 31, 1996 of $85 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 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, Small Cap Value, Growth and Income, 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.

11
<PAGE> 150

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 Bank or other subsidiaries of
Fleet Financial Group, Inc. in consideration for administrative and shareholder
support services which they provide to beneficial shareholders. For the fiscal
year ended October 31, 1996, Fleet received advisory fees (after fee waivers) at
the effective annual rate of .10% of the Fund's average daily net assets. In
addition to fee waivers, during the fiscal year ended October 31, 1996, Fleet
also reimbursed the Fund for certain operating expenses, which reimbursement may
be revised or discontinued at any time.

AUTHORITY TO ACT AS INVESTMENT ADVISER

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Fund. For the fiscal year ended October 31, 1996, FDISG received
administration fees (after fee waivers) at the effective annual rate of .086% of
the Fund's average daily net assets.

12
<PAGE> 151

DESCRIPTION OF GALAXY AND ITS SHARES

Each share of Galaxy (irrespective of series designation) has a par value
of $.001, represents an equal proportionate interest in the related investment
portfolio 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
investment portfolio 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.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, 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.
("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 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their 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 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; costs 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> 152

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 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 the "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 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 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 the Fund or Galaxy 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 the Fund or Galaxy, or (b) 67%
or more of the Shares of the Fund or Galaxy present at a meeting if more than
50% of the outstanding Shares of the Fund or Galaxy are represented at the
meeting in person or by proxy.

14
<PAGE> 153

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 154

THE GALAXY FUND

INSTITUTIONAL TREASURY MONEY MARKET FUND

PROSPECTUS

FEBRUARY 28, 1997

[Galaxy Logo]

FN-171 975012 (3/97)

<PAGE> 155

TRUST

THE GALAXY FUND

SHORT-TERM BOND FUND
INTERMEDIATE GOVERNMENT INCOME FUND
HIGH QUALITY BOND FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 156

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

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 FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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 8
AND POLICIES........................
Short-Term Bond Fund................ 8
Intermediate Government 9
Income Fund......................
High Quality Bond Fund........... 10
Special Risk Considerations...... 11
Other Investment Policies and 11
Risk Considerations............
INVESTMENT LIMITATIONS................ 19
PRICING OF SHARES..................... 20
HOW TO PURCHASE AND REDEEM SHARES..... 21
Distributor...................... 21
Purchase of Shares............... 21
Redemption of Shares............. 22
DIVIDENDS AND DISTRIBUTIONS........... 22

<CAPTION>
PAGE
-----
<S> <C>
TAXES................................. 22
Federal.......................... 22
State and Local.................. 23
MANAGEMENT OF THE FUNDS............... 23
Investment Adviser............... 24
Authority to Act as Investment 25
Adviser........................
Administrator.................... 25
DESCRIPTION OF GALAXY AND ITS 25
SHARES..............................
Shareholder Services Plan........ 26
Affiliate Agreement for 27
Sub-Account Services...........
CUSTODIAN AND TRANSFER AGENT.......... 27
EXPENSES.............................. 28
PERFORMANCE AND YIELD 28
INFORMATION.........................
MISCELLANEOUS......................... 29
</TABLE>

================================================================================
<PAGE> 157

THE GALAXY FUND

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

The SHORT-TERM BOND FUND'S investment objective is to seek a high level of
current income consistent with preservation of capital. Under normal market and
economic conditions, the Fund will invest substantially all of its assets in
debt obligations of domestic and foreign issuers rated at the time of purchase
within the four highest rating categories assigned by 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, Fleet Investment Advisors Inc., the Fund's investment
adviser, will consider the total rate of return on portfolio securities in
managing the Fund. Under normal market and economic conditions, the Fund will
invest substantially all of its assets in debt obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, in debt obligations
rated at the time of purchase within the three highest rating categories
assigned by S&P or Moody's (or which, if unrated, are of comparable quality) and
in "money market" instruments.

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 of domestic and foreign issuers that are rated at
the time of purchase within the three highest rating categories assigned by 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.

<PAGE> 158

This Prospectus describes Trust Shares in each Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc., and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue an additional series of shares, Retail A
Shares, in the Intermediate Government Income Fund, and two additional series of
shares, Retail A shares and Retail B Shares, in each of the Short-Term Bond Fund
and High Quality Bond Fund (Retail A Shares and Retail B Shares are referred to
herein collectively as "Retail Shares"). Retail Shares are offered under a
separate prospectus primarily to individuals, corporations or other entities
purchasing either for their own accounts or for the accounts of others and to
FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities, Inc.,
Fleet Enterprises, 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 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.

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

FEBRUARY 28, 1997

2
<PAGE> 159

EXPENSE SUMMARY

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

<TABLE>
<CAPTION>
INTERMEDIATE HIGH
SHORT-TERM GOVERNMENT QUALITY
SHAREHOLDER TRANSACTION EXPENSES BOND FUND INCOME FUND BOND FUND
- --------------------------------------------------------- ---------- ----------- ---------
<S> <C> <C> <C>
Sales Load............................................... None None None
Sales Load on Reinvested Dividends....................... None None None
Deferred Sales Load...................................... None None None
Redemption Fees.......................................... None None None
Exchange Fees............................................ None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- -----------------------------------------
Advisory Fees (After Fee Waivers)........................ .55% .55% .55%
12b-l Fees............................................... None None None
Other Expenses........................................... .33% .24% .36%
--- --- ---
Total Fund Operating Expenses
(After Fee Waivers).................................... .88% .79% .91%
=== === ===
</TABLE>

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

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

THE FOREGOING EXAMPLE 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> 160

FINANCIAL HIGHLIGHTS

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

The financial highlights presented below for the Short-Term Bond,
Intermediate Government Income and High Quality Bond Funds have been audited by
Coopers & Lybrand L.L.P., Galaxy's independent accountants, whose report is
contained in Galaxy's Annual Report to Shareholders relating to the Funds dated
October 31, 1996 (the "Annual Report"). Such financial highlights should be read
in conjunction with the financial statements contained in the Annual Report and
incorporated by reference into the Statement of Additional Information.
Information in the financial highlights for periods prior to the fiscal year
ended October 31, 1994 reflects the investment results of both Retail A Shares
and Trust Shares of the Funds (Retail A Shares of the Intermediate Government
Income Fund were first offered during the fiscal year ended October 31, 1992).
More information about the performance of each Fund is also contained in the
Annual Report, which may be obtained without charge by contacting Galaxy at its
telephone number or address provided above.

4
<PAGE> 161

SHORT-TERM BOND FUND(1)

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------
1996 1995 1994
------------------------------------ YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
TRUST SHARES 1993 (2) 1992 (1,2)
------------------------------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 10.06 $ 9.73 $ 10.30 $ 10.09 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income(3,4)....... 0.55 0.57 0.44 0.47 0.42
Net realized and unrealized gain
(loss) on investments......... (0.07) 0.33 (0.51) 0.22 0.09
------- ------- ------- ------- -------
Total from Investment
Operations:............ 0.48 0.90 (0.07) 0.69 0.51
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income........................ (0.55) (0.57) (0.44) (0.47) (0.42)
Dividends from net realized
capital gains................. -- -- -- (0.01) --
Dividends in excess of net
realized capital gains........ -- -- (0.06) -- --
------- ------- ------- ------- -------
Total Dividends:......... (0.55) (0.57) (0.50) (0.48) (0.42)
------- ------- ------- ------- -------
Net increase (decrease) in net
asset value...................... (0.07) 0.33 (0.57) 0.21 0.09
------- ------- ------- ------- -------
Net Asset Value, End of Period..... $ 9.99 $ 10.06 $ 9.73 $ 10.30 $ 10.09
======= ======= ======= ======= =======
Total Return....................... 4.91% 9.55% (0.66)% 6.98% 5.21%(5)
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net Assets, End of Period
(000's).......................... $58,227 $ 35,088 $39,843 $85,211 $ 57,403
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......... 5.49% 5.79% 4.45% 4.51% 5.77%(6)
Operating expenses including
reimbursement/waiver.......... 0.84% 0.74% 0.91% 0.86% 0.90%(6)
Operating expenses excluding
reimbursement/waiver.......... 1.08% 1.02% 1.11% 1.06% 1.20%(6)
Portfolio Turnover Rate............ 214% 289% 233% 100% 114%(5)
</TABLE>

- ------------
(1) The Fund commenced operations on December 30, 1991.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail and Trust
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."

(3) Net investment income per share for Trust Shares before waiver of fees by
Fleet and/or the Fund's administrator for the years ended October 31, 1996,
1995 and 1994 were $0.53, $0.54 and $0.42, respectively.

(4) Net investment income per share before waiver of fees by Fleet and/or the
Fund's 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> 162

INTERMEDIATE GOVERNMENT INCOME FUND(1)

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

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
------------------------------ PERIOD
ENDED
1996 1995 1994 OCTOBER 31,
YEAR ENDED OCTOBER 31,(2)
-------------------------------------------------
-------------------------
TRUST SHARES 1993 1992 1991 1990 1989 1988(1,2)
------------------------------ -------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period....................... $ 10.28 $ 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).... 0.60 0.64 0.57 0.65 0.71 0.73 0.76 0.82 0.11
Net realized and unrealized
gain (loss) on
investments................. (0.22) 0.60 (1.03) 0.10 0.40 0.71 (0.56) 0.16 0.29
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total from Investment
Operations:........... 0.38 1.24 (0.46) 0.75 1.11 1.44 0.20 0.98 0.40
-------- -------- -------- -------- -------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income........... (0.60) (0.64) (0.56) (0.64) (0.74) (0.71) (0.74) (0.96) --
Dividends in excess of net
investment income........... -- -- (0.01) (0.03) -- -- -- -- --
Dividends from net realized
capital gains............... -- -- -- (0.19) -- -- -- (0.15) --
Dividends in excess of net
realized capital gains...... -- -- (0.01) -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total Dividends:........ (0.60) (0.64) (0.58) (0.86) (0.74) (0.71) (0.74) (1.11) --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in net
asset value................... (0.22) 0.60 (1.04) (0.11) 0.37 0.73 (0.54) (0.13) 0.40
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of
Period........................ $ 10.06 $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73 $ 10.27 $ 10.40
======== ======== ======== ======== ======== ======= ======= ======= =======
Total Return............ 3.88% 13.18% (4.39)% 7.06% 10.95% 15.35% 2.06% 10.22% 3.90%(5)
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)....................... $213,750 $186,037 $212,144 $447,359 $199,135 $99,942 $80,645 $71,400 $ 58,318
Ratios to average net assets:
Net investment income
including
reimbursement/waiver........ 5.98% 6.39% 5.61% 6.03% 6.52% 7.25% 7.69% 8.19% 6.41%(6)
Operating expenses including
reimbursement/waiver........ 0.75% 0.73% 0.75% 0.80% 0.80% 0.96% 0.98% 0.99% 0.98%(6)
Operating expenses excluding
reimbursement/waiver........ 0.95% 0.94% 0.95% 1.00% 0.94% 0.96% 0.99% 1.00% 0.98%(6)
Portfolio Turnover Rate........ 235% 145% 124% 153% 103% 150% 162% 112% 41%(5)
</TABLE>

- ------------
(1) The Fund (formerly known as the Intermediate Bond Fund) commenced operations
on September 1, 1988.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail and Trust
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."

(3) Net investment income per share for Trust Shares before waiver of fees by
Fleet and/or the Fund's Administrator for the years ended October 31, 1996,
1995 and 1994 were $0.58, $0.62 and $0.54, respectively.

(4) Net investment income per share before waiver of fees by Fleet and/or the
Fund's Administrator 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> 163

HIGH QUALITY BOND FUND

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

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED
------------------------------ OCTOBER 31,(2) PERIOD ENDED
1996 1995 1994 ------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991(1,2)
------------------------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.00
-------- -------- -------- -------- -------- -------
Income from Investment Operations:
Net Investment Income(3,4)............. 0.62 0.64 0.65 0.66 0.68 0.64
Net realized and unrealized gain (loss)
on investments....................... (0.16) 1.09 (1.56) 0.93 0.36 0.33
-------- -------- -------- -------- -------- -------
Total from Investment
Operations:................... 0.46 1.73 (0.91) 1.59 1.04 0.97
-------- -------- -------- -------- -------- -------
Less Dividends:
Dividends from net investment income... (0.62) (0.64) (0.65) (0.66) (0.71) (0.62)
Dividends from net realized capital
gains................................ -- -- -- (0.16) (0.08) --
Dividends in excess of net realized
capital gains........................ -- -- (0.27) -- -- --
-------- -------- -------- -------- -------- -------
Total Dividends:................ (0.62) (0.64) (0.92) (0.82) (0.79) (0.62)
-------- -------- -------- -------- -------- -------
Net increase (decrease) in net asset
value.................................. (0.16) 1.09 (1.83) 0.77 0.25 0.35
-------- -------- -------- -------- -------- -------
Net Asset Value, End of Period........... $ 10.47 $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
======== ======== ======== ======== ======== =======
Total Return............................. 4.46% 18.66% (8.39)% 15.63% 10.32% 10.04%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...... $149,075 $134,631 $118,776 $162,594 $108,774 $57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver............... 5.88% 6.33% 6.28% 5.98% 6.55% 7.25%(6)
Operating expenses including
reimbursement/waiver............... 0.85% 0.85% 0.78% 0.76% 0.87% 0.95%(6)
Operating expenses excluding
reimbursement/waiver............... 1.06% 1.07% 0.98% 0.96% 0.94% 0.95%(6)
Portfolio Turnover Rate.................. 163% 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 Trust Shares before waiver of fees by
Fleet and/or the Fund's Administrator for the years ended October 31, 1996,
1995 and 1994 were $0.60, $0.62 and $0.63, respectively.

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

(5) Not Annualized.
(6) Annualized.

7
<PAGE> 164

INVESTMENT OBJECTIVES AND POLICIES

Fleet Investment Advisors Inc. ("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.

SHORT-TERM BOND FUND

The Short-Term Bond Fund's investment objective is to seek a high level of
current income consistent with preservation of capital. The Fund will invest
substantially all of its assets in corporate debt obligations of domestic and
foreign corporations such as bonds and debentures, obligations convertible into
common stock, "money market" instruments such as bank obligations and commercial
paper, obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and asset-backed and mortgage-backed securities. The Fund may
also invest, from time to time, in obligations issued by state or local
governmental issuers ("municipal securities"). The purchase of municipal
securities may be advantageous when, as a result of prevailing economic,
regulatory or other circumstances, the performance of such securities, on a
pretax basis, is comparable to that of corporate or U.S. Government 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 four highest rating categories assigned by of S&P (AAA, AA,
A and BBB) or Moody's (Aaa, Aa, A and Baa) (or which, if unrated, are determined
by Fleet to be of comparable quality) and in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and "money market"
instruments such as those listed below under "Other Investment Policies and Risk
Considerations." Debt obligations rated within the four highest rating
categories assigned by S&P or Moody's are considered to be investment grade.
Debt obligations rated in the lowest of the four highest rating categories
assigned by S&P or Moody's are considered to have speculative characteristics,
even though they are of investment grade quality, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case with higher grade debt
obligations. Under normal market and economic conditions at least 65% of the
Fund's total assets will be invested in debt obligations rated in the three
highest rating categories assigned by S&P or Moody's. 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 Fleet's opinion, 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.

8
<PAGE> 165

in either Canadian or U.S. dollars and have an established over-the-counter
market in the United States. Also included are debt obligations of supranational
entities. Supranational entities include international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related governmental
agencies. Examples of these include the International Bank for Reconstruction
and Development ("World Bank"), the Asian Development Bank and the InterAmerican
Development Bank. Obligations of supranational entities may be supported by
appropriated but unpaid commitments of their member countries, and there is no
assurance that these commitments will be undertaken or met in the future. The
Fund may not invest more than 35% of its total assets in the securities of
foreign issuers. The Fund may also invest in dollar-denominated high quality
debt obligations of U.S. corporations issued outside the United States.

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 asset-backed and mortgage-backed securities. The Fund
may also invest, from time to time, in municipal securities. See "Investment
Objectives and Policies--Short-Term Bond Fund." The Intermediate Government
Income Fund may also enter into interest rate futures contracts to hedge against
changes in market values. See "Other Investment Policies and Risk
Considerations." The Fund will not invest in common stock, and any common stock
received through the conversion of convertible debt obligations will be sold in
an orderly manner as soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in debt obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, debt obligations rated, at
the time of purchase, within the three highest rating categories assigned by S&P
(AAA, AA and A) or Moody's (Aaa, Aa and A) (or which, if unrated, are determined
by Fleet to be of comparable quality) and "money market" instruments such as
those listed below under "Other Investment Policies and Risk Considerations."
Unrated securities will be determined to be of comparable quality to rated debt
obligations if, among other things, other outstanding obligations of the issuers
of such securities are rated A or better. Notwithstanding the foregoing, under
normal market and economic conditions, at least 65% of the Fund's assets will be
invested in debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. When, in Fleet's opinion, 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.

9
<PAGE> 166

Fund may also invest in dollar-denominated high quality debt obligations of U.S.
corporations issued outside the United States.

Fleet 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 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. 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 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 three highest rating categories assigned by
S&P (AAA, AA and A) or Moody's (Aaa, Aa and A) (or, if unrated, are determined
by Fleet to be of comparable quality) and in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and "money market"
instruments such as those listed below under "Other Investment Policies and Risk
Considerations." Unrated securities will be determined to be of comparable
quality to high quality debt obligations if, among other things, other
outstanding obligations of the issuers of such securities are rated A or better.
When, in Fleet's opinion, 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 by Canadian
Provincial Governments and in debt obligations of supranational entities. See
"Investment Objectives and Policies--Short-Term Bond Fund." The Fund may also
invest in dollar-denominated high quality debt obligations of U.S. corporations
issued outside the United States.

The Fund seeks to provide a current yield greater than that generally
available from a portfolio of high quality short-term obligations. The 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 Fleet's assessment of prospective
changes in interest rates. The success of this strategy depends upon Fleet's
ability to predict changes in interest rates.

10
<PAGE> 167

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

SPECIAL RISK CONSIDERATIONS

Investments by the Short-Term Bond Fund in foreign securities may involve
higher costs than investments in U.S. securities, including higher transaction
costs, as well as the imposition of additional taxes by foreign governments. In
addition, foreign investments may include additional risks, including the
difficulty of predicting interest rate patterns and fluctuations in currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect the payment of principal and interest on
foreign obligations. In addition, foreign issuers in general may be subject to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic companies, and securities of foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic issuers.

Although the Short-Term Bond Fund may invest in securities denominated in
foreign currencies, the Fund values its securities and other assets in U.S.
dollars. As a result, the net asset value of the Fund's shares may fluctuate
with U.S. dollar exchange rates as well as with price changes of the Fund's
foreign securities in the various local markets and currencies. Thus, an
increase in the value of the U.S. dollar compared to the currencies in which the
Fund makes its foreign investments could reduce the effect of increases and
magnify the effect of decreases in the price of the Fund's foreign securities in
their local markets. Conversely, a decrease in the value of the U.S. dollar will
have the opposite effect of magnifying the effect of increases and reducing the
effect of decreases in the prices of the Fund's foreign securities in their
local markets. In addition to favorable and unfavorable currency exchange rate
developments, the Fund is subject to the possible imposition of exchange control
regulations or freezes on convertibility of currency.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Investment methods described in this Prospectus are among those which one
or more of the Funds have the power to utilize. Some may be employed on a
regular basis; others may not be used at all. Accordingly, reference to any
particular method or technique carries no implication that it will be utilized
or, if it is, that it will be successful.

U.S. GOVERNMENT OBLIGATIONS AND MONEY MARKET INSTRUMENTS

Each 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.

11
<PAGE> 168

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.

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 Fleet believes that the credit
risk with respect to the instrument is minimal.

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

TYPES OF MUNICIPAL SECURITIES

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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 Fleet 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 Fleet under guidelines approved by Galaxy's Board of Trustees.
No Fund will enter into repurchase agreements with Fleet or any of its
affiliates. Unless a repurchase agreement has a remaining maturity of seven days
or less or may be terminated on demand by notice of seven days or less, the
repurchase agreement will be considered an illiquid security and will be subject
to the limit described in Investment Limitation No. 3 under "Investment
Limitations" in this Prospectus.

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value of the securities sold by a Fund may decline below the repurchase price. A
Fund would pay interest on amounts obtained pursuant to a reverse repurchase
agreement.

SECURITIES LENDING

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

INVESTMENT COMPANY SECURITIES

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

INTEREST RATE FUTURES CONTRACTS

The Funds may enter into contracts (both purchases and sales) which provide
for the future delivery of fixed income securities (commonly known as interest
rate futures contracts). The Funds will not engage in futures transactions for
speculation, but only to hedge against changes in the market values of
securities which the Funds hold or intend to purchase. The Funds will engage in
futures transactions only to the extent permitted by the Commodity Futures
Trading Commission ("CFTC") and the Securities and Exchange Commission. The
purchase of futures instruments in connection with securities which a Fund
intends to purchase will require an amount of cash and/or liquid assets, 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.

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Transactions in futures as a hedging device may subject the Funds to a
number of risks. Successful use of futures by a Fund is subject to the ability
of Fleet 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,
a Fund may realize a loss on a futures transaction that is not offset by a
favorable movement in the price of securities which it holds or intends to
purchase or a Fund may be unable to close a futures position in the event of
adverse price movements. All income from investments in futures contracts will
be taxable. Additional information concerning futures transactions, including
special rules regarding the taxation of such transactions, is contained in
Appendix B to the Statement of Additional Information.

WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS

Each Fund may purchase eligible securities on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. Each of the Funds
may also purchase or sell eligible securities on a "delayed settlement" basis.
When-issued and forward commitment transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit 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 a Fund's total assets absent unusual market conditions. In the
event a Fund's forward commitments, when-issued purchases and delayed
settlements ever exceeded 25% of the value of its total assets, the Fund's
liquidity and the ability of Fleet to manage the Fund may be adversely affected.
The Funds do not intend to engage in when-issued purchases, forward commitments
and delayed settlements for speculative purposes, but only in furtherance of
their respective investment objectives.

STAND-BY COMMITMENTS

Each 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 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 municipal 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

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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. 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 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 value of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

MORTGAGE DOLLAR ROLLS

Each Fund may enter into mortgage "dollar rolls" in which a Fund sells
securities for delivery in the current month and simultaneously contracts with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date not exceeding 120 days.
During the roll period, a Fund loses the right to receive principal and interest
paid on the securities sold. However, the Fund would benefit to the extent of
any difference between the price received for the securities sold and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income plus the interest earned on the cash proceeds of the securities sold
until the settlement date of the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage prepayments
that would have been realized on the securities sold as part of the mortgage
dollar roll, the use of this technique will diminish the investment performance
of a Fund compared with what such performance would have been without the use of
mortgage dollar rolls. All cash proceeds will be invested in instruments that
are permissible

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investments for each Fund. The Funds will hold and maintain in a segregated
account until the settlement date cash or other liquid assets in an amount equal
to the forward purchase price.

For financial reporting and tax purposes, the Funds propose to treat
mortgage dollar rolls as two separate transactions, one involving the purchase
of a security and a separate transaction involving a sale. The Funds do not
currently intend to enter into mortgage dollar rolls that are accounted for as a
financing.

Mortgage dollar rolls involve certain risks. If the broker-dealer to whom a
Fund sells the security becomes insolvent, the Fund's right to purchase or
repurchase the mortgage-related securities may be restricted and the instrument
which the Fund is required to repurchase may be worth less than an instrument
which the Fund originally held. Successful use of mortgage dollar rolls may
depend upon Fleet's ability to predict correctly interest rates and mortgage
prepayments. For these reasons, there is no assurance that mortgage dollar rolls
can be successfully employed.

STRIPPED OBLIGATIONS

To the extent consistent with its investment objective, each Fund may
purchase U.S. Treasury receipts and other "stripped" securities that evidence
ownership in either future interest payments or 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 by the Funds. Obligations
issued by the U.S. Government may be considered liquid under guidelines
established by Galaxy's Board of Trustees if they can be disposed of promptly in
the ordinary course of business at a value reasonably close to that used in the
calculation of net asset value per share.

GUARANTEED INVESTMENT CONTRACTS

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are issued or guaranteed by insurance companies that at the time of purchase are
rated at least AA by S&P or receive a similar high quality rating from a
nationally recognized service which provides ratings of insurance companies.
GICs are considered illiquid securities and will be subject to the Funds'
limitation on such investments, unless there is an active and substantial
secondary market for the particular instrument and market quotations are readily
available.

BANK INVESTMENT CONTRACTS

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

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, interest rate futures and certain asset-backed and mortgage-backed
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.

Fleet 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 objective. It is possible, however, that Fleet'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 Statement of Additional
Information relating to the Funds for additional information.

PORTFOLIO TURNOVER

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portfolio turnover will not be a limiting factor in making portfolio decisions.
A high rate of portfolio turnover may result in the realization of substantial
capital gains and involves correspondingly greater transaction costs. To the
extent that net capital gains are realized, distributions derived from such
gains are treated as ordinary income for federal income tax purposes. See
"Financial Highlights" and "Taxes--Federal."

INVESTMENT LIMITATIONS

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

No Fund may:

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

2. Borrow money or issue senior securities, except that each Fund may
borrow 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 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 according to their services. (For example, gas,
gas transmission, electric and gas, electric and telephone each will be
considered a separate industry.)

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With respect to Investment Limitation No. 2 above, (a) 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, and (b)
mortgage dollar rolls entered into by the Funds that are not accounted for as
financings shall not constitute borrowings.

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,
as amended, for resales of certain securities to qualified institutional buyers.
A Fund's investment in Rule 144A securities could have the effect of increasing
the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the limitation on purchases of illiquid instruments described
under Investment Limitation No. 3 above, Rule 144A securities will not be
considered illiquid if Fleet 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), on each day on which the Exchange is open for trading.
Currently, the holidays which Galaxy observes are New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Net asset value per Share for purposes of pricing sales and
redemptions is calculated separately for each series of Shares by dividing the
value of all securities and other assets attributable to a particular series of
Shares of a Fund, less the liabilities attributable to Shares of that series of
the Fund, by the number of outstanding Shares of that series of the Fund.

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

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HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in each Fund are sold on a continuous basis by Galaxy's distributor,
First Data Distributors, Inc. ("FD Distributors"), a wholly-owned subsidiary of
First Data Investor Services Group, Inc. FD Distributors is a registered
broker/dealer with principal offices located at 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans are
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 FD Distributors 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 (in the case of
employer-sponsored defined contribution plans, their employer) for further
information concerning the types of eligible Customer accounts and the related
purchase and redemption procedures.

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

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

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

Redemption orders are effected at the net asset value per Share next
determined after receipt and acceptance of the order by FD Distributors. Payment
for redemption orders received by FD Distributors 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 60 days'
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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

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

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.

22
<PAGE> 179

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

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

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

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

A taxable gain or loss may be realized by a shareholder upon redemption,
transfer or exchange of Shares of the Funds 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 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

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

MANAGEMENT OF THE FUNDS

23
<PAGE> 180

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to other individual and institutional clients,
and manages the other investment portfolios of Galaxy: the Money Market,
Government, Tax-Exempt, U.S. Treasury, 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, Corporate 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 with respect to the Funds,
Fleet 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 Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and shareholder support services which they provide to beneficial shareholders.
Fleet is currently waiving a portion of the advisory fees payable to it by the
Short-Term Bond, Intermediate Government Income and High Quality Bond Funds such
that it is entitled to receive an advisory fee at the annual rate of .55% of
each such Fund's average daily net assets, but Fleet may, in its discretion,
revise or discontinue this waiver at any time. For the fiscal year ended October
31, 1996, Fleet received advisory fees (after fee waivers) at the effective
annual rates of .55%, .55% and .55%, respectively, of the Short-Term Bond,
Intermediate Government Income and High Quality Bond Funds' average daily net
assets. In addition to fee waivers, during the fiscal year ended October 31,
1996, Fleet also reimbursed the Short-Term Bond and High Quality Bond Funds for
certain operating expenses, which reimbursement may be revised or discontinued
at any time.

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

The Intermediate Government Income Fund's portfolio manager, Marie H.
Schofield, is primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Schofield, a Vice President, has been with Fleet since
1991 and has been engaged in providing investment management services for over
twenty years. She has managed the Intermediate Government Income Fund since
December 1, 1996.

24
<PAGE> 181

Ms. Schofield also serves as portfolio manager of the High Quality Bond
Fund and is primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Schofield began serving as co-portfolio manager of the
Fund on March 1, 1996 and has been sole portfolio manager of the Fund since
April 1, 1996.

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. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective annual rate of .085% of each Fund's average
daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

25
<PAGE> 182

Series 1 shares (Retail A Shares), both series representing interests in the
Intermediate Government Income Fund; Class J-Series 1 shares (Trust Shares),
Class J-Series 2 shares (Retail A Shares) and Class J-Series 3 shares (Retail B
shares), each series representing interests in the High Quality Bond Fund; and
Class L-Series 1 shares (Trust Shares), Class L-Series 2 shares (Retail A
Shares) and Class L-Series 3 shares (Retail B shares), each series representing
interests in the Short-Term Bond Fund. Each Fund is classified as a diversified
company under the 1940 Act. The Board of Trustees has also authorized the
issuance of additional classes and series of shares representing interests in
the other portfolios of Galaxy. For information regarding the Funds' Retail
Shares and these other portfolios, which are offered through separate
prospectuses, contact FD Distributors 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 under Galaxy's Shareholder Services
Plan described below. Holders of Retail B Shares of the Short-Term Bond Fund and
High Quality Bond Fund bear the fees described in the prospectus for such Shares
that are paid under Galaxy's Distribution and Services Plan at an annual rate
not to exceed .80% of the average daily net asset value of a Fund's outstanding
Retail B Shares. Currently, these payments are not made with respect to a Fund's
Trust Shares. In addition, Shares of each series in a Fund bear differing
transfer agency expenses. Standardized yield and total return quotations are
computed separately for each series of Shares. The differences in the expenses
paid by the respective series will affect their performance.

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

Each Share of Galaxy (irrespective of series designation) has a par value
of $.001 per share, represents an equal proportionate interest in the related
investment portfolio 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 investment portfolio 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

26
<PAGE> 183

or more of the following services to such Customers: aggregating and processing
purchase and redemption requests and placing net purchase and redemption orders
with FD Distributors; processing dividend payments from a Fund; providing
sub-accounting with respect to Retail A Shares or the information necessary for
sub-accounting; and providing periodic mailings to Customers. Institutions may
also receive up to one-half of this fee for providing one or more of these
additional services to such Customers; providing Customers with information as
to their positions in Retail A Shares; responding to Customer inquiries; and
providing a service to invest the assets of Customers in Retail A Shares. These
services are described more fully in Galaxy's Statement of Additional
Information under "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 no 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
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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank performs certain sub-account and administrative
functions ("Sub-Account Services") on a per account basis with respect to Trust
Shares of each Fund held by defined contribution plans, including maintaining
records reflecting separately with respect to each plan participant's
sub-account all purchases and redemptions of Trust Shares and the dollar value
of Trust Shares in each sub-account; crediting to each participant's sub-account
all dividends and distributions with respect to that sub-account; and
transmitting to each participant a periodic statement regarding the sub-account
as well as any proxy materials, reports and other material Fund communications.
Fleet Bank 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 ("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 Short-Term Bond Fund upon approval
of the Trustees in accordance with the regulations of the SEC, for the purpose
of providing custodial services for the Fund's foreign assets held outside the
United States. First Data Investor Services Group, Inc. ("FDISG"), a
wholly-owned subsidiary of First Data Corporation, serves as the Funds' transfer
and dividend disbursing agent. Services performed by both entities for the Funds
are described in the Statement of Additional Information. Communications to
FDISG should be directed to FDISG at P.O. Box 5108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

27
<PAGE> 184

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Funds. Galaxy bears the expenses
incurred in the Funds' operations. Such expenses include taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule12b-1
distribution, 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 shareholder
reports and 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/or 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. The Funds may
also advertise their "effective yield" which is calculated similarly but, when
annualized, the income earned by an investment in a Fund is assumed to be
reinvested.

The Funds may also advertise their performance using "average annual total
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 dividend and capital gain distributions made by a Fund during the period
are reinvested in Fund Shares.

28
<PAGE> 185

held in a portfolio, portfolio maturity, operating expenses, and market
conditions. Any additional fees charged directly by Institutions with respect to
accounts of Customers that have invested in Trust Shares of a Fund will not be
included in calculations of yield and performance.

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.

29
<PAGE> 186

[THIS PAGE INTENTIONALLY LEFT BLANK]

30
<PAGE> 187

[THIS PAGE INTENTIONALLY LEFT BLANK]

31
<PAGE> 188

[THIS PAGE INTENTIONALLY LEFT BLANK]

32
<PAGE> 189

GALAXY FUNDS

SHORT-TERM BOND FUND

INTERMEDIATE GOVERNMENT INCOME FUND

HIGH QUALITY BOND FUND

[GALAXY FUNDS LOGO]

FN-042 15039 (3/97) FEBRUARY 28, 1997

<PAGE> 190

TRUST

THE GALAXY FUND

SHORT-TERM BOND FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 191

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

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...................... 6
INVESTMENT LIMITATIONS.................. 14
PRICING OF SHARES....................... 15
HOW TO PURCHASE AND REDEEM SHARES....... 16
Distributor........................... 16
Purchase of Shares.................... 16
Redemption of Shares.................. 17
DIVIDENDS AND DISTRIBUTIONS............. 17

<CAPTION>
PAGE
<S> <C>
TAXES................................... 17
Federal............................... 17
State and Local....................... 18
MANAGEMENT OF THE FUNDS................. 18
Investment Adviser.................... 19
Authority to Act as Investment
Adviser............................. 19
Administrator......................... 20
DESCRIPTION OF GALAXY AND ITS SHARES.... 20
CUSTODIAN AND TRANSFER AGENT............ 22
EXPENSES................................ 22
PERFORMANCE AND YIELD INFORMATION....... 22
MISCELLANEOUS........................... 23
</TABLE>

================================================================================
<PAGE> 192

THE GALAXY FUND

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

This prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc., and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue two additional series of shares in the Fund,
Retail A Shares and Retail B Shares (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities,
Inc., Fleet Enterprises, 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.

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 28, 1997
<PAGE> 193

EXPENSE SUMMARY

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

<TABLE>
<CAPTION>
SHORT-TERM
SHAREHOLDER TRANSACTION EXPENSES BOND FUND
- -------------------------------------------------------------------------------- ----------
<S> <C>
Sales Load...................................................................... None
Sales Load on Reinvested Dividends.............................................. None
Deferred Sales Load............................................................. None
Redemption Fees................................................................. None
Exchange Fees................................................................... None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
Advisory Fees (After Fee Waivers)............................................... .55%
12b-1 Fees...................................................................... None
Other Expenses.................................................................. .33%
--------
Total Fund Operating Expenses (After Fee Waivers)............................... .88%
========
</TABLE>

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

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

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

THE FOREGOING EXAMPLE 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> 194

FINANCIAL HIGHLIGHTS

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

The financial highlights presented below have been audited by Coopers &
Lybrand L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements contained in the Annual Report and
incorporated by reference into the Statement of Additional Information.
Information in the financial highlights for periods prior to the fiscal year
ended October 31, 1994 reflects the investment results of both Retail A Shares
and Trust Shares of the Fund. More information about the performance of the Fund
is also contained in the Annual Report, which may be obtained without charge by
contacting Galaxy at its telephone number or address provided above.

3
<PAGE> 195

SHORT-TERM BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1996 1995 1994 YEAR ENDED PERIOD ENDED
OCTOBER
----------------------------- OCTOBER 31, 31,(1,2)
TRUST SHARES 1993(2) 1992(1,2)
----------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 10.06 $ 9.73 $ 10.30 $ 10.09 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income(3,4)............ 0.55 0.57 0.44 0.47 0.42
Net realized and unrealized gain
(loss) on investments.............. (0.07) 0.33 (0.51) 0.22 0.09
------- ------- ------- ------- -------
Total from Investment
Operations:................. 0.48 0.90 (0.07) 0.69 0.51
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income............................. (0.55) (0.57) (0.44) (0.47) (0.42)
Dividends from net realized capital
gains.............................. -- -- -- (0.01) --
Dividends in excess of net realized
capital gains...................... -- -- (0.06) -- --
------- ------- ------- ------- -------
Total Dividends:.............. (0.55) (0.57) (0.50) (0.48) (0.42)
------- ------- ------- ------- -------
Net increase (decrease) in net asset
value................................. (0.07) 0.33 (0.57) 0.21 0.09
------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 9.99 $ 10.06 $ 9.73 $ 10.30 $ 10.09
======= ======= ======= ======= =======
Total Return............................ 4.91% 9.55% (0.66)% 6.98% 5.21%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $58,227 $35,088 $39,843 $ 85,211 $ 57,403
Ratios to average net assets:
Net investment income including
reimbursement/waiver............... 5.49% 5.79% 4.45% 4.51% 5.77%(6)
Operating expenses including
reimbursement/waiver............... 0.84% 0.74% 0.91% 0.86% 0.90%(6)
Operating expenses excluding
reimbursement/waiver............... 1.08% 1.02% 1.11% 1.06% 1.20%(6)
Portfolio Turnover Rate................. 214% 289% 233% 100% 114%(5)
</TABLE>

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

(1) The Fund commenced operations on December 30, 1991.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail and Trust
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."
(3) Net investment income per share for Trust Shares before waiver and/or of
fees by Fleet and/or the Fund's Administrator for the years ended October
31, 1996, 1995 and 1994 were $0.53, $0.54 and $0.42, respectively.
(4) Net investment income per share before waiver of fees by Fleet and/or the
Fund's 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.

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INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek a high level of current income
consistent with preservation of capital. The Fund will invest substantially all
of its assets in corporate debt obligations of domestic and foreign
corporations, such as bonds and debentures, obligations convertible into common
stock, "money market" instruments such as bank obligations and commercial paper,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and asset-backed and mortgage-backed securities. The Fund may
also invest, from time to time, in obligations issued by state and local
governmental issuers ("municipal securities"). The purchase of municipal
securities may be advantageous when, as a result of prevailing economic,
regulatory or other circumstances, the performance of such securities, on a
pretax basis, is comparable to that of corporate or U.S. Government debt
obligations. The Fund may also enter into interest rate futures contracts to
hedge against changes in market values. See "Other Investment Policies and Risk
Considerations." 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 four highest rating categories assigned by S&P (AAA, AA, A
and BBB) or Moody's (Aaa, Aa, A and Baa) or which, if unrated, are determined by
Fleet Investment Advisors Inc. ("Fleet") the Fund's investment adviser, to be of
comparable quality) and in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and "money market" instruments
such as those listed below under "Other Investment Policies and Risk
Considerations." Debt obligations rated within the four highest rating
categories of S&P or Moody's are considered to be investment grade. Debt
obligations rated in the lowest of the four highest rating categories assigned
by S&P or Moody's are considered to have speculative characteristics, even
though they are of investment grade quality, and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade debt
obligations. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in debt obligations rated in the three
highest ratings assigned by S&P or Moody's. 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/Baa or better. When, in the opinion of Fleet, 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 of foreign banks and in
obligations issued or guaranteed by foreign governments or any of their
political subdivisions or instrumentalities. Such obligations include debt
obligations issued by Canadian Provincial Governments, which are similar to U.S.
municipal securities except that the income derived therefrom is fully subject
to U.S. federal taxation. These instruments are denominated in either Canadian
or U.S. dollars and have an established over-the-counter market in the United
States. Also included are debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related governmental
agencies. Examples of those include the International Bank for Reconstruction
and Development ("World Bank"), the Asian Development Bank and the InterAmerican
Development Bank. Obligations of supranational entities may be supported by
appropri-

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<PAGE> 197

ated but unpaid commitments of their member countries and there is no assurance
that those commitments will be undertaken or met in the future. The Fund may not
invest more than 35% of its total assets in the securities of foreign issuers.
The Fund may also invest in dollar-denominated debt obligations of U.S.
corporations issued outside the United States.

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

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.

SPECIAL RISK CONSIDERATIONS

Investments by the Fund in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks, including the difficulty of predicting
interest rate patterns and fluctuations in currency exchange rates, less
complete financial information about the issuers, less market liquidity, and
political instability. Future political and economic developments, the possible
imposition of withholding taxes on interest income, the possible seizure or
nationalization of foreign holdings, the possible establishment of exchange
controls, or the adoption of other governmental restrictions might adversely
affect the payment of principal and interest on foreign obligations. In
addition, foreign issuers in general may be subject to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic companies, and securities of foreign issuers may be less liquid and
their prices more volatile than those of comparable domestic issuers.

Although the 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

Investment methods described in this Prospectus are among those which the
Fund has the power to utilize. Some may be employed on a regular basis; others
may not be used at all. Accordingly, reference to any particular method or
technique carries no implication that it will be utilized or, if it is, that it
will be successful.

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<PAGE> 198

U.S. Government Obligations and Money Market Instruments

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

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

Bank obligations include bankers' acceptances, negotiable certificates of
deposit, and non-negotiable time deposits issued for a definite period of time
and earning a specified return by a U.S. bank which is a member of the Federal
Reserve System or is insured by the Federal Deposit Insurance Corporation, or by
a savings and loan association or savings bank which is insured by the Federal
Deposit Insurance Corporation. Bank obligations also include U.S.
dollar-denominated obligations of foreign branches of U.S. banks or of U.S.
branches of foreign banks, all of the same type as domestic bank obligations.
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 obligations of foreign branches of U.S. banks and of U.S.
branches of foreign banks may subject a Fund to additional risks, including
future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. In addition, foreign
branches of U.S. banks and U.S. branches of foreign banks may be subject to less
stringent reserve requirements and to different accounting, auditing, reporting,
and recordkeeping standards than those applicable to domestic branches of U.S.
banks. The Fund will invest in the obligations of U.S. branches of foreign banks
or foreign branches of U.S. banks only when Fleet believes that the credit risk
with respect to the instrument is minimal.

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<PAGE> 199

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.

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

Repurchase and Reverse Repurchase Agreements

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

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<PAGE> 200

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 Fleet to be of good standing and only when, in Fleet'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 Fleet.

Interest Rate Futures Contracts

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<PAGE> 201

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

When-Issued, Forward Commitment and Delayed Settlement Transactions

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

Stand-by Commitments

The Fund may acquire "stand-by commitments" with respect to municipal
securities 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. The
Fund expects that stand-by commitments will generally be available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, the Fund may pay for a stand-by commitment either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitment (thus reducing the yield otherwise available for the same
securities). Stand-by commitments acquired by the Fund would be valued at zero
in determining the Fund's net asset value.

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<PAGE> 202

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. See "Asset-Backed Securities" in the Statement of Additional
Information.

Mortgage-Backed Securities

The Fund may invest in mortgage-backed securities (including collateralized
mortgage obligations) that represent pools of mortgage loans assembled for sale
to investors by various governmental agencies and government-related
organizations, such as the Government National Mortgage Association, the Federal
National Mortgage Association, and the Federal Home Loan Mortgage Corporation.
Mortgage-backed securities provide a monthly payment consisting of interest and
principal payments. Additional payment may be made out of unscheduled repayments
of principal resulting from the sale of the underlying residential property,
refinancing or foreclosure, net of fees or costs that may be incurred.
Prepayments of principal on mortgage-backed securities may tend to increase due
to refinancing of mortgages as interest rates decline. To the extent that the
Fund purchases mortgage-backed securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time
without penalty) may result in some loss of the Fund's principal investment to
the extent of the premium paid. The yield of the Fund from investing in
mortgaged-backed securities may be affected by reinvestment of prepayments at
higher or lower rates than the original investment.

Mortgage Dollar Rolls

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<PAGE> 203

such benefits exceed the income, capital appreciation and gain or loss due to
mortgage prepayments that would have been realized on the securities sold as
part of the mortgage dollar roll, the use of this technique will diminish the
investment performance of the Fund compared with what such performance would
have been without the use of mortgage dollar rolls. All cash proceeds will be
invested in instruments that are permissible investments for the Fund. The Fund
will hold and maintain in a segregated account until the settlement date cash,
or other liquid assets in an amount equal to the forward purchase price.

For financial reporting and tax purposes, the Fund proposes to treat
mortgage dollar rolls as two separate transactions, one involving the purchase
of a security and a separate transaction involving a sale. The Fund does not
currently intend to enter into mortgage dollar rolls that are accounted for as a
financing.

Mortgage dollar rolls involve certain risks. If the broker-dealer to whom
the Fund sells the security becomes insolvent, the Fund's right to purchase or
repurchase the mortgage-related securities may be restricted and the instrument
which the Fund is required to repurchase may be worth less than an instrument
which the Fund originally held. Successful use of mortgage dollar rolls may
depend upon Fleet's ability to predict correctly interest rates and mortgage
prepayments. For these reasons, there is no assurance that mortgage dollar rolls
can be successfully employed.

Stripped Obligations

To the extent consistent with its investment objective, the Fund may
purchase U.S. Treasury receipts and other "stripped" securities that evidence
ownership in either future interest payments or 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 by the Fund. Obligations
issued by the U.S. Government may be considered liquid under guidelines
established by the Trust's Board of Trustees if they can be disposed of promptly
in the ordinary course of business at a value reasonably close to that used in
the calculation of net asset value per share.

Guaranteed Investment Contracts

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<PAGE> 204

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.

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, interest rate futures and
certain asset-backed and mortgage-backed 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.

Fleet 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 Fleet'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.

Portfolio Turnover

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<PAGE> 205

such as a more favorable investment opportunity or other circumstances bearing
on the desirability of continuing to hold such investments. A portfolio turnover
rate of 100% or more is considered high, although the rate of portfolio turnover
will not be a limiting factor in making portfolio decisions. A high rate of
portfolio turnover may result in the realization of substantial capital gains
and involves correspondingly greater transaction costs. To the extent that net
capital gains are realized, distributions derived from such gains are treated as
ordinary income for Federal income tax purposes. See "Financial Highlights" and
"Taxes -- Federal."

INVESTMENT LIMITATIONS

The 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 that the Fund may
borrow 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 borrowing (including reverse repurchase agreements) in excess of 5%
of its total assets are outstanding.

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

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<PAGE> 206

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, (a) 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, and (b)
mortgage dollar rolls entered into by the Fund that are not accounted for as
financings shall not constitute borrowings.

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,
as amended, for resales of certain securities to qualified institutional buyers.
The Fund's investment in Rule 144A securities could have the effect of
increasing the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the 10% limitation on purchases of illiquid instruments
described under Investment Limitation No. 3 above, Rule 144A securities will not
be considered illiquid if Fleet 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), on each day on which the Exchange is open for trading.
Currently, the holidays which Galaxy observes are New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. Net asset value per Share of the Fund for purposes of pricing
sales and redemptions is calculated separately for each series of shares by
dividing the value of all securities and other assets attributable to a
particular series of shares of the Fund, less the liabilities attributable to
the shares of that series of the Fund, by the number of outstanding shares of
that series of the Fund.

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.

15
<PAGE> 207

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc. and to participants in
employer-sponsored defined contribution plans (such institutions and plans are
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 FD Distributors 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 (in the case of employer-sponsored defined contribution plans, their
employer) for further information concerning the types of eligible Customer
accounts and the related purchase and redemption procedures.

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

16
<PAGE> 208

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

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an 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 FD Distributors. Payment for redemption
orders received by FD Distributors on a Business Day will normally be wired the
following Business Day to the Institution. Payment for redemption orders which
are received on a non-Business Day will normally be wired to the Institution on
the next Business Day. However, in both cases Galaxy reserves the right to wire
redemption proceeds within seven days after receiving the redemption order if,
in its judgment, an earlier payment could adversely affect the Fund.

Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized. The Fund reserves the right to redeem
Shares in any account at their net asset value involuntarily, upon 60 days'
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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

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

TAXES

FEDERAL

In General

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

17
<PAGE> 209

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

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

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

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

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

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

STATE AND LOCAL

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

MANAGEMENT OF THE FUNDS

18
<PAGE> 210

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, Small Company Equity, Asset
Allocation, Small Cap Value, Growth and Income, 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.

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

Fleet may from time to time, in its discretion, waive advisory fees payable
by the Fund in order to help maintain a competitive expense ratio and may from
time to time allocate a portion of its advisory fees to Fleet Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and shareholder support services which they provide to beneficial shareholders.
Fleet is currently waiving a portion of the advisory fees payable to it by the
Fund so that it is entitled to receive an advisory fee at the annual rate of
.55% of the Fund's average daily net assets, but Fleet may in its discretion
revise or discontinue this waiver at any time. For the fiscal year ended October
31, 1996, Fleet received advisory fees (after fee waivers) at the effective
annual rate of .55% of the Fund's average daily net assets. In addition to fee
waivers, during the fiscal year ended October 31, 1996 Fleet also reimbursed the
Fund for certain operating expenses, but Fleet does not expect to continue such
reimbursement in the current fiscal year.

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

AUTHORITY TO ACT AS INVESTMENT ADVISER

19
<PAGE> 211

customers. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of
combined average daily net assets over $5 billion. Prior to September 5, 1996,
FDISG was 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 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 voluntarily all or a portion of the administration fee payable to it
by the Fund. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective rate of .085% of the Fund's 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 and Retail B Shares bear the fees that are paid under Galaxy's
Shareholder Services Plan described below. Holders of the Fund's Retail B Shares
bear the fees described in the prospectus for such shares that are paid under
Galaxy's Distribution and Services Plan at an annual rate not to exceed .80% of
the average daily net asset value of the Fund's outstanding Retail B shares.
Currently, these payments are not made with respect to the Fund's Trust Shares.
In addition, Shares of each series in the Fund bear differing transfer agency
expenses. Standardized yield and total return quotations are computed separately
for each series of Shares. The differences in the expenses paid by the
respective series will affect their performance.

20
<PAGE> 212

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% and automatically convert to Retail A Shares of
the Fund six years after the date of purchase. Retail A and Retail B Shares have
certain exchange and other privileges which are not available with respect to
Trust Shares.

Each Share of Galaxy (irrespective of series designation) has a par value
of $.001 per share, represents an equal proportionate interest in the related
investment portfolio 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 investment portfolio as are declared in the discretion of
Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

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

Although the Shareholder Services Plan has been approved with respect to
both Retail A Shares and Trust Shares of the Fund, as of the date of this
Prospectus, Galaxy intends to enter into servicing agreements under the
Shareholder Services Plan only with respect to Retail A Shares of the Fund, and
to limit the payment under these service agreements for the Fund to no 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 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 to their Customers a schedule of any fees that they may charge in
connection with Customer investments in Retail A Shares.

21
<PAGE> 213

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank performs certain sub-account and administrative
functions ("Sub-Account Services") on a per account basis with respect to Trust
Shares of the Fund held by defined contribution plans, including maintaining
records reflecting separately with respect to each plan participant's
sub-account all purchases and redemption of Trust Shares and the dollar value of
Trust Shares in each sub-account; crediting to each participant's sub-account
all dividends and distributions with respect to that sub-account; and
transmitting to each participant a periodic statement regarding the sub-account
as well as any proxy materials, reports and other material Fund communications.
Fleet Bank 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 ("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 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. ("FDISG"), a wholly-owned subsidiary of
First Data Corporation serves as the Funds' transfer and dividend disbursing
agent. Services performed by both entities for the Fund are described in the
Statement of Additional Information. Communications to FDISG should be directed
to FDISG at P.O. Box 5108, 4400 Computer Drive, Westboro, Massachusetts
01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 shareholder
reports and meetings; and any extraordinary expenses. The Fund also pays for
brokerage fees and commissions in connection with the purchase of portfolio
securities.

PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
performance and yields of the Fund may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
bond indexes 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.

22
<PAGE> 214

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/or Retail B Shares of the Fund.

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

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

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

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

MISCELLANEOUS

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

As used in this Prospectus, a "vote of the holders of a majority of the
outstanding Shares" of Galaxy or 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.

23
<PAGE> 215

(This page intentionally left blank)

24
<PAGE> 216

GALAXY
SHORT-TERM BOND
FUND

February 28, 1997

PROSPECTUS

Trust Shares

[GALAXY FUND LOGO]

FN-259 975027 (3/97)

<PAGE> 217

TRUST

THE GALAXY FUND

INTERMEDIATE GOVERNMENT INCOME FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 218

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

TABLE OF CONTENTS

<CAPTION>
PAGE
<S> <C>
Federal............................. 16
State and Local..................... 17
MANAGEMENT OF THE FUND................ 18
Investment Adviser.................. 18
Authority to Act as Investment
Adviser.......................... 18
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..... 21
MISCELLANEOUS......................... 22
</TABLE>

================================================================================
<PAGE> 219

THE GALAXY FUND

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

This Prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities Inc., Fleet Enterprises, 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, 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 28, 1997
<PAGE> 220

EXPENSE SUMMARY

<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT
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
</TABLE>

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

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

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

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

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Trust Shares of the
Fund will bear directly or indirectly. They are 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 Fleet, Advisory Fees would be .75%, and Total
Fund Operating Expenses for the Fund would be .99% for Trust Shares of the Fund.
For more complete descriptions of these costs and expenses, see "Management of
the Fund" and "Description of Galaxy and Its Shares" in this Prospectus and the
financial statements and notes incorporated by reference into the Statement of
Additional Information. Any fees that are charged by affiliates of Fleet
Investment Advisors Inc. or other institutions directly to their customer
accounts for services related to an investment in Trust Shares of the Funds and
are in addition to and not reflected in the fees and expenses described above.

THE FOREGOING EXAMPLE 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> 221

FINANCIAL HIGHLIGHTS

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

The financial highlights presented below have been audited by Coopers &
Lybrand L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements contained in the Annual Report and
incorporated by reference into the Statement of Additional Information.
Information in the financial highlights for periods prior to the fiscal year
ended October 31, 1994 reflects the investment results of both Trust Shares and
Retail A Shares of the Fund (Retail A Shares of the Fund were first offered
during the fiscal year ended October 31, 1992). More information about the
performance of the Fund is also contained in the Annual Report, which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

3
<PAGE> 222

INTERMEDIATE GOVERNMENT INCOME FUND(1)

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

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, PERIOD
ENDED
1996 1995 1994 YEAR ENDED OCTOBER 31,(2) OCTOBER 31,
-------------------------------------------------
--------------------------
TRUST SHARES 1993 1992 1991 1990 1989 1988(1,2)
------------------------------ -------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 10.28 $ 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)............... 0.60 0.64 0.57 0.65 0.71 0.73 0.76 0.82 0.11
Net realized and unrealized
gain (loss) on
investments............... (0.22) 0.60 (1.03) 0.10 0.40 0.71 (0.56) 0.16 0.29
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total from Investment
Operations:............. 0.38 1.24 (0.46) 0.75 1.11 1.44 0.20 0.98 0.40
-------- -------- -------- -------- -------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income......... (0.60) (0.64) (0.56) (0.64) (0.74) (0.71) (0.74) (0.96) --
Dividends in excess of net
investment income......... -- -- (0.01) (0.03) -- -- -- -- --
Dividends from net realized
capital gains............. -- -- -- (0.19) -- -- -- (0.15) --
Dividends in excess of net
realized capital gains.... -- -- (0.01) -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total Dividends:.......... (0.60) (0.64) (0.58) (0.86) (0.74) (0.71) (0.74) (1.11) --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in net
asset value................. (0.22) 0.60 (1.04) (0.11) 0.37 0.73 (0.54) (0.13) 0.40
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of
Period...................... $ 10.06 $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73 $ 10.27 $ 10.40
======== ======== ======== ======== ======== ======= ======= ======= =======
Total Return.................. 3.88% 13.18% (4.39)% 7.06% 10.95% 15.35% 2.06% 10.22% 3.90%(5)
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)..................... $213,750 $186,037 $212,144 $447,359 $199,135 $99,942 $80,645 $71,400 $58,318
Ratios to average net assets:
Net investment income
including reimbursement
/waiver................... 5.98% 6.39% 5.61% 6.03% 6.52% 7.25% 7.69% 8.19% 6.41%(6)
Operating expenses including
reimbursement/waiver...... 0.75% 0.73% 0.75% 0.80% 0.80% 0.96% 0.98% 0.99% 0.98%(6)
Operating expenses excluding
reimbursement/waiver...... 0.95% 0.94% 0.95% 1.00% 0.94% 0.96% 0.96% 0.99% 1.00%(6)
Portfolio Turnover Rate....... 235% 145% 124% 153% 103% 150% 162% 112% 41%(5)
</TABLE>

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

(1) The Fund (formerly known as the Intermediate Bond Fund) commenced operations
on September 1, 1988.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail and Trust
Shares. On September 7, 1995, Retail Shares of the Fund were redesignated
"Retail A Shares."

(3) Net investment income per share for Trust Shares before waiver of fees by
Fleet and/or the Fund's administrator for the years ended October 31, 1996,
1995 and 1994 were $0.58, $0.62 and $0.54, respectively.

(4) Net investment income per share before waiver of fees by Fleet and/or the
Fund's administrator 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.

4
<PAGE> 223

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek the highest level of current
income consistent with prudent risk of capital. Subject to this objective, Fleet
Investment Advisors Inc. ("Fleet") the Fund's investment adviser, 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, 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 asset backed and
mortgage-backed securities. The Fund may also invest, from time to time, in
obligations issued by state or local governmental issuers ("municipal
securities"). The purchase of municipal securities may be advantageous when, as
a result of prevailing economic, regulatory or other circumstances, the
performance of such securities, on a pretax basis, is comparable to that of
corporate or U.S. debt obligations. The Fund may also enter into interest rate
futures contracts to hedge against changes in market values. See "Other
Investment Policies." The Fund will not invest in common stock, and any common
stock received through the conversion of convertible debt obligations will be
sold in an orderly manner as soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in debt obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, debt obligations rated, at
the time of purchase, within the three highest rating categories assigned by S&P
(AAA, AA and A) or Moody's (Aaa, Aa and A) (or which, if unrated, are determined
by Fleet to be of comparable quality) 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. Notwithstanding the foregoing, under normal market and
economic conditions, at least 65% of the Fund's assets will be invested in debt
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. When, in Fleet's opinion, 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 by Canadian
Provincial Governments, which are similar to U.S. Municipal Securities except
that the income derived therefrom is fully subject to U.S. federal taxation.
These instruments are denominated in either Canadian or U.S. dollars and have an
established over-the-counter market in the United States. The Fund may also
invest in dollar-denominated high quality debt obligations of U.S. corporations
issued outside the United States.

Fleet 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.

Fleet will use its best efforts to achieve the Fund's investment objective,
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.

5
<PAGE> 224

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations and Money Market Instruments

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 10
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.

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 Fleet believes that the credit risk
with respect to the instrument is minimal.

6
<PAGE> 225

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

Types of Municipal Securities

Variable and Floating Rate Municipal Securities

Repurchase and Reverse Repurchase Agreements

7
<PAGE> 226

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 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

8
<PAGE> 227

Interest Rate Futures Contracts

The Fund may enter into contracts (both purchases and sales) which provide
for the future delivery of fixed income securities (commonly known as interest
rate futures contracts). The Fund will not engage in futures transactions for
speculation, but only to hedge against changes in the market values of
securities which the Fund holds or intends to purchase. The Fund will engage in
futures transactions only to the extent permitted by the Commodity Futures
Trading Commission ("CFTC") and the Securities and Exchange Commission. The
purchase of futures instruments in connection with securities which the Funds
intend to purchase will require an amount of cash and/or liquid assets, 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.

When-Issued, Forward Commitment and Delayed Settlement Transactions

Stand-by Commitments

9
<PAGE> 228

not intend to exercise its rights thereunder for trading purposes. The Fund
expects that stand-by commitments will generally be available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, the Fund may pay for a stand-by commitment either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitment (thus reducing the yield otherwise available for the same
securities). Stand-by commitments acquired by the Fund would be valued at zero
in determining the Fund's net asset value.

Asset-Backed Securities

Mortgage-Backed Securities

The Fund may invest in mortgage-backed securities that represent pools of
mortgage loans assembled for sale to investors by various governmental agencies
and government-related organizations such as the Government National Mortgage
Association, the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation. Mortgage-backed securities provide a monthly payment
consisting of interest and principal payments. Additional payment may be made
out of unscheduled repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. To the extent that the Fund purchases mortgage-backed securities
at a premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of the
Fund's principal investment to the extent of the premium paid. The yield of the
Fund from investing in mortgaged-backed securities may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment.

10
<PAGE> 229

Mortgage Dollar Rolls

The Fund may enter into mortgage "dollar rolls" in which the Fund sells
securities for delivery in the current month and simultaneously contracts with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date not exceeding 120 days.
During the roll period, the Fund loses the right to receive principal and
interest paid on the securities sold. However, the Fund would benefit to the
extent of any difference between the price received for the securities sold and
the lower forward price for the future purchase (often referred to as the
"drop") or fee income plus the interest earned on the cash proceeds of the
securities sold until the settlement date of the forward purchase. Unless such
benefits exceed the income, capital appreciation and gain or loss due to
mortgage prepayments that would have been realized on the securities sold as
part of the mortgage dollar roll, the use of this technique will diminish the
investment performance of the Fund compared with what such performance would
have been without the use of mortgage dollar rolls. All cash proceeds will be
invested in instruments that are permissible investments for the Fund. The Fund
will hold and maintain in a segregated account until the settlement date cash,
or other liquid assets in an amount equal to the forward purchase price.

Stripped Obligations

To the extent consistent with its investment objective, the Fund may
purchase U.S. Treasury receipts and other "stripped" securities that evidence
ownership in either future interest payments or 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.

11
<PAGE> 230

considered liquid under guidelines established by Galaxy's Board of Trustees if
they can be disposed of promptly in the ordinary course of business at a value
reasonably close to that used in the calculation of net asset value per share.

Guaranteed Investment Contracts

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

Bank Investment Contracts

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, interest rate futures
and certain asset-backed and mortgage-backed 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.

12
<PAGE> 231

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.

Portfolio Turnover

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

INVESTMENT LIMITATIONS

The Fund may not:

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

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

13
<PAGE> 232

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 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,
as amended, for resales of certain securities to qualified institutional buyers.
The Fund's investment in Rule 144A securities could have the effect of
increasing the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the 10% limitation on purchases of illiquid instruments
described under Investment Limitation No. 3 above, Rule 144A securities will not
be considered illiquid if Fleet 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), 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.

14
<PAGE> 233

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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc. and to participants in
employer-sponsored defined contribution plans (such institutions and plans are
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 nonBusiness Day, the order will not be executed
until it is received and accepted by FD Distributors 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 (in the case of employer-sponsored defined contribution plans, their
employer) for further information concerning the types of eligible Customer
accounts and the related purchase and redemption procedures.

15
<PAGE> 234

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

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an 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 FD Distributors. Payment for redemption
orders received by FD Distributors on a Business Day will normally be wired the
following Business Day to the Institution. Payment for redemption orders which
are received on a non-Business Day will normally be wired to the Institution on
the next Business Day. However, in both cases Galaxy reserves the right to wire
redemption proceeds within seven days after receiving the redemption order if,
in its judgment, an earlier payment could adversely affect the Fund.

Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized. The Fund reserves the right to redeem
Shares in any account at their net asset value involuntarily, upon 60 days'
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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

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

16
<PAGE> 235

qualification generally relieves the Fund of liability for federal income taxes
to the extent the Fund's earnings are distributed in accordance with the Code.

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

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

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

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

A taxable gain or loss may be realized by a shareholder upon redemption,
transfer or exchange of Shares of the Fund 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

17
<PAGE> 236

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, High Quality
Bond, Corporate 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 with respect to the Fund,
Fleet is entitled to receive advisory fees, computed daily and paid monthly, at
an annual rate of .75% of the average daily net assets of the Fund. The fee for
the Fund is higher than fees paid by most other mutual funds, although the Board
of Trustees of Galaxy believes that it is not higher than the average advisory
fees paid by funds with similar investment objectives and policies.

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 Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and other services which they provide to beneficial shareholders. Fleet is
currently waiving a portion of the advisory fees payable to it by the Fund so
that it is entitled to receive an advisory fee at the annual rate of .55% of the
Fund's average daily net assets, but Fleet may in its discretion revise or
discontinue this waiver at any time. For the fiscal year ended October 31, 1996,
Fleet received advisory fees (after fee waivers) at the effective rate of .55%
of the Fund's average daily net assets.

The Fund's portfolio manager, Marie H. Schofield, is primarily responsible
for the day-to-day management of the Fund's investment portfolio. Ms. Schofield,
a Vice President, has been with Fleet since 1991 and has been engaged in
providing investment management services for over twenty years. She has managed
the Intermediate Government Income Fund since December 1, 1996.

AUTHORITY TO ACT AS INVESTMENT ADVISER

18
<PAGE> 237

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. Fleet, the
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.

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of
combined average daily net assets over $5 billion. Prior to September 5, 1996,
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 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 voluntarily all or a portion of the administration fee payable to it
by the Fund. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective rate of .085% of the Fund's average daily
net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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

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

19
<PAGE> 238

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
investment portfolio 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 investment portfolio as are
declared in the discretion of Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing agreements with Institutions (including Fleet Bank and
its affiliates). Pursuant to these servicing agreements, Institutions will
render certain administrative and support services to Customers who are the
beneficial owners of Retail A Shares. Such services will be provided to
Customers who are the beneficial owners of Retail A Shares and are intended to
supplement the services provided by FDISG as administrator and transfer agent to
the shareholders of record of Retail A Shares. The Plan provides that Galaxy
will pay fees for such services at an annual rate of up to .30% of the average
daily net asset value of Retail A Shares of the Fund owned beneficially by
Customers of Institutions. 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 FD Distributors; 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 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 each 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 beneficially owned by Customers of Institutions.
Galaxy understands that Institutions may charge fees to their Customers who are
owners of Retail A Shares in connection with their accounts with such
institutions. After such fees would be in addition to any amounts which may be
received by an Institution under the Shareholder Services Plan. Under the terms
of each servicing agreement entered into with Galaxy, Institutions are required
to provide to their Customers a schedule of any fees that they may charge in
connection with Customer investments in Retail A Shares.

20
<PAGE> 239

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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, 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. ("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 01581-5108.

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 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 shareholder reports and 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 and
Retail A Shares of the Fund.

21
<PAGE> 240

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

MISCELLANEOUS

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

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

22
<PAGE> 241

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23
<PAGE> 242

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24
<PAGE> 243

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25
<PAGE> 244
Galaxy

Intermediate

Government Income

Fund

February 28, 1997

PROSPECTUS
Trust Shares

[Galaxy Logo]

PN-260 975028 (3/97)

<PAGE> 245

TRUST

THE GALAXY FUND

HIGH QUALITY BOND FUND

PROSPECTUS
FEBRUARY 28, 1997
<PAGE> 246

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
EXPENSE SUMMARY....................... 2
FINANCIAL HIGHLIGHTS.................. 3
INVESTMENT OBJECTIVE AND POLICIES..... 5
In General.......................... 5
Other Investment Policies and Risk
Considerations................... 6
INVESTMENT LIMITATIONS................ 13
PRICING OF SHARES..................... 14
HOW TO PURCHASE AND REDEEM
SHARES.............................. 15
Distributor......................... 15
Purchase of Shares.................. 15
Redemption of Shares................ 16
DIVIDENDS AND DISTRIBUTIONS........... 16
TAXES................................. 16

================================================================================
<PAGE> 247

THE GALAXY FUND

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

This Prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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 (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 FIS Securities, Inc., Fleet Brokerage Securities,
Inc., Fleet Securities, Inc., Fleet Enterprises, Inc., Fleet Financial Group,
Inc., its affiliates, their correspondent banks and other qualified banks,
savings and loans associations and broker/dealers on behalf of their customers.
Trust Shares, Retail A Shares and Retail B Shares represent equal pro rata
interests in the Fund, except they bear different expenses which reflect the
difference in the range of service provided to them. See "Financial Highlights,"
"Management of the Fund" and "Description of Galaxy and Its Shares" herein.

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 number 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 28, 1997
<PAGE> 248

EXPENSE SUMMARY

<TABLE>
<CAPTION>
HIGH QUALITY
SHAREHOLDER TRANSACTION EXPENSES BOND FUND
- ------------------------------------------------------------------------------- ------------
<S> <C>
Sales Load..................................................................... None
Sales Load on Reinvested Dividends............................................. None
Deferred Sales Load............................................................ None
Redemption Fees................................................................ None
Exchange Fees.................................................................. None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------
Advisory Fees (After Fee Waivers).............................................. .55%
12b-1 Fees..................................................................... None
Other Expenses................................................................. .36%
----
Total Fund Operating Expenses (After Fee Waivers).............................. .91%
====
</TABLE>

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

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

The Expense Summary and Example are intended to assist the investor in
understanding the costs and expenses that an investor in Trust Shares of the
Fund will bear directly or indirectly. They are 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 Fleet, Advisory Fees would be .75%, and Total
Fund Operating Expenses would be 1.11% for Trust Shares of the Fund. For more
complete descriptions of these costs and expenses, see "Management of the Fund"
and "Description of Galaxy and its Shares" in this Prospectus and the financial
statements and notes incorporated by reference into the Statement of Additional
Information. Any fees that are charged by affiliates of Fleet Investment
Advisors Inc. or other institutions directly to their customer accounts for
services related to an investment in Trust statements and notes incorporated by
reference into the Statement of Additional Information.

THE FOREGOING EXAMPLE 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> 249

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 expense incurred under Galaxy's Shareholder Services
Plan for Retail A Shares and Trust Shares at an annual rate of up to .15% of the
average daily net asset value of the Fund's outstanding Retail A Shares, (ii)
Retail B shares of the Fund bear the expenses incurred under Galaxy's
Distribution and Services Plan for Retail B shares at an annual rate of up to
.80% of the average daily net asset value of the Fund's outstanding Retail B
Shares, and (iii) Trust Shares, Retail A Shares and Retail B Shares bear
differing transfer agency expenses. Retail Shares are offered under a separate
prospectus.

The financial highlights presented below have been audited by Coopers &
Lybrand L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements contained in the Annual Report and
incorporated by reference into the Statement of Additional Information.
Information in the financial highlights for periods prior to the fiscal year
ended October 31, 1994 reflects the investment results of both Trust Shares and
Retail A Shares of the Fund. More information about the performance of the Fund
is also contained in the Annual Report, which may be obtained without charge by
contacting Galaxy at its telephone number or address provided above.

3
<PAGE> 250

HIGH QUALITY BOND FUND
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1996 1995 1994 YEAR ENDED PERIOD ENDED
OCTOBER 31,(2)
-------------------
----------------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991(1,2)
------------------------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.00
-------- -------- -------- -------- -------- -------
Income from Investment Operations
Net Investment Income(3,4).............. 0.62 0.64 0.65 0.66 0.68 0.64
Net realized and unrealized gain (loss)
on investments........................ (0.16) 1.09 (1.56) 0.93 0.36 0.33
-------- -------- -------- -------- -------- -------
Total from Investment
Operations:.................... 0.46 1.73 (0.91) 1.59 1.04 0.97
-------- -------- -------- -------- -------- -------
Less Dividends:
Dividends from net investment income.... (0.62) (0.64) (0.65) (0.66) (0.71) (0.62)
Dividends from net realized capital
gains................................. -- -- -- (0.16) (0.08) --
Dividends in excess of net realized
capital gains......................... -- -- (0.27) -- -- --
-------- -------- -------- -------- -------- -------
Total Dividends:................. (0.62) (0.64) (0.92) (0.82) (0.79) (0.62)
-------- -------- -------- -------- -------- -------
Net increase (decrease) in net asset
value................................... (0.16) 1.09 (1.83) 0.77 0.25 0 .35
-------- -------- -------- -------- -------- -------
Net Asset Value, End of Period............ $ 10.47 $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
======== ======== ======== ======== ======== =======
Total Return.............................. 4.46% 18.66% (8.39%) 15.63% 10.32% 10.04%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)......... $149,075 $134,631 $118,776 $162,594 $108,774 $ 57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver.................. 5.88% 6.33% 6.28% 5.98% 6.55% 7.25%(6)
Operating expenses including
reimbursement/waiver.................. 0.85% 0.85% 0.78% 0.76% 0.87% 0.95%(6)
Operating expenses excluding
reimbursement/waiver.................. 1.06% 1.07% 0.98% 0.96% 0.94% 0.95%(6)
Portfolio Turnover Rate................... 163% 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 Trust Shares before waiver of fees by
Fleet and/or the Fund's Administrator for the years ended October 31, 1996,
1995 and 1994 were $0.60, $0.62 and $0.63, respectively.
(4) Net investment income per share before waiver of fees by Fleet and/or the
Fund's Administrator for the years ended October 31, 1993, 1992 and 1991
were $0.63, $0.67 and $0.64, respectively.
(5) Not Annualized.
(6) Annualized.

4
<PAGE> 251

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek a high level of current income
consistent with prudent risk of capital. The Fund will invest substantially all
of its assets in corporate debt obligations such as bonds 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 in asset-backed and
mortgage-backed securities. The Fund may also invest, from time to time, in
obligations issued by state or local governmental issuers ("municipal
securities"). The purchase of municipal securities may be advantageous when, as
a result of prevailing economic, regulatory or other circumstances, the
performance of such securities, on a pretax basis, is comparable to that of
corporate or U.S. debt obligations. The Fund may enter into interest rate
futures contracts to hedge against changes in market values of fixed income
instruments that the Fund holds or intends to purchase. See "Other Investment
Policies and Risk Considerations." At least 65% of the Fund's total assets will
be invested in non-convertible bonds. Any common stock received through the
conversion of convertible debt obligations will be sold in an orderly manner as
soon as possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in high quality debt obligations that are rated,
at the time of purchase, within the three highest rating categories assigned by
S&P (AAA, AA, and A) or Moody's (Aaa, Aa and A) (or, if unrated, are determined
by Fleet Investment Advisors Inc. ("Fleet") the Fund's investment adviser, to be
of comparable quality) and in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and "money market" instruments
such as those listed below under "Other Investment Policies and Risk
Considerations." Unrated securities will be determined to be of comparable
quality to high quality debt obligations if, among other things, other
outstanding obligations of the issuers of such securities are rated A or better.
When, in Fleet's opinion, 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 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 U.S. dollars and have an established
over-the-counter market in the United States. The Fund may also invest in
dollar-denominated high quality debt obligations of U.S. corporations issued
outside the United States.

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

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

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. Government Obligations and Money Market Instruments

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.
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.

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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 Fleet 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

Variable and Floating Rate Municipal Securities

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

Repurchase and Reverse Repurchase Agreements

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

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

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Interest Rate Futures Contracts

The Fund may enter into contracts (both purchases and sales) which provide
for the future delivery of fixed income securities (commonly known as interest
rate futures contracts). The Fund will not engage in futures transactions for
speculation, but only to hedge against changes in the market values of
securities which the Fund hold or intend to purchase. The Fund will engage in
futures transactions only to the extent permitted by the Commodity Futures
Trading Commission ("CFTC") and the Securities and Exchange Commission ("SEC").
The purchase of futures instruments in connection with securities which the
Funds intend to purchase will require an amount of cash and/or liquid assets,
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.

When-Issued, Forward Commitment and Delayed Settlement Transactions

Stand-By Commitments

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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, the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation.
Mortgage-backed securities provide a monthly payment consisting of interest and
principal payments. Additional payment may be made out of unscheduled repayments
of principal resulting from the sale of the underlying residential property,
refinancing or foreclosure, net of fees or costs that may be incurred.
Prepayments of principal on mortgage-backed securities may tend to increase due
to refinancing of mortgages as interest rates decline. To the extent that the
Fund purchases mortgage-backed securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time
without penalty) may result in some loss of the Fund's principal investment to
the extent of the premium paid. The yield of the Fund from investing in
mortgaged-backed securities may be affected by reinvestment of prepayments at
higher or lower rates than the original investment.

Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercials 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 rats 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 value of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

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Mortgage Dollar Rolls

Stripped Obligations

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considered liquid under guidelines established by the Trust's Board of Trustees
if they can be disposed of promptly in the ordinary course of business at a
value reasonably close to that used in the calculation of net asset value per
share.

Guaranteed Investment Contracts

Bank Investment Contracts

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

INVESTMENT LIMITATIONS

The Fund may not:

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

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

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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.

With respect to Investment Limitation No. 2 above, (a) 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, and (b)
mortgage dollar rolls entered into by the Fund that are not accounted for as
financings shall not constitute borrowings.

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,
as amended, for resales of certain securities to qualified institutional buyers.
The Fund's investment in Rule 144A securities could have the effect of
increasing the level of illiquidity of the Fund during any period that qualified
institutional buyers were no longer interested in purchasing these securities.
For purposes of the 10% limitation on purchases of illiquid instruments
described under Investment Limitation No. 3 above, Rule 144A securities will not
be considered illiquid if Fleet 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), on each day on which the Exchange is open for trading.
Currently, the holidays which Galaxy observes are New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Net asset value per Share for purposes of pricing sales and
redemptions is calculated separately for each series of Shares by dividing the
value of all securities and other assets attributable to a particular series of
the Fund, less the liabilities attributable to Shares of that series of the
Fund, by the number of outstanding Shares of that series of the Fund.

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<PAGE> 261

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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc. and to participants in
employer-sponsored defined contribution plans (such institutions ad plans are
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 per Share 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 FD Distributors 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 (in the case of employer-sponsored defined contribution plans, their
employer) for further information concerning the types of eligible Customer
accounts and the related purchase and redemption procedures.

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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 respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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

Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized. The Fund reserves the right to redeem
Shares in any account at their net asset value involuntarily, upon 60 days'
written notice, if the value of the account is less than $250 as a result of
redemptions.

DIVIDENDS AND DISTRIBUTIONS

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

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

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qualification generally relieves the Fund of liability for federal income taxes
to the extent the Fund's earnings are distributed in accordance with the Code.

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

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

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

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MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and institutional clients; and
manages other investment portfolios of Galaxy: the Money Market, Government,
Tax-Exempt, U.S. Treasury, Connecticut Municipal Money Market, Massachusetts
Municipal Money Market, Institutional Treasury Money Market, Equity Value,
Equity Growth, Equity Income, International Equity, Small Company Equity, Asset
Allocation, Small Cap Value, Growth and Income, Short-Term Bond, Intermediate
Government Income, Corporate Bond, Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds.

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 Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and other services which they provide to beneficial shareholders. Fleet is
currently waiving a portion of the advisory fees payable to it by the Fund so
that it is entitled to receive an advisory fee at the annual rate of .55% of the
Fund's average daily net assets, but Fleet may in its discretion revise or
discontinue this waiver at any time. For the fiscal year ended October 31, 1996,
Fleet received advisory fees (after fee waivers) at the effective annual rate of
.55% of the Fund's average daily net assets. In addition to fee waivers, during
the fiscal year ended October 31, 1996 Fleet also reimbursed the Fund for
certain operating expenses during this fiscal year, but Fleet does not expect to
continue such reimbursements in the current fiscal year.

Marie M. Schofield serves as portfolio manager of the Fund and is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Ms. Schofield, a Vice President, has been with Fleet since 1991 and has been
engaged in providing investment management services for over twenty years. Ms.
Schofield began serving as co-portfolio manager of the Fund on March 1, 1996 and
has been the Fund's sole portfolio manager since April 1, 1996.

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,

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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. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of
combined average daily net assets over $5 billion. Prior to September 5, 1996,
FDISG was 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 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 voluntarily all or a portion of the administration fee payable to it
by the Fund. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective rate of .085% of the Fund's 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 Service Plan described below. 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

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annual rate not to exceed .80% of the average daily net asset value of the
Fund's outstanding Retail B Shares. Currently, these payments are not made with
respect to the Fund's Trust Shares. In addition, Shares of each series in the
Fund bear differing transfer agency expenses. Standardized yield and total
return quotations are computed separately for each series of Shares. The
difference in the expenses paid by the respective series will affect their
performance.

Each share of Galaxy (irrespective of series designation) has a par value
of $.001 per share, represents an equal proportionate interest in the related
investment portfolio 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 investment portfolio as are declared in the discretion of
Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing agreements with Institutions (including Fleet Bank and
its affiliates). Pursuant to these servicing agreements, to 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 FDISG as administrator and transfer agent to
the shareholders of record of Retail A Shares. Institutions may also receive up
to one-half of this fee 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 FD Distributors; 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. The Plan provides that Galaxy will pay fees for such
services at an annual rate of up to .30% of the average daily net asset value of
Retail A Shares of the Fund owner beneficially by Customers of Institutions.
Institutions also receive up to one-half of this fee 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 the Statement of Additional
Information under "Shareholder Services Plan."

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<PAGE> 267

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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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, 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. ("FDISG"), a wholly-owned subsidiary First Data Corporation, serves as the
Fund's transfer and dividend disbursing agent. Services performed by both
entities for the Fund are described in the Statement of Additional Information.
Communications to FDISG should be directed to FDISG at P.O. Box 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

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 fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distributions, 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 shareholder
reports and 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

21
<PAGE> 268

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

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 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 the Fund or
Galaxy, or (b) 67% or more of the Shares of the Fund or Galaxy present at a
meeting if more than 50% of the outstanding Shares of the Fund or Galaxy are
represented at the meeting in person or by proxy.

22
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<PAGE> 270

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<PAGE> 271

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<PAGE> 272

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<PAGE> 273

GALAXY
HIGH QUALITY BOND
FUND

February 28, 1997

PROSPECTUS

Trust Shares

[GALAXY FUND LOGO]

FN-261 15027 (3/97)

<PAGE> 274

TRUST

THE GALAXY FUND

CORPORATE BOND FUND

PROSPECTUS
FEBRUARY 28, 1997
<PAGE> 275

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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.......... 6
Other Investment Policies and Risk
Considerations.................... 7
INVESTMENT LIMITATIONS................. 14
PRICING OF SHARES...................... 15
HOW TO PURCHASE AND REDEEM SHARES...... 16
Distributor.......................... 16
Purchase of Shares................ 16
Purchase Procedures--Customers of
Institutions.................... 16
Purchase Procedures--Direct
Investors....................... 17
Other Purchase Information........... 17
Redemption Procedures--Customers
of Institutions................. 18
Redemption Procedures--Direct
Investors....................... 18
Other Redemption Information......... 20

<CAPTION>
PAGE
<S> <C>
INFORMATION SERVICES................... 20
Galaxy Information Center............ 20
Voice Response System................ 20
Galaxy Shareholder Services.......... 20
DIVIDENDS AND DISTRIBUTIONS............ 20
TAXES.................................. 21
Federal.............................. 21
State and Local...................... 22
MANAGEMENT OF THE FUND................. 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.......................... 26
</TABLE>

================================================================================
<PAGE> 276

THE GALAXY FUND

The Fund's investment objective is to seek a high level of current income by
investing primarily in investmentgrade, 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. Under normal market and
economic conditions, 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
rating categories assigned by Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's") (or which, if unrated, are of comparable
quality) and in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and "money market" instruments.

This Prospectus describes Trust Shares in the Fund. Trust Shares are offered
to investors maintaining qualified accounts primarily 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 FIS Securities, Inc.,
Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises,
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. ("Fleet"), and
sponsored and distributed by First Data Distributors, Inc., which is
unaffiliated with Fleet and its parent, Fleet Financial Group, Inc., and
affiliates.

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 28, 1997
<PAGE> 277

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 Fund expects to incur during the current fiscal year with respect to
its Trust Shares. Examples based on the table are also shown.

<TABLE>
<CAPTION>
CORPORATE
BOND
SHAREHOLDER TRANSACTION EXPENSES FUND
- --------------------------------------------------------------------------------- ---------
<S> <C>
Sales Load....................................................................... None
Sales Load on Reinvested Dividends............................................... None
Deferred Sales Load.............................................................. None
Redemption Fees(1)............................................................... None
Exchange Fees.................................................................... None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------------------------------------------------
<S> <C>
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 below under "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................................. $9 $29 $50 $112
</TABLE>

The Expense Summary and Example are intended to assist investors 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 Fleet, 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 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 described
above.

THE FOREGOING EXAMPLE 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> 278

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 .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.

3
<PAGE> 279

CORPORATE BOND FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED OCTOBER 31,
OCTOBER 31, 1996 1995(1)
---------------- -----------------
<S> <C> <C>
Net Asset Value, Beginning of period......................... $ 10.74 $ 10.00
-------- -------
Income from Investment Operations:
Net investment income(2)................................... 0.64 0.61
Net realized and unrealized gain (loss) on investments..... (0.13) 0.74
-------- -------
Total from Investment Operations:....................... 0.51 1.35
-------- -------
Less Dividends:
Dividends from net investment income....................... (0.64) (0.61)
Dividends from net realized capital gains.................. (0.08) --
-------- -------
Total Dividends:........................................ (0.72) (0.61)
-------- -------
Net increase (decrease) in net asset value................... (0.21) 0.74
-------- -------
Net Asset Value, End of period............................... $ 10.53 $ 10.74
======== =======
Total Return................................................. 5.00% 13.85%(3)
Ratios/Supplemental Data:
Net Assets, End of period (000's)............................ $107,728 $37,391
Ratios to average net assets:
Net investment income including reimbursement/waiver....... 6.13% 6.61%(4)
Operating expenses including reimbursement/waiver.......... 0.85% 1.06%(4)
Operating expenses excluding reimbursement/waiver.......... 1.05% 1.26%(4)
Portfolio Turnover Rate...................................... 84% 41%(3)
</TABLE>

- ------------
(1) The Fund commenced operations on December 12, 1994.
(2) Net investment income per share before reimbursement/waiver of fees by Fleet
and/or the Fund's administrator for the fiscal year ended October 31, 1996
and for the period ended October 31, 1995 were $0.62 and $0.57,
respectively.
(3) Not Annualized.
(4) Annualized.

4
<PAGE> 280

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 ("Fleet"), will consider the total rate of return on securities in
managing the Fund. Under normal market and economic conditions, 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 corporate form by one or
more states or political subdivisions in the United States or by one or more
foreign governments or political subdivisions. 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. Government 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 rating categories
assigned by S&P ("AAA", "AA", "A" and "BBB") or Moody's ("Aaa", "Aa", "A" and
"Baa") (or which, if unrated, are determined by Fleet 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 Fleet 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 Fleet's
opinion, 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.

5
<PAGE> 281

to special investment risks. See "Special Risks and Considerations." The Fund
may also invest in dollar-denominated debt obligations of U.S. corporations
issued outside the United States.

Fleet expects that under normal market conditions, the Fund's portfolio
securities will have an average weighted maturity of three to ten years. See
"Other Investment Policies" below for information regarding additional
investment policies of the Fund.

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.

Investments in foreign securities may 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. In addition, foreign issuers in general may be subject to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic companies, and securities of foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic issuers.

Although the 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 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.

6
<PAGE> 282

The Fund's investments in obligations rated below the four highest ratings
assigned by 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.

7
<PAGE> 283

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.

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

8
<PAGE> 284

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 Fleet 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 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

9
<PAGE> 285

investment company will be owned in the aggregate by the Fund, other investment
portfolios of Galaxy, and any other investment companies advised by Fleet.

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 or other liquid assets, 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 Fleet 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 the Fund 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 total assets, the Fund's liquidity and the
ability of Fleet 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.

10
<PAGE> 286

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, 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 value of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

Mortgage Dollar Rolls

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such benefits exceed the income, capital appreciation and gain or loss due to
mortgage prepayments that would have been realized on the securities sold as
part of the mortgage dollar roll, the use of this technique will diminish the
investment performance of the Fund compared with what such performance would
have been without the use of mortgage dollar rolls. All cash proceeds will be
invested in instruments that are permissible investments for the Fund. The Fund
will hold and maintain in a segregated account until the settlement date cash or
other liquid assets in an amount equal to the forward purchase price.

Stripped Obligations

To the extent consistent with its investment objective, the Fund may
purchase U.S. Treasury receipts and other "stripped" securities that evidence
ownership in either future interest payments or 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 by the Fund. Obligations
issued by the U.S. Government may be considered liquid under guidelines
established by Galaxy'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

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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.

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 or
currency exchange rates, or indices, and include, but are not limited to,
interest rate futures, certain asset-backed and mortgage-backed securities,
certain zero coupon bonds and currency forward contracts.

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

INVESTMENT LIMITATIONS

The Fund may not:

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.

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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, (i) 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, and (ii)
mortgage dollar rolls entered into by the Fund that are not accounted for as
financings shall not constitute borrowings.

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, as amended, 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 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 Fleet 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), 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
Shares of that series of the Fund, by the number of outstanding Shares of that
series of the Fund.

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

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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

PURCHASE OF SHARES

FD Distributors 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") (i) who maintain qualified accounts
primarily at bank and trust institutions, including subsidiaries of Fleet
Financial Group, Inc., (ii) who are participants in employer-sponsored defined
contribution plans, or (iii) who are customers of FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, Inc.,
Fleet Financial Group, Inc., its affiliates, their correspondent banks, and
other qualified banks, savings and loan associations and broker/dealers (such
institutions and plans are referred to herein collectively as "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 FD
Distributors, 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 FD Distributors on a Business Day in accordance with FD
Distributors' 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 FD Distributors and for wiring required funds in
payment to Galaxy's custodian on a timely basis. FD Distributors 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 particular Institution should contact such entity (in
the case of employer-sponsored defined contribution plans, their employer)
directly for appropriate purchase instructions.

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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 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 FD Distributors 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 confirmation of a
prior transaction, (b) a subsequent order form that may be obtained from FD
Distributors, 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.
("FDISG"), Galaxy's transfer agent. Such purchases may only be made on days on
which FD Distributors, Galaxy's custodian and Galaxy's transfer agent are open
for business. Prior to making any purchase by wire, an investor must telephone
1-800-628-0414 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 FD Distributors 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.

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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 FD Distributors 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

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their particular Institution. It is the
responsibility of the Institution to transmit redemption orders to FD
Distributors 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 their 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 FD Distributors 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 5108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the name of the Fund and 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. FD Distributors will not
accept guarantees from notaries public. FD Distributors 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 FD Distributors 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

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<PAGE> 294

FD Distributors of the redemption request. Questions with respect to the proper
form for redemption requests should be directed to FD Distributors at
1-800-628-0414.

Redemption by Telephone. Direct Investors may redeem Trust Shares by
calling 1-800-628-0414 and instructing FD Distributors 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" above for
details regarding signature guarantees.)

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 FD Distributors 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. FD Distributors 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 FD
Distributors. To request redemption of Trust Shares by wire, Direct Investors
should call FD Distributors at 1-800-628-0414.

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 FD
Distributors. 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 transactions, it may be liable
for losses due to unauthorized or fraudulent telephone instructions.

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 FD Distributors 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.

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<PAGE> 295

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 FD Distributors. 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, 7 days a week. To access the Galaxy Information
Center Automated Telephone Service, 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 above under "How To Purchase and Redeem Shares." To access the Voice
Response System, just call 1-800-628-0414 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 1-800-628-0414.

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

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<PAGE> 296

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.

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its tax-exempt interest income (if any) net of certain
deductions for such year. In general, the Fund's investment company taxable
income will be its taxable income, including dividends, interest and short-term
capital gains (the excess of net short-term capital gain over net long-term
capital loss), subject to certain adjustments and excluding the excess of any
net long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year. The policy of the Fund is to distribute as
dividends substantially all of its investment company taxable income and any net
tax-exempt interest income each year. Such dividends will be taxable as ordinary
income to the Fund's shareholders who are not currently exempt from federal
income taxes, whether such dividends are received in cash or reinvested in
additional 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 Shares of the Fund 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.

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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 FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, 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 with respect to the Fund,
Fleet 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 Bank or other
subsidiaries of Fleet Financial Group, Inc., in consideration for administrative
and shareholder support services which they provide to beneficial shareholders.
Fleet is currently waiving a portion of the advisory fee payable by the Fund
such that it is entitled to receive advisory fees at the annual rate of .55% of
the Fund's average daily net assets. For the fiscal year ended October 31, 1996,
Fleet received advisory fees (after fee waivers) at the effective annual rate of
.55% of the Fund's average daily net assets.

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, has been with Fleet and its predecessors since 1986 and
has been the Fund's portfolio manager since its inception.

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,

22
<PAGE> 298

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. Fleet,
the 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.

ADMINISTRATOR

First Data Investor Services Group, Inc. ("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. Effective
September 5, 1996, for the services provided to the Fund, FDISG is entitled to
receive administration fees, computed daily and paid monthly, at an annual rate
of .09% of the first $2.5 billion of 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 .075% of
combined average daily net assets over $5 billion. Prior to September 5, 1996,
FDISG was 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 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 voluntarily all or a portion of the administration fee payable to it
by the Fund. For the fiscal year ended October 31, 1996, the Fund paid FDISG
administration fees at the effective annual rate of .085% of its average daily
net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

23
<PAGE> 299

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
investment portfolio 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 investment portfolio as are declared in the discretion of
Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing agreements with Institutions (including Fleet Bank and
its affiliates). Pursuant to the 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 .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 FD
Distributors; 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 to their Customers a schedule of any fees that they may
charge in connection with Customer investments in Retail A Shares.

24
<PAGE> 300

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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 ("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 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. ("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
01581-5108.

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 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 shareholder reports and meetings; and any
extraordinary expenses. The Fund also pays for brokerage fees and commissions in
connection with the purchase of portfolio securities.

PERFORMANCE AND YIELD INFORMATION

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

25
<PAGE> 301

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.

Any additional fees charged 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.

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<PAGE> 303

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<PAGE> 305
GALAXY
CORPORATE BOND
FUND

February 28, 1997

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

[LOGO]

FN-426 15026 (3/97)

<PAGE> 306

THE GALAXY FUND

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

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 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 Investment Advisors Inc., 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 rating categories
assigned by S&P or Moody's (or which, if unrated, are of comparable quality) and
in "money market" instruments.

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
three highest rating categories assigned by S&P or Moody's (or which, if
unrated, are of comparable quality) and in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and "money market"
instruments.

This Prospectus describes the Retail A Shares representing interests in each
Fund and 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 FIS
Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities, Inc.,
Fleet Enterprises, 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.

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

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 28, 1997
<PAGE> 307

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, U.S. TREASURY, TAX-EXEMPT, 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, 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 First Data 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 FIS Securities, Inc., Fleet Brokerage Securities, Inc.,
Fleet Securities, Inc., Fleet Enterprises, 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 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 of Institutions 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" below.

Q: When are dividends paid?

A: Dividends from net investment income of the Funds are 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 with respect to which the
dividend or distribution was declared without sales or CDSC charges. See
"Dividends and Distributions."

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

A: The Short-Term Bond Fund invests primarily in corporate debt obligations
rated within the four highest rating categories assigned by S&P or Moody's.
Corporate debt obligations rated in the lowest of the four highest rating
categories assigned by Moody's or S&P are considered to have speculative
characteristics, even though they are of investment grade quality. The
Intermediate Government Income and High Quality Bond Funds invest in such
obligations rated within the three highest rating categories assigned by S&P or
Moody's. The Short-Term Bond Fund may invest in the debt obligations of foreign
corporations and banks and in obligations issued or guaranteed by foreign
governments or any of their political subdivisions or instrumentalities. Each
Fund may invest in dollar-denominated debt obligations of U.S. corporations
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

1
<PAGE> 308

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 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 additional sales or CDSC charges.
Galaxy offers Individual Retirement Accounts ("IRAs"), Simplified Employee
Pension Plans ("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 Plans ("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."

2
<PAGE> 309

EXPENSE SUMMARY

<TABLE>
<CAPTION>
INTERMEDIATE
SHORT-TERM GOVERNMENT HIGH QUALITY
BOND FUND INCOME FUND BOND FUND
----------------------- ------------ -----------------------
(RETAIL A (RETAIL B (RETAIL A (RETAIL A (RETAIL B
SHARES) SHARES) SHARES) SHARES) SHARES)
--------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------
Maximum Front End Sales Charge Imposed on Purchases (as
a percentage of offering price)....................... 3.75%(1) None 3.75%(1) 3.75%(1) None
Maximum Deferred Sales Charge (as a percentage of
offering price)....................................... None 5.00%(2) None None 5.00%(2)
Sales Charge Imposed on Reinvested Dividends............ None None None None None
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 (After Fee Waivers and Expenses
Reimbursements)....................................... .59% .43% .54% .54% .38%
Total Fund Operating Expenses (After Fee Waivers and
Expense Reimbursements)............................... 1.14% 1.78% 1.09% 1.09% 1.73%
</TABLE>

- ----------------------------------
(1) Reduced front-end sales charge may be available. See "How to Purchase
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 Shares--Applicable Sales Charge--Retail B Shares."
(3) Direct Investors are charged a $5.00 fee if redemption proceeds are paid by
wire.
(4) Retail A Shares do not currently charge 12b-1 fees. Long-term investors in
Retail B Shares (as well as investors in Retail A Shares if 12b-1 fees are
charged in the future) 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 Government Income 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.

3
<PAGE> 310

The Expense Summary and Example are intended to assist investors in
understanding the costs and expenses that an investor in Retail A and/or Retail
B Shares of the Funds will bear directly or indirectly. The information
contained in the Expense Summary and Example is based on expenses incurred by
each Fund during the last fiscal year, restated to reflect the expenses that
each Fund expects to incur during the current fiscal year on its Retail A and/or
Retail B Shares. Without voluntary fee waivers and/or expense reimbursements by
Fleet, "Advisory Fees" would be .75% and .75% for Retail A Shares and Retail B
Shares, respectively, of the Short-Term Bond Fund, .75% for Retail A Shares of
the Intermediate Government Income Fund and .75% and .75% for Retail A Shares
and Retail B Shares, respectively, of the High Quality Bond Fund, Other Expenses
would be .50% for Retail B Shares of the High Quality Bond Fund and Total Fund
Operating Expenses would be 1.34% and 1.98% for Retail A Shares and Retail B
Shares, respectively, of the Short-Term Bond Fund, 1.29% for Retail A Shares of
the Intermediate Government Income Fund and 1.29% and 2.05% for Retail A Shares
and Retail B Shares, respectively, of the High Quality 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
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 EXAMPLE 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> 311

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 have been audited by Coopers &
Lybrand, L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Funds dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements contained in the Annual Report 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).
More information about the performance of each Fund is also contained in the
Annual Report, which may be obtained without charge by contacting Galaxy at its
telephone number or address provided above.

5
<PAGE> 312

SHORT-TERM BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1996 PERIOD
--------------------- 1995 1994 ENDED
RETAIL A RETAIL B ------- ------- OCTOBER 31,
SHARES SHARES(3) RETAIL SHARES 1993(2) 1992(1,2)
-------- -------- ------------------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 10.06 $10.09 $ 9.73 $ 10.30 $ 10.09 $ 10.00
------- ------ ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income(4,5).......................... 0.52 0.31 0.55 0.44 0.47 0.42
Net realized and unrealized gain (loss) on
investments....................................... (0.07) (0.10) 0.33 (0.51) 0.22 0.09
------- ------ ------- ------- ------- -------
Total from Investment Operations:............ 0.45 0.21 0.88 (0.07) 0.69 0.51
------- ------ ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ............... (0.52) (0.31) (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: ............................ (0.52) (0.31) (0.55) (0.50) (0.48) (0.42)
------- ------ ------- ------- ------- -------
Net increase (decrease) in net asset value............ (0.07) (0.10) 0.33 (0.57) 0.21 0.09
------- ------ ------- ------- ------- -------
Net Asset Value, End of Period........................ $ 9.99 $ 9.99 $ 10.06 $ 9.73 $ 10.30 $ 10.09
======= ====== ======= ======= ======= =======
Total Return(6)....................................... 4.63% 2.12%(7) 9.28% (0.68%) 6.98% 5.21%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)..................... $33,388 $ 260 $31,542 $34,061 $85,211 $57,403
Ratios to average net assets:
Net investment income including
reimbursement/waiver.............................. 5.22% 4.73%(8) 5.54% 4.43% 4.51% 5.77%(8)
Operating expenses including reimbursement/waiver... 1.11% 1.77%(8) 0.99% 0.93% 0.86% 0.90%(8)
Operating expenses excluding reimbursement/waiver... 1.35% 1.98%(8) 1.32% 1.14% 1.06% 1.20%(8)
Portfolio Turnover Rate............................... 214% 214% 289% 233% 100% 114%(7)
</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) The Fund began offering Retail B Shares on March 4, 1996.
(4) Net investment income per share for Retail A Shares before reimbursement and
waiver of fees by Fleet for the years ended October 31, 1996, 1995 and 1994
were $0.50, $0.52 and $0.42, respectively and for the period ended October
31, 1996 for Retail B Shares was $0.29.
(5) Net investment income per share before fee waivers and/or reimbursements by
Fleet and/or the Fund's administrator for the year ended October 31, 1993
and for the period ended October 31, 1992 were $0.45 and $0.40,
respectively.
(6) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(7) Not Annualized.
(8) Annualized.

6
<PAGE> 313

INTERMEDIATE GOVERNMENT INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
------------------------------
1996 1995 1994 PERIOD
-------- ------- ------- YEAR ENDED OCTOBER 31,(2) ENDED
RETAIL A ----------------------------------------------------- OCTOBER 31,
SHARES RETAIL SHARES 1993 1992 1991 1990 1989 1988(1,2)
-------- ------------------ -------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period............... $ 10.28 $ 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)........... 0.57 0.61 0.57 0.65 0.71 0.73 0.76 0.82 0.11
Net realized and
unrealized gain (loss)
on investments........ (0.22) 0.60 (1.03) 0.10 0.40 0.71 (0.56) 0.16 0.29
------- ------- ------- -------- -------- ------- ------- ------- -------
Total from
Investment
Operations:..... 0.35 1.21 (0.46) 0.75 1.11 1.44 0.20 0.98 0.40
------- ------- ------- -------- -------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income..... (0.57) (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:...... (0.57) (0.61) (0.58) (0.86) (0.74) (0.71) (0.74) (1.11) --
------- ------- ------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in
net asset value......... (0.22) 0.60 (1.04) (0.11) 0.37 0.73 (0.54) (0.13) 0.40
------- ------- ------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of
Period.................. $ 10.06 $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73 $ 10.27 $ 10.40
======= ======= ======= ======== ======== ======= ======= ======= =======
Total Return(5)........... 3.58% 12.85% (4.42%) 7.06% 10.95% 15.35% 2.06% 10.22% 3.90%(6)
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)................. $79,741 $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... 5.69% 6.10% 5.58% 6.03% 6.52% 7.25% 7.69% 8.19% 6.41%(7)
Operating expenses
including
reimbursement/waiver... 1.04% 1.02% 0.78% 0.80% 0.80% 0.96% 0.98% 0.99% 0.98%(7)
Operating expenses
excluding
reimbursement/waiver... 1.24% 1.26% 0.99% 1.00% 0.94% 0.96% 0.99% 1.00% 0.98%(7)
Portfolio Turnover Rate... 235% 145% 124% 153% 103% 150% 162% 112% 41%(6)
</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
Fleet for the years ended October 31, 1996, 1995 and 1994 were $0.55, $0.58
and $0.54, respectively.
(4) Net investment income per share before waiver of fees by Fleet and/or the
Fund's administrator for the years ended October 31, 1993, 1992, 1990 and
1989 were $0.63, $0.70, $0.73, and $0.82, respectively.
(5) Calculation does not include sales charge for Retail A Shares.
(6) Not Annualized.
(7) Annualized.

7
<PAGE> 314

HIGH QUALITY BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996 YEAR ENDED
-------------------- YEAR ENDED OCTOBER 31,(2) PERIOD ENDED
RETAIL A RETAIL B ------------------ -------------------- OCTOBER 31,
SHARES SHARES(3) 1995 1994 1993 1992 1991(1,2)
-------- -------- ------- ------- -------- -------- ------------
RETAIL SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 10.63 $10.72 $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.00
------- ------ ------- ------- -------- -------- -------
Income from Investment Operations:
Net Investment Income(4,5)................. 0.59 0.36 0.62 0.64 0.66 0.68 0.64
Net realized and unrealized gain (loss) on
investments.............................. (0.16) (0.25) 1.09 (1.56) 0.93 0.36 0.33
------- ------ ------- ------- -------- -------- -------
Total from Investment Operations:... 0.43 0.11 1.71 (0.92) 1.59 1.04 0.97
------- ------ ------- ------- -------- -------- -------
Less Dividends:
Dividends from net investment income....... (0.59) (0.36) (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:.................... (0.59) (0.36) (0.62) (0.91) (0.82) (0.79) (0.62)
------- ------ ------- ------- -------- -------- -------
Net increase (decrease) in net asset value... (0.16) (0.25) 1.09 (1.83) 0.77 0.25 0.35
------- ------ ------- ------- -------- -------- -------
Net Asset Value, End of Period............... $ 10.47 $10.47 $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
======= ====== ======= ======= ======== ======== =======
Total Return(6).............................. 4.24% 1.14%(7) 18.46% (8.41)% 15.63% 10.32% 10.04%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............ $30,984 $ 646 $30,093 $26,654 $162,594 $108,774 $ 57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver..................... 5.66% 5.34%(8) 6.16% 6.25% 5.98% 6.55% 7.25%(8)
Operating expenses including
reimbursement/waiver..................... 1.07% 1.60%(8) 1.02% 0.81% 0.76% 0.87% 0.95%(8)
Operating expenses excluding
reimbursement/waiver..................... 1.28% 1.81%(8) 1.26% 1.02% 0.96% 0.94% 0.95%(8)
Portfolio Turnover Rate...................... 163% 163% 110% 108% 128% 121% 145%(7)
</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) The Fund began offering Retail B Shares on March 4, 1996.
(4) Net investment income per share for Retail A Shares before waiver of fees by
Fleet for the years ended October 31, 1996, 1995 and 1994 were $0.57, $0.59
and $0.62, respectively and for the period ended October 31, 1996 for Retail
B Shares was $0.34.
(5) Net investment income per share before waiver of fees by Fleet 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.
(6) Calculation does not include sales charge for Retail B Shares.
(7) Not Annualized.
(8) Annualized.

8
<PAGE> 315

INVESTMENT OBJECTIVES AND POLICIES

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. Government 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 four highest rating categories assigned by S&P ("AAA", "AA",
"A" and "BBB") or Moody's ("Aaa", "Aa", "A" and "Baa") (or which, if unrated,
are determined by Fleet to be of comparable quality) and in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
"money market" instruments such as those listed below under "Other Investment
Policies." Debt obligations rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. Debt
obligations rated in the lowest of the four highest rating categories assigned
by S&P or Moody's are considered to have speculative characteristics, even
though they are of investment grade quality, and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade debt
obligations. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in debt obligations rated in the three
highest rating categories assigned by S&P or Moody's. 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/Baa or better. When, in the opinion of Fleet, 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 of foreign banks and 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. The Fund may also invest in dollar-denominated debt obligations
of U.S. corporations issued outside the United States.

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

INTERMEDIATE GOVERNMENT INCOME FUND

9
<PAGE> 316

ket" instruments such as bank obligations and commercial paper, and in
asset-backed and mortgage-backed securities. 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, 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, in debt obligations rated, at the
time of purchase, within the three highest rating categories assigned by S&P
("AAA", "AA" and "A") or Moody's ("Aaa", "Aa" and "A") (or which, if unrated,
are determined by Fleet to be of comparable quality) and "money market"
instruments such as those listed below under "Other Investment Policies and Risk
Considerations." Unrated securities will be determined to be of comparable
quality to rated debt obligations if, among other things, other outstanding
obligations of the issuers of such securities are rated A or better.
Notwithstanding the foregoing, under normal market and economic conditions, at
least 65% of the Fund's assets will be invested in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. When, in
the opinion of Fleet, 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.

Fleet 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 debt obligations 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. 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 three highest rating categories assigned by
S&P ("AAA", "AA" and "A") or Moody's ("Aaa", "Aa" and "A") (or which, if
unrated, are determined by Fleet to be of comparable quality) and in obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and "money market" instruments such as those listed below under "Other
Investment Policies and Risk Considerations." Unrated securities will be
determined to be of comparable quality to high quality 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 Fleet, 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.

10
<PAGE> 317

SPECIAL RISK CONSIDERATIONS

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.
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.

11
<PAGE> 318

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

TYPES OF MUNICIPAL SECURITIES

The two principal classifications of municipal securities which may be held
by the Funds are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Funds are in most
cases revenue securities and are not payable from the unrestricted revenues of
the issuer. Consequently, the credit quality of such private activity bonds is
usually directly related to the credit standing of the corporate user of the
facility involved.

VARIABLE AND FLOATING RATE MUNICIPAL SECURITIES

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 Fleet 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.

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

12
<PAGE> 319

SECURITIES LENDING

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
Fund, other investment portfolios of Galaxy, or any other investment companies
advised by Fleet.

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 a Fund
intends to purchase will require an amount of cash and/or, liquid assets 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 a Fund is subject to the ability
of Fleet 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,
a Fund may realize a loss on a futures transaction that is not offset by a
favorable movement in the price of securities which it holds or intends to
purchase or a Fund 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 Fund may purchase eligible securities on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. Each Fund 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 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
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 set-

13
<PAGE> 320

tlements ever exceeded 25% of the value of its total assets, the Fund's
liquidity and the ability of Fleet 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 municipal securities which
are acquired subject to the commitment (thus reducing the yield otherwise
available for the same securities). Stand-by commitments acquired by a Fund
would be valued at zero in determining the Fund's net asset value.

ASSET-BACKED SECURITIES

Each Fund may purchase asset-backed securities, which represent a
participation in, or are secured by and payable from, a stream of payments
generated by particular assets, most often a pool of assets similar to one
another. Assets generating such payments will consist of such instruments as
motor vehicle installment purchase obligations, credit card receivables and home
equity loans. Payment of principal and interest may be guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with entities issuing the securities. The
estimated life of an asset-backed security varies with the prepayment experience
with respect to the underlying debt instruments. The rate of such prepayments,
and hence the life of the asset-backed security, will be primarily a function of
current market rates, although other economic and demographic factors will be
involved. 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 noncallable debt securities. In addition,
like other debt securities, the value of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

MORTGAGE DOLLAR ROLLS

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<PAGE> 321

ment performance of a Fund compared with what such performance would have been
without the use of mortgage dollar rolls. All cash proceeds will be invested in
instruments that are permissible investments for each Fund. The Funds will hold
and maintain in a segregated account until the settlement date cash or other
liquid assets in an amount equal to the forward purchase price.

STRIPPED OBLIGATIONS

To the extent consistent with its investment objective, each Fund may
purchase U.S. Treasury receipts and other "stripped" securities that evidence
ownership in either future interest payments or 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.

GUARANTEED INVESTMENT CONTRACTS

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

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DERIVATIVE SECURITIES

PORTFOLIO TURNOVER

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

INVESTMENT LIMITATIONS

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.

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

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<PAGE> 323

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, (a) 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, and (b)
mortgage dollar rolls entered into by a Fund that are not accounted for as
financings shall not constitute borrowings.

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
as amended 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 Fleet 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), 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.

HOW TO PURCHASE SHARES

DISTRIBUTOR

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 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" before deciding between the two.

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<PAGE> 324

either for their own accounts or for the accounts of others
("Direct Investors"). Retail Shares may also be purchased by FIS Securities,
Inc., Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet
Enterprises, 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 FD
Distributors, 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 FD Distributors on a Business Day in accordance with FD
Distributors' procedures.

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 FD Distributors and for wiring required funds in
payment to Galaxy's custodian on a timely basis. FD Distributors 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 particular 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 5108
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 FD Distributors 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. ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, an investor must telephone
1-800-628-0414 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 FD Distributors 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 FD Distributors 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

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<PAGE> 325

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 FD Distributors 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. The minimum investment requirement
with respect to IRAs, SEPs, MERPs and Keogh Plans (see below under "Retirement
Plans") is $500 (including 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.

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.

FD Distributors will pay the appropriate reallowance to dealers to
broker-dealer organizations which have entered into agreements with FD
Distributors. The reallowance to dealers may be changed from time to time.

At various times FD Distributors may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts. Also, FD Distributors in its discretion may from time to time, pursuant
to objective criteria established by FD Distributors, 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 FD
Distributors out of its own assets and not out of the assets of the Funds. These
programs will not change the price of Retail A Shares or the amount that the
Funds will receive from such sales.

Fleet's indirect parent, Fleet National Bank, or another affiliate of
Fleet, may at its expense, provide additional compensation to Fleet Enterprises,
Inc., a broker-dealer affiliate of Fleet, whose customers purchase significant
amounts of Retail A Shares of a Fund. Such compensation will not represent an
additional expense to the Funds or their shareholders, since it will be paid
from the assets of Fleet's affiliates.

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:

- reinvestment of dividends and distributions;

- purchases by IRA, SEP and Keogh Plan accounts that 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 January 1, 1997;

- 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 FD Distributors and of
broker-dealers having agreements with FD Distributors pertaining to the sale of
Retail A Shares to the extent permitted by such organizations;

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<PAGE> 326

- 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. ("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 FD Distributors 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 FD
Distributors' 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 Galaxy's
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 as to the number of times an investor may use this
Privilege.

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<PAGE> 327

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.

APPLICABLE SALES CHARGES--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 FD
Distributors 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. Certain affiliates of Fleet may, at
their own expense, provide additional compensation to Fleet Enterprises, Inc., a
broker-dealer affiliate of Fleet, whose customers purchase significant amounts
of Retail B Shares of a Fund. See "Applicable Sales Charge-- 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 FD Distributors, 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), (iv) 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 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 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/distribu-

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<PAGE> 328

tion 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 currently
subject to ongoing shareholder servicing fees at an annual rate of up to .15% of
a 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 currently 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 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 FD Distributors 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.
Upon conversion, the converted Shares will be relieved of the distribution and
shareholder servicing fees borne by Retail B Shares, although they will be
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 respect 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 the 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 FD Distributors. 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 FD Distributors on a Business
Day will normally be wired on the third 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 5108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the name of the Fund and 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. FD Distributors will not accept guarantees from notaries public. FD
Distributors 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 FD Distributors
receives all required documents in proper form. The Funds ordinarily will make
payment for Retail Shares redeemed by mail within three Business Days after
proper receipt by FD Distributors of the redemption request. Questions with
respect to the proper form for redemption requests should be directed to FD
Distributors at 1-800-628-0414.

Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling 1-800-628-0414 and instructing FD Distributors 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" above for
details regarding signature guarantees.)

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 FD Distributors by wire or telephone to wire the
redemption proceeds of $1,000 or more directly to the Direct Investor's account
at any commercial bank in the United States. FD Distributors 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 FD
Distributors. To request redemption of Retail Shares by wire, Direct Investors
should call FD Distributors at 1-800-628-0413.

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utors, 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 FD
Distributors. 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 transactions, 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 FD Distributors 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 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 Money Market, 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.

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 1-800-628-0414. 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. Telephone 1-800-628-0414 for a
prospectus or to make an exchange. See "How to Redeem Shares-- Redemption
Procedure--Direct Investors--Redemptions by

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Wire" above for a description of Galaxy's policy regarding
telephone transactions.

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 respective
Institutions for applicable information.

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

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 FD Distributors (call 1-800-628-0414) 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 three 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 Galaxy's 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 be disadvantageous for
holders of Retail B Shares due to the effect of the contingent deferred sales
charge.

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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 occurs. 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 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 FD Distributors (call
1-800-628-0414).

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 FD Distributors at 1-800-628-0414. 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, 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 1-800-628-0414 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, 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,
deduction of any applicable sales charge, and reinvestment of dividends and
capital gains distributions, if any.

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DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Funds are declared daily and
paid monthly. Dividends on each Share of a 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
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

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.

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 Shares of a Fund depending upon the tax basis of such
Shares and their price at the time of redemption, transfer or exchange.

STATE AND LOCAL

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MANAGEMENT OF THE FUNDS

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and institutional clients and
manages other investment portfolios of Galaxy: the Money Market, Government,
U.S. Treasury, Tax-Exempt, 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, Corporate 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 with respect to the Funds,
Fleet 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 Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and shareholder 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, 1996,
Fleet received advisory fees (after fee waivers) at the effective annual rates
of .55%, .55% and .55%, respectively, of the Short-Term Bond, Intermediate
Government Income and High Quality Bond Funds' average daily net assets. In
addition to fee waivers, during tax fiscal year ended October 31, Fleet
reimbursed the Short-Term Bond and High Quality Bond Funds for certain operating
expenses, which reimbursement may be revised or discontinued 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 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. Fleet, the 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.

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ADMINISTRATOR

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective annual rate of .085% 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
investment portfolio 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 investment portfolio 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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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 FD Distributors; processing dividend payments from a
Fund; providing sub-accounting with respect to Retail A Shares or the
information necessary for sub-accounting; and providing periodic mailings to
Customers. Institutions may also receive up to one-half of this fee for
providing one or more of these additional services to such Customers: providing
Customers with information as to their positions in Retail A Shares; responding
to Customer inquiries; and providing a service to invest the assets of Customers
in Retail A Shares. These services are described more fully in Galaxy's
Statement of Additional Information under "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 to their Customers 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) FD Distributors 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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.

30
<PAGE> 337

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, 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. ("FDISG"), a wholly-owned subsidiary of First Data Corporation, serves as
the Funds' transfer and dividend disbursing agent. Services performed by both
entities for the Funds are described in the Statement of Additional Information.
Communications to FDISG should be directed to FDISG at P.O. Box 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Funds. Galaxy bears the expenses
incurred in the Funds' operations including taxes; interest; fees (including
fees paid to its trustees and officers who are not affiliated with FDISG); SEC
fees; state securities fees; costs of preparing and printing prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory,
administration, shareholder servicing, Rule 12b-1 distribution, 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 shareholder reports and 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

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 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 or the redemption of Retail B
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 the 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.

31
<PAGE> 338

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.

32
<PAGE> 339

[This Page Intentionally Left Blank]
<PAGE> 340

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 FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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........... 9
Short-Term Bond Fund....................... 9
Intermediate Government Income Fund........ 9
High Quality Bond Fund..................... 10
Special Risk Considerations................ 11
Other Investment Policies and Risk
Considerations.......................... 11
INVESTMENT LIMITATIONS....................... 16
PRICING OF SHARES............................ 17
HOW TO PURCHASE SHARES....................... 17
Distributor................................ 17
General.................................... 17
Purchase Procedures -- Customers of
Institutions............................ 18
Purchase Procedures -- Direct Investors.... 18
Other Purchase Information................. 19
Applicable Sales Charges -- Retail A
Shares.................................. 19
Quantity Discounts......................... 20
Applicable Sales Charges -- Retail B
Shares.................................. 21
Characteristics of Retail A Shares and
Retail B Shares......................... 21
Factors to Consider When Selecting Retail A
Shares or Retail B Shares............... 22
HOW TO REDEEM SHARES......................... 23
General.................................... 23
Redemption Procedures -- Customers of
Institutions............................ 23
Redemption Procedures -- Direct
Investors............................... 23
Other Redemption Information............... 24

<CAPTION>
PAGE
-----
<S> <C>
INVESTOR PROGRAMS............................ 24
Exchange Privilege......................... 24
Retirement Plans........................... 25
Automatic Investment Program and Systematic
Withdrawal Plan......................... 25
Payroll Deduction Program.................. 26
College Investment Program................. 26
Direct Deposit Program..................... 26
INFORMATION SERVICES......................... 26
Galaxy Information Center -- 24 Hour
Information Service..................... 26
Voice Response System...................... 26
Galaxy Shareholder Services................ 26
DIVIDENDS AND DISTRIBUTIONS.................. 27
TAXES........................................ 27
Federal.................................... 27
State and Local............................ 27
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.................. 29
Distribution and Services Plan............. 30
Affiliate Agreement for Sub-Account
Services................................ 30
CUSTODIAN AND TRANSFER AGENT................. 31
EXPENSES..................................... 31
PERFORMANCE AND YIELD INFORMATION............ 31
MISCELLANEOUS................................ 32
</TABLE>

(LOGO)
50% Recycled Paper
FN-173 (3/97) 10% Post-Consumer Waste
<PAGE> 341
RETAIL A SHARES

THE GALAXY FUND

Corporate Bond Fund

Prospectus

February 28, 1997

<PAGE> 342

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
----------------

TABLE OF CONTENTS
PAGE

HIGHLIGHTS................................................................ 3

EXPENSE SUMMARY........................................................... 6

FINANCIAL HIGHLIGHTS...................................................... 8

INVESTMENT OBJECTIVE AND POLICIES......................................... 10
In General....................................................... 10
Special Risk Considerations..................................... 12
Other Investment Policies and Risk Considerations................ 13

INVESTMENT LIMITATIONS.................................................... 23

PRICING OF SHARES......................................................... 25

HOW TO PURCHASE AND REDEEM SHARES......................................... 26
Distributor...................................................... 26
Purchase of Shares.............................................. 26
Public Offering Price............................................ 27
Quantity Discounts.............................................. 29
Purchase Procedures -- Customers of Institutions................ 31
Purchase Procedures -- Direct Investors......................... 31
Other Purchase Information....................................... 32
Redemption Procedures -- Customers of Institutions.............. 33
Redemption Procedures -- Direct Investors....................... 34
Other Redemption Information..................................... 36

INVESTOR PROGRAMS......................................................... 36
Exchange Privilege.............................................. 36
Retirement Plans................................................ 38
Automatic Investment Program and Systematic
Withdrawal Plan................................................ 38
Payroll Deduction Program....................................... 39
College Investment Program...................................... 39
Direct Deposit Program........................................... 40

-i-

<PAGE> 343

PAGE

INFORMATION SERVICES...................................................... 40
Galaxy Information Center - 24 Hour
Information Service............................................ 40
Voice Response System............................................ 40
Galaxy Shareholder Services...................................... 41

DIVIDENDS AND DISTRIBUTIONS............................................... 41

TAXES ................................................................. 41
Federal.......................................................... 41
State and Local.................................................. 43

MANAGEMENT OF THE FUND.................................................... 43
Investment Adviser.............................................. 43
Authority to Act as Investment Adviser.......................... 44
Administrator................................................... 45

DESCRIPTION OF GALAXY AND ITS SHARES...................................... 45
Shareholder Services Plan....................................... 46
Affiliate Agreement for Sub-Account Services.................... 47

CUSTODIAN AND TRANSFER AGENT.............................................. 48

EXPENSES ................................................................. 48

PERFORMANCE AND YIELD INFORMATION......................................... 48

MISCELLANEOUS............................................................. 50

-ii-

<PAGE> 344

THE GALAXY FUND

4400 Computer Drive For an application and
Westboro, Massachusetts information regarding
01581-5108 purchases, redemptions,
exchanges and other
shareholder services or for
current performance, call
1-800-628-0414.

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes a series of Galaxy's shares ("Retail A 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. Under normal market and
economic conditions, 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
rating categories assigned by 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 Retail A Shares described in this Prospectus are offered to customers
("Customers") of FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Enterprises, 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 primarily at bank and trust institutions affiliated with Fleet
Financial Group, Inc. and to participants in employer-sponsored defined
contribution plans. Retail A Shares and Trust 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 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.

<PAGE> 345

FEBRUARY 28, 1997

-2-

<PAGE> 346

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 CORPORATE 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, 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 Fund?

A: The Fund is managed by Fleet Investment Advisors Inc. ("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,
1996 of approximately $85 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?

-3-

<PAGE> 347

employees of Fleet Financial Group, Inc. and its affiliates through payroll
deductions. Retail A Shares of the Fund 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. 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 the 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" below.

Q: When are dividends paid?

A: Dividends from net investment income of the Fund are 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 at least 65% of its assets in corporate debt
obligations, which may be convertible into common stock or other securities,
rated within the four highest rating categories of S&P or Moody's. Debt
obligations rated in the fourth highest rating category 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 principal
and interest. The Fund may invest in the debt obligations of foreign companies,
which may be convertible into common stock or other securities, and in
obligations issued or guaranteed by foreign governments or any of their
political sub-divisions or instrumentalities. The Fund may lend its securities
and enter into repurchase agreements and reverse repurchase agreements with
qualifying banks and broker/dealers. In addition, the Fund may enter into
interest rates futures 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 value of the Fund's portfolio
securities will generally vary inversely with changes in prevailing interest
rates. See "Investment Objective and Policies."

-4-

<PAGE> 348

Q: What shareholder privileges are offered by the Fund?

A: Investors may exchange Retail A Shares of the Fund having a value of
at least $100 for Retail A Shares of any other portfolio offered by Galaxy in
which the investor has an existing account. 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 A
Shares on a monthly basis, as well as other shareholder privileges. See
"Investor Programs."

-5-

<PAGE> 349
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 the Fund expects to incur during the current fiscal year with respect
to its Retail A Shares. Examples based on the summary are also shown.

<TABLE>
<CAPTION>
CORPORATE
BOND
SHAREHOLDER TRANSACTION EXPENSES FUND
<S> <C>

Maximum Front-End Sales Charge Imposed
on Purchases (on a percentage of
offering price) 3.75%(1)
Maximum Front-End Sales Charge Imposed
on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees(2) 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) Reduced front-end 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) 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 $9 $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 Retail A Shares of the
Fund will bear directly or indirectly. The information contained in the Expense
Summary and Example is based on expenses the Fund expects to incur during the
current fiscal year on its Retail A Shares. Without voluntary fee waivers by
Fleet, Advisory Fees would be .75% and Total Fund

-6-
<PAGE> 350

Operating Expenses would be 1.13% for Retail A Shares of the Fund. See "How to
Purchase and Redeem Shares -- Public Offering Price" and "How to Purchase and
Redeem Shares -- Quantity Discounts." For more complete descriptions of these
costs and expenses, see "Management of the Fund" and "Description of Galaxy and
Its Shares" in this Prospectus. 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 EXAMPLE 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.

-7-

<PAGE> 351

FINANCIAL HIGHLIGHTS

This Prospectus describes the Retail A Shares in the Fund. Galaxy is also
authorized to issue an additional series of Shares in the Fund, Trust Shares,
which are offered under a separate prospectus. As described below under
"Description of Galaxy and Its Shares," Retail A Shares and Trust 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) Retail A Shares and Trust Shares
bear differing transfer agency expenses.

During the periods shown in the financial highlights presented below, the
Fund offered only Trust Shares. The financial highlights set forth certain
historic investment results of the Trust Shares of the Fund and is intended to
give you a longer term perspective of the Fund's financial history. 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 relating to the Fund dated October 31, 1996 (the
"Annual Report"). Such financial highlights should be read in conjunction with
the financial statements contained in the Annual Report 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, which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

-8-

<PAGE> 352

CORPORATE BOND FUND
(FOR A TRUST SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995(1)
---------------- -------------------

<S> <C> <C>
Net Asset Value, Beginning of Period ..................................... $ 10.74 $ 10.00
----------- ----------
Income from Investment Operations:
Net investment income(2) ........................................... 0.64 0.61

Net realized and unrealized gain
(loss) on investments ............................................... (0.13) 0.74
----------- ----------
Total from Investment Operations: ................................ 0.51 1.35
----------- ----------

Less Dividends:
Dividends from next investment income .............................. (0.64) (0.61)
Dividends from net realized capital gains ................................ (0.08) --
----------- ----------
Total Dividends .................................................. (0.72) (0.61)
----------- ----------
Net increase (decrease) in net asset value ............................... 10.21 0.74
----------- ----------
Net Asset Value, End of Period ........................................... $ 10.53 $ 10.74
=========== ==========

Total Return ............................................................. 5.00% 13.85%(3)

Ratios/Supplemental Data:

Net assets, End of Period (000s) ................................... $ 107,728 $ 37,391

Ratio to average net assets:

Net investment income including
reimbursement/waiver ........................................... 6.13% 6.61%(4)
Operating expenses including
reimbursement/waiver ........................................... 0.85% 1.06%(4)
Operating expenses excluding
reimbursement/waiver ........................................... 1.05% 1.26%(4)
Portfolio Turnover Rate ............................................ 84% 41%(3)
</TABLE>

(1) The Fund commenced operations on December 12, 1994.

(2) Net investment income per share before reimbursement/waiver of fees by
Fleet and/or the Fund's administrator for the fiscal year ended
October 31, 1996 and for the period ended October 31, 1995 were $0.62
and $0.57, respectively.
(3) Not Annualized.

(4) Annualized.

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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 will consider the total rate of return
on securities in managing the Fund. Under normal market and economic conditions,
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 corporate
form by one or more states or political subdivisions in the United States or by
one or more foreign governments or political subdivisions. 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. Government 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.

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<PAGE> 354

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 Fleet, 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 Fleet, 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." The Fund may also
invest in dollar-denominated debt obligations of U.S. corporations issued
outside the United States.

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 Fleet fails to predict foreign currency values
correctly.

Fleet expects that under normal market conditions, the Fund's portfolio
securities will have an average weighted maturity of three to ten years. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Fund.

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.

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<PAGE> 355

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.

Investments in foreign securities may 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. In addition, foreign issuers in general may be subject to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic companies, and securities of foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic issuers.

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<PAGE> 356

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.

The Fund's investments in obligations rated below the four highest
ratings assigned by 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 the Investment Advisor fails to predict foreign
currency values correctly.

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<PAGE> 357

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 10
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 is limited to the obligations of financial
institutions having more than $1 billion in total assets at the time of
purchase.

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<PAGE> 358

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

Types of Municipal Securities

The 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

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<PAGE> 359

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

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 Fleet 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 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

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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 Fleet to be of good standing and only
when, in Fleet's judgment, the income to be earned from the loan justifies the
attendant risks. The Fund currently intends to limit the lending of its
portfolio securities so that, at any given time, securities loaned by the Fund
represent not more than one-third of the value of its total assets.

Investment Company Securities

Interest Rate Futures Contracts

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<PAGE> 361

liquid assets, 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 Fleet 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 the Fund 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

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<PAGE> 362

commitments, when-issued purchases and delayed settlements ever exceeded 25% of
the value of its total assets, the Fund's liquidity and the ability of Fleet
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

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.

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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.

Mortgage Dollar Rolls

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<PAGE> 364

Stripped Obligations

To the extent consistent with its investment objective, the Fund may
purchase U.S. Treasury receipts and other "stripped" securities that evidence
ownership in either future interest payments or 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 by the Fund. Obligations
issued by the U.S. Government may be considered liquid under guidelines
established by Galaxy'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.

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<PAGE> 365

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.

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 or currency exchange rates, or indices, and include, but are not
limited to, interest rate futures, certain asset-backed and mortgage-backed
securities, certain zero coupon bonds and currency forward contracts.

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<PAGE> 366

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 or
exchange 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.

Portfolio Turnover

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

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy
and may not be changed with respect to the

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<PAGE> 367

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 that the Fund
may borrow 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.

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.

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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, (i) 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, and
(ii) mortgage dollar rolls entered into by the Fund that are not accounted for
as financings shall not constitute borrowings.

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,
as amended, 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 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 Fleet 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), 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

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<PAGE> 369

attributable to Shares of that series of the Fund, by the number of outstanding
Shares of that series of the Fund.

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

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in the Fund are sold on a continuous basis by Galaxy's
distributor, First Data Distributors, Inc. ("FD Distributors"), a wholly-owned
subsidiary of First Data Investor Services Group, Inc. FD Distributors is a
registered broker/dealer with principal offices located at 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

PURCHASE OF SHARES

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<PAGE> 370

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 FD Distributors on a Business Day
in accordance with FD Distributors' procedures. Retail A Shares of the Fund will
be issued only in exchange for monetary consideration as described below.

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:

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.

FD Distributors 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 FD Distributors may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts. Also, FD Distributors in its discretion may from time to time, pursuant
to objective criteria established by FD Distributors, 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 FD
Distributors out of its own assets and not out of the assets of

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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;

- purchases by IRA, SEP and Keogh Plan accounts that 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 January 1, 1997;

- 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 FD Distributors
and of broker-dealers having agreements with FD Distributors
pertaining to the sale of Retail A Shares to the extent permitted
by such organizations;

- purchases by members of Galaxy's Board of Trustees;

- investors who purchase pursuant to a "wrap fee" program offered by
any broker-dealer or other financial institution or financial
planning organization;

- 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.

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QUANTITY DISCOUNTS

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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 Director 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 FD Distributors' 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 Fund or in
Retail A Shares of another portfolio of Galaxy within 90 days of the redemption
trade date without paying a sales charge. Retail A Shares so reinvested will be
purchased at a price equal to the net asset value next determined after Galaxy's
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.

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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 FD Distributors and for wiring required
funds in payment to Galaxy's custodian on a timely basis. FD Distributors 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 particular Institution should contact such entity directly for
appropriate purchase instructions.

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 FD Distributors at
1-800-628-0414.

Subsequent investments in an existing account 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

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<PAGE> 375

detachable form that regularly accompanies confirmation of a prior transaction,
(b) a subsequent order form that may be obtained from FD Distributors, 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.

OTHER PURCHASE INFORMATION

Purchases by Wire. Direct 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. ("FDISG"), Galaxy's
transfer agent. Such purchases may only be made on days on which FD
Distributors, 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
5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108. Applications may
be obtained by calling FD Distributors 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.

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Galaxy reserves the right to reject any purchase order, in whole or in
part. The issuance of Retail A 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 Retail A Shares
received and accepted by FD Distributors 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 FD Distributors on a Business Day
in accordance with the above procedures.

REDEMPTION PROCEDURES -- CUSTOMERS OF INSTITUTIONS

Customers may redeem all or part of their Retail A Shares in accordance
with procedures governing their accounts at their particular Institutions. It is
the responsibility of the Institutions to transmit redemption orders to FD
Distributors and to 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 Institution.

Payment for redemption orders received by FD Distributors on a Business
Day will normally be wired on the third Business Day to the Institution.

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

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<PAGE> 377

REDEMPTION PROCEDURES -- DIRECT INVESTORS

Redemption by Mail. Retail A 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 name of the Fund and 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. FD Distributors will not
accept guarantees from notaries public. FD Distributors 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 FD Distributors receives all required documents in
proper form. The Fund ordinarily will make payment for Retail A Shares redeemed
by mail within three Business Days after proper receipt by FD Distributors of
the redemption request. Questions with respect to the proper form for redemption
requests should be directed to FD Distributors at 1-800-628-0414.

Redemption by Telephone. Direct Investors may redeem Retail A Shares by
calling 1-800-628-0414 and instructing FD Distributors 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" above for
details regarding signature guarantees.)

Redemption by Wire. Direct Investors who have so indicated on the
application, or have subsequently arranged in writing to

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<PAGE> 378

do so, may redeem Retail A Shares by instructing FD Distributors by wire or
telephone to wire the redemption proceeds of $1,000 or more directly to the
Direct Investor's account at any commercial bank in the United States. FD
Distributors 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 FD Distributors. To request redemption
of Retail A Shares by wire, Direct Investors should call FD Distributors at
1-800- 628-0414.

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 FD
Distributors . 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 transactions, 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 Retail A Shares to be redeemed represents an
investment made by personal check, Galaxy reserves the right to delay payment of
proceeds until FD Distributors 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

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<PAGE> 379

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 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 of the order by FD Distributors. 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 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. 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 in another fund by
exchange, except for the Institutional Treasury Money Market Fund, by exchange
is $2,500, unless at the time of exchange the Direct Investor or Customer
elects, with respect to the portfolio 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.

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<PAGE> 380

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 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 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 1-800-628-0414. 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. Telephone 1-800-628-0414 for a prospectus or to
make an exchange. See "How to Purchase and Redeem Shares - Redemption Procedures
- -Direct Investors - Redemption by Wire" above for a description of Galaxy's
policy regarding telephone transactions .

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.

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RETIREMENT PLANS

Shares of the Fund 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.

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 A 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 FD Distributors (call 1-800-628-0414) 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 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, Retail A 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.

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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.

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 up to three days after the
debit occurs. 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

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<PAGE> 383

initial investment as a result of redemptions. See "How to
Purchase and Redeem Shares -- Other Redemption Information" above for further
information.

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 FD Distributors at 1-800-628-0414.

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.

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 above under "Investor Programs - Exchanges" and "How To Purchase and
Redeem Shares". To access the Voice Response System, just call 1-800-628-0414
from any touch-tone telephone and follow the recorded instructions.

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<PAGE> 384

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 1-800-628-0414.

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 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 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 generally relieves the Fund
of liability for federal income taxes to the extent the Fund's earnings are
distributed in accordance with the Code.

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the

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Fund distribute to its shareholders an amount equal to at least 90% of its
investment company taxable income and 90% of its tax-exempt interest income, if
any, net of certain deductions for such year. In general, the Fund's investment
company taxable income will be its taxable income, including dividends, interest
and short-term capital gains (the excess of net short-term capital gain over net
long-term capital loss), subject to certain adjustments and excluding the excess
of any net long-term capital gain for the taxable year over the net short-term
capital loss, if any, for such year. The policy of the Fund is to distribute as
dividends substantially all of its investment company taxable income and any net
tax-exempt interest income each year. Such dividends will be taxable as ordinary
income to the Fund's shareholders who are not currently exempt from federal
income taxes, whether such dividends are received in cash or reinvested in
additional Retail A 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 Retail A 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.

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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 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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,
U.S. Treasury, Tax-Exempt, 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, 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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<PAGE> 387

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 Bank or
other subsidiaries of Fleet Financial Group, Inc., in consideration for
administrative and shareholder support services which they provide to beneficial
shareholders. Fleet is currently waiving a portion of the advisory fee payable
by the Fund such that it is entitled to receive advisory fees at the annual rate
of .55% of the Fund's average daily net assets. For the fiscal year ended
October 31, 1996, Fleet received advisory fees (after fee waivers) at the
effective annual rate of .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. Fleet, the 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.

-44-

<PAGE> 388

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, for services provided to the Fund, FDISG is entitled to
receive administration fees, computed daily and paid monthly, at an annual rate
of .09% of the first $2.5 billion of 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 .075% of
combined average daily net assets over $5 billion. Prior to September 5, 1996,
FDISG was 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 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 voluntarily all or a portion of the administration fee payable to it
by the Fund. For the fiscal year ended October 31, 1996, the Fund paid FDISG
administration fees at the effective annual rate of .085% 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

-45-

<PAGE> 389

that are paid under Galaxy's Shareholder Services Plan described below.
Currently, these payments are not made with respect to the Fund's Trust Shares
and, as a result, the net yield on the Fund's Retail A Shares will generally be
lower than the net yield on the Fund's Retail A 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.

Retail A Shares of the Fund have certain exchange and other privileges
which are not available with respect to Trust Shares.

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

-46-

<PAGE> 390

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 28, 1997
<PAGE> 391

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

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 FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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........ 11
Connecticut Municipal Bond Fund..... 12
Massachusetts Municipal Bond Fund... 13
Rhode Island Municipal Bond Fund.... 14
Special Considerations and Risks.... 15
Other Investment Policies and Risk
Considerations................... 18
INVESTMENT LIMITATIONS................ 25
PRICING OF SHARES..................... 26
HOW TO PURCHASE AND REDEEM SHARES..... 27
Distributor......................... 27
Redemption of Shares................ 28

<CAPTION>
PAGE
----
<S> <C>
DIVIDENDS AND DISTRIBUTIONS........... 28
TAXES................................. 29
Federal............................. 29
State and Local..................... 29
Miscellaneous....................... 31
MANAGEMENT OF THE FUNDS............... 31
Investment Adviser.................. 31
Authority to Act as Investment
Adviser.......................... 32
Administrator....................... 32
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 33
Shareholder Services Plan........... 34
CUSTODIAN AND TRANSFER AGENT.......... 34
EXPENSES.............................. 34
PERFORMANCE AND YIELD
INFORMATION......................... 35
MISCELLANEOUS......................... 36
</TABLE>

================================================================================
<PAGE> 392

THE GALAXY FUND

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

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 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 total assets in
New York Municipal Securities. The Fund is a non-diversified investment
portfolio under the Investment Company Act of 1940, as amended (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 total 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 total assets in
Massachusetts Municipal Securities. 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 total assets in Rhode
Island Municipal Securities. The Fund is a non-diversified investment portfolio
under the 1940 Act.

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.

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 FIS
Securities, Inc., Fleet Brokerage Securities, Inc. Fleet Securities, Inc., Fleet
Enterprises, 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.

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

FEBRUARY 28, 1997

2
<PAGE> 394

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
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
- ---------------------------------
Advisory Fees (After Fee Waivers)..... .55% .55% .25% .25% .25%
12b-1 Fees............................ None None None None None
Other Expenses (After Fee Waivers and
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 investors 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 is based on expenses incurred by each Fund during the last
fiscal year, restated to reflect the expenses which each Fund expects to incur
during the current fiscal year on its Trust Shares. Without voluntary fee
waivers and expense reimbursements by Fleet and/or the Funds' administrator,
"Advisory Fees" would be .75%, .75%, .75%, .75% and .75%, Other Expenses would
be .21%, .30%, .67%, .63% and .70% and Total Fund Operating Expenses would be
.96%, 1.05%, 1.42%, 1.38% and 1.45% 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 Funds are in addition to and not
reflected in the fees and expenses described above.

THE FOREGOING EXAMPLE 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> 395

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, 1996 have been audited by Coopers & Lybrand, L.L.P., Galaxy's independent
accountants, whose report is contained in Galaxy's Annual Report to Shareholders
relating to the Funds dated October 31, 1996 (the "Annual Report"). Such
financial highlights should be read in conjunction with the financial statements
contained in the Annual Report 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
information as to that Fund's financial history. More information about the
performance of the Funds is also contained in the Annual Report, which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

4
<PAGE> 396

TAX-EXEMPT BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
1996 1995 1994 YEAR ENDED PERIOD ENDED
-------------------------------- OCTOBER 31, OCTOBER 31,
TRUST SHARES 1993(2) 1992(1,2)
-------------------------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 10.78 $ 9.99 $ 11.12 $ 10.11 $ 10.00
-------- ------- ------- -------- -------
Income from Investment Operations:
Net investment income(3,4)......... 0.53 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................. 0.53 1.33 (0.51) 1.55 0.45
-------- ------- ------- -------- -------
Less Dividends:
Dividends from net investment
income.......................... (0.53) (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:.............. (0.53) (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 $ 10.78 $ 9.99 $ 11.12 $ 10.11
======== ======= ======= ======== =======
Total Return......................... 5.03% 13.62% (4.75)% 15.63% 4.55%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).... $103,163 $91,740 $91,647 $ 144,048 $ 15,891
Ratios to average net assets:
Net investment income including
reimbursement/waiver............ 4.91% 5.18% 5.01% 5.00% 5.03%(6)
Operating expenses including
reimbursement/waiver............ 0.70% 0.72% 0.78% 0.64% 0.42%(6)
Operating expenses excluding
reimbursement/waiver............ 0.95% 0.97% 1.00% 1.08% 2.15%(6)
Portfolio Turnover Rate.............. 15% 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 Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.51, $0.51 and $0.50, respectively.
(4) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the year ended
October 31, 1993 and for the period ended October 31, 1992 was $0.49 and
$0.23, respectively.
(5) Not Annualized.
(6) Annualized.

5
<PAGE> 397

NEW YORK MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995 1994 YEAR ENDED PERIOD ENDED
----------------------------- OCTOBER 31, OCTOBER 31,
TRUST SHARES 1993(2) 1992(1,2)
----------------------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.78 $ 9.89 $ 11.04 $ 10.00 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(3,4)............. 0.51 0.51 0.49 0.50 0.38
Net realized and unrealized gain (loss)
on investments...................... (0.03) 0.89 (1.15) 1.04 --
------- ------- ------- ------- -------
Total from Investment
Operations..................... 0.48 1.40 (0.66) 1.54 0.38
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income... (0.51) (0.51) (0.49) (0.50) (0.38)
Dividends from net realized capital
gains............................... -- -- -- -- --
------- ------- ------- ------- -------
Total Dividends:.................. (0.51) (0.51) (0.49) (0.50) (0.38)
------- ------- ------- ------- -------
Net increase (decrease) in net asset
value.................................. (0.03) 0.89 (1.15) 1.04 --
------- ------- ------- ------- -------
Net Asset Value, End of Period........... $ 10.75 $ 10.78 $ 9.89 $ 11.04 $ 10.00
======= ======= ======= ======= =======
Total Return............................. 4.55% 14.23% (6.14)% 15.66% 3.83%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........ $23,762 $23,077 $24,209 $ 70,242 $ 20,144
Ratios to average net assets:
Net investment income including
reimbursement/waiver................ 4.75% 4.91% 4.64% 4.54% 5.22%(6)
Operating expenses including
reimbursement/waiver................ 0.70% 0.74% 0.87% 0.87% 0.65%(6)
Operating expenses excluding
reimbursement/waiver................ 1.10% 1.07% 1.08% 1.19% 1.70%(6)
Portfolio Turnover Rate.................. 12% 5% 18% 3% 19%(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 Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.47, $0.48 and $0.47, respectively.
(4) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the year ended
October 31, 1993 and for the period ended October 31, 1992 was $0.47 and
$0.30, respectively.
(5) Not Annualized.
(6) Annualized.

6
<PAGE> 398

CONNECTICUT MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
1996 1995 1994 PERIOD ENDED
---------------------------- OCTOBER 31,
TRUST SHARES 1993(1,2)
---------------------------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $10.13 $ 9.22 $10.32 $ 10.00
------ ------ ------ -------
Income from Investment Operations:
Net investment income(3,4)........................ 0.44 0.46 0.46 0.25
Net realized and unrealized gain (loss)
on investments................................. 0.01 0.91 (1.10) 0.32
------ ------ ------ -------
Total from Investment Operations............. 0.45 1.37 (0.64) 0.57
------ ------ ------ -------
Less Dividends:
Dividends from net investment income.............. (0.44) (0.46) (0.46) (0.25)
Dividends from net realized capital gains......... -- -- -- --
------ ------ ------ -------
Total Dividends:............................. (0.44) (0.46) (0.46) (0.25)
------ ------ ------ -------
Net increase (decrease) in net asset value.......... 0.01 0.91 (1.10) 0.32
------ ------ ------ -------
Net Asset Value, End of Period...................... $10.14 $10.13 $ 9.22 $ 10.32
====== ====== ====== =======
Total Return........................................ 4.54% 15.21% (6.37)% 5.80%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $6,348 $4,083 $4,419 $ 18,771
Ratios to average net assets:
Net investment income including
reimbursement/waiver........................... 4.34% 4.76% 4.66% 4.30%(6)
Operating expenses including
reimbursement/waiver........................... 0.49% 0.45% 0.23% 0.00%(6)
Operating expenses excluding
reimbursement/waiver........................... 1.17% 1.24% 1.41% 1.73%(6)
Portfolio Turnover Rate............................. 3% 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 Trust Shares before reimbursement and
waiver of fees by Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.37, $0.38 and $0.35, respectively.
(4) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the period ended
October 31, 1993 was $0.15.
(5) Not Annualized.
(6) Annualized.

7
<PAGE> 399

MASSACHUSETTS MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995 1994 PERIOD ENDED
-------------------------------- OCTOBER 31,
TRUST SHARES 1992(1,2)
-------------------------------- -------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 9.98 $ 9.12 $10.24 $ 10.00
------- ------ ------ -------
Income from Investment Operations:
Net investment income(3,4)...................... 0.46 0.45 0.48 0.29
Net realized and unrealized gain
(loss) on investments........................ (0.04) 0.86 (1.12) 0.24
------- ------ ------ -------
Total from Investment Operations........... 0.42 1.31 (0.64) 0.53
------- ------ ------ -------
Less Dividends:
Dividends from net investment income............ (0.46) (0.45) (0.48) (0.29)
Dividends from net realized capital gains....... -- -- -- --
------- ------ ------ -------
Total Dividends:........................... (0.46) (0.45) (0.48) (0.29)
------- ------ ------ -------
Net increase (decrease) in net asset value........ (0.04) 0.86 (1.12) 0.24
------- ------ ------ -------
Net Asset Value, End of Period.................... $ 9.94 $ 9.98 $ 9.12 $ 10.24
======= ====== ====== =======
Total Return...................................... 4.27% 14.72% (6.46)% 5.42%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $11,047 $ 7,607 $5,617 $ 20,121
Ratios to average net assets:
Net investment income including
reimbursement/waiver......................... 4.60% 4.73% 4.89% 4.87%(6)
Operating expenses including
reimbursement/waiver......................... 0.48% 0.52% 0.33% 0.05%(6)
Operating expenses excluding
reimbursement/waiver......................... 1.14% 1.31% 1.41% 1.82%(6)
Portfolio Turnover Rate........................... 16% 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 Trust Shares before reimbursement and
waiver of fees by Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.40, $0.38 and $0.38, respectively.
(4) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the period ended
October 31, 1993 was $0.18.
(5) Not Annualized.
(6) Annualized.

8
<PAGE> 400

RHODE ISLAND MUNICIPAL BOND FUND
(FOR A RETAIL A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED OCTOBER 31,
OCTOBER 31, 1995(1)
1996 ------------
--------------- RETAIL
RETAIL A SHARES SHARES
--------------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period............................. $ 10.67 $ 10.00
------- -------
Income from Investment Operations:
Net investment income(2)....................................... 0.51 0.44
Net realized and unrealized gain (loss) on investments......... 0.03 0.67
------- -------
Total from Investment Operations.......................... 0.54 1.11
------- -------
Less Dividends:
Dividends from net investment income........................... (0.51) (0.44)
Dividends from net realized capital gains...................... (0.05) --
------- -------
Total Dividends:.......................................... (0.56) (0.44)
------- -------
Net increase (decrease) in net asset value....................... (0.02) 0.67
------- -------
Net Asset Value, End of Period................................... $ 10.65 $ 10.67
======= =======
Total Return..................................................... 5.22% 11.29%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................................ $14,900 $ 10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver........... 4.78% 5.13%(4)
Operating expenses including reimbursement/waiver.............. 0.77% 0.40%(4)
Operating expenses excluding reimbursement/waiver.............. 1.34% 2.25%(4)
Portfolio Turnover Rate.......................................... 13% 34%(3)
</TABLE>

- ---------------
(1) The Fund commenced operations on December 30, 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 Fleet
and/or the Fund's administrator for the fiscal year ended October 31, 1996
and for the period ended October 31, 1995 was $0.45 and $0.28, respectively.
(3) Not annualized.
(4) Annualized.

9
<PAGE> 401

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 total 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 four highest rating categories assigned
by Standard & Poor's Ratings Group ("S&P") ("AAA," "AA," "A" and "BBB") or
Moody's Investors Service, Inc. ("Moody's") ("Aaa," "Aa," and "A" and "Baa") or
unrated instruments determined by Fleet to be of comparable quality. Municipal
Securities rated within the four highest rating categories assigned by S&P or
Moody's are considered to be investment grade. Municipal Securities rated in the
lowest of the four highest rating categories assigned by S&P or Moody's are
considered to have speculative characteristics, even though they are of
investment grade quality, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade Municipal Securities.
Such Municipal Securities will be purchased (and retained) only when Fleet
believes the issuers have an adequate capacity to pay interest and repay
principal. If the ratings of a particular Municipal Security purchased by the
Fund are subsequently downgraded below the four highest rating categories
assigned by S&P or Moody's, such factor will be considered by Fleet in its
evaluation of the overall merits of that Municipal Security but such ratings
change will not necessarily result in an automatic sale of the Municipal
Security. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in Municipal Securities rated in the three
highest rating categories assigned by S&P or Moody's. 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 Fleet, 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" instrument such
as certificates of deposit and bankers' acceptances of selected banks and
commercial paper rated within the two highest rating categories assigned by any
major rating service; and (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

10
<PAGE> 402

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 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 total 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 Fleet, suitable obligations are unavailable for investment, at least
65% of the Fund's total 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 rating
categories assigned by S&P ("AAA," "AA," "A" and "BBB") or Moody's ("Aaa," "Aa,"
"A" and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. See
"Investment Objectives and Policies--Tax-Exempt Bond Fund" above for a
discussion of certain risks in investing in Municipal Securities rated in the
lowest of the four highest rating categories assigned by S&P or Moody's. If the
ratings of a particular Municipal Security purchased by the Fund are
subsequently downgraded below the four highest rating categories assigned by S&P
or Moody's, such factor will be considered by Fleet in its evaluation of the
overall merits of that Municipal Security but such ratings change will not
necessarily result in an automatic sale of the Municipal Security. Under normal
market and economic conditions, at least 65% of the Fund's total assets will be
invested in Municipal Securities rated in the three highest rating categories
assigned by S&P or Moody's. See Appendix A to the Statement of Additional
Information for a description of S&P's and Moody's rating categories.

11
<PAGE> 403

(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 rating categories assigned by any
major rating service; (iv) repurchase agreements collateralized by U.S.
Government obligations or other "money market" instruments; (v) future
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 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 total 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
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 expects that except during temporary defensive periods or when, in the
opinion of Fleet, suitable obligations are unavailable for investment, at least
65% of the Fund's total 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.

12
<PAGE> 404

Municipal Securities rated in the three highest rating categories assigned by
S&P or Moody's. 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 Fleet, prevailing market or economic conditions warrant.
Uninvested cash reserves may 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 rating categories 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 Connecticut Municipal Bond Fund.

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 total 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 Fleet, suitable obligations are unavailable for
investment, at least 65% of the Fund's total 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.

13
<PAGE> 405

above for a discussion of certain risks in investing in Municipal Securities
rated in the lowest of the four highest rating categories assigned by S&P or
Moody's. If the ratings of a particular Municipal Security purchased by the Fund
are subsequently downgraded below the four highest rating categories assigned by
S&P or Moody's, such factor will be considered by Fleet in its evaluation of the
overall merits of that Municipal Security but such ratings change will not
necessarily result in an automatic sale of the Municipal Security. Under normal
market and economic conditions, at least 65% of the Fund's total assets will be
invested in Municipal Securities rated in the three highest rating categories
assigned by S&P or Moody's. 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 Fleet, prevailing market or economic conditions warrant.
Uninvested cash reserves may 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 rating categories 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 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 total 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 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 expects that except during temporary defensive periods or when, in the
opinion of Fleet, suitable obligations are unavailable for investment, at least
65% of the Fund's total assets will be invested in debt securities of the State
of Rhode Island, its political subdivisions, 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.

14
<PAGE> 406

Municipal Securities purchased by the Fund will consist primarily of issues
which are rated at the time of purchase within the four highest rating
categories assigned by S&P ("AAA," "AA," "A" and BBB") or Moody's ("Aaa," "Aa,"
"A" and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. See
"Investment Objectives and Policies--Tax-Exempt Bond Fund" above for a
discussion of certain risks in investing in Municipal Securities rated in the
lowest of the four highest rating categories assigned by S&P or Moody's. If the
ratings of a particular Municipal Security purchased by the Fund are
subsequently downgraded below the four highest rating categories assigned by S&P
or Moody's, such factor will be considered by Fleet in its evaluation of the
overall merits of that Municipal Security but such ratings change will not
necessarily result in an automatic sale of the Municipal Security. Under normal
market and economic conditions, at least 65% of the Fund's total assets will be
invested in Municipal Securities rated in the three highest rating categories
assigned by S&P or Moody's. 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 Fleet, prevailing market or economic conditions warrant.
Uninvested cash reserves may 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" conditions such
as certificates of deposit and bankers' acceptances of selected banks and
commercial paper rated within the two highest rating categories 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.

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.

15
<PAGE> 407

investment is deemed necessary or appropriate by Fleet. 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 at times 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 other jurisdictions. 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.

16
<PAGE> 408

The State of Connecticut and various of its municipalities are challenged
by financial difficulties. For the four fiscal years ended June 30, 1991, the
General Fund experienced operating deficits but, for the five fiscal years ended
June 30, 1996, the General Fund recorded operating surpluses. During the same
period, the State's budgeted expenditures more than doubled from approximately
$4,300,000,000 for the 1986-87 fiscal year to approximately $9,200,000,000 for
the 1996-97 fiscal year. In 1991, legislation was enacted by the State
authorizing the State Treasurer to issue Economic Recovery Notes to fund the
General Fund's accumulated deficit. The notes were to be payable no later than
June 30, 1996, but payment of the remaining notes scheduled to occur during the
1995-96 fiscal year was rescheduled to be made over the four fiscal years ending
June 30, 1999. As a result of 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 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

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.

17
<PAGE> 409

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.

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.

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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.
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 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
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 Fleet 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 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.

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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 Fleet 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.

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 Fleet 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.

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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

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 Fund, other
investment portfolios of Galaxy, or any other investment companies advised by
Fleet.

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, Fleet 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

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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 or other liquid assets, 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 Fleet 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,
a Fund may realize a loss on a futures transaction that is not offset by a
favorable movement in the price of securities which it holds or intends 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

Each of the Funds may purchase eligible securities on a "when-issued" basis
and may purchase or sell securities on a "forward commitment" basis. Each of the
Funds may also purchase or sell eligible securities on a "delayed settlement"
basis. When-issued and forward commitment transactions, which involve a
commitment by a Fund to purchase or sell particular securities with payment and
delivery taking place at a future date (perhaps one or two months later), permit
a Fund to lock in a price or yield on a security it owns or intends to

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purchase, regardless of future changes in interest rates. Delayed settlement
describes settlement of a securities transaction in the secondary market which
will occur some time in the future. When-issued, forward commitment and delayed
settlement transactions involve the risk, however, that the yield or price
obtained in a transaction may be less favorable than the yield or price
available in the market when the securities delivery takes place. It is expected
that forward commitments, when-issued purchases and delayed settlements will not
exceed 25% of the value of a Fund's total assets absent unusual market
conditions. In the event a Fund's forward commitments, when-issued purchases and
delayed settlements ever exceeded 25% of the value of its total assets, the
Fund's liquidity and the ability of Fleet 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 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 a
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

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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 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 value of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

Guaranteed Investment Contracts

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.

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 limited to,
municipal bond index and interest rate futures and certain asset-backed and
mortgage-backed securities.

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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.

Portfolio Turnover

INVESTMENT LIMITATIONS

No Fund may:

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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 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.

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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. ("Institutions"). Trust Shares sold
to such investors ("Customers") will be held of record by Institutions. The
Institution is responsible for transmitting to FD Distributors orders for
purchases of Trust Shares and for wiring required funds in payment to Galaxy's
custodian on a timely basis. FD Distributors 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 FD
Distributors, 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 FD Distributors 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 per Share 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 FD Distributors on a Business Day in
accordance with the foregoing procedures.

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

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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 respective Institutions. It is the
responsibility of the Institution to transmit redemption orders to FD
Distributors 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 an 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 FD Distributors. Payment for redemption
orders received by FD Distributors 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

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 respective Institutions.

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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.

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 subject to tax.

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

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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, its political subdivisions or public
instrumentalities, state or local authorities, districts or similar 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.

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 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.

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The Rhode Island Municipal Bond 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

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, High Quality Bond and Corporate Bond Funds.

31
<PAGE> 423

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 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, 1996, Fleet received advisory fees
(after fee waivers) at the effective annual rates of .55%, .55%, .20%, .20% and
.30%, respectively, of the Tax-Exempt Bond, New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode Island Municipal Bond
Funds' average daily net assets. In addition to fee waivers, during the fiscal
year ended October 31, 1996 Fleet also reimbursed the Tax-Exempt Bond, New York
Municipal Bond and Rhode Island Municipal Bond Funds for certain operating
expenses, which reimbursement may be revised or discontinued at any time.

The organizational arrangements of Fleet require that all investment
decisions with respect to the Funds be made by a committee, and no one person is
primarily responsible for making recommendations to that committee.

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. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective annual rate of .085% of the average daily
net assets of each of the Tax-Exempt Bond, New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode Island Municipal Bond
Funds.

32
<PAGE> 424

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares into one or more classes or series of shares.
Pursuant to such authority, the Board of Trustees has authorized the issuance of
an unlimited number of Shares in each series in the Funds as follows: Class
M-Series 1 shares (Trust Shares), Class M-Series 2 shares (Retail A Shares) and
Class M-Series 3 shares (Retail B Shares), each series representing interests in
the Tax-Exempt Bond Fund; Class O-Series 1 shares (Trust Shares) and Class
O-Series 2 shares (Retail A Shares), each series representing interests in the
New York Municipal Bond Fund; Class P-Series 1 shares (Trust Shares) and Class
P-Series 2 shares (Retail A Shares), each series representing interests in the
Connecticut Municipal Bond Fund; Class Q-Series 1 shares (Trust Shares) and
Class Q-Series 2 shares (Retail A Shares), each series representing interests in
the 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 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' Retail Shares and these other portfolios, which are offered
through separate prospectuses, contact FD Distributors 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 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% and automatically convert to Retail A
Shares of the Fund six years after the date of purchase. Retail A and Retail B
Shares have certain exchange and other privileges which are not available 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
investment portfolio 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 investment portfolio 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.

33
<PAGE> 425

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 .30% of the average
daily net asset value of Retail A Shares owned beneficially by their 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 FD
Distributors; 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 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 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 to 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, 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. ("FDISG"), a wholly-owned subsidiary of First Data Corporation, serves as
the Funds' transfer and dividend disbursing agent. Services performed by both
entities for the Funds are described in the Statement of Additional Information.
Communications to FDISG should be directed to FDISG at P.O. Box 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

34
<PAGE> 426

auditing and legal expenses; costs of independent pricing services; costs of
shareholder reports and 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 by quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
bond indices or to rankings prepared by independent services or other financial
or industry publications that monitor the performance of mutual funds. For
example, the performance of the Funds may be compared to data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors the performance of mutual funds.

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

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 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.

35
<PAGE> 427

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.

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<PAGE> 429

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<PAGE> 430

[INSERT ART FOR BACK COVER]

FN-170 15040 (3/97)
<PAGE> 431
GALAXY FUNDS

TAX-EXEMPT BOND FUND

NEW YORK MUNICIPAL BOND FUND

CONNECTICUT MUNICIPAL
BOND FUND

MASSACHUSETTS MUNICIPAL
BOND FUND

RHODE ISLAND MUNICIPAL
BOND FUND

FN-170 15040 (3/97) February 28, 1997

<PAGE> 432

THE GALAXY FUND

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 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 total assets in Connecticut Municipal
Securities. The Fund is a non-diversified investment portfolio under the 1940
Act.

This prospectus describes the Retail A Shares representing interests in
each Fund and 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 FIS Securities, Inc., Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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.

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 28, 1997
<PAGE> 433

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, NEW YORK MUNICIPAL BOND,
CONNECTICUT MUNICIPAL BOND, MASSACHUSETTS MUNICIPAL BOND and RHODE ISLAND
MUNICIPAL 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, SMALL CAP VALUE, GROWTH AND INCOME, SHORT-TERM BOND, INTERMEDIATE
GOVERNMENT INCOME, HIGH QUALITY BOND and CORPORATE 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 First Data 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 FIS Securities, Inc., Fleet Brokerage Securities, Inc.,
Fleet Securities, Inc., Fleet Enterprises, 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 of
Institutions 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" below.

Q: When are dividends paid?

A: Dividends from net investment income of the Funds are 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 with respect to which the
dividend or distribution was declared 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 four highest rating categories assigned by Standard & Poor's Rating
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
four highest rating categories assigned by S&P or Moody's. Municipal Securities
rated in the lowest of the four highest rating categories assigned by Moody's or
S&P are considered to have speculative characteristics, even though they are of
investment grade quality. 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 return may be dependent upon the

1
<PAGE> 434

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 additional sales or 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> 435

EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction expenses
imposed by each Fund with respect to 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
Maximum 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)
Maximum Deferred Sales Charge (as a percentage of
offering price)................................ None 5.00%(2) None None None None
Sales Charge Imposed on Reinvested Dividends..... None None 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(4).................................... None .80% None None None None
Other Expenses (After Fee Waivers and 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 front-end sales charge 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) Retail A Shares do not currently pay 12b-1 fees. Long-term investors in
Retail B Shares (as well as investors in Retail A Shares if 12b-1 fees are
charged in the future) 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>

The Expense Summary and Example are intended to assist investors in
understanding the costs and expenses that an investor in Retail A Shares and/or
Retail B Shares of the Funds will bear directly or indirectly. The information
contained in the Expense Summary and Example is based on expenses incurred by
each Fund during the last fiscal year, restated to reflect the expenses

3
<PAGE> 436

which each Fund expects to incur during the current fiscal year on its Retail A
and/or Retail B Shares. Without voluntary fee waivers and/or expense
reimbursements by Fleet and/or the Fund's administrator, Advisory Fees would be
.75%, .75%, .75%, .75% and .75%, Other Expenses would be .44%, .52%, .89%, .85%
and .70% and Total Fund Operating Expenses would be 1.19%, 1.27%, 1.64%, 1.60%
and 1.45% 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 .34% and Total Fund Operating Expenses would be
1.89% 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 EXAMPLE 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> 437

FINANCIAL HIGHLIGHTS

This Prospectus describes the Retail A Shares in each Fund and the 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 have been audited by Coopers &
Lybrand L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Funds for the fiscal year
ended October 31, 1996 (the "Annual Report"). Such financial highlights should
be read in conjunction with the financial statements contained in Galaxy's
Annual Report 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. More information about the performance
of the Funds is also contained in the Annual Report, which may be obtained
without charge by contacting Galaxy at its telephone numbers or address provided
above.

5
<PAGE> 438

TAX-EXEMPT BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996
--------------------- PERIOD
RETAIL A RETAIL B 1995 1994 ENDED
------- -------
RETAIL OCTOBER 31,
SHARES SHARES SHARES 1993(2) 1992(1,2)
-------- -------- ------------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 10.78 $10.94 $ 9.99 $ 11.12 $ 10.11 $ 10.00
------- ------ ------- ------- -------- -------
Income from Investment Operations:
Net investment income(4,5).......................... 0.50 0.27 0.52 0.53 0.54 0.34
Net realized and unrealized gain (loss) on
investments....................................... -- (0.16) 0.79 (1.04) 1.01 0.11
------- ------ ------- ------- -------- -------
Total From Investment Operations:............ 0.50 0.11 1.31 (0.51) 1.55 0.45
------- ------ ------- ------- -------- -------
Less Dividends:
Dividends from net investment income................ (0.50) (0.27) (0.52) (0.53) (0.54) (0.34)
Dividends from net realized capital gains........... -- -- -- -- -- --
Dividends in excess of net realized capital gains... -- -- -- (0.09) -- --
------- ------ ------- ------- -------- -------
Total Dividends:............................. (0.50) (0.27) (0.52) (0.62) (0.54) (0.34)
------- ------ ------- ------- -------- -------
Net increase (decrease) in net asset value............ -- (0.16) 0.79 (1.13) 1.01 0.11
Net Asset Value, End of Period........................ $ 10.78 $10.78 $ 10.78 $ 9.99 $ 11.12 $ 10.11
======= ====== ======= ======= ======== =======
Total Return(6)....................................... 4.77% 1.08%(7) 13.40% (4.75)% 15.63% 4.55%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)..................... $28,339 $ 787 $31,609 $35,911 $144,048 $15,891
Ratios to average net assets:
Net investment income including
reimbursement/waiver.............................. 4.68% 4.08%(8) 4.99% 5.01% 5.00% 5.03%(8)
Operating expenses including reimbursement/waiver... 0.93% 1.57%(8) 0.91% 0.80% 0.64% 0.42%(8)
Operating expenses excluding reimbursement/waiver... 1.18% 1.77%(8) 1.24% 1.03% 1.08% 2.15%(8)
Portfolio Turnover Rate............................... 15% 15% 11% 17% 38% 11%(7)
</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) The Fund began offering Retail B Shares on March 4, 1996.
(4) Net investment income per share before reimbursement and waiver of fees by
Fleet and/or the Fund's administrator (i) for the years ended October 31,
1996, 1995 and 1994 was $0.48, $0.48 and $0.50, respectively, for Retail A
Shares, and (ii) for the period ended October 31, 1996 was $0.25 for Retail
B Shares.
(5) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the year ended
October 31, 1993 and for the period ended October 31, 1992 were $0.49 and
$0.23, respectively.
(6) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(7) Not Annualized.
(8) Annualized.

6
<PAGE> 439

NEW YORK MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------
1996 1995 1994
-------- ------- ------- YEAR ENDED PERIOD ENDED
RETAIL A RETAIL OCTOBER 31, OCTOBER 31,
SHARES SHARES 1993(1,2) 1992(1,2)
-------- ------------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......................... $ 10.78 $ 9.89 $ 11.04 $ 10.00 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(3,4)................................. 0.48 0.49 0.49 0.50 0.38
Net realized and unrealized gain (loss) on investments..... (0.03) 0.89 (1.15) 1.04 --
------- ------- ------- ------- -------
Total From Investment Operations:................... 0.45 1.38 (0.66) 1.54 0.38
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income....................... (0.48) (0.49) (0.49) (0.50) (0.38)
Dividends from net realized capital gains.................. -- -- -- -- --
------- ------- ------- ------- -------
Total Dividends:.................................... (0.48) (0.49) (0.49) (0.50) (0.38)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value................... (0.03) 0.89 (1.15) 1.04 --
------- ------- ------- ------- -------
Net Asset Value, End of Period............................... $ 10.75 $ 10.78 $ 9.89 $ 11.04 $ 10.00
======= ======= ======= ======= =======
Total Return(5).............................................. 4.31% 14.03% (6.14)% 15.66% 3.83%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............................ $40,154 $42,870 $42,451 $70,242 $20,144
Ratios to average net assets:
Net investment income including reimbursement/waiver....... 4.50% 4.73% 4.64% 4.54% 5.22%(7)
Operating expenses including reimbursement/waiver.......... 0.95% 0.92% 0.87% 0.87% 0.65%(7)
Operating expenses excluding reimbursement/waiver.......... 1.35% 1.31% 1.10% 1.19% 1.70%(7)
Portfolio Turnover Rate...................................... 12% 5% 18% 3% 19%(6)
</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 Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.44, $0.44 and $0.46, respectively.
(4) Net investment income per share and expense reimbursements by Fleet and/or
the Fund's administrator for the year ended October 31, 1993 and for the
period ended October 31, 1992 were $0.47 and $0.30, respectively.
(5) Calculation does not include sales charge for Retail A Shares.
(6) Not Annualized.
(7) Annualized.

7
<PAGE> 440

CONNECTICUT MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------
1996 1995 1994
------- ------- ------- PERIOD ENDED
RETAIL A RETAIL OCTOBER 31,
SHARES SHARES 1993(1,2)
-------- ------------------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $ 10.13 $ 9.22 $ 10.32 $ 10.00
------- ------- ------- -------
Income from Investment Operations:
Net investment income(3,4)................................... 0.42 0.44 0.46 0.25
Net realized and unrealized gain (loss) on investments....... 0.01 0.91 (1.10) 0.32
------- ------- ------- -------
Total From Investment Operations:.................... 0.43 1.35 (0.64) 0.57
------- ------- ------- -------
Less Dividends:
Dividends from net investment income......................... (0.42) (0.44) (0.46) (0.25)
Dividends from net realized capital gains.................... -- -- -- --
------- ------- ------- -------
Total Dividends:..................................... (0.42) (0.44) (0.46) (0.25)
------- ------- ------- -------
Net increase (decrease) in net asset value..................... 0.01 0.91 (1.10) 0.32
------- ------- ------- -------
Net Asset Value, End of Period................................. $ 10.14 $ 10.13 $ 9.22 $ 10.32
======= ======= ======= =======
Total Return(5)................................................ 4.32% 14.94% (6.39)% 5.80%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............................. $23,244 $18,066 $18,229 $18,771
Ratios to average net assets:
Net investment income including reimbursement/waivers........ 4.13% 4.53% 4.66% 4.30%(7)
Operating expenses including reimbursement/waivers........... 0.70% 0.68% 0.25% 0.00%(7)
Operating expenses excluding reimbursement/waiver............ 1.38% 1.48% 1.42% 1.73%(7)
Portfolio Turnover Rate........................................ 3 % 7% 4% 7%(6)
</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 Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.35, $0.37 and $0.34, respectively.
(4) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the period ended
October 31, 1993 was $0.15.
(5) Calculation does not include sales charge for Retail A Shares.
(6) Not Annualized.
(7) Annualized.

8
<PAGE> 441

MASSACHUSETTS MUNICIPAL BOND FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------
1996 1995 1994
-------- ------- ------- PERIOD ENDED
RETAIL A RETAIL OCTOBER 31,
SHARES SHARES 1993(1,2)
-------- ------------------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $ 9.98 $ 9.12 $ 10.24 $ 10.00
------- ------- ------- -------
Income from Investment Operations:
Net investment income(3,4)................................... 0.43 0.44 0.47 0.29
Net realized and unrealized gain (loss) on investments....... (0.04) 0.86 (1.12) 0.24
------- ------- ------- -------
Total From Investment Operations:.................... 0.39 1.30 (0.65) 0.53
------- ------- ------- -------
Less Dividends:
Dividends from net investment income......................... (0.43) (0.44) (0.47) (0.29)
Dividends from net realized capital gains.................... -- -- -- --
------- ------- ------- -------
Total Dividends:..................................... (0.43) (0.44) (0.47) (0.29)
------- ------- ------- -------
Net increase (decrease) in net asset value..................... (0.04) 0.86 (1.12) 0.24
------- ------- ------- -------
Net Asset Value, End of Period................................. $ 9.94 $ 9.98 $ 9.12 $ 10.24
======= ======= ======= =======
Total Return(5)................................................ 4.05% 14.52% (6.46)% 5.42%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............................. $26,275 $16,113 $15,966 $20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver......... 4.42% 4.56% 4.89% 4.87%(7)
Operating expenses including reimbursement/waiver............ 0.66% 0.70% 0.33% 0.05%(7)
Operating expenses excluding reimbursement/waiver............ 1.32% 1.58% 1.43% 1.82%(7)
Portfolio Turnover Rate........................................ 16% 19% 11% 0%(6)
</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 Fleet and/or the Fund's administrator for the years ended
October 31, 1996, 1995 and 1994 was $0.37, $0.36 and $0.37, respectively.
(4) Net investment income per share before fee waivers and expense
reimbursements by Fleet and/or the Fund's administrator for the period ended
October 31, 1993 was $0.18.
(5) Calculation does not include sales charge for Retail A Shares.
(6) Not Annualized.
(7) Annualized.

9
<PAGE> 442

RHODE ISLAND MUNICIPAL BOND FUND
(FOR A RETAIL A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31,
1995(1)
-------------
YEAR ENDED
OCTOBER 31, RETAIL
1996 SHARES
----------- -------------
RETAIL A
SHARES
-----------
<S> <C> <C>
Net Asset Value, Beginning of Period............................................ $ 10.67 $ 10.00
------- -------
Income from Investment Operations:
Net investment income(2)...................................................... 0.51 0.44
Net realized and unrealized gain (loss) on investments........................ 0.03 0.67
------- -------
Total From Investment Operations:..................................... 0.54 1.11
------- -------
Less Dividends:
Dividends from net investment income.......................................... (0.51) (0.44)
Dividends from net realized capital gains..................................... (0.05) --
------- -------
Total Dividends:...................................................... (0.56) (0.44)
------- -------
Net increase (decrease) in net asset value...................................... (0.02) 0.67
------- -------
Net Asset Value, End of Period.................................................. $ 10.65 $ 10.67
======= =======
Total Return(3)................................................................. 5.22% 11.29%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............................................... $14,900 $10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver.......................... 4.78% 5.13%(5)
Operating expenses including reimbursement/waiver............................. 0.77% 0.40%(5)
Operating expenses excluding reimbursement/waiver............................. 1.34% 2.25%(5)
Portfolio Turnover Rate......................................................... 13% 34%(4)
</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 Fleet
and/or the Fund's administrator for the fiscal year ended October 31, 1996
and the period ended October 31, 1995 was $0.45 and $0.28, respectively.
(3) Calculation does not include sales charge for Retail A Shares.
(4) Not Annualized.
(5) Annualized.

10
<PAGE> 443

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 total 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 four highest rating categories assigned
by S&P or Moody's or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest rating categories
assigned by S&P ("AAA", "AA", "A" and "BBB") or Moody's ("Aaa", "Aa", "A" and
"Baa") are considered to be investment grade. Municipal Securities rated in the
lowest of the four highest rating categories assigned by S&P or Moody's are
considered to have speculative characteristics, even though they are of
investment grade quality, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade Municipal Securities.
Such Municipal Securities will be purchased (and retained) only when Fleet
believes the issuers have an adequate capacity to pay interest and repay
principal. If the ratings of a particular Municipal Security purchased by the
Fund are subsequently downgraded below the four highest ratings assigned by S&P
or Moody's, such factor will be considered by Fleet in its evaluation of the
overall merits of that Municipal Security, but such ratings change will not
necessarily result in an automatic sale of the Municipal Security. Under normal
market and economic conditions, at least 65% of the Fund's total assets will be
invested in Municipal Securities rated in the three highest ratings assigned by
S&P or Moody's. 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 Fleet's opinion, 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 rating categories assigned by any
major rating service; and (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.

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

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 total 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
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 expects that except during

11
<PAGE> 444

temporary defensive periods or when, in Fleet's opinion, suitable obligations
are unavailable for investment, 65% of the Fund's total 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 four highest rating
categories assigned by S&P ("AAA", "AA", "A" and "BBB") or Moody's ("Aaa", "Aa",
"A" and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest ratings assigned by
S&P or Moody's are considered to be investment grade. See "Investment Objectives
and Policies--Tax-Exempt Bond Fund" above for a discussion of certain risks in
investing in Municipal Securities rated in the lowest of the four highest rating
categories assigned by S&P or Moody's. If the ratings of a particular Municipal
Security purchased by the Fund are subsequently downgraded below the four
highest rating categories assigned by S&P or Moody's, such factor will be
considered by Fleet in its evaluation of the overall merits of that Municipal
Security but such ratings change will not necessarily result in an automatic
sale of the Municipal Security. Under normal market and economic conditions, at
least 65% of the Fund's total assets will be invested in Municipal Securities
rated in the three highest rating categories assigned by S&P or Moody's. 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 Fleet's opinion, 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 rating categories 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 New York Municipal Bond Fund.

CONNECTICUT MUNICIPAL BOND FUND

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 total 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
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 expects that except during temporary defensive periods or when, in Fleet's
opinion, suitable obligations are unavailable for investment, 65% of the Fund's
total 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.

12
<PAGE> 445

of certain risks in investing in Municipal Securities rated in the lowest of the
four highest rating categories assigned by S&P or Moody's. If the ratings of a
particular Municipal Security purchased by the Fund are subsequently downgraded
below the four highest rating categories assigned by S&P or Moody's, such factor
will be considered by Fleet in its evaluation of the overall merits of that
Municipal Security but such ratings change will not necessarily result in an
automatic sale of the Municipal Security. Under normal market and economic
conditions, at least 65% of the Fund's total assets will be invested in
Municipal Securities rated in the three highest rating categories assigned by
S&P or Moody's. 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 Fleet's opinion, 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 rating categories 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 Connecticut Municipal Bond Fund.

MASSACHUSETTS MUNICIPAL BOND FUND

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 total 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 Fleet's opinion, suitable obligations are unavailable for investment,
65% of the Fund's total 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 four highest rating
categories assigned by S&P ("AAA", "AA", "A" and "BBB") or Moody's ("Aaa", "Aa",
"A" and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. See
"Investment Objectives and Policies--Tax-Exempt Bond Fund" above for a
discussion of certain risks in investing in Municipal Securities rated in the
lowest of the four highest rating categories assigned by S&P or Moody's. If the
ratings of a particular Municipal Security purchased by the Fund are
subsequently downgraded below the four highest rating categories assigned by S&P
or Moody's, such factor will be considered by Fleet in its evaluation of the
overall merits of that Municipal Security but such ratings change will not
necessarily result in an automatic sale of the Municipal Security. Under normal
market and economic conditions, at least 65% of the Fund's total assets will be
invested in Municipal Securities rated in the three highest rating categories
assigned by S&P or Moody's. See Appendix A to the Statement of Additional
Information for a description of S&P's and Moody's rating categories.

13
<PAGE> 446

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 Massachusetts Municipal Bond Fund.

RHODE ISLAND MUNICIPAL BOND FUND

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 total 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 Fleet's opinion, suitable obligations are unavailable for investment,
at least 65% of the Fund's total 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.

Municipal Securities purchased by the Fund will consist primarily of issues
which are rated at the time of purchase within the four highest rating
categories assigned by S&P ("AAA", "AA", "A" and "BBB") or Moody's ("Aaa", "Aa",
"A", and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. See
"Investment Objectives and Policies--Tax-Exempt Bond Fund" above for a
discussion of certain risks in investing in Municipal Securities rated in the
lowest of the four highest ratings assigned by S&P or Moody's. If the ratings of
a particular Municipal Security purchased by the Fund are subsequently
downgraded below the four highest rating categories assigned by S&P or Moody's,
such factor will be considered by Fleet in its evaluation of the overall merits
of that Municipal Security but such ratings change will not necessarily result
in an automatic sale of the Municipal Security. Under normal market and economic
conditions, at least 65% of the Fund's total assets will be invested in
Municipal Securities rated in the three highest rating categories assigned by
S&P or Moody's. 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 Fleet's opinion, 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 rating categories 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.

SPECIAL CONSIDERATIONS AND RISKS

IN GENERAL

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<PAGE> 447

ment 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 on similar projects if such investment is
deemed necessary or appropriate by Fleet. To the extent that a Fund's assets are
concentrated in Municipal Securities payable from revenues on similar projects,
the Fund will be subject to the particular risks presented by such projects to a
greater extent than it would be if its assets were not so concentrated.

NEW YORK MUNICIPAL BOND FUND

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 State of Connecticut and various of its municipalities are challenged
by financial difficulties. For the four fiscal years ended June 30, 1991, the
General Fund experienced operating deficits but, for the five fiscal years ended
June 30, 1996, the General Fund recorded operating surpluses. During the same
period, the State's budgeted expenditures more than doubled from approximately
$4,300,000,000 for the 1986-87 fiscal year to approximately $9,200,000,000 for
the 1996-97 fiscal year. In 1991, legislation was enacted by the State
authorizing the State Treasurer to issue Economic Recovery Notes to fund the
General Fund's accumulated deficit. The notes were to be payable no later than
June 30, 1996, but payment of the remaining notes scheduled to occur during the
1995-96 fiscal year was rescheduled to be made over the four fiscal years ending
June 30, 1999. As a result of recurring budgetary problems, Connecticut's
general obligation bonds were down-

15
<PAGE> 448

graded 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 the
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 has 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.

Other considerations affecting the Fund's investments in Connecticut
Municipal Securities are summarized in the Statement of Additional Information.

MASSACHUSETTS MUNICIPAL BOND FUND

RHODE ISLAND MUNICIPAL BOND FUND

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

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<PAGE> 449

U.S. GOVERNMENT OBLIGATIONS AND MONEY MARKET INSTRUMENTS

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 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.

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.

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<PAGE> 450

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 Fleet 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.

SECURITIES LENDING

INVESTMENT COMPANY SECURITIES

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<PAGE> 451

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
Fleet.

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, Fleet 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

WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS

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<PAGE> 452

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 commitments, when-issued purchases and delayed
settlements ever exceeded 25% of the value of its total assets, the Fund's
liquidity and the ability of Fleet 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 standby commitment, a dealer agrees to
purchase, at a Fund's option, specified Municipal Securities at a specified
price. The Funds will acquire stand-by commitments solely to facilitate
portfolio liquidity and do not intend to exercise their rights thereunder for
trading purposes. The Funds expect that stand-by commitments will generally be
available without the payment of any direct or indirect consideration. However,
if necessary or advisable, a Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield otherwise
available for the same securities). Stand-by commitments acquired by a Fund
would be valued at zero in determining the Fund's net asset value.

ASSET-BACKED SECURITIES

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

MORTGAGE-BACKED SECURITIES

Each Fund may invest in mortgage-backed securities (including
collateralized mortgage obligations) that represent pools of mortgage loans
assembled for sale to investors by various governmental agencies and
government-related organizations, such as the Government National Mortgage
Association, the Federal National Mortgage Association, and the Federal Home
Loan Mortgage Corporation. Mortgage-backed securities provide a monthly payment
consisting of interest and principal payments. Additional payment may be made
out of unscheduled repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. To the extent that the Fund purchases mortgage-backed securities
at a premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of the
Fund's principal investment to the extent of the premium paid. The yield of a
Fund that invests in mortgage-backed securities may be affected by reinvestment
of prepayments at higher or lower rates than the original investment.

Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers, and special purpose
entities. These private mortgage-backed securities may be supported by U.S.
Government mortgage-backed securities or some form of non-government credit
enhancement. Mortgage-backed securities have either fixed or adjustable interest
rates. The rate of return on mortgage-backed securities may be affected by
prepayments of principal on the underlying loans, which generally increase as
interest rates decline; as a result, when interest rates decline, holders of
these securities normally do not benefit from appreciation in market value to
the same extent as holders of other noncallable debt securities. In addition,
like other debt securities, the value of mortgage-related securities, including
government and government related mortgage pools, generally will fluctuate in
response to market interest rates.

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

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<PAGE> 453

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.

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, municipal bond index and interest rate futures and certain asset-backed and
mortgage-backed securities.

PORTFOLIO TURNOVER

INVESTMENT LIMITATIONS

No Fund may:

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<PAGE> 454

collateral is equal at all times to at least 100% of the value of the
securities loaned.

4. 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 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:

In addition, the New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds may not:

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.

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<PAGE> 455

HOW TO PURCHASE SHARES

DISTRIBUTOR

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.

FD Distributors 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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 FD Distributors, 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 FD
Distributors on a Business Day in accordance with FD Distributors' procedures.

PURCHASE PROCEDURES--CUSTOMERS OF INSTITUTIONS

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 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 FD Distributors 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. ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, an investor must telephone
1-800-628-0414 to place an order and for instruc-

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<PAGE> 456

tions. 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 FD Distributors 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.

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.

APPLICABLE SALES CHARGE--RETAIL A SHARES

Further reductions in the sales charges shown above are also possible. See
"Quantity Discounts" below.

FD Distributors will pay the appropriate reallowance to dealers to
broker-dealer organizations which have entered into

24
<PAGE> 457

agreements with FD Distributors. The reallowance to dealers may be changed from
time to time.

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;
- purchases by IRA, SEP and Keogh Plan accounts that 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 January 1, 1997;
- 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 FD Distributors and of
broker-dealers having agreements with FD Distributors 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

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.

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<PAGE> 458

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 FD
Distributors' 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.

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 FD Distributors 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. Certain affiliates of Fleet may, at their own expense, provide
additional compensation to Fleet Enterprises, Inc., a broker-dealer affiliate of
Fleet, whose customers purchase significant amounts of Retail B Shares of a
Fund. See "Applicable Sales Charge--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> 459

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 currently 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 currently
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 FD
Distributors 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.
Upon conversion, the converted Shares will be relieved of the distribution and
shareholder servicing fees borne by Retail B Shares, although they will be
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 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 respect to the advisability of purchasing Retail B
Shares in amounts exceeding $250,000.

27
<PAGE> 460

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 the
purchase. In order to reduce such fees for investors that hold Retail B Shares
for more than six years, Retial 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 and acceptance of the order by FD Distributors.
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 FD Distributors on a
Business Day will normally be wired on the third 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 5108
4400 Computer Drive
Westboro, MA 01581-5108

A written redemption request must (i) state the name of the Fund and 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. FD Distributors will not
accept guarantees from notaries public. FD Distributors 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 FD Distributors receives all required documents in
proper form. The Funds ordinarily will make payment for Retail Shares redeemed
by mail within three Business Days after proper receipt by FD Distributors of
the redemption request. Questions with respect to the proper form for redemption
requests should be directed to FD Distributors at 1-800-628-0414.

Redemption by Telephone. Direct Investors may redeem Retail Shares by
calling 1-800-628-0414 and instructing FD Distributors 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),

28
<PAGE> 461

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 FD Distributors 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. FD Distributors 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 FD
Distributors. To request redemption of Retail Shares by wire, Direct Investors
should call FD Distributors at 1-800-628-0414.

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 FD
Distributors. 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 FD Distributors 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 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 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
Money Market, 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.

29
<PAGE> 462

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 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.

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 1-800-628-0414. 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. Telephone 1-800-628-0414 for a
prospectus or to make an exchange. See "How to Redeem Shares--Redemption
Procedures--Direct Investors--Redemptions by Wire" above for a description of
Galaxy's policy on telephone transactional.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

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 three 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 Galaxy's 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 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-

30
<PAGE> 463

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 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- 628-0414 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.

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<PAGE> 464

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.

TAXES

FEDERAL

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.

STATE AND LOCAL

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.

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<PAGE> 465

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, its political subdivisions or public
instrumentalities, state or local authorities, districts or similar public
entities created under Connecticut law are not be 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 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 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 Rhode Island Municipal Bond 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 75 State Street, Boston, Massachusetts
02108, 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 $85 billion at December 31,
1996. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and institutional clients and
manages the other investment portfo-

33
<PAGE> 466

lios 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, High Quality
Bond and Corporate 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 Bank or other
subsidiaries of Fleet Financial Group, Inc., in consideration for administrative
and other shareholder 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, 1996, Fleet received advisory fees (after fee waivers) at the
effective annual rates of .55%, .55%, .20%, .20% and .30% of the Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds' average daily net assets,
respectively. In addition to fee waivers, Fleet also reimbursed the Tax-Exempt
Bond, New York Municipal Bond and Rhode Island Municipal Bond Funds for certain
operating expenses, which reimbursement may be revised or discontinued at any
time.

The organizational arrangements of Fleet require that all investment
decisions with respect to the Funds be made by a committee and no one person is
responsible for making recommendations to that committee.

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 Retail
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. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, FDISG received
administration fees at the effective annual rate of .085% of the average daily
net assets of each of the Tax-Exempt Bond, New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode Island Municipal Bond
Funds.

34
<PAGE> 467

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares into one or more classes or series of Shares.
Pursuant to such authority, the Board of Trustees has authorized the issuance of
an unlimited number of Shares in each series in the Funds as follows: Class
M--Series 1 shares (Trust Shares), Class M-- Series 2 shares (Retail A Shares)
and Class M--Series 3 shares (Retail B Shares), each series representing
interests in the Tax-Exempt Bond Fund; Class O--Series 1 shares (Trust Shares)
and Class O--Series 2 shares (Retail A Shares), each series representing
interests in the New York Municipal Bond Fund; Class P--Series 1 shares (Trust
Shares) and Class P-- Series 2 shares (Retail A Shares), each series
representing interests in the Connecticut Municipal Bond Fund; Class Q-- Series
1 shares (Trust Shares) and Class Q--Series 2 shares (Retail A Shares), each
series representing interests in the 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 FD Distributors 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.

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 .30% of the average
daily net asset value of Retail A Shares of the Funds 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 FD Distributors; 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 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 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 to their Customers a
schedule of any fees that they may charge in connection with Customer
investments in Retail A Shares.

35
<PAGE> 468

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) FD Distributors 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 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, 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. ("FDISG"), a wholly-owned subsidiary of First Data Corporation, serves as
the Funds' transfer and dividend disbursing agent. Services performed by both
entities for the Funds are described in the Statement of Additional Information.
Communications to FDISG should be directed to FDISG at P.O. Box 5108, 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Funds. Galaxy bears the expenses
incurred in the Funds' operations 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 shareholder reports and 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

36
<PAGE> 469

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 the 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 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
charges imposed on the purchase of Retail A Shares or the redemption of Retail B
Shares in accordance with the rules of the SEC. Quotations that do not reflect
the sales charges will be higher than quotations that do reflect the sales
charges.

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 Institutions with respect to accounts of
Customers that have invested in 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, 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.

37
<PAGE> 470

[This Page Intentionally Left Blank]
<PAGE> 471

[This Page Intentionally Left Blank]
<PAGE> 472

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 FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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............ 11
Tax-Exempt Bond Fund........................ 11
New York Municipal Bond Fund................ 11
Connecticut Municipal Bond Fund............. 12
Massachusetts Municipal Bond Fund........... 13
Rhode Island Municipal Bond Fund............ 14
Special Considerations and Risks............ 14
Other Investment Policies and Risk
Considerations........................... 16
INVESTMENT LIMITATIONS........................ 21
PRICING OF SHARES............................. 22
HOW TO PURCHASE SHARES........................ 23
Distributor................................. 23
General..................................... 23
Purchase Procedures--Customers of
Institutions............................. 23
Purchase Procedures--Direct Investors....... 23
Other Purchase Information.................. 24
Applicable Sales Charges--Retail A Shares... 24
Quantity Discounts.......................... 25
Applicable Sales Charges--Retail B Shares... 26
Characteristics of Retail A Shares and
Retail B Shares.......................... 27
Factors to Consider When Selecting Retail A
Shares or Retail B Shares................ 27
HOW TO REDEEM SHARES.......................... 28
Redemption Procedures--Customers of
Institutions............................. 28
Redemption Procedures--Direct Investors..... 28

<CAPTION>
PAGE
----
<S> <C>
Other Redemption Information................ 29
INVESTOR PROGRAMS............................. 29
Exchange Privilege.......................... 29
Automatic Investment Program and Systematic
Withdrawal Plan.......................... 30
Payroll Deduction Program................... 30
College Investment Program.................. 31
Direct Deposit Program...................... 31
INFORMATION SERVICES.......................... 31
Galaxy Information Center--24 Hour
Information Service...................... 31
Voice Response System....................... 31
Galaxy Shareholder Services................. 31
DIVIDENDS AND DISTRIBUTIONS................... 32
TAXES......................................... 32
Federal..................................... 32
State and Local............................. 32
Miscellaneous............................... 33
MANAGEMENT OF THE FUNDS....................... 33
Investment Adviser.......................... 33
Authority to Act as Investment Adviser...... 34
Administrator............................... 34
DESCRIPTION OF GALAXY AND ITS SHARES.......... 35
Shareholder Services Plan................... 35
Distribution and Services Plan.............. 36
CUSTODIAN AND TRANSFER AGENT.................. 36
EXPENSES...................................... 36
PERFORMANCE AND YIELD INFORMATION............. 36
MISCELLANEOUS................................. 37
</TABLE>

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<PAGE> 473
RETAIL A SHARES

THE GALAXY FUND

Rhode Island Municipal Bond Fund

Prospectus
February 28, 1997
<PAGE> 474

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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 OBJECTIVE AND POLICIES.............. 5
Special Considerations and Risks............. 6
Other Investment Policies and Risk
Considerations............................ 6
INVESTMENT LIMITATIONS......................... 11
PRICING OF SHARES.............................. 12
HOW TO PURCHASE AND REDEEM SHARES.............. 12
Distributor.................................. 12
Purchase of Shares........................... 13
Purchase Procedures--Customers of
Institutions.............................. 13
Purchase Procedures--Direct Investors........ 13
Other Purchase Information................... 14
Applicable Sales Charge...................... 14
Quantity Discounts........................... 15
Redemption Procedures--Customers of
Institutions.............................. 16
Redemption Procedures--Direct Investors...... 16
Other Redemption Information................. 17
INVESTOR PROGRAMS.............................. 17
Exchange Privilege........................... 17
Automatic Investment Program and Systematic
Withdrawal Plan........................... 18

<CAPTION>
PAGE
----
<S> <C>
Payroll Deduction Program.................... 18
College Investment Program................... 18
Direct Deposit Program....................... 18
INFORMATION SERVICES........................... 19
Galaxy Information Center -- 24 Hour
Information Service....................... 19
Voice Response System........................ 19
Galaxy Shareholder Services.................. 19
DIVIDENDS AND DISTRIBUTIONS.................... 19
TAXES.......................................... 19
Federal...................................... 19
State and Local.............................. 20
Miscellaneous................................ 20
MANAGEMENT OF THE FUND......................... 20
Investment Adviser........................... 20
Authority to Act as Investment Adviser....... 21
Administrator................................ 21
DESCRIPTION OF GALAXY AND ITS SHARES........... 21
Shareholder Services Plan.................... 22
CUSTODIAN AND TRANSFER AGENT................... 22
EXPENSES....................................... 23
PERFORMANCE AND YIELD INFORMATION.............. 23
MISCELLANEOUS.................................. 23
</TABLE>

(LOGO)
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<PAGE> 475

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive Westboro, Massachusetts 01581 For an application and information regarding purchases,
redemptions, exchanges and other shareholder services or
for current performance, call 1-800-628-0414.
</TABLE>

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 total assets in debt securities of the State of
Rhode Island, its political subdivisions, 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"). The Fund is a non-diversified investment
portfolio under the Investment Company Act of 1940, as amended (the "1940 Act").

The Retail A Shares described in this Prospectus are offered to customers
("Customers") of FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet
Securities, Inc., Fleet Enterprises, 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 or corporations, 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 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.

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 28, 1997
<PAGE> 476

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, GROWTH AND INCOME,
SMALL CAP VALUE, SHORT-TERM BOND, INTERMEDIATE GOVERNMENT INCOME, HIGH QUALITY
BOND, CORPORATE 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?

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 can I buy and redeem shares?

A: The Fund is distributed by First Data 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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 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 by 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: Dividends from net investment income of the Fund are declared daily and
paid monthly. Net realized capital gains of the Fund 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 with respect to which the
dividend or distribution was declared without sales charge. 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 four highest rating categories assigned by
Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"). Municipal Securities rated in the lowest of the four highest rating
categories assigned by Moody's or S&P and considered to have speculative
characteristics, even though they are of investment grade quality. 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 obligations 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 futures 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 and for shares of any other
investment portfolio otherwise advised by Fleet or its affiliates. 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> 477

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
BOND FUND
------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum 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
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Advisory Fees (After Fee Waivers)................................................................ .25%
12b-1 Fees....................................................................................... None
Other Expenses................................................................................... .70%
----
Total Fund Operating Expenses (After Fee Waivers)................................................ .95%
====
</TABLE>

- ----------------------------------
(1) Reduced front-end 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 investors 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 by
Fleet, "Advisory Fees" would be .75% and "Total Fund Operating Expenses" would
be 1.45% 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 EXAMPLE 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> 478

FINANCIAL HIGHLIGHTS

This Prospectus describes the 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 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) Retail A
Shares and Trust Shares bear differing transfer agency expenses.

3
<PAGE> 479

RHODE ISLAND MUNICIPAL BOND FUND
(FOR A RETAIL A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED OCTOBER 31,
OCTOBER 31, 1996 1995(1)
---------------- -----------------
RETAIL A SHARES RETAIL SHARES
---------------- -----------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................................... $ 10.67 $ 10.00
------- -------
Income from Investment Operations:
Net investment income(2).............................................. 0.51 0.44
Net realized and unrealized gain (loss) on investments................ 0.03 0.67
------- -------
Total From Investment Operations:................................ 0.54 1.11
------- -------
Less Dividends:
Dividends from net investment income..................................... (0.51) (0.44)
Dividends from net realized capital gains................................ (0.05) --
------- -------
Total Dividends:................................................. (0.56) (0.44)
------- -------
Net increase (decrease) in net asset value................................. (0.02) 0.67
------- -------
Net Asset Value, End of Period............................................. $ 10.65 $ 10.67
======= =======
Total Return(3)............................................................ 5.22% 11.29%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).......................................... $ 14,900 $10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver..................... 4.78% 5.13%(5)
Operating expenses including reimbursement/waiver........................ 0.77% 0.40%(5)
Operating expenses excluding reimbursement/waiver........................ 1.34% 2.25%(5)
Portfolio Turnover Rate.................................................. 13% 34%(4)
</TABLE>

4
<PAGE> 480

INVESTMENT OBJECTIVE AND POLICIES

Fleet Investment Advisors Inc., the Fund's investment adviser ("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 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 total 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 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 expects that except during temporary defensive periods or when, in
Fleet's opinion, suitable obligations are unavailable for investment, 65% of the
Fund's total 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 four highest rating
categories assigned by S&P ("AAA", "AA", "A" and "BBB") or Moody's ("Aaa", "Aa",
"A" and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. Municipal Securities rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. Municipal
Securities rated in the lowest of the four highest rating categories assigned by
S&P or Moody's are considered to have speculative characteristics, even though
they are considered to have speculative characteristics, even though they are of
investment grade quality, even though they are of investment grade quality, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher grade Municipal Securities. Such Municipal Securities will be
purchased (and retained) only when Fleet believes the issuers have an adequate
capacity to pay interest and repay principal. If the ratings of a particular
Municipal Security purchased by the Fund are subsequently downgraded below the
four highest rating categories assigned by S&P or Moody's, such factor will be
considered by Fleet in its evaluation of the overall merits of that Municipal
Security but such ratings change will not necessarily result in an automatic
sale of the Municipal Security. Under normal market and economic conditions, at
least 65% of the Fund's total assets will be invested in Municipal Securities
rated in the three highest rating categories assigned by S&P or Moody's.

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 Fleet's opinion, prevailing market or economic conditions warrant.
Uninvested cash reserves may 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 rating categories 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 Fund.

5
<PAGE> 481

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.

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 on similar projects if such
investment is deemed necessary or appropriate by Fleet. 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 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 obligations and could affect
adversely the values of other Rhode Island Municipal Securities as well.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

U.S. GOVERNMENT OBLIGATIONS AND MONEY MARKET INSTRUMENTS

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

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

6
<PAGE> 482

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.

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

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 Fleet will review the proceedings relating to the issuance of Municipal
Securities or the bases for such opinions.

VARIABLE AND FLOATING RATE INSTRUMENTS

7
<PAGE> 483

less, 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 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 Fleet under guidelines approved by Galaxy's Board of Trustees.
The Fund will not enter into repurchase agreements with Fleet or any of its
affiliates. Unless a repurchase agreement has a remaining maturity of seven days
or less or may be terminated on demand by notice of seven days or less, the
repurchase agreement will be considered an illiquid security and will be subject
to the 10% limit described in Investment Limitation No. 3 under "Investment
Limitations" in this Prospectus.

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 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 Fleet.

8
<PAGE> 484

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 certificates of
participation that, in the opinion of counsel to the issuer, are exempt from
federal income tax. A certificate of participation gives the Fund an undivided
interest in a pool of Municipal Securities held by a bank. Certificates of
participation interests may have fixed, floating or variable rates of interest.
If a certificate of participation is unrated, Fleet 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, 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 or other liquid assets, 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 Fleet 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 it holds or intends 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

9
<PAGE> 485

absent unusual market conditions. In the event its forward commitments,
when-issued purchases and delayed settlements ever exceeded 25% of the value of
its total assets, the Fund's liquidity and the ability of Fleet 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-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 value of mortgage-related securities, including
government and government related mortgage pools, generally will fluctuate in
response to market interest rates.

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

10
<PAGE> 486

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

DERIVATIVE SECURITIES

The Fund may from time to time, in accordance with its interest 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, municipal bond index and
interest rate futures and certain asset-backed and mortgage-backed 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.

Fleet 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 Fleet'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.

PORTFOLIO TURNOVER

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:

11
<PAGE> 487

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 that the Fund may
borrow 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; 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.

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 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 Shares of that series of the Fund, by
the number of outstanding Shares of that series of the Fund.

The Fund's assets are valued for purposes of pricing sales and redemptions
by an independent pricing service ("Service") approved by Galaxy's Board of
Trustees. When, in the judgment of the Service, quoted bid prices for portfolio
securities are readily available and are representative of the bid side of the
market, these investments are valued at the mean between quoted bid prices (as
obtained by the Service from dealers in such securities) and asked prices (as
calculated by the Service based upon its evaluation of the market for such
securities). Other investments are carried at fair value as determined by the
Service, based on methods which include consideration of yields or prices of
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,
First Data Distributors Inc. ("FD Distributors"), an indirect wholly-owned
subsidiary of First Data Investor Services Group, Inc. FD Distributors is a
registered broker/dealer with principal offices located at 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

12
<PAGE> 488

PURCHASE OF SHARES

FD Distributors 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 FIS Securities, Inc., Fleet
Brokerage Securities Inc., Fleet Securities, Inc., Fleet Enterprises, 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 FD Distributors, 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 FD
Distributors on a Business Day in accordance with FD Distributors' procedures.
Retail A Shares of the Fund will be issued only in exchange for monetary
consideration as described below.

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 FD Distributors and for wiring required funds in
payment to Galaxy's custodian on a timely basis. FD Distributors 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 particular
Institution should contact such entity directly for appropriate purchase
instructions.

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

All purchase orders placed by mail must be accompanied by a purchase
application. Applications may be obtained by calling FD Distributors 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 FD Distributors, 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. ("FDISG"), Galaxy's transfer agent.
Prior to making any purchase by wire, an investor must telephone 1-800-628-0414
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 FD Distributors 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.

13
<PAGE> 489

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 FD Distributors
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.

APPLICABLE SALES CHARGE

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, FD Distributors may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts. Also, FD Distributors in its discretion may from time to time, pursuant
to objective criteria established by FD Distributors, 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 FD
Distributors 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.

Fleet's indirect parent, Fleet National Bank, or another affiliate of
Fleet, may at its expense, provide additional compensation to Fleet Enterprises,
Inc., a broker-dealer affiliate of Fleet, whose customers purchase significant
amounts of Retail A Shares of the Fund. Such compensation will not represent an
additional expense to the Fund or its shareholders, since it will be paid from
the assets of Fleet's affiliates.

- reinvestment of dividends and distributions;
- purchases by IRA, SEP and Keogh Plan accounts that were beneficial owners
of shares of the Fund or any of the other portfolios offered by Galaxy or any
other fund adviser by Fleet or its affiliates before January 1, 1997;
- 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 FD Distributors and
of broker-dealers having agreements with the FD Distributors pertaining to the
sale of Retail A Shares to the extent permitted by such organizations;

14
<PAGE> 490

- 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

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 FD
Distributors' 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 plan (or the aggregate investments 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 Galaxy's
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 as to the number of times an investor may use this
Privilege.

15
<PAGE> 491

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 FD
Distributors 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 FD Distributors on a Business
Day will normally be wired on the third 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.

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

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. First Data Distributors will not accept guarantees from
notaries public. FD Distributors 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
First Data Distributors receives all required documents in proper form. The Fund
ordinarily will make payment for Retail A Shares redeemed by mail within three
Business Days after proper receipt by FD Distributors of the redemption request.
Questions with respect to the proper form for redemption requests should be
directed to FD Distributors at 1-800-628-0414.

Redemption by Telephone. Direct investors may redeem Retail Shares by
calling 1-800-628-0414 and instructing FD Distributors 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 FD Distributors 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. FD Distributors 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 FD
Distributors. To request redemption of Retail A Shares by wire, Direct Investors
should call FD Distributors at 1-800-628-0414.

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 FD
Distributors. 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 transactions, it may be liable
for losses due to unauthorized or fraudulent telephone instructions.

16
<PAGE> 492

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 FD Distributors 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.

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 FD Distributors. 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 1-800-628-0414. 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. Telephone 1-800-628-0414 for a prospectus or to
make an exchange. See "How to Purchase and Redeem Shares--Redemption
Procedures--Direct Investors--Redemption by Wire" above for a description of
Galaxy's policy regarding telephone transactions.

17
<PAGE> 493

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, a Customer or Direct Investor should consult a tax
or other financial adviser to determine the tax consequences.

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 Galaxy's 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 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 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.

DIRECT DEPOSIT PROGRAM

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 termi-

18
<PAGE> 494

nate a Direct investor's participation upon 30 days' notice to the Direct
Investor.

INFORMATION SERVICES

GALAXY INFORMATION CENTER--24 HOUR INFORMATION SERVICE

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 1-800-628-0414 (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 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,
deduction of any applicable sales charge, 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 divi-

19
<PAGE> 495

dends 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 subject to tax.

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

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to Fleet Trust Company and other 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, High Quality Bond, Corporate Bond, New
York

20
<PAGE> 496

Municipal Bond, Connecticut Municipal Bond and
Massachusetts Municipal Bond Funds.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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 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 Bank 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 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. For the fiscal year ended October 31, 1996,
Fleet received advisory fees (after fee waivers) at the effective annual rate of
.30% of the Fund's average daily net assets. In addition to the fee waivers,
Fleet also reimbursed the Fund during the fiscal year ended October 31, 1996 for
certain operating expenses, but Fleet does not expect to continue such
reimbursement in the current fiscal year.

The organizational structure of Fleet requires that all investment
decisions with respect to the Fund be made by a committee, and no one person is
primarily responsible for making recommendations to that committee.

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 Retail A
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. Fleet, the 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.

ADMINISTRATOR

First Data Investor Services Group, Inc. ("FDISG"), located at 4400
Computer Drive, Westboro, Massachusetts 01581, 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. Effective
September 5, 1996, 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 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 over $5 billion. Prior to September 5, 1996, FDISG was 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 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 voluntarily
all or a portion of the administration fee payable to it by the Fund. For the
fiscal year ended October 31, 1996, the Fund paid administration fees at the
effective annual rate of .085% of its average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

21
<PAGE> 497

as follows: Class R--Series 1 shares (Trust Shares) and Class R--Series 2 shares
(Retail A Shares), both series representing interests in the Fund. The Fund is
classified as a non-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 Trust Shares and these other portfolios, which are offered
through separate prospectuses, contact FD Distributors at 1-800-628-0414. As of
the date of this Prospectus, Trust Shares of the Fund are not being offered to
investors.

Shares of each series in the Fund bear their pro rata 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 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 investment portfolio 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 investment portfolio as and declared in the discretion
of Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing 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 .30% of the average
daily net asset value of 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 FD
Distributors; 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 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 .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 to their Customers a
schedule of any fees that they may charge in connection with Customer
investments in Retail A Shares.

CUSTODIAN AND TRANSFER AGENT

22
<PAGE> 498

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 shareholder reports and 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
bond indices or to rankings prepared by independent services or other financial
or industry publications that monitor the performance of mutual funds. For
example, the performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors the performance of mutual funds.

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

23
<PAGE> 499

TRUST

THE GALAXY FUND
EQUITY VALUE FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 500

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

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

<CAPTION>
PAGE
<S> <C>
State and Local..................... 16
MANAGEMENT OF THE FUND................ 16
Investment Adviser.................. 17
Authority to Act as Investment
Adviser........................... 17
Administrator....................... 18
DESCRIPTION OF GALAXY AND ITS SHARES... 18
Shareholder Services Plan........... 19
Affiliate Agreement for Sub-Account
Services.......................... 19
CUSTODIAN AND TRANSFER AGENT.......... 20
EXPENSES.............................. 20
PERFORMANCE AND YIELD INFORMATION..... 20
MISCELLANEOUS......................... 21
</TABLE>

================================================================================
<PAGE> 501

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For an application and information concerning
Westboro, Massachusetts 01581-5108 purchases, redemptions, exchanges and other
shareholder services or for current
performance, call 1-800-628-0414.
</TABLE>

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, Fleet Investment Advisors Inc., believes are undervalued.

This prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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, corporations or other entities
purchasing either for their own accounts or for the accounts of others and to
FIS Securities Inc., Fleet Brokerage Corporation, Fleet Securities, Inc., Fleet
Enterprises, 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.

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

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 28, 1997
<PAGE> 502

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 investors 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 EXAMPLE 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> 503

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 LLP, Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report 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, which may be obtained without charge by contacting Galaxy at its
telephone number or address provided above.

3
<PAGE> 504

EQUITY VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31, PERIOD
1996 1995 1994 YEAR ENDED OCTOBER 31,(2) ENDED
------------------------------ ------------------------------------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991 1990 1989 1988(1,2)
------------------------------ -------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................ $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41 $ 10.00
-------- -------- -------- -------- -------- ------- ------- ------- -----------
Income from Investment
Operations:
Net investment income........ 0.21 0.28 0.19 0.19 0.26 0.37 0.39 0.36 0.03
Net realized and unrealized
gain (loss) on
investments................ 2.74 2.24 0.45 2.14 0.33 2.41 (1.37) 1.10 0.38
-------- -------- -------- -------- -------- ------- ------- ------- -----------
Total from Investment
Operations:.......... 2.95 2.52 0.64 2.33 0.59 2.78 (0.98) 1.46 0.41
-------- -------- -------- -------- -------- ------- ------- ------- -----------
Less Dividends:
Dividends from net investment
income..................... (0.21) (0.30) (0.16) (0.20) (0.27) (0.37) (0.38) (0.36) --
Dividends from net realized
capital gains.............. (1.11) (1.21) (0.28) (0.42) (0.43) (0.34) (0.70) -- --
-------- -------- -------- -------- -------- ------- ------- ------- -----------
Total Dividends:....... (1.32) (1.51) (0.44) (0.62) (0.70) (0.71) (1.08) (0.36) --
-------- -------- -------- -------- -------- ------- ------- ------- -----------
Net increase (decrease) in net
asset value.................. 1.63 1.01 0.20 1.71 (0.11) 2.07 (2.06) 1.10 0.41
-------- -------- -------- -------- -------- ------- ------- ------- -----------
Net Asset Value, End of
Period....................... $ 15.96 $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41
======== ======== ======== ======== ======== ======= ======= ======= =========
Total Return................... 22.05% 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).................... $194,827 $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....... 1.42% 2.10% 1.46% 1.52% 2.24% 3.25% 3.66% 3.25% 1.89%(4)
Operating expenses including
reimbursement/waiver....... 1.03% 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.97% 0.95%(4)
Operating expenses excluding
reimbursement/waiver....... 1.03% 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.98% 0.95%(4)
Portfolio Turnover Rate........ 116% 76% 71% 50% 136% 40% 94% 44% 4%(3)
Average Commission Rate
Paid(5)...................... $ 0.0605 N/A N/A N/A N/A N/A N/A N/A N/A
</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) Required for fiscal years beginning on or after September 1, 1995.

4
<PAGE> 505

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 ("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, Fleet
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").

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 that Fleet believes to be undervalued. 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.

The Fund may hold other types of securities in such proportions as, in
Fleet's opinion, existing market and economic conditions 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 Fleet, 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"). For additional information
concerning investments in options and similar securities, 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.

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.

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

5
<PAGE> 506

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 change.

Foreign Securities

Investments in foreign securities may 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 dividends or 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 countries with emerging economies or
emerging securities markets. 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 Investment 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 Fleet.

6
<PAGE> 507

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 10
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.

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 Fleet 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

7
<PAGE> 508

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 Fleet 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 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

8
<PAGE> 509

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
Fleet.

REITs

The Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITs are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pays dividends
to their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
its distributions may also be designated as a return of capital. See "Taxes".

Options

Covered Call Options. To further increase return on its portfolio
securities and in accordance with its investment objective 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 foregoes 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. The Fund 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. Such options would
normally be written only on underlying securities as to which Fleet does not
anticipate significant short-term capital appreciation. See "Derivative
Securities" below.

American and European Depository Receipts

9
<PAGE> 510

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 not used to achieve leverage with respect to the Fund's
investments, the Fund will establish with its custodian a segregated account
consisting of cash, or other liquid assets 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

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
shares 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.

10
<PAGE> 511

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 the assets of the issuer
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 issuer. 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 Fleet's opinion, the investment characteristics of the
underlying common stock 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, Fleet 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, Fleet 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 or
currency exchange rates, or indices, and include, but are not limited to,
options and foreign currency exchange rates.

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest or exchange 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 or exchange 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.

Fleet 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 such securities will be used in furtherance of the
Fund's investment objective. It is possible, however, that Fleet'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 for additional information.

Portfolio Turnover

11
<PAGE> 512

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 relating to the Fund under "Investment Objectives and Policies."

The Fund may not:

2. Borrow money or issue senior securities, except that each Fund may
borrow 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.

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

12
<PAGE> 513

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,
as amended, 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 Fleet 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). 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 Fleet 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

13
<PAGE> 514

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 primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors 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 (in the case of employer-sponsored defined contribution 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

14
<PAGE> 515

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 their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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.

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> 516

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.

The dividends received deduction is not available for dividends
attributable to distributions made by a REIT to the Fund. In addition,
distributions paid by REITS often include a "return of capital." The Code
requires a REIT to distribute at least 95% of its taxable income to investors.
In many cases, however, because of "non-cash" expenses such as property
depreciation, an equity REIT's cash flow will exceed its taxable income. The
REIT may distribute this excess cash to offer a more competitive yield. This
portion of the distribution is deemed a return of capital, and is generally not
taxable to shareholders.

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.

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.

MANAGEMENT OF THE FUND

16
<PAGE> 517

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, Asset Allocation, Small Company Equity,
Small Cap Value, Growth and Income, Short-Term Bond, Intermediate Government
Income, High Quality Bond, Corporate Bond, Tax-Exempt Bond, New York Municipal
Bond, Connecticut Municipal Bond, Massachusetts Municipal Bond Fund and Rhode
Island Municipal Bond Funds.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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 Bank or other subsidiaries of Fleet Financial Group, Inc., in
consideration for administrative and shareholder support services which they
provide to beneficial shareholders. For the fiscal year ended October 31, 1996,
Fleet received advisory fees (after fee waivers) at the effective annual rate of
0.75% of the Fund's average daily net assets.

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.

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. Fleet, the 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.

17
<PAGE> 518

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. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Fund. For the fiscal year ended October 31, 1996, the Fund paid
administration fees to FDISG at the effective annual rate of .085% of its
average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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 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% and automatically convert to Retail A Shares of
the Fund six years after the date of purchase. Retail A Shares and Retail B
Shares have certain exchange and other privileges which are not available with
respect to Trust Shares.

18
<PAGE> 519

Each Share of Galaxy (irrespective of series designation) has a par value
of $.001 per share, represents an equal proportionate interest in the related
investment portfolio 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 investment portfolio as are declared in the discretion of
Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing 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 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 FD Distributors; 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 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 .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 confection 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 to 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

19
<PAGE> 520

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 Bank 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 ("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. ("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 5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include: taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 shareholder
reports and 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.

20
<PAGE> 521

performance and yield data will be calculated separately for Trust Shares,
Retail A Shares and Retail B 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.

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.

21
<PAGE> 522

[This Page Intentionally Left Bank]
<PAGE> 523
GALAXY
EQUITY VALUE
FUND

February 28, 1997

PROSPECTUS
Trust Shares

[LOGO]

FN-264 15031 (3/97)
<PAGE> 524

TRUST

THE GALAXY FUND

EQUITY GROWTH FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 525

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

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

TABLE OF CONTENTS

<CAPTION>
PAGE
<S> <C>
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........... 19
Affiliate Agreement for Sub-Account
Services.......................... 19
CUSTODIAN AND TRANSFER AGENT.......... 20
EXPENSES.............................. 20
PERFORMANCE AND YIELD INFORMATION..... 20
MISCELLANEOUS......................... 21
</TABLE>

================================================================================
<PAGE> 526

THE GALAXY FUND

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 primarily at bank and trust
institutions, including institutions affiliated with Fleet Financial Group, Inc.
and to participants in employer-sponsored defined contribution plans. Galaxy is
also authorized to issue two additional series of shares in the Fund, Retail A
Shares and Retail B Shares (Retail A Shares and Retail B Shares are referred to
herein collectively as "Retail Shares"). Retail Shares are offered under a
separate prospectus primarily to individuals, corporations or other entities
purchasing either for their own accounts or for the accounts of others and to
FIS Securities, Inc., Fleet Brokerage Corporation, Fleet Securities Inc., Fleet
Enterprises 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.

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

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 28, 1997
<PAGE> 527

EXPENSE SUMMARY

<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 investors 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 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 EXAMPLE 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> 528

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 LLP, Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report 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, which may be obtained without charge by contacting Galaxy at its
telephone number or address provided above.

3
<PAGE> 529

EQUITY GROWTH FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1996 1995 1994 YEAR ENDED PERIOD ENDED
OCTOBER 31,(2) OCTOBER 31,
------------------- --------------
-----------------------------
TRUST SHARES 1993 1992 1991(1,2)
------------------------------ -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99 $ 10.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(5)................ 0.17 0.20 0.18 0.15 0.17 0.16
Net realized and unrealized gain (loss)
on investments........................ 3.40 3.28 0.47 0.95 0.91 1.97
-------- -------- -------- -------- -------- --------
Total from Investment
Operations:.................... 3.57 3.48 0.65 1.10 1.08 2.13
-------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income.... (0.18) (0.20) (0.16) (0.15) (0.17) (0.14)
Dividends from net realized capital
gains................................. (0.30) (0.17) (0.06) (0.09) -- --
-------- -------- -------- -------- -------- --------
Total Dividends: ................ (0.48) (0.37) (0.22) (0.24) (0.17) (0.14)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset
value................................... 3.09 3.11 0.43 0.86 0.91 1.99
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period............ $ 20.39 $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99
======== ======== ======== ======== ======== ========
Total Return.............................. 21.03% 25.08% 4.80% 8.58% 9.10% 21.39%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)......... $562,419 $420,016 $362,094 $427,298 $224,630 $ 92,224
Ratios to average net assets:
Net investment income including
reimbursement/waiver.................. 0.92% 1.31% 1.27% 1.20% 1.37% 1.46%(4)
Operating expenses including
reimbursement/waiver.................. 0.98% 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Operating expenses excluding
reimbursement/waiver.................. 0.98% 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Portfolio Turnover Rate................... 36% 14% 18% 16% 22% 16%(3)
Average Commission Rate Paid(6)........... $ 0.0615 N/A N/A N/A N/A N/A
</TABLE>

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

<TABLE>
<C> <S>
(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.
(5) Net investment income per share before reimbursement/waiver of fees by Fleet and/or the
Fund's administrator for the years ended October 31, 1996 and 1995 were $0.17 and $0.20
respectively.
(6) Required for fiscal years beginning on or after September 1, 1995.
</TABLE>

4
<PAGE> 530

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
("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 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"). In addition, the
Fund may invest in securities issued by foreign branches of U.S. banks and
foreign banks. 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.

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 Fleet's opinion, prevailing market or economic conditions
warrant. See "Other Investment Policies" below for information regarding
additional investment policies of the Fund.

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.

SPECIAL RISK CONSIDERATIONS AND 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.

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.

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Foreign Securities

Investments in foreign securities may 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 dividends or 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.

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 Fleet.

U.S. Government Obligations and Money Market Instruments

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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.

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

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<PAGE> 533

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 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 Fleet.

REITs

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<PAGE> 534

be subject to certain risks associated with the direct ownership of real estate
including declines in the value of real estate, risks related to general and
local economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, and variations in rental income.
Generally, increases in interest rates will decrease the value of high yielding
securities and increase the costs of obtaining financing, which could decrease
the value of the portfolio's investments. In addition, equity REITs may be
affected by changes in the value of the underlying property owned by the trusts,
while mortgage REITs may be affected by the quality of credit extended. Equity
and mortgage REITs are dependent upon management skill, are not diversified and
are subject to the risks of financing projects. REITs are also subject to heavy
cash flow dependency, defaults by borrowers, self liquidation and the
possibility of failing to qualify for tax-free pass-through of income under the
Internal Revenue Code and to maintain exemption from the 1940 Act. REITs pays
dividends to their shareholders based upon available funds from operations. It
is quite common for these dividends to exceed the REITs taxable earnings and
profits resulting in the excess portion of such dividends being designated as a
return of capital. The Fund intends to include the gross dividends from such
REITs in its periodic distributions to its shareholders and, accordingly, a
portion of its distributions may also be designated as a return of capital. See
"Taxes".

Options

Covered Call Options. To further increase return on its portfolio
securities and 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 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. The Fund 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. Such options would
normally be written only on underlying securities as to which Fleet 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

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<PAGE> 535

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.

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 will establish with its custodian a segregated account
consisting of cash or other liquid assets 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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<PAGE> 536

in which, in Fleet's opinion, the investment characteristics of the underlying
common stock 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, Fleet 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, Fleet 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 or
currency exchange rates, or indices, and include, but are not limited to,
options and foreign currency exchange transactions.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if
Fleet 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 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."

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<PAGE> 537

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 relating to the Fund, under "Investment Objectives and Policies."

The Fund may not:

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

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.

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<PAGE> 538

amended, 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 Fleet 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). The net asset value per Share is determined on each
day on which the Exchange is open for trading. Currently, the holidays which
Galaxy observes are New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Net asset value
per Share for purposes of pricing sales and redemptions is calculated separately
for each series of Shares by dividing the value of all securities and other
assets attributable to a particular series of 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

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<PAGE> 539

is a registered broker/dealer with principal offices located at 4400 Computer
Drive, Westboro, Massachusetts 01581-5108.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employersponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors 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 employer-sponsored defined contribution plans,
their employer) for further information concerning the types of eligible
Customer accounts and the related purchase and redemption procedures.

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<PAGE> 540

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their Respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an 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 FD Distributors. Payment for redemption
orders received by FD Distributors 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 of 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 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> 541

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.

The dividends received deduction is not available for dividends
attributable to distributions made by a REIT to the Fund. In addition,
distributions paid by REITs often include a "return of capital." The Code
requires a REIT to distribute at least 95% of its taxable income to investors.
In many cases, however, because of "non-cash" expenses such as property
depreciation, an equity REIT's cash flow will exceed its taxable income. The
REIT may distribute this excess cash to offer a more competitive yield. This
portion of the distribution is deemed a return of capital, and is generally not
taxable to shareholders.

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.

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> 542

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 Income, International Equity, Small Company Equity,
Growth and Income, Asset Allocation, Small Cap Value, 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.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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 Bank or other subsidiaries of Fleet Financial Group, Inc., in
consideration for administrative and other services which they provide to
beneficial shareholders. For the fiscal year ended October 31, 1996, Fleet
received advisory fees (after fee waivers) at the effective annual rate of .75%
of the Fund's average daily net assets.

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.

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. Fleet, the 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.

ADMINISTRATOR

First Data Investor Services Group, Inc. ("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.

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<PAGE> 543

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 FD Distributors 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. 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% and automatically convert to Retail A Shares of the Fund six
years after the date of purchase. Retail A Shares 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.

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<PAGE> 544

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, to 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 FDISG as administrator and transfer agent to
the shareholders of record of the Retail 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 FD Distributors; 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 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 .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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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.

19
<PAGE> 545

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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. ("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 5108, 4400 Computer Drive, Westboro, Massachusetts
01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include: taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG; SEC fees; state securities fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 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, 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,
Retail A Shares and Retail B Shares of the Fund.

20
<PAGE> 546

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; Funds 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.

21
<PAGE> 547

[This Page Intentionally Left Bank]
<PAGE> 548

THE GALAXY FUND

EQUITY GROWTH FUND

PROSPECTUS

FEBRUARY 28, 1997

[GALAXY LOGO]

FN - 265 15033 (3/97)

<PAGE> 549

TRUST

THE GALAXY FUND

EQUITY INCOME FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 550

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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................ 12
PRICING OF SHARES..................... 13
HOW TO PURCHASE AND REDEEM SHARES..... 13
Distributor......................... 13
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........... 19
Affiliate Agreement for Sub-Account
Services......................... 19
CUSTODIAN AND TRANSFER AGENT.......... 20
EXPENSES.............................. 20
PERFORMANCE AND YIELD INFORMATION..... 20
MISCELLANEOUS......................... 21
</TABLE>

================================================================================
<PAGE> 551

THE GALAXY FUND

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

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 that offer income
potential.

This Prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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.

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 28, 1997
<PAGE> 552

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
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 Income Fund....................................... $ 11 $33 $57 $127
</TABLE>

The Expense Summary and Example are intended to assist investors 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 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 EXAMPLE 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> 553

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) 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, 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 relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report 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 reflect 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, which may be obtained without charge by contacting Galaxy at its
telephone number or address provided above.

3
<PAGE> 554

EQUITY INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED PERIOD ENDED
1996 1995 1994 OCTOBER 31,(2) OCTOBER 31,
---------------------------- ------------------ ------------
TRUST SHARES 1993 1992 1991(1,2)
---------------------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 14.99 $ 12.75 $ 12.85 $ 11.85 $ 11.29 $10.00
-------- ------- ------- -------- ------- ------------
Income from Investment Operations:
Net Investment Income(3)......... 0.37 0.36 0.31 0.30 0.30 0.29
Net realized and unrealized gain
(loss) on investments......... 2.48 2.45 0.07 1.09 0.76 1.26
-------- ------- ------- -------- ------- ------------
Total from Investment
Operations:............ 2.85 2.81 0.38 1.39 1.06 1.55
-------- ------- ------- -------- ------- ------------
Less Dividends:
Dividends from net investment
income........................ (0.37) (0.36) (0.29) (0.28) (0.30) (0.26)
Dividends from net realized
capital gains................. (0.54) (0.21) (0.19) (0.11) (0.20) --
-------- ------- ------- -------- ------- ------------
Total Dividends:......... (0.91) (0.57) (0.48) (0.39) (0.50) (0.26)
-------- ------- ------- -------- ------- ------------
Net increase (decrease) in net
asset value...................... 1.94 2.24 (0.10) 1.00 0.56 1.29
-------- ------- ------- -------- ------- ------------
Net Asset Value, End of Period..... $ 16.93 $ 14.99 $ 12.75 $ 12.85 $ 11.85 $11.29
======== ======= ======= ======== ======= ==========
Total Return....................... 19.65% 22.81% 3.02% 11.85% 9.71% 15.61%(4)
Ratios/Supplemental Data:
Net Assets, End of Period
(000's).......................... $106,094 $87,819 $78,880 $123,970 $21,778 $7,096
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......... 2.32% 2.60% 2.49% 2.34% 2.84% 2.72%(5)
Operating expenses including
reimbursement/waiver.......... 0.94% 0.98% 1.07% 1.16% 1.03% 0.85%(5)
Operating expenses excluding
reimbursement/waiver.......... 0.94% 1.00% 1.07% 1.22% 1.54% 1.39%(5)
Portfolio Turnover Rate............ 45% 21% 31% 27% 18% 77%(4)
Average Commission Rate Paid(6).... $ 0.0620 N/A N/A N/A N/A N/A
</TABLE>

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

(3) Net investment income per share before reimbursement/waiver of fees by Fleet
and/or the Fund's 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.

(6) Required for fiscal years beginning on or after September 1, 1995.

4
<PAGE> 555

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 that
offer income potential. 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.

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. 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 ("Fleet"), prevailing market or economic conditions warrant.
See "Other Investment Policies" below for information regarding additional
investment policies of the Fund.

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.

SPECIAL RISK CONSIDERATIONS

Market Risk

Interest Rate Risk

Foreign Securities

5
<PAGE> 556

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 dividends or
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.

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 Fleet. 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.

U.S. Government Obligations and Money Market Instruments

6
<PAGE> 557

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 Fleet and/or the Sub-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

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 Fleet 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

7
<PAGE> 558

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 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 Fleet.

REITs

8
<PAGE> 559

value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITS are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pays dividends
to their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
its distributions may also be designated as a return of capital. See "Taxes".

Options

Covered Call Options. To further increase return on its portfolio
securities and in accordance with its investment objective 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. The Fund 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. Such options would
normally be written only on underlying securities as to which Fleet does not
anticipate significant short-term capital appreciation. See "Derivative
Securities" below.

American and European Depository Receipts

Foreign Currency Exchange Transactions

9
<PAGE> 560

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.

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 will establish with its custodian a segregated account
consisting of cash, or other liquid assets 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> 561

Fund in achieving its investment objective. Otherwise, the Fund will hold or
trade the convertible securities. In selecting convertible securities for the
Fund, Fleet 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, Fleet 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 or
currency exchange rates, or indices, and include, but are not limited to,
options and foreign currency exchange transactions.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if
Fleet 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."

11
<PAGE> 562

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 relating to the Fund under "Investment Objectives and Policies."

The Fund may not:

2. Borrow money or issue senior securities, except that the Fund may
borrow 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.

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.)

12
<PAGE> 563

PRICING OF SHARES

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

13
<PAGE> 564

is a registered broker/dealer with principal offices located at 4400 Computer
Drive, Westboro, Massachusetts 01581-5108.

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors 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 (in the case of employer-sponsored deferred contribution 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 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.

14
<PAGE> 565

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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 respective Institutions.

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.

15
<PAGE> 566

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.

The dividends received deduction is not available for dividends
attributable to distributions made by a REIT to the Fund. In addition,
distributions paid by REIT often include a "return of capital." The Code
requires a REIT to distribute at least 95% of its taxable income to investors.
In many cases, however, because of "non-cash" expenses such as property
depreciation, an equity REIT's cash flow will exceed its taxable income. The
REIT may distribute this excess cash to offer a more competitive yield. This
portion of the distribution is deemed a return of capital, and is generally not
taxable to shareholders.

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.

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 applicable Statement of Additional Information
contains the names of and general background information concerning the
Trustees.

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and

16
<PAGE> 567

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, International Equity, Growth and Income,
Asset Allocation, Small Company Equity, Small Cap Value, 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.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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.

The Fund's portfolio manager, J. Edward Klisiewicz of Fleet, 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.

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. Fleet, the 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.

ADMINISTRATOR

17
<PAGE> 568

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, for the services provided to the Fund, FDISG was 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 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 voluntarily
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, 1996, the Fund paid FDISG administration fees at
the effective annual rate of .085% of its average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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.

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> 569

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 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 FD Distributors; 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 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 .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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet
pursuant to which Fleet Bank 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 Bank 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.

19
<PAGE> 570

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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. ("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 5108, 4400 Computer Drive, Westboro, Massachusetts
01581-5108.

EXPENSES

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

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.

20
<PAGE> 571

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.

21
<PAGE> 572
GALAXY
EQUITY INCOME
FUND

February 28, 1997

PROSPECTUS

Trust Shares

FN-263 15029 (3/97)
<PAGE> 573

TRUST

THE GALAXY FUND

INTERNATIONAL EQUITY FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 574

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

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

<CAPTION>
PAGE
<S> <C>
State and Local..................... 18
MANAGEMENT OF THE FUND................ 18
Investment Adviser and
Sub-Adviser....................... 18
Authority to Act as Investment
Adviser........................... 20
Administrator....................... 20
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 20
Shareholder Services Plan........... 21
Affiliate Agreement for Sub-Account
Services.......................... 22
CUSTODIAN AND TRANSFER AGENT.......... 22
EXPENSES.............................. 22
PERFORMANCE AND YIELD INFORMATION..... 22
MISCELLANEOUS......................... 24
</TABLE>

================================================================================
<PAGE> 575

THE GALAXY FUND

This prospectus describes Trust Shares in each Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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.

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 28, 1997
<PAGE> 576

EXPENSE SUMMARY

<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).............................................. .67%
12b-1 Fees..................................................................... None
Other Expenses................................................................. .60%
----
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 $68 $151
</TABLE>

The Expense Summary and Example are intended to assist investors 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 by Fleet,
Advisory Fees would be 1.15%, and Total Fund Operating Expenses would be 1.75%
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 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 EXAMPLE 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> 577

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) 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 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 relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report 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, which may be
obtained without charge by contacting Galaxy at its telephone number or address
provided above.

3
<PAGE> 578

INTERNATIONAL EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER OCTOBER 31,
1996 1995 1994 31, ------------
------------------------------ ----------
TRUST SHARES 1993(2) 1992(1,2)
------------------------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 12.98 $ 13.20 $ 12.13 $ 9.66 $ 10.00
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(3).......... 0.17 0.16 0.06 0.02 0.06
Net realized and unrealized gain
(loss) on investments........... 1.30 (0.18) 1.02 2.51 (0.40)
-------- ------- ------- ------- -------
Total from Investment
Operations:................ 1.47 (0.02) 1.08 2.53 (0.34)
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income.......................... (0.20) (0.04) (0.01) (0.06) --
Dividends from net realized
capital gains................... (0.24) (0.16) -- -- --
-------- ------- ------- ------- -------
Total Dividends:............. (0.44) (0.20) (0.01) (0.06) --
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value................................ 1.03 (0.22) 1.07 2.47 (0.34)
-------- ------- ------- ------- -------
Net Asset Value, End of Period......... $ 14.01 $ 12.98 $ 13.20 $ 12.13 $ 9.66
======== ======= ======= ======= =======
Total Return........................... 11.51% (0.02)% 8.91% 26.36% (3.40)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...... $172,561 $89,614 $82,350 $ 39,246 $ 12,584
Ratios to average net assets:
Net investment income including
reimbursement/waiver............ 1.40% 1.36% 0.74% 0.37% 1.19%(5)
Operating expenses including
reimbursement/waiver............ 1.08% 1.22% 1.43% 1.57% 1.61%(5)
Operating expenses excluding
reimbursement/waiver............ 1.36% 1.48% 1.72% 2.04% 2.79%(5)
Portfolio Turnover Rate................ 146% 48% 39% 29% 21%(4)
Average Commission Rate Paid(6)........ $ 0.0381 N/A N/A N/A N/A
</TABLE>

(3) Net investment income per share before reimbursement/waiver of fees by Fleet
and/or the Fund's administrator for the years ended October 31, 1996, 1995,
1994 and 1993 and for the period ended October 31, 1992 were $0.13, $0.13,
$0.04, $0.00 and $0.00, respectively.

(4) Not Annualized.
(5) Annualized.
(6) Required for fiscal years beginning on or after September 1, 1995.

4
<PAGE> 579

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, 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. Under normal market and economic conditions, no more
than 15% of the Fund's net assets will be invested in the aggregate in the
securities of issuers located in countries with emerging economies or emerging
securities markets.

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 debt securities, including short-term obligations of national
governments, their agencies, instrumentalities, authorities or political
subdivisions; (ii) commercial paper, including master notes;

5
<PAGE> 580

(iii) bank obligations, including negotiable certificates of deposit, time
deposits, bankers' acceptances, and Euro-currency instruments and securities;
and (iv) repurchase agreements.

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. See "Other Investment Policies" below regarding additional investment
policies of the International Equity Fund.

Fleet Investment Advisors Inc., the Fund's investment adviser ("Fleet") and
Oechsle International Advisors, L.P., the Fund's sub-adviser ("Oechsle") 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.

SPECIAL RISK CONSIDERATIONS

Market Risk

Interest Rate Risk

Foreign Securities

Investments in foreign securities may 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 dividends or principal and
interest on foreign obligations.

6
<PAGE> 581

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
Investors Service Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"),
or if unrated, determined by Fleet and/or Oechsle to be of comparable quality.
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.

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 10
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.

7
<PAGE> 582

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 Fleet and/or Oechsle 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

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 Fleet and/or Oechsle under guidelines approved by Galaxy's Board
of Trustees. The Fund will not enter into repurchase agreements with Fleet or
Oechsle or any of their 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.

8
<PAGE> 583

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 Fleet and/or Oechsle to be of good standing and only when,
in Fleet's and/or Oechsle'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 Fleet or Oechsle.

REITs

9
<PAGE> 584

addition, equity REITs may be affected by changes in the value of the underlying
property owned by the trusts, while mortgage REITs may be affected by the
quality of credit extended. Equity and mortgage REITs are dependent upon
management skill, are not diversified and are subject to the risks of financing
projects. REITs are also subject to heavy cash flow dependency, defaults by
borrowers, self liquidation and the possibility of failing to qualify for
tax-free pass-through of income under the Internal Revenue Code and to maintain
exemption from the 1940 Act. REITs pays dividends to their shareholders based
upon available funds from operations. It is quite common for these dividends to
exceed the REITs taxable earnings and profits resulting in the excess portion of
such dividends being designated as a return of capital. The Fund intends to
include the gross dividends from such REITs in its periodic distributions to its
shareholders and, accordingly, a portion of its distributions may also be
designated as a return of capital. See "Taxes".

Options

Covered Call Options. To further increase return on its portfolio
securities and in accordance with its investment objective 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. The Fund 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. Such options would
normally be written only on underlying securities as to which Fleet and/or
Oechsle does not anticipate significant short-term capital appreciation. See
"Derivative Securities" below.

Options on Foreign Stock Indices. 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 indices 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 indices 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 indices 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
"Derivative Securities" below and in 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

10
<PAGE> 585

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

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 will establish with its custodian a segregated account
consisting of cash or other liquid assets 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.

11
<PAGE> 586

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 the assets of the issuer
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 issuer. 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 nonconvertible
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 Fleet's and/or Oechsle's opinion, the investment
characteristics of the underlying common stock 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, Fleet and/or
Oechsle 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, Fleet and/or Oechsle 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 or
currency exchange rates, or indices, and include, but are not limited to,
options and options on foreign stock indices and foreign currency exchange
transactions.

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest or exchange 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 or exchange 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.

Fleet and/or Oechsle will evaluate the risks presented by the derivative
securities purchased by the Fund, and will determine, in connection with their
day-to-day management of the Fund, how such securities will be used in
furtherance of the Fund's investment objective. It is possible, however, that
Fleet's and/or Oechsle's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that

12
<PAGE> 587

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 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 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. 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
Fleet and/or Oechsle 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 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 relating to the Fund under "Investment Objectives and Policies."

The Fund may not:

2. Borrow money or issue senior securities, except that the Fund may
borrow 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.

13
<PAGE> 588

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, nonnegotiable 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.)

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,
as amended, 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 Fleet and/or Oechsle 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). The net asset value per Share is determined on each
day on which the Exchange is open for trading. Currently, the holidays which
Galaxy observes are New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Net asset value
per Share for purposes of pricing sales and redemptions is calculated separately
for each series of Shares by dividing the value of all securities and other
assets attributable to a particular series of Shares of the Fund, less the
liabilities attributable to the Shares of that series of the Fund, by the number
of outstanding Shares of that series of the Fund.

The Fund's 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

14
<PAGE> 589

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 Galaxy's 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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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

15
<PAGE> 590

purchase order from its Customer on a non-Business Day, the order will not be
executed until it is received and accepted by FD Distributors 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 (in the case of employer-sponsored defined contribution 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 Oechsle.

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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

16
<PAGE> 591

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.

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.

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.

17
<PAGE> 592

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 should they so choose.

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 AND SUB-ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, Growth and Income, Asset Allocation, Small Company
Equity, Small Cap Value, 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.

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 Oechsle, the International Equity Fund's
sub-adviser, as described below).

For the services provided and expenses assumed with respect to the Fund,
Fleet 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

18
<PAGE> 593

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.

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 subadviser to assist it in the performance of its services.
Pursuant to such authorization, Fleet has appointed Oechsle, a Delaware limited
partnership with principal offices at One International Place, Boston,
Massachusetts 02210, as the Sub-Adviser to the Fund. The general partner of
Oechsle is Oechsle Group, L.P., and the managing general partner of Oechsle
Group, L.P. is Walter Oechsle. Oechsle currently manages approximately $9.2
billion in assets. Oechsle began serving as sub-adviser to the Fund on August
12, 1996.

Under its sub-advisory agreement with Fleet, Oechsle 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 Fleet with foreign broker research and a quarterly review of
international economic and investment developments. Fleet, among other things,
assists and consults with Oechsle in connection with the Fund's continuous
investment program; approves lists of foreign countries recommended by Oechsle
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 Oechsle 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 to Oechsle, computed daily and paid
quarterly, at the annual rate of .40% of the first $50 million of the Fund's
average daily net assets, plus .35% of average daily net assets in excess of $50
million. For the period from August 12, 1996 through October 31, 1996, Oechsle
received sub-advisory fees from Fleet at the effective annual rate of .36% of
the Fund's average daily net assets.

Prior to August 12, 1996, Wellington Management Company ("Wellington
Management") served as the Fund's sub-adviser. For the services provided and
expenses assumed pursuant to its sub-advisory agreement, Wellington Management
was entitled to receive a fee from Fleet, 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 period from November 1, 1995 through
August 11, 1996, Wellington Management received sub-advisory fees at the
effective annual rate of .32% of the Fund's average daily net assets.

The Fund's portfolio managers, David von Hemert of Fleet and S. Dewey
Keesler, Jr. and Kathleen Harris of Oechsle, 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. Keesler, General Partner and
Portfolio Manager, has been with Oechsle since its founding in 1986. Ms. Harris
has been a Portfolio Manager at Oechsle since January 1995. Prior thereto, she
was Portfolio Manager and Investment Director for the State of Wisconsin
Investment Board and a Fund Manager and Equity Analyst for Northern Trust
Company.

19
<PAGE> 594

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. Fleet, the 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.

ADMINISTRATOR

DESCRIPTION OF GALAXY AND ITS SHARES

20
<PAGE> 595

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 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.

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 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 FD Distributors; 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 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 .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

21
<PAGE> 596

the terms of each servicing agreement entered into with Galaxy, Institutions are
required to provide to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank performs certain sub-account and administrative
functions ("Sub-Account Services") or 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 Bank 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 ("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. ("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 5108, 4400 Computer Drive, Westboro, Massachusetts
01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Fund. 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 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 shareholder reports and 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

22
<PAGE> 597

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.

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.

23
<PAGE> 598

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> 599

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<PAGE> 600

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<PAGE> 601

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<PAGE> 602

THE GALAXY FUND

INTERNATIONAL EQUITY FUND

PROSPECTUS

FEBRUARY 28, 1997

[GALAXY LOGO]

FN-266 15036 (3/97)
<PAGE> 603

TRUST

THE GALAXY FUND
SMALL COMPANY EQUITY FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 604

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

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

TABLE OF CONTENTS

<CAPTION>
PAGE
<S> <C>
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......................... 22
</TABLE>

================================================================================
<PAGE> 605

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For an application and information concerning
Westboro, Massachusetts 01581-5108 redemptions, exchanges and other shareholder
services or for current performance, call
1-800-628-0414.
</TABLE>

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 primarily at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc., and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue two additional series of shares in the Fund,
Retail A Shares and Retail B Shares (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to FIS Securities, Inc., Fleet Brokerage Corporation, Fleet Securities,
Inc., Fleet Enterprises 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.

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

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 28, 1997
<PAGE> 606

EXPENSE SUMMARY

<TABLE>
<CAPTION>
SMALL
COMPANY
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...................................................................... .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 investors 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 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 EXAMPLE 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> 607

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 effective October 1, 1994 (i) Retail A
Shares of the Fund bear the expenses incurred under Galaxy's Shareholder
Services Plan at an annual rate not to exceed .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 not to exceed .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 relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report 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, which
may be obtained without charge by contacting Galaxy at its telephone number or
address provided above.

3
<PAGE> 608

SMALL COMPANY EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED
OCTOBER PERIOD ENDED
1996 1995 1994 31, OCTOBER 31,
------------------------------ ---------- -----------
TRUST SHARES 1993(2) 1992(1,2)
------------------------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 16.38 $ 12.36 $ 12.41 $ 8.79 $ 10.00
Income from Investment Operations:
Net investment income (loss)(3)....... (0.09) (0.04) -- (0.04) (0.03)
Net realized and unrealized gain
(loss) on investments.............. 4.08 4.25 -- 3.66 (1.18)
-------- ------- ------- ------- -------
Total from Investment
Operations:................... 3.99 4.21 -- 3.62 (1.21)
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income............................. -- -- -- --
Dividends from net realized capital
gains.............................. (0.17) (0.19) (0.05) -- --
-------- ------- ------- ------- -------
Total Dividends:................. (0.17) (0.19) (0.05) -- --
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value................................. 3.82 4.02 (0.05) 3.62 (1.21)
-------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 20.20 $ 16.38 $ 12.36 $ 12.41 $ 8.79
======== ======= ======= ======= =======
Total Return............................ 24.69% 34.73% 0.02% 41.18% (12.10)%(4)

Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $174,990 $94,831 $66,462 $ 55,683 $ 29,072
Ratios to average net assets:
Net investment income (loss) including
reimbursement/waiver............... (0.60)% (0.37)% (0.35)% (0.66)% (0.63)%(5)
Operating expenses including
reimbursement/waiver............... 1.14% 1.12% 1.27% 1.18% 1.06%(5)
Operating expenses excluding
reimbursement/waiver............... 1.14% 1.12% 1.27% 1.22% 1.33%(5)
Portfolio Turnover Rate................. 82% 54% 35% 57% 87%(4)
Average Commission Rate Paid(6)......... $ 0.0531 N/A N/A N/A N/A
</TABLE>

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

<TABLE>
<C> <S>
(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 Fleet and/or
the Fund's administrator for the period ended October 31, 1992 was $(0.05).
(4) Not Annualized.
(5) Annualized.
(6) Required for fiscal years beginning on or after September 1, 1995.
</TABLE>

4
<PAGE> 609

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 ("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 Fleet, prevailing market or economic
conditions warrant. See "Other Investment Policies" below for information
regarding additional investment policies of the Fund.

5
<PAGE> 610

SPECIAL RISK CONSIDERATIONS AND RISK CONSIDERATIONS

Interest Rate Risk

Foreign Securities

Investments in foreign securities may 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 dividends or 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 Fleet.

6
<PAGE> 611

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 10
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.

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

7
<PAGE> 612

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 Fleet 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 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

8
<PAGE> 613

REITS

The Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITs are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pay dividends to
their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
its distributions may also be designated as a return of capital. See "Taxes."

Options

Covered Call Options. To further increase return on its portfolio
securities and in accordance with its investment objective 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. The Fund 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. Such options would
normally be written only on underlying securities as to which Fleet does not
anticipate significant short-term capital appreciation. See "Derivative
Securities" below.

American and European Depository Receipts

9
<PAGE> 614

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 will 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> 615

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 the assets of the issuer
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 issuer. 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 Fleet's opinion, the investment characteristics of the
underlying common stock 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, Fleet 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, Fleet 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 or
currency exchange rates, or indices, and include, but are not limited to,
options and foreign currency exchange transactions.

Portfolio Turnover

11
<PAGE> 616

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 relating to the Fund under "Investment Objectives and Policies."

The Fund may not:

2. Borrow money or issue senior securities, except that each Fund may
borrow 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

12
<PAGE> 617

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,
as amended, 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 Fleet 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.

13
<PAGE> 618

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 primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collaterally as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors 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 employer-sponsored defined contribution 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

14
<PAGE> 619

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 respective Institution. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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

Due to the nature of dividends paid by REITs, a Fund may or may not realize
a return of capital. Consequently, a portion of a Fund's distribution might also
include a return of capital.

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

15
<PAGE> 620

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.

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.

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

16
<PAGE> 621

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, Growth and Income, Asset
Allocation, Small Cap Value, 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.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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 Bank or other subsidiaries of Fleet Financial Group, Inc., in
consideration for administrative and shareholder support services which they
provide to beneficial shareholders. For the fiscal year ended October 31, 1996,
Fleet received advisory fees at the effective annual rate of .75% of the Fund's
average daily net assets. During the fiscal year ended October 31, 1996, Fleet
reimbursed the Fund for certain operating expenses during this fiscal year which
reimbursement may be revised or discontinued at any time.

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.

AUTHORITY TO ACT AS INVESTMENT ADVISER

17
<PAGE> 622

investment company or from purchasing shares of such a company as agent for and
upon the order of customers. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 0.75% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Fund. For the fiscal year ended October 31, 1996, the Fund paid
FDISG administration fees at the effective rate of .085% of the Fund's average
daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

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 of up to .95% of the average daily net asset value of the
Fund's outstanding Retail B 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.

18
<PAGE> 623

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% and automatically convert to Retail A Shares of the Fund six years
after the date of purchase. Retail A Shares and Retail B Shares have certain
exchange and other privileges which are not available with respect to Trust
Shares.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing agreements with Institutions (including Fleet Bank and
its affiliates). Pursuant to these servicing agreements, to 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 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 FD Distributors; 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 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 .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 to their Customers a schedule of any fees that they may
charge in connection with Customer investments in Retail A Shares.

19
<PAGE> 624

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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 directly bear
these fees.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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. ("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 5108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Fund. Galaxy bears the expenses
incurred in the Fund's operations. Such expenses include: taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 shareholder
reports and 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, the S&P 500, an unmanaged index of
groups of common stocks,

20
<PAGE> 625

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,
Retail A Shares and Retail B 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.

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.

21
<PAGE> 626

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.

22
<PAGE> 627

[This Page Intentionally Left Bank]
<PAGE> 628

TRUST

THE GALAXY FUND

ASSET ALLOCATION FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 629

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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................ 13
PRICING OF SHARES..................... 15
HOW TO PURCHASE AND REDEEM SHARES..... 15
Distributor......................... 15
Purchase of Shares.................. 15
Redemption of Shares................ 16
DIVIDENDS AND DISTRIBUTIONS........... 17
TAXES................................. 17
Federal............................. 17

<CAPTION>
PAGE
<S> <C>
State and Local..................... 18
MANAGEMENT OF THE FUND................ 18
Investment Adviser.................. 18
Authority to Act as Investment
Adviser.......................... 19
Administrator....................... 19
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 20
Shareholder Services Plan........... 21
Affiliate Agreement for Sub-Account
Services......................... 21
CUSTODIAN AND TRANSFER AGENT.......... 22
EXPENSES.............................. 22
PERFORMANCE AND YIELD INFORMATION..... 22
MISCELLANEOUS......................... 23
</TABLE>

================================================================================
<PAGE> 630

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For an application and information concerning
Westboro, Massachusetts 01581-5108 initial purchases, redemptions, exchanges and
other shareholder services or for current
performance, call 1-800-628-0413.
</TABLE>

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 primarily 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, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities,
Inc., Fleet Enterprises, 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 First Data Distributors, Inc., which is unaffiliated with Fleet
("Fleet") and its parent, Fleet Financial Group, Inc. and affiliates.

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 28, 1997
<PAGE> 631

EXPENSE SUMMARY

<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 $161
</TABLE>

The Expense Summary and Example are intended to assist investors 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 Trusts Shares of the Fund are in addition
to and not reflected in the fees and expenses described above.

THE FOREGOING EXAMPLE 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> 632

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 effective October 1, 1994 (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 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 relating to the Fund dated October 31,
1996 (the "Annual Report"). Such financial highlights should be read in
conjunction with the financial statements and notes thereto contained in the
Annual Report 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, which
may be obtained without charge by contacting Galaxy at its telephone number or
address provided above.

3
<PAGE> 633

ASSET ALLOCATION FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994
-------------------------------- ---------- -----------
TRUST SHARES 1993(2) 1992(1)(2)
-------------------------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 12.83 $ 10.68 $ 11.15 $ 10.16 $ 10.00
Income from Investment Operations:
Net investment income(3).......... 0.33 0.32 0.28 0.25 0.15
Net realized and unrealized gain
(loss) on investments.......... 1.83 2.16 (0.49) 0.99 0.13
-------- ------- ------- ------- -------
Total from Investment
Operations:............... 2.16 2.48 (0.21) 1.24 0.28
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income......................... (0.33) (0.33) (0.26) (0.25) (0.12)
Dividends from net realized
capital gains.................. (0.13) -- -- -- --
-------- ------- ------- ------- -------
Total Dividends:............. (0.46) (0.33) (0.26) (0.25) (0.12)
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value............................. 1.70 2.15 (0.47) 0.99 0.16
-------- ------- ------- ------- -------
Net Asset Value, End of Period...... $ 14.53 $ 12.83 $ 10.68 $ 11.15 $ 10.16
======== ======= ======= ======= =======
Total Return........................ 17.19% 23.68% (1.93)% 12.37% 2.85%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)... $123,603 $76,771 $65,464 $92,348 $ 11,555
Ratios to average net assets:
Net investment income including
reimbursement/waiver........... 2.52% 2.74% 2.70% 2.59% 2.80%(5)
Operating expenses including
reimbursement/waiver........... 1.19% 1.26% 1.18% 1.14% 1.11%(5)
Operating expenses excluding
reimbursement/waiver........... 1.21% 1.30% 1.18% 1.25% 2.39%(5)
Portfolio Turnover Rate............. 48% 41% 23% 7% 2%(4)
Average Commission Rate Paid(6)..... $ 0.0635 N/A N/A N/A N/A
</TABLE>

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

<TABLE>
<C> <S>
(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 Fleet and/or the
Fund's 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.
(6) Required for fiscal years beginning on or after September 1, 1995.
</TABLE>

4
<PAGE> 634

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
("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 Standard
& Poor's 500 Composite Stock Price Index (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 Fleet'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. In selecting common
stock for purchase by the Fund, Fleet 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. Such foreign investments may be made directly, by purchasing
securities issued or guaranteed by foreign corporations, banks or governments or
their political subdivisions or instrumentalities, or by supranational banks or
other organizations, or indirectly by purchasing American Depository Receipts
("ADRs") and European Depository Receipts ("EDRs"). Examples of supranational
banks include the International Bank for Reconstruction and Development ("World
Bank"), the Asia 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
commitment will be undertaken or met in the future. See "Special Risk
Considerations" and "Other Investment Policies" below. The Fund may also invest
in dollar-denominated high quality debt obligations of U.S. corporations issued
outside the United States. 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 Fleet, prevailing market and economic
conditions warrant. See "Other Investment Policies" below for information
regarding additional investment policies of the Fund.

SPECIAL RISK CONSIDERATIONS

Market Risk

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

5
<PAGE> 635

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

Investments in foreign securities may 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 dividends or 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.

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 Fleet. Debt securities rated "Baa" by Moody's or "BBB" by S&P are
generally considered to be investment grade securities although they may have
speculative characteristics and changes in economic

6
<PAGE> 636

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. 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.

U.S. Government Obligations and Money Market Instruments

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 10
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.

7
<PAGE> 637

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

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 Fleet 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 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

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<PAGE> 638

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 Fleet.

REITs

The Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITS invest directly in real property while mortgage
REITs invest in mortgages on real property. REITS may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITS are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pays dividends
to their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
its distributions may also be designated as a return of capital. See "Taxes".

Options

Covered Call Options. To further increase return on its portfolio
securities and in accordance with its investment objective 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. The Fund 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. Such options would

9
<PAGE> 639

normally be written only on underlying securities as to which Fleet does not
anticipate significant short-term capital appreciation. See "Derivative
Securities" below.

American and European Depository Receipts

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 will establish with its custodian a segregated account
consisting of cash or other liquid assets 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

10
<PAGE> 640

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, 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, 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 noncallable debt securities. In addition,
like other debt securities, the value of mortgage-related securities, including
government and government related mortgage pools, generally will fluctuate in
response to market interest rates.

Mortgage Dollar Rolls

11
<PAGE> 641

Fund would benefit to the extent of any difference between the price received
for the securities sold and the lower forward price for the future purchase
(often referred to as the "drop") or fee income plus the interest earned on the
cash proceeds of the securities sold until the settlement date of the forward
purchase. Unless such benefits exceed the income, capital appreciation and gain
or loss due to mortgage prepayments that would have been realized on the
securities sold as part of the mortgage dollar roll, the use of this technique
will diminish the investment performance of the Fund compared with what such
performance would have been without the use of mortgage dollar rolls. All cash
proceeds will be invested in instruments that are permissible investments for
the Fund. The Fund will hold and maintain in a segregated account until the
settlement date cash, other liquid assets in an amount equal to the forward
purchase price.

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 the assets of the issuer
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 issuer. 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 Fleet's opinion, the investment characteristics of the
underlying common stock 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, Fleet 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, Fleet 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.

12
<PAGE> 642

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 or
currency exchange rates, or indices, and include, but are not limited to,
options and Foreign currency exchange options.

Portfolio Turnover

The Fund may sell a portfolio investment soon after its acquisition if
Fleet 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 on 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 relating to the Fund under "Investment Objectives and Policies."

The Fund may not:

13
<PAGE> 643

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 that the Fund may
borrow 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 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, (a) 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, and (b)
mortgage dollar rolls entered into by the Fund that are not accounted for as
financings shall not constitute borrowings.

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,
as amended, 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 Fleet has determined, in accordance with
guidelines established by the Board of Trustees, that an adequate trading market
exists for such securities.

14
<PAGE> 644

PRICING OF SHARES

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employersponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors is

15
<PAGE> 645

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 FD Distributors, Galaxy's custodian and the purchasing
Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 nonBusiness Day, the order will not be executed
until it is received and accepted by FD Distributors 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 (in the case of employer-sponsored deferred contribution 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

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

16
<PAGE> 646

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

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.

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.

17
<PAGE> 647

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.

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 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, Growth and Income, Small
Company Equity, Small Cap Value, 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.

18
<PAGE> 648

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 Bank or other subsidiaries of Fleet Financial Group, Inc., in
consideration for administrative and shareholder support services which they
provide to beneficial shareholders. For the fiscal year ended October 31, 1996,
Fleet received advisory fees at the effective annual rate of .75% of the Fund's
average daily net assets. Fleet reimbursed the Fund for certain operating
expenses, which reimbursement may be revised or discontinued at any time.

The Fund's co-portfolio managers, Donald Jones and David Lindsay, are
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Jones determines the allocation of the Fund's assets between
equity and fixed income investments and manages the equity portion of the Fund's
investment portfolio. Mr. Lindsay manages the fixed income portion 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. Mr. Lindsay, a Senior Vice President,
has been with Fleet and its predecessors since 1986. He has managed the fixed
income portion of the Fund's portfolio since January, 1997 and has managed
Galaxy's Corporate Bond Fund since its inception in December 1994.

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. Fleet, the 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.

ADMINISTRATOR

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<PAGE> 649

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 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 voluntarily
all or a portion of the administration fee payable to it by the Fund. For the
fiscal year ended October 31, 1996, the Fund paid FDISG administration fees at
the effective annual rate of .085% 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 FD Distributors 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. 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
investment portfolio 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 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.

20
<PAGE> 650

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 the annual rate of up to .50% of the average
daily net asset value of the Fund's outstanding Retail A Shares beneficially
owned by its 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 FD Distributors; 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 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 .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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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.

21
<PAGE> 651

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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. ("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 5108, 4400 Computer Drive, Westboro, Massachusetts
01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Fund. Galaxy bears the expenses
incurred 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 fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 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, 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,
Retail A Shares and Retail B Shares of the Fund.

22
<PAGE> 652

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 (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> 653

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<PAGE> 654

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<PAGE> 655

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<PAGE> 656

[CAMERA READY COPY]
<PAGE> 657

TRUST

THE GALAXY FUND

SMALL CAP VALUE FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 658

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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................ 13
PRICING OF SHARES..................... 14
HOW TO PURCHASE AND REDEEM SHARES..... 15
Distributor......................... 15
Purchase of Shares.................. 15
Redemption of Shares................ 16
DIVIDENDS AND DISTRIBUTIONS........... 16
TAXES................................. 16
Federal............................. 16

<CAPTION>
PAGE
<S> <C>
State and Local..................... 17
MANAGEMENT OF THE FUND................ 17
Investment Adviser.................. 18
Authority to Act as Investment
Adviser............................... 18
Administrator....................... 19
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 19
CUSTODIAN AND TRANSFER AGENT.......... 21
EXPENSES.............................. 21
PERFORMANCE AND YIELD INFORMATION..... 21
MISCELLANEOUS......................... 22
</TABLE>

================================================================================
<PAGE> 659

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For applications and information concerning
Westboro, Massachusetts 01581-5180 purchases, current performance, redemptions,
exchanges and other shareholder services, call
1-800-628-0414.
</TABLE>

The Fund's investment objective is to provide long-term capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal market and economic conditions, 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 primarily 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 FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises 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.

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 28, 1997
<PAGE> 660

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
</TABLE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Advisory Fees................................................................... .75%
12b-1 Fees...................................................................... None
Other Expenses (After Fee Waivers).............................................. .29%
---------
Total Fund Operating Expenses (After Fee Waivers)............................... 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 investors 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. Without
voluntary fee waivers by Fleet, Other Expenses would be .32%, and Total Fund
Operating Expenses would be 1.07% 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 relating to the Fund. 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 EXAMPLE 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> 661

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 (i) the investment results of the Small Cap Value Fund's Trust Shares
for the fiscal year ended October 31, 1996 and (ii) the investment results of
the Predecessor Fund's Trust Shares (the series that is similar to the Trust
Shares of the Fund) for the fiscal years ended October 31, 1995 and October 31,
1994 and the fiscal period ended October 31, 1993. The information about the
Fund for the fiscal year ended October 31, 1996 has been audited by Coopers &
Lybrand L.L.P., Galaxy's independent accountants, whose report is contained in
Galaxy's Annual Report to Shareholders relating to the Fund dated October 31,
1996 (the "Annual Report"). The information about the Predecessor Fund for the
fiscal years ended October 31, 1995 and October 31, 1994 and the fiscal period
ended October 31, 1993 was audited by Price Waterhouse LLP, independent
accountants for the Predecessor Fund, whose report is contained in The Shawmut
Funds' Annual Report to Shareholders relating to the Predecessor Fund dated
October 31, 1995 (the "Shawmut Annual Report"). The financial highlights should
be read in conjunction with the financial statements and notes thereto contained
in the Annual Report and the Shawmut Annual Report and incorporated by reference
into the Statement of Additional Information relating to the Fund. More
information about the performance of the Fund is contained in the Annual Report
which may be obtained without charge by contacting Galaxy at its telephone
number or address provided above.

3
<PAGE> 662

SMALL CAP VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER OCTOBER OCTOBER PERIOD ENDED
31, 31, 31, OCTOBER 31,
1996(2) 1995 1994 1993(1)
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 12.71 $ 11.07 $ 11.21 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net Investment Income(3,4,5)............... 0.05 0.01 0.02 --
Net realized and unrealized gain/(loss) on
investments............................. 2.97 2.21 0.17 1.21
-------- -------- -------- --------
Total from Investment
Operations:...................... 3.02 2.22 0.19 1.21
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income(3).... (0.05) (0.01) (0.01) --
Dividends in excess of net investment
income.................................. (0.01) -- -- --
Dividends from net realized capital
gains................................... (0.91) (0.57) (0.32) --
-------- -------- -------- --------
Total Dividends:(3)................ (0.97) (0.58) (0.33) --
-------- -------- -------- --------
Net increase (decrease) in net asset value... 2.05 1.64 (0.14) 1.21
-------- -------- -------- --------
Net Asset Value, End of Period............... $ 14.76 $ 12.71 $ 11.07 $ 11.21
======== ======== ======== ========
Total Return................................. 25.22% 21.52% 1.86% 12.12%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............ $137,341 $121,364 $101,905 $100,382
Ratios to average net assets:
Net investment income including
reimbursement/waiver.................... 0.45% 0.07% 0.15% 0.02%(6)
Operating expenses including
reimbursement/waiver.................... 1.05% 1.10% 1.06% 1.01%(6)
Operating expenses excluding
reimbursement/waiver.................... 1.06% 1.35% 1.34% 1.29%(6)
Portfolio Turnover Rate...................... 39% 32% 29% 29%(7)
Average Commission Rate Paid(8).............. $ 0.0559 N/A N/A N/A
</TABLE>

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

(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. The Predecessor
Fund began offering Investment Shares on February 12, 1993.

(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of Galaxy. Prior to the reorganization, the Predecessor Fund offered and
sold two series of shares, Investment Shares and Trust Shares, that were
similar to the Fund's Retail A and Trust Shares, respectively. In connection
with the reorganization, the shareholders of the Predecessor Fund exchanged
Investment Shares and Trust Shares for Retail A Shares and Trust Shares,
respectively, in the Fund.

(3) Represents less than $0.01 per share for the year 1993.

(4) Net investment income per share before reimbursement/waiver of fees by other
parties for the fiscal years ended October 31, 1995 and 1994 were $(0.03)
and $(0.01), respectively, (unaudited).

(5) Net investment income per share does not reflect the tax reclassifications
arising in the current period.

(6) Annualized.

(7) Not Annualized.

(8) Required for fiscal years beginning on or after September 1, 1995.

4
<PAGE> 663

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 prices of large company stocks rise or vice versa.
Therefore, investors should expect that the Fund will be more volatile than, and
may fluctuate independently of, broad stock market indexes 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 foreign issuers if any such risk appears to
Fleet Investment Advisors Inc., the Fund's investment adviser ("Fleet") 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 Fleet, 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 assigned 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 Small Cap Value Fund is permitted to invest is
contained in the Statement of Additional Information. See "Other Investment
Policies" below for information regarding additional investment policies of the
Fund.

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> 664

SPECIAL RISK CONSIDERATIONS

Market Risk

Interest Rate Risk

Foreign Securities

Investments in foreign securities may 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 dividend or 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
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

6
<PAGE> 665

instruments purchased by the Fund must be rated in one of the top two rating
categories assigned by a nationally recognized statistical rating agency, such
as S&P, Moody's or Fitch.

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 other "money market" instruments, including bank
obligations and commercial paper.

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 10
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.

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, 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."

7
<PAGE> 666

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 Fleet 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 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.

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 Fleet to be of good standing and only
when, in Fleet'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

8
<PAGE> 667

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 Fleet.

Reits

The Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITs are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pay dividends to
their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
its distributions may also be designated as a return of capital. See "Taxes".

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.

Options and futures can be volatile investments, and involve certain risks.
If Fleet 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.

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<PAGE> 668

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 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.

10
<PAGE> 669

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 will establish with its custodian a segregated account
consisting of cash or other liquid assets 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

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
shares 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 the assets of the issuer 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 issuer.
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 Fleet's opinion,
the investment characteristics of the underlying common stock 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, Fleet evaluates the investment characteristics of the convertible security
as a fixed income instrument, and the investment potential of the

11
<PAGE> 670

underlying equity security for capital appreciation. In evaluating these matters
with respect to a particular convertible security, Fleet 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. Fleet 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" 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

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 or
currency exchange rates, or indices, and include, but are not limited to,
options, stock index futures and options, indexed securities and swap
agreements, and foreign currency exchange transactions.

12
<PAGE> 671

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 Fleet 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
Fleet 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 relating to the Fund 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

13
<PAGE> 672

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(2) 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 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.)

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

14
<PAGE> 673

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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors 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 employer-sponsored defined contribution 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, an Institution may impose
such requirements on the accounts maintained by its

15
<PAGE> 674

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 respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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. Net realized capital gains are distributed at least 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.

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> 675

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.

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

17
<PAGE> 676

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, Asset Allocation, Growth and
Income, Small Company Equity, 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.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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.

For the period from December 4, 1995 through October 31, 1996, Fleet
received advisory fees at the effective annual rate of .75% of the Fund's
average daily net assets. During the fiscal year ended October 31, 1996 Fleet
reimbursed the Fund for certain operating expenses, which reimbursement may be
revised or discontinued at any time.

The Predecessor Fund bore advisory fees during the period from November 1,
1995 through December 3, 1995 pursuant to the investment advisory agreement then
in effect with Shawmut Bank, N.A., its former adviser at the effective annual
rate of 1.00% of the Predecessor Fund's average daily net assets.

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.

AUTHORITY TO ACT AS INVESTMENT ADVISER

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<PAGE> 677

customers. Fleet, the 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.

ADMINISTRATOR

FDISG generally assists the Fund in its administration and operation. FDISG
also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of the combined average daily net assets over $5 billion. Prior
to September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the
administration fee payable to it by the Fund.

For the period from December 4, 1995 through October 31, 1996, the Fund
paid FDISG administration fees at the effective annual rate of .085% of its
average daily net assets.

The Predecessor Fund bore administration fees during the period from
November 1, 1995 through December 3, 1995 pursuant to the agreement in effect
with Federated Administrative Services, its prior administrator, at the
effective annual rate of .15% of its average daily net assets after fee waivers.

DESCRIPTION OF GALAXY AND ITS SHARES

19
<PAGE> 678

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 has a par value of $.001 per Share, represents an
equal proportionate interest in the related investment portfolio 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 investment portfolio as
are declared in the discretion of Galaxy's Board of Trustees.

Galaxy is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove Trustees.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan pursuant to which it intends
to enter into servicing 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 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 FD Distributors; 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 the Statement of Additional Information
relating to the Fund 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 to their Customers a schedule of any fees that they may
charge in connection with Customer investments in Retail A Shares.

20
<PAGE> 679

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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 ("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. ("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 5108, 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

EXPENSES

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

21
<PAGE> 680

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.

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

MISCELLANEOUS

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

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

22
<PAGE> 681
GALAXY
SMALL CAP VALUE
FUND

February 28, 1997

P R O S P E C T U S

Trust Shares

[LOGO]

FN-508 15003 (3/97)

<PAGE> 682

TRUST

THE GALAXY FUND

GROWTH AND INCOME FUND

PROSPECTUS

FEBRUARY 28, 1997
<PAGE> 683

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

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
FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY FIRST DATA DISTRIBUTORS, INC. 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................... 7
REITS................................. 9
INVESTMENT LIMITATIONS................ 13
PRICING OF SHARES..................... 14
HOW TO PURCHASE AND REDEEM SHARES..... 15
Distributor......................... 15
Purchase of Shares.................. 15
Redemption of Shares................ 16
DIVIDENDS AND DISTRIBUTIONS........... 16
TAXES................................. 17

<CAPTION>
PAGE
<S> <C>
Federal............................. 17
State and Local..................... 17
MANAGEMENT OF THE FUND................ 17
Investment Adviser.................. 18
Authority to Act as Investment
Adviser.......................... 18
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..... 21
MISCELLANEOUS......................... 22
</TABLE>

================================================================================
<PAGE> 684

THE GALAXY FUND

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").

This Prospectus describes Trust Shares in the Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily at bank and trust
institutions, including institutions affiliated with Fleet Financial Group,
Inc., and to participants in employer-sponsored defined contribution plans.
Galaxy is also authorized to issue two additional series of shares in the Fund,
Retail A Shares and Retail B Shares (Retail A Shares and Retail B Shares are
referred to herein collectively as "Retail Shares"). Retail Shares are offered
under a separate prospectus primarily to individuals, corporations or other
entities purchasing either for their own accounts or for the accounts of others
and to FIS Securities, Inc., Fleet Brokerage Securities, Inc., Fleet Securities,
Inc., Fleet Enterprises, 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.

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 28, 1997
<PAGE> 685

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
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------
Advisory Fees.................................................................. .75%
12b-1 Fees..................................................................... None
Other Expenses (After Fee Waivers)............................................. .32%
---------
Total Fund Operating Expenses (After Fee Waivers).............................. 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 investors 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. Without voluntary fee
waivers by Fleet, Other Expenses would be .37% and Total Fund Operating Expenses
would be 1.12% 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 relating
to the Fund. 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 EXAMPLE 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> 686

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 Growth and Income 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
Predecessor 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 (i) the investment results of the Growth and Income Fund's Trust
Shares for the fiscal year ended October 31, 1996 and (ii) the investment
results of the Predecessor Fund's Trust Shares (the series that is similar to
the Trust Shares of the Fund) for the fiscal years ended October 31, 1995 and
October 31, 1994 and the fiscal period ended October 31, 1993. The information
about the Fund for the fiscal year ended October 31, 1996 has been audited by
Coopers & Lybrand L.L.P., Galaxy's independent accountants, whose report is
contained in Galaxy's Annual Report to Shareholders relating to the Funds dated
October 31, 1996 (the "Annual Report"). The information about the Predecessor
Fund for the fiscal years ended October 31, 1995 and October 31, 1994 and the
fiscal period ended October 31, 1993 was audited by Price Waterhouse LLP,
independent accountants for the Predecessor Fund, whose report is contained in
The Shawmut Funds' Annual Report to Shareholders relating to the Predecessor
Fund dated October 31, 1995 (the "Shawmut Annual Report"). The financial
highlights should be read in conjunction with the financial statements and notes
thereto contained in the Annual Report and the Shawmut Annual Report and
incorporated by reference into the Statement of Additional Information relating
to the Fund. More information about the performance of the Fund is contained in
the Annual Report which may be obtained without charge by contacting Galaxy at
its telephone number or address provided above.

3
<PAGE> 687

GROWTH AND INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996(2) 1995 1994 1993(1)
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 12.35 $ 11.15 $ 10.69 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(3,4).............. 0.27 0.28 0.25 0.18
Net realized and unrealized gain/(loss)
on investments....................... 2.16 1.69 0.72 0.69
-------- -------- -------- --------
Total from Investment
Operations:................... 2.43 1.97 0.97 0.87
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income.... (0.25) (0.28) (0.23) (0.18)
Dividends from net realized capital
gains................................ (0.73) (0.49) (0.28) --
-------- -------- -------- --------
Total Dividends:................ (0.98) (0.77) (0.51) (0.18)
-------- -------- -------- --------
Net increase (decrease) in net asset
value................................... 1.45 1.20 0.46 0.69
-------- -------- -------- --------
Net Asset Value, End of Period............ $ 13.80 $ 12.35 $ 11.15 $ 10.69
======== ======== ======== ========
Total Return.............................. 20.77% 18.80% 9.45% 8.80%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)......... $ 186,708 $ 189,011 $156,827 $147,090
Ratio to average net assets:
Net investment income including
reimbursement/waiver................. 2.01% 2.42% 2.31% 2.11%(5)
Operating expenses including
reimbursement/waiver................. 1.02% 1.07% 1.04% 0.98%(5)
Operating expenses excluding
reimbursement/waiver................. 1.03% 1.27% 1.24% 1.25%(5)
Portfolio Turnover Rate................... .59% 51% 73% 38%(6)
Average Commission Rate Paid(7)........... $ 0.0654 N/A N/A N/A
</TABLE>

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

(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.

(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of Galaxy. Prior to the reorganization,the Predecessor Fund offered and sold
two series of shares, Investment Shares and Trust Shares, that were similar
to the Fund's Retail A and Trust Shares, respectively. In connection with
the reorganization, shareholders of the Predecessor Fund exchanged
Investment Shares and Trust Shares for Retail A Shares and Trust Shares,
respectively, in the Fund.

(3) Net investment income per share before reimbursement/waiver of fees by other
parties for the fiscal years ended October 31, 1995 and 1994 and the fiscal
period ended October 31, 1993 were $0.25, and $0.22 and $0.15, respectively,
(unaudited).

(4) Net investment income per share does not reflect the tax reclassifications
arising in the current period.

(5) Annualized.

(6) Not Annualized

(7) Required for fiscal years beginning on or after September 1, 1995.

4
<PAGE> 688

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 its 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 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 indexes 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 foreign issuers 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
Fleet Investment Advisors Inc., the Fund's investment adviser ("Fleet") 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 Fleet, 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 assigned 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. See "Other Investment Policies" below
for information regarding additional investment policies of the Growth and
Income Fund.

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

5
<PAGE> 689

"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

Foreign Securities

Investments in foreign securities may 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 dividends or 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
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.

Certain of the risks associated with investments in foreign securities are
heightened with respect to investments in countries with emerging economies or
emerging securities markets. The risk of expropriation, nationalization and
social, political and economic instability are greater in those countries than
in more developed capital markets.

6
<PAGE> 690

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

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 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 10
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.

7
<PAGE> 691

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 Fleet 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 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.

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 Fleet to be of good standing and only
when, in Fleet'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.

8
<PAGE> 692

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 the
Fund, other investment portfolios of Galaxy, or any other investment companies
advised by Fleet.

REITS

The Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased, competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITs are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pays dividends
to their shareholders, based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
its distributions may also be designated as a return of capital. See "Taxes."

Options and Futures Contracts

9
<PAGE> 693

Stock Index Futures, Swap Agreements, Indexed Securities and Options.

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 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."

10
<PAGE> 694

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.

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 will establish with its custodian a segregated account
consisting of cash or other liquid assets 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 relating to the
Fund 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
shares 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.

11
<PAGE> 695

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 the assets of the issuer 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 issuer.
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 Fleet's opinion,
the investment characteristics of the underlying common stock 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, Fleet 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, Fleet 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. Fleet
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" 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

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 or
currency exchange rates, or indices, and include, but are not limited to,
options, stock index futures and options, indexed securities and swap
agreements, and foreign currency exchange transactions.

12
<PAGE> 696

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.

Fleet 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 such securities will be used in furtherance of the
Fund's investment objective. It is possible, however, that Fleet'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
Fleet 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 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

13
<PAGE> 697

The Fund may not:

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.

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.)

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

14
<PAGE> 698

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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors on a Business Day in
accordance with the foregoing procedures.

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

15
<PAGE> 699

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 (in the case of employer sponsored defined contribution 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

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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

16
<PAGE> 700

The crediting and payment of dividends to Customers will be in accordance with
the procedures governing such Customers' accounts at their respective
Institutions.

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.

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.

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

17
<PAGE> 701

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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 Growth,
Equity Value, Equity Income, International Equity, Small Company Equity, Asset
Allocation, Small Cap Value, 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.

For the services provided and expenses assumed with respect to the Fund,
Fleet 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.

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.

18
<PAGE> 702

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. Fleet, the 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

For the period from December 4, 1995 through October 31, 1996, the Fund
paid FDISG administration fees at the effective annual rate of .085% of its
average daily net assets.

The Predecessor Growth and Income Fund bore administration fees during the
period from November 1, 1995 through December 3, 1995 pursuant to the
administration agreement then in effect with Federated Administrative Services,
its prior administrator, at the effective annual rate of .15% of the Predecessor
Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

19
<PAGE> 703

number of Shares in the 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 interests in the Fund. 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 FD Distributors 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. 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. 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.

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 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 FD Distributors; 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

20
<PAGE> 704

to invest the assets of Customers in Retail A Shares. These services are
described more fully in the Statement of Additional Information relating to the
Fund 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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank 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 Bank 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 ("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. ("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 5108, 4400 Computer Drive,
Westboro, Massachusetts 01581-5180.

EXPENSES

21
<PAGE> 705

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 shareholder reports
and 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, 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,
Retail A Shares and Retail B 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.

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

22
<PAGE> 706

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.

23
<PAGE> 707

[INSERT BACK COVER ART]

N-507 15004 (3/97)

<PAGE> 708

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 28, 1997
<PAGE> 709

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

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................ 31
PRICING OF SHARES..................... 33
HOW TO PURCHASE AND REDEEM SHARES..... 34
Distributor......................... 34
Purchase of Shares.................. 34

<CAPTION>
PAGE
----
<S> <C>
Redemption of Shares................ 35
DIVIDENDS AND DISTRIBUTIONS........... 35
TAXES................................. 36
Federal............................. 36
State and Local..................... 37
MANAGEMENT OF THE FUNDS............... 37
Investment Adviser and
Sub-Adviser...................... 37
Authority to Act as Investment
Adviser.......................... 40
Administrator....................... 40
DESCRIPTION OF GALAXY AND ITS
SHARES.............................. 41
Shareholder Services Plan........... 42
Affiliate Agreement for Sub-Account
Services......................... 42
CUSTODIAN AND TRANSFER AGENT.......... 43
EXPENSES.............................. 43
PERFORMANCE AND YIELD
INFORMATION......................... 43
MISCELLANEOUS......................... 44
</TABLE>

================================================================================
<PAGE> 710

THE GALAXY FUND

<TABLE>
<S> <C>
4400 Computer Drive For an application and information concerning
Westboro, Massachusetts purchases, redemptions, exchanges and other
01581-5108 shareholder services or for current performance,
call 1-800-628-0414.
</TABLE>

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 that offer income
potential.

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 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 market and economic conditions, 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.

<PAGE> 711

This Prospectus describes the Trust Shares in each Fund. Trust Shares are
offered to investors maintaining qualified accounts primarily 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 FIS Securities, Inc., Fleet Brokerage Securities,
Inc., Fleet Securities, Inc., Fleet Enterprises, 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 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.

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

FEBRUARY 28, 1997

<PAGE> 712

EXPENSE SUMMARY

<TABLE>
<CAPTION>
SMALL
EQUITY EQUITY EQUITY INTERNATIONAL COMPANY ASSET SMALL CAP GROWTH AND
SHAREHOLDER TRANSACTION VALUE GROWTH INCOME EQUITY EQUITY ALLOCATION VALUE INCOME
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% .67% .75% .75% .75% .75%
12b-1 Fees.................. None None None None None None None None
Other Expenses (After Fee
Waivers).................. .38% .34% .31% .60% .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 $68 $151
Small Company Equity Fund................................. $ 12 $37 $65 $143
Asset Allocation Fund..................................... $ 14 $42 $73 $161
Small Cap Value Fund...................................... $ 11 $33 $58 $128
Growth and Income Fund.................................... $ 10 $32 $56 $125
</TABLE>

3
<PAGE> 713

by reference into the 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
Trust Shares of the Funds are in addition to and not reflected in the fees and
expenses described above.

THE FOREGOING EXAMPLE 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 relating to the Funds dated October 31, 1996 (the "Annual Report").
Such financial highlights should be read in conjunction with the financial
statements and notes thereto contained in the Annual Report 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 reflect 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 the
Annual Report, which may be obtained without charge by contacting Galaxy at its
telephone number or address provided above.

4
<PAGE> 714

EQUITY VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED PERIOD
OCTOBER 31, ENDED
1996 1995 1994 YEAR ENDED OCTOBER 31,(2) OCTOBER 31,
-------------------------- ------------------------------------------
TRUST SHARES 1993 1992 1991 1990 1989 1988(1,2)
------------------------------ -------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41 $ 10.00
-------- -------- -------- -------- -------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income....... 0.21 0.28 0.19 0.19 0.26 0.37 0.39 0.36 0.03
Net realized and unrealized
gain (loss) on
investments............... 2.74 2.24 0.45 2.14 0.33 2.41 (1.37) 1.10 0.38
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total from Investment
Operations:........... 2.95 2.52 0.64 2.33 0.59 2.78 (0.98) 1.46 0.41
-------- -------- -------- -------- -------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income......... (0.21) (0.30) (0.16) (0.20) (0.27) (0.37) (0.38) (0.36) --
Dividends from net realized
capital gains............. (1.11) (1.21) (0.28) (0.42) (0.43) (0.34) (0.70) -- --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total Dividends:........ (1.32) (1.51) (0.44) (0.62) (0.70) (0.71) (1.08) (0.36) --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net increase (decrease) in net
asset value................. 1.63 1.01 0.20 1.71 (0.11) 2.07 (2.06) 1.10 0.41
-------- -------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of
Period...................... $ 15.96 $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41
======== ======== ======== ======== ======== ======= ======= ======= =======
Total Return.................. 22.05% 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)..................... $194,827 $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.................... 1.42% 2.10% 1.46% 1.52% 2.24% 3.25% 3.66% 3.25% 1.89%(4)
Operating expenses including
reimbursement/waiver...... 1.03% 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.97% 0.95%(4)
Operating expenses excluding
reimbursement/waiver...... 1.03% 1.02% 1.06% 0.97% 0.94% 0.94% 0.95% 0.98% 0.95%(4)
Portfolio Turnover Rate....... 116% 76% 71% 50% 136% 40% 94% 44% 4%(3)
Average Commission
Rate Paid(5)................ $ 0.0605 N/A N/A N/A N/A N/A N/A N/A N/A
</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) Required for fiscal years beginning on or after September 1, 1995.

5
<PAGE> 715

EQUITY GROWTH FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31, YEAR ENDED
1996 1995 1994 OCTOBER 31,(2) PERIOD ENDED
------------------------------ ------------------- OCTOBER 31,
TRUST SHARES 1993 1992 1991(1,2)
------------------------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period......................... $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99 $ 10.00
-------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.......... 0.17 0.20 0.18 0.15 0.17 0.16
Net realized and unrealized
gain (loss) on
investments................. 3.40 3.28 0.47 0.95 0.91 1.97
-------- -------- -------- -------- -------- --------
Total from Investment
Operations:............ 3.57 3.48 0.65 1.10 1.08 2.13
-------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment
income...................... (0.18) (0.20) (0.16) (0.15) (0.17) (0.14)
Dividends from net realized
capital gains............... (0.30) (0.17) (0.06) (0.09) -- --
-------- -------- -------- -------- -------- --------
Total Dividends:.......... (0.48) (0.37) (0.22) (0.24) (0.17) (0.14)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net
asset value.................... 3.09 3.11 0.43 0.86 0.91 1.99
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period... $ 20.39 $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99
======== ======== ======== ======== ======== ========
Total Return..................... 21.03% 25.08% 4.80% 8.58% 9.10% 21.39%(3)
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)........................ $562,419 $420,016 $362,094 $427,298 $224,630 $ 92,224
Ratios to average net assets:
Net investment income including
reimbursement/waiver........ 0.92% 1.31% 1.27% 1.20% 1.37% 1.46%(4)
Operating expenses including
reimbursement/waiver........ 0.98% 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Operating expenses excluding
reimbursement/waiver........ 0.98% 1.00% 0.93% 0.97% 0.95% 0.83%(4)
Portfolio Turnover Rate.......... 36% 14% 18% 16% 22% 16%(3)
Average Commission Rate
Paid(5)........................ $ 0.0615 N/A N/A N/A N/A N/A
</TABLE>

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

6
<PAGE> 716

EQUITY INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED
1996 1995 1994 OCTOBER 31,(2) PERIOD ENDED
---------------------------- ------------------ OCTOBER 31,
TRUST SHARES 1993 1992 1991(1,2)
---------------------------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 14.99 $ 12.75 $ 12.85 $ 11.85 $ 11.29 $10.00
-------- ------- ------- -------- ------- ------
Income from Investment Operations:
Net investment income(3).......... 0.37 0.36 0.31 0.30 0.30 0.29
Net realized and unrealized gain
(loss) on investments.......... 2.48 2.45 0.07 1.09 0.76 1.26
-------- ------- ------- -------- ------- ------
Total from Investment
Operations:............... 2.85 2.81 0.38 1.39 1.06 1.55
-------- ------- ------- -------- ------- ------
Less Dividends:
Dividends from net investment
income......................... (0.37) (0.36) (0.29) (0.28) (0.30) (0.26)
Dividends from net realized
capital gains.................. (0.54) (0.21) (0.19) (0.11) (0.20) --
-------- ------- ------- -------- ------- ------
Total Dividends:............. (0.91) (0.57) (0.48) (0.39) (0.50) (0.26)
-------- ------- ------- -------- ------- ------
Net increase (decrease) in net
asset value......................... 1.94 2.24 (0.10) 1.00 0.56 1.29
-------- ------- ------- -------- ------- ------
Net Asset Value, End of Period...... $ 16.93 $ 14.99 $ 12.75 $ 12.85 $ 11.85 $11.29
======== ======= ======= ======== ======= ======
Total Return........................ 19.65% 22.81% 3.02% 11.85% 9.71% 15.61%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)... $106,094 $87,819 $78,880 $123,970 $21,778 $7,096
Ratios to average net assets:
Net investment income including
reimbursement/waiver........... 2.32% 2.60% 2.49% 2.34% 2.84% 2.72%(5)
Operating expenses including
reimbursement/waiver........... 0.94% 0.98% 1.07% 1.16% 1.03% 0.85%(5)
Operating expenses excluding
reimbursement/waiver........... 0.94% 1.00% 1.07% 1.22% 1.54% 1.39%(5)
Portfolio Turnover Rate............. 45% 21% 31% 27% 18% 77%(4)
Average Commission Rate Paid(6)..... $ 0.0620 N/A N/A N/A N/A N/A
</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
Fleet and/or the Fund's 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.
(6) Required for fiscal years beginning on or after September 1, 1995.

7
<PAGE> 717

INTERNATIONAL EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1996 1995 1994 YEAR ENDED PERIOD ENDED
----------------------------- OCTOBER 31, OCTOBER 31,
TRUST SHARES 1993(2) 1992(1,2)
----------------------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 12.98 $ 13.20 $ 12.13 $ 9.66 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(3)................. 0.17 0.16 0.06 0.02 0.06
Net realized and unrealized gain (loss)
on investments........................ 1.30 (0.18) 1.02 2.51 (0.40)
------- ------- ------- ------- -------
Total from Investment Operations:... 1.47 (0.02) 1.08 2.53 (0.34)
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income..... (0.20) (0.04) (0.01) (0.06) --
Dividends from net realized capital
gains................................. (0.24) (0.16) -- -- --
------- ------- ------- ------- -------
Total Dividends:.................... (0.44) (0.20) (0.01) (0.06) --
------- ------- ------- ------- -------
Net increase (decrease) in net asset
value.................................... 1.03 (0.22) 1.07 2.47 (0.34)
------- ------- ------- ------- -------
Net Asset Value, End of Period............. $ 14.01 $ 12.98 $ 13.20 $ 12.13 $ 9.66
======= ======= ======= ======= =======
Total Return............................... 11.51% (0.02)% 8.91% 26.36% (3.40)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).......... $172,561 $89,614 $82,350 $39,246 $ 12,584
Ratios to average net assets:
Net investment income including
reimbursement/waiver.................. 1.40% 1.36% 0.74% 0.37% 1.19%(5)
Operating expenses including
reimbursement/waiver.................. 1.08% 1.22% 1.43% 1.57% 1.61%(5)
Operating expenses excluding
reimbursement/waiver.................. 1.36% 1.48% 1.72% 2.04% 2.79%(5)
Portfolio Turnover Rate.................... 146% 48% 39% 29% 21%(4)
Average Commission Rate Paid(6)............ $ 0.0381 N/A N/A N/A N/A
</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
Fleet and/or the Fund's administrator for the years ended October 31, 1996,
1995, 1994 and 1993 and for the period ended October 31, 1992 were $0.13,
$0.13, $0.04, $0.00 and $0.00, respectively.
(4) Not Annualized.
(5) Annualized.
(6) Required for fiscal years beginning on or after September 1, 1995.

8
<PAGE> 718

SMALL COMPANY EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED
1996 1995 1994 OCTOBER PERIOD ENDED
---------------------------- 31, OCTOBER 31,
TRUST SHARES 1993(2) 1992(1,2)
---------------------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $ 16.38 $ 12.36 $ 12.41 $ 8.79 $ 10.00
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (loss)(3)........... (0.09) (0.04) -- (0.04) (0.03)
Net realized and unrealized gain (loss)
on investments......................... 4.08 4.25 -- 3.66 (1.18)
-------- ------- ------- ------- -------
Total from Investment Operations:.... 3.99 4.21 -- 3.62 (1.21)
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income...... -- -- -- --
Dividends from net realized capital
gains.................................. (0.17) (0.19) (0.05) -- --
-------- ------- ------- ------- -------
Total Dividends:..................... (0.17) (0.19) (0.05) -- --
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value..................................... 3.82 4.02 (0.05) 3.62 (1.21)
-------- ------- ------- ------- -------
Net Asset Value, End of Period.............. $ 20.20 $ 16.38 $ 12.36 $ 12.41 $ 8.79
======== ======= ======= ======= =======
Total Return................................ 24.69% 34.73% 0.02% 41.18% (12.10)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........... $174,990 $94,831 $66,462 $ 55,683 $ 29,072
Ratios to average net assets:
Net investment income (loss) including
reimbursement/waiver................... (0.60)% (0.37)% (0.35)% (0.66)% (0.63)%(5)
Operating expenses including
reimbursement/waiver................... 1.14% 1.12% 1.27% 1.18% 1.06%(5)
Operating expenses excluding
reimbursement/waiver................... 1.14% 1.12% 1.27% 1.22% 1.33%(5)
Portfolio Turnover Rate..................... 82% 54% 35% 57% 87%(4)
Average Commission Rate Paid(6)............. $ 0.0531 N/A N/A N/A N/A
</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 Fleet and/or the Fund's administrator for the period ended October 31,
1992 was $(0.05).
(4) Not Annualized.
(5) Annualized.
(6) Required for fiscal years beginning on or after September 1, 1995.

9
<PAGE> 719

ASSET ALLOCATION FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995 1994 YEAR ENDED PERIOD ENDED
-------------------------------- OCTOBER 31, OCTOBER 31,
TRUST SHARES 1993(2) 1992(1,2)
-------------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.............................. $ 12.83 $ 10.68 $ 11.15 $ 10.16 $ 10.00
-------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income(3)............ 0.33 0.32 0.28 0.25 0.15
Net realized and unrealized gain
(loss) on investments............ 1.83 2.16 (0.49) 0.99 0.13
-------- ------- ------- ------- -------
Total from Investment
Operations:................. 2.16 2.48 (0.21) 1.24 0.28
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income........................... (0.33) (0.33) (0.26) (0.25) (0.12)
Dividends from net realized capital
gains............................ (0.13) -- -- -- --
-------- ------- ------- ------- -------
Total Dividends:............... (0.46) (0.33) (0.26) (0.25) (0.12)
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value............................... 1.70 2.15 (0.47) 0.99 0.16
-------- ------- ------- ------- -------
Net Asset Value, End of Period........ $ 14.53 $ 12.83 $ 10.68 $ 11.15 $ 10.16
======== ======= ======= ======= =======
Total Return.......................... 17.19% 23.68% (1.93)% 12.37% 2.85%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)..... $123,603 $76,771 $65,464 $ 92,348 $ 11,555
Ratios to average net assets:
Net investment income including
reimbursement/waiver............. 2.52% 2.74% 2.70% 2.59% 2.80%(5)
Operating expenses including
reimbursement/waiver............. 1.19% 1.26% 1.18% 1.14% 1.11%(5)
Operating expenses excluding
reimbursement/waiver............. 1.21% 1.30% 1.18% 1.25% 2.39%(5)
Portfolio Turnover Rate............... 48% 41% 23% 7% 2%(4)
Average Commission Rate Paid(6)....... $ 0.0635 N/A N/A N/A N/A
</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
Fleet and/or the Fund's 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.
(6) Required for fiscal years beginning on or after September 1, 1995.

10
<PAGE> 720

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 Predecessor 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' Trust Shares and Retail A Shares, respectively.

The financial highlights presented below set forth certain information
concerning (i) the investment results of the Small Cap Value and Growth and
Income Funds' Trust Shares for the fiscal year ended October 31, 1996 and (ii)
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 about the Small Cap Value
and Growth and Income Funds for the fiscal year ended October 31, 1996 has been
audited by Coopers & Lybrand L.L.P., Galaxy's independent accountants, whose
report is contained in Galaxy's Annual Report to Shareholders relating to the
Funds dated October 31, 1996 (the "Annual Report"). The information about the
Predecessor Small Cap Value and Predecessor Growth and Income Funds for the
fiscal years ended October 31, 1995 and October 31, 1994 and the fiscal period
ended October 31, 1993 was audited by Price Waterhouse LLP, independent
accountants for the Predecessor Funds, whose report is contained in The Shawmut
Funds' Annual Report to Shareholders relating to the Predecessor Funds dated
October 31, 1995 (the "Shawmut Annul Report"). The financial highlights should
be read in conjunction with the financial statements and notes thereto contained
in the Annual Report and the Shawmut Annual Report and incorporated by reference
into the Statement of Additional Information relating to these Funds. More
information about the performance of the Funds is contained in the Annual Report
which may be obtained without charge by contacting Galaxy at its telephone
number or address provided above.

11
<PAGE> 721

SMALL CAP VALUE FUND(1)
(FOR A SHARE(2)OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996(2) 1995 1994 1993(1)
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 12.71 $ 11.07 $ 11.21 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(3,4,5)................ 0.05 0.01 0.02 --
Net realized and unrealized gain/(loss) on
investments.............................. 2.97 2.21 0.17 1.21
-------- -------- -------- --------
Total from Investment Operations:...... 3.02 2.22 0.19 1.21
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income(3)..... (0.05) (0.01) (0.01) --
Dividends in excess of net investment
income...................................
Dividends from net realized (0.01) -- -- --
capital gains............................ (0.91) (0.57) (0.32) --
-------- -------- -------- --------
Total Dividends(3):.................... (0.97) (0.58) (0.33) --
-------- -------- -------- --------
Net increase (decrease) in net asset value.... 2.05 1.64 (0.14) 1.21
-------- -------- -------- --------
Net Asset Value, End of Period................ $ 14.76 $ 12.71 $ 11.07 $ 11.21
======== ======== ======== ========
Total Return.................................. 25.22% 21.52% 1.86% 12.12%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........... $ 137,341 $ 121,364 $ 101,905 $ 100,382
Ratios to average net assets:
Net investment income including
reimbursement/waiver..................... 0.45% 0.07% 0.15% 0.02%(6)
Operating expenses including
reimbursement/waiver..................... 1.05% 1.10% 1.06% 1.01%(6)
Operating expenses excluding
reimbursement/waiver..................... 1.06% 1.35% 1.34% 1.29%(6)
Portfolio Turnover Rate....................... 39% 32% 29% 29%(7)
Average Commission Rate Paid(8)............... $ 0.0559 N/A N/A N/A
</TABLE>

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

(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of Galaxy. Prior to the reorganization, the Predecessor Fund
offered and sold two series of shares, Investment Shares and Trust Shares,
that were similar to the Fund's Retail A and Trust Shares, respectively. In
connection with the reorganization, shareholders of the Predecessor Fund
exchanged Investment Shares and Trust Shares for Retail A Shares and Trust
Shares, respectively, in the Fund.
(3) Represents less than $0.01 per share for the year 1993.
(4) Net investment income (loss) per share before reimbursement/waiver of fees
by other parties for the fiscal years ended October 31, 1995 and 1994 were
$(0.03) and $(0.01), respectively, (unaudited).
(5) Net investment income per share does not reflect the tax reclassifications
arising in the current period.
(6) Annualized.
(7) Not Annualized.
(8) Required for fiscal years beginning on or after September 1, 1995.

12
<PAGE> 722

GROWTH AND INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996(2) 1995 1994 1993(1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 12.35 $ 11.15 $ 10.69 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(3,4)...................... 0.27 0.28 0.25 0.18
Net realized and unrealized gain/(loss) on
investments.................................. 2.16 1.69 0.72 0.69
-------- -------- -------- --------
Total from Investment Operations:.......... 2.43 1.97 0.97 0.87
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income............ (0.25) (0.28) (0.23) (0.18)
Dividend from net realized capital gains........ (0.73) (0.49) (0.28) --
-------- -------- -------- --------
Total Dividends:........................... (0.98) (0.77) (0.51) (0.18)
-------- -------- -------- --------
Net increase (decrease) in net asset value........ 1.45 1.20 0.46 0.69
-------- -------- -------- --------
Net Asset Value, End of Period.................... $ 13.80 $ 12.35 $ 11.15 $ 10.69
======== ======== ======== ========
Total Return...................................... 20.77% 18.80% 9.45% 8.80%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $186,708 $189,011 $156,827 $147,090
Ratio to average net assets:
Net investment income including
reimbursement/waiver......................... 2.01% 2.42% 2.31% 2.11%(5)
Operating expenses including
reimbursement/waiver......................... 1.02% 1.07% 1.04% 0.98%(5)
Operating expenses excluding
reimbursement/waiver......................... 1.03% 1.27% 1.24% 1.25%(5)
Portfolio Turnover Rate........................... 59% 51% 73% 38%(6)
Average Commission Rate Paid(7)................... $ 0.0654 N/A N/A N/A
</TABLE>

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

(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of Galaxy. Prior to the reorganization, the Predecessor Fund
offered and sold two series of shares, Investment Shares and Trust Shares,
that were similar to the Fund's Retail A and Trust Shares, respectively. In
connection with the reorganization, shareholders of the Predecessor Fund
exchanged Investment Shares and Trust Shares for Retail A Shares and Trust
Shares, respectively, in Fund.
(3) Net investment income per share before reimbursement/waiver of fees by
other parties for the fiscal years ended October 31, 1995 and 1994 and the
fiscal period ended October 31, 1993 were $0.25, $0.22 and $0.15,
respectively, (unaudited).
(4) Net investment income per share does not reflect the tax reclassifications
arising in the current period.
(5) Annualized.
(6) Not Annualized.
(7) Required for fiscal years beginning on or after September 1, 1995.

13
<PAGE> 723

INVESTMENT OBJECTIVES AND POLICIES

Fleet Investment Advisors Inc., the Funds' investment adviser ("Fleet"),
and, with respect to the International Equity Fund, Oechsle International
Advisors, L.P. ("Oechsle"), the Fund's sub-adviser, will use their 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.

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 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, Fleet
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 (the "S&P 500").

The Fund may hold other types of securities in such proportions as, in the
opinion of Fleet, existing market and economic conditions 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 Fleet, 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. 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. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Equity Value Fund.

EQUITY GROWTH FUND

14
<PAGE> 724

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 Fund may invest up to 20% of its total assets in foreign securities,
either directly or indirectly through the purchase of ADRs and EDRs. In
addition, the Fund may invest in securities issued by foreign branches of U.S.
banks and foreign banks. 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.

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 Fleet, 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 that
offer income potential. 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.

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. 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> 725

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."

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 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. See

16
<PAGE> 726

"Other Investment Policies and Risk Considerations" below regarding additional
investment policies of the International Equity 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 Fleet 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 Considerations--Derivative Securities" below.

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. 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.

17
<PAGE> 727

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. In selecting common
stock for purchase by the Fund, Fleet 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. Such foreign investments may be made directly, by purchasing
securities issued or guaranteed by foreign corporations, banks or governments
(or their political subdivisions or instrumentalities) or by supranational banks
or other organizations, or indirectly, by purchasing ADRs and EDRs. 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. See
"Special Risk Considerations" and "Other Investment Policies and Risk
Considerations" below. The Fund may also invest in dollar-denominated high
quality debt obligations of U.S. corporations issued outside the United States.
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 Fleet, 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 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.

18
<PAGE> 728

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 Fleet 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 Fleet, 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 assigned 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 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 its investment 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 invests primarily in growth-oriented equity securities.
Growth-oriented stocks may include issuers with smaller capitalizations. See
"Small Company Equity Fund" and "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 indexes 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.

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 foreign issuers 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
Fleet to be substantial. See "Special Risk Considerations" and Other Investment
Policies and Risk Considerations" below.

19
<PAGE> 729

categories assigned 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

Investments in foreign securities may 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 dividends or principal and
interest on foreign obligations.

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.

Certain of the risks associated with investments in foreign securities are
heightened with respect to investments in countries with emerging economies or
securities markets. The risks of expropriation,

20
<PAGE> 730

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 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 Fleet. Debt securities rated "Baa" by Moody's or "BBB" by
S&P 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.

The International Equity Fund may only purchase debt securities rated "A"
or higher by Moody's or S&P, or if unrated, determined by Fleet or Oechsle to be
of comparable quality. Issuers of commercial paper, bank obligations or
repurchase agreements in which the International Equity 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.

The Small Cap Value and Growth and Income Funds may purchase convertible
bonds rated "Ba" or higher by Moody's or "BB" or higher by S&P or Fitch 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 "Ba" or "BB". 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 assigned by a nationally
recognized statistical rating agency, such as Moody's, S&P 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 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

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<PAGE> 731

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 FDIC. 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. Investments in bank
obligations are 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. 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% (15%
with respect to the Small Cap Value Fund and Growth and Income Fund) of a Fund's
total 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 Fleet and/or Oechsle believe that the credit
risk with respect to the instrument is minimal.

Repurchase and Reverse Repurchase Agreements

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<PAGE> 732

and/or Oechsle under guidelines approved by Galaxy's Board of Trustees. No Fund
will enter into repurchase agreements with Fleet or Oechsle or any of their
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.

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 Fleet and/or Oechsle to be of good standing and only when, in Fleet's
and/or Oechsle'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> 733

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 the Fund, other investment portfolios of Galaxy, or any
other investment companies advised by Fleet or Oechsle.

REITs

Each Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITs are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pays dividends
to their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. Each Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
the Fund's distributions may also be designated as a return of capital. See
"Taxes".

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
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. The Fund 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

24
<PAGE> 734

purchasing an option of the same series. Such options would normally be written
only on underlying securities as to which Fleet and/or Oechsle 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
"Derivative Securities" below and the Statement of Additional Information
relating to the 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 Fleet 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 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.

25
<PAGE> 735

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 a Fund enters 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 party to a currency exchange
contract will be a commercial bank or other financial institution.

26
<PAGE> 736

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 will establish with its custodian a segregated account consisting of
cash or other liquid assets 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 applicable
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. See "Asset-Backed Securities" in the Statement of Additional
Information relating to the 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, 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

27
<PAGE> 737

Fund, should it invest in mortgage-backed securities, may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment.

Mortgage Dollar Rolls--Asset Allocation Fund

The Asset Allocation Fund may enter into mortgage "dollar rolls" in which
the Fund sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date not
exceeding 120 days. During the roll period, the Fund loses the right to receive
principal and interest paid on the securities sold. However, the Fund would
benefit to the extent of any difference between the price received for the
securities sold and the lower forward price for the future purchase (often
referred to as the "drop") or fee income plus the interest earned on the cash
proceeds of the securities sold until the settlement date of the forward
purchase. Unless such benefits exceed the income, capital appreciation and gain
or loss due to mortgage prepayments that would have been realized on the
securities sold as part of the mortgage dollar roll, the use of this technique
will diminish the investment performance of the Fund compared with what such
performance would have been without the use of mortgage dollar rolls. All cash
proceeds will be invested in instruments that are permissible investments for
the Fund. The Fund will hold and maintain in a segregated account until the
settlement date cash or other liquid assets in an amount equal to the forward
purchase price.

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 shares 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.

28
<PAGE> 738

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 the assets of the issuer 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 issuer.
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 Fleet's and/or
Oechsle's opinion, the investment characteristics of the underlying common stock
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, Fleet and/or Oechsle 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, Fleet and/or Oechsle 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-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. Fleet 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"
after a 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 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

29
<PAGE> 739

limited to, put and call options, stock index futures and options, indexed
securities and swap agreements, and foreign currency exchange transactions.

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest or exchange 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 or exchange 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 a 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.

Fleet and/or Oechsle will evaluate the risks presented by the derivative
securities purchased by the Funds, and will determine, in connection with their
day-to-day management of the Funds, how such securities will be used in
furtherance of the Funds' investment objectives. It is possible, however, that
Fleet'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 applicable Statement of Additional Information 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 Fleet or Oechsle,
as the case may be, 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
Fleet and/or Oechsle 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 a Fund's
shareholders. High portfolio turnover may result

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<PAGE> 740

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 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:

2. Borrow money or issue senior securities, except that each Fund may
borrow 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 a 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.

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

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<PAGE> 741

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(2) of the Securities Act of 1933
and certain securities which meet the criteria for 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, (a) 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, and (b) mortgage dollar rolls
entered into by the Asset Allocation Fund that are not accounted for as
financings shall not constitute borrowings.

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
such 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,
as amended, 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

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<PAGE> 742

instruments described above, Rule 144A securities will not be considered to be
illiquid if Fleet and/or Oechsle 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 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 Fleet 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 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 Galaxy's Board of
Trustees. For valuation purposes, quotations of

33
<PAGE> 743

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

PURCHASE OF SHARES

The Trust Shares described in this Prospectus are sold to investors
maintaining qualified accounts primarily at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and to participants in
employer-sponsored defined contribution plans (such institutions and plans
referred to herein collectively as "Institutions"). Trust Shares sold to such
investors ("Customers") will be held of record by Institutions. The Institution
is responsible for transmitting to FD Distributors orders for purchases of Trust
Shares and for wiring required funds in payment to Galaxy's custodian on a
timely basis. FD Distributors 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 FD Distributors, Galaxy's custodian and
the purchasing Institution are open for business ("Business Days").

A purchase order for Trust Shares received by FD Distributors 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 FD Distributors 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.

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<PAGE> 744

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 International Equity Fund described in this Prospectus
may also be sold to clients, partners and employees of Oechsle.

REDEMPTION OF SHARES

Customers may redeem all or part of their Trust Shares in accordance with
procedures governing their accounts at their respective Institutions. It is the
responsibility of an Institution to transmit redemption orders to FD
Distributors 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 an Institution may charge its Customers' accounts for
redemption services. Information relating to such redemption services and
charges, if any, is available from the Institution.

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.

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.

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<PAGE> 745

The crediting and payment of dividends to Customers will be in accordance with
the procedures governing such Customers' accounts at their respective
Institutions.

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 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 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.

36
<PAGE> 746

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, or (b) if they
itemize their deductions, to deduct such proportionate amount from their U.S.
income should they so choose. 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.

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 applicable 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 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, High Quality Bond, Corporate Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds.

Subject to the general supervision of Galaxy's Board of Trustees and in
accordance with each Fund's investment policies, Fleet manages each Fund, makes
decisions with respect to and places orders for all purchases and sales of its
portfolio securities and maintains related records (except with respect to such
functions that have been delegated to Oechsle, the International Equity Fund's
sub-advisors as described below).

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, Fleet 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. For the services provided and
expenses assumed with respect to the International Equity Fund, Fleet 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

37
<PAGE> 747

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 in order to help maintain a competitive
expense ratio and may from time to time allocate a portion of its advisory fees
to Fleet Bank or other subsidiaries of Fleet Financial Group, Inc., in
consideration for administrative and shareholder support services which they
provide to beneficial shareholders. For the fiscal year ended October 31, 1996,
Fleet received advisory fees (after fee waivers) at the effective annual rates
of .75%, .75%, .75%, .69%, .75% and .75% of the average daily net assets of the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity and Asset Allocation Funds, respectively. For the period from December 4,
1995 through October 31, 1996, Fleet received advisory fees at the effective
annual rates of .75% and .75% of the average daily net assets of the Small Cap
Value and Growth and Income Funds, respectively. In addition to fee waivers
during the fiscal year ended October 31, 1996, Fleet also reimbursed the Small
Company Equity, Asset Allocation, Small Cap Value and Growth and Income Funds
for certain operating expenses, which reimbursement may be revised or
discontinued at any time.

The Predecessor Small Cap Value and Predecessor Growth and Income Funds
bore advisory fees during the period from November 1, 1995 through December 3,
1995 pursuant to the investment advisory agreement then in effect with Shawmut
Bank, N.A., their former adviser at the effective annual rate of 1.00% of each
such Predecessor Fund's 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 Oechsle, a Delaware limited partnership, with principal offices at One
International Place, Boston, Massachusetts 02210, as the sub-adviser to the
International Equity Fund. The general partner of Oechsle is Oechsle Group,
L.P., and the managing general partner of Oechsle Group, L.P. is Walter Oechsle.
Oechsle currently manages approximately $9.2 billion in assets. Oechsle began
serving as sub-adviser to the Fund on August 12, 1996.

For the services provided and the expenses assumed pursuant to the
sub-advisory agreement, Fleet pays a fee to Oechsle, computed daily and paid
quarterly, at the annual rate of .40% of the first $50 million of the
International Equity Fund's average daily net assets, plus .35% of average daily
net assets in excess of $50 million. For the period from August 12, 1996 through
October 31, 1996, Oechsle received sub-advisory fees from Fleet at the effective
annual rate of .36% of the Fund's average daily net assets.

Prior to August 12, 1996, Wellington Management Company ("Wellington
Management") served as the International Equity Fund's sub-adviser. For the
services provided and expenses assumed pursuant to its sub-advisory agreement,
Wellington Management was entitled to receive a fee from Fleet, 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

38
<PAGE> 748

.30% of the next $50 million of such assets, plus .20% of all net assets in
excess of $100 million. For the period from November 1, 1995 through August 11,
1996, Wellington Management received sub-advisory fees at the effective annual
rate of .32% of the Fund's average daily net assets.

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 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 of
Fleet and S. Dewey Keesler, Jr. and Kathleen Harris of Oechsle, 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.
Keesler, General Partner and Portfolio Manager, has been wit Oechsle since its
founding in 1986. Ms. Harris has been a Portfolio Manager at Oechsle since
January 1995. Prior thereto, she was Portfolio Manager and Investment Director
for the State of Wisconsin Investment Board and a Fund Manager and Equity
Analyst for Northern Trust Company.

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 co-portfolio managers, Donald Jones and David
Lindsay, are primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Jones determines the allocation of the Fund's assets
between equity and fixed income investments and manages the equity portion of
the Fund's investment portfolio. Mr. Lindsay manages the fixed income portion 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. Mr. Lindsay, a
Senior Vice President, has been with Fleet and its predecessors since 1986. He
has managed the fixed income portion of the Fund's portfolio since January, 1997
and has managed Galaxy's Corporate Bond Portfolio since its inception in
December 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.

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<PAGE> 749

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. Fleet, the 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 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. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 Portfolios, .085% of the next $2.5
billion of combined average daily net assets 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, 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 .085% of each Fund's average daily net assets.

For the period from December 4, 1995 through October 31, 1996, the Small
Cap Value and Growth and Income Funds paid FDISG administration fees at the
effective annual rate of .085% of each Fund's average daily net assets.

The Predecessor Small Cap Value and Predecessor Growth and Income Funds
bore administration fees during the period from November 1, 1995 through
December 3, 1995 pursuant to the agreement then in effect with Federated
Administrative Services, their prior administrator, at the effective annual rate
of .15% of each such Predecessor Fund's average daily net assets after fee
waivers.

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<PAGE> 750

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares into one or more classes or series of shares.
Pursuant to such authority, the Board of Trustees has authorized the issuance of
an unlimited number of Shares in each series 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' Retail Shares and these other portfolios, which are offered through
separate prospectuses, contact FD Distributors 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 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.

Each Share of Galaxy (irrespective of series designation) has a par value
of $.001 per Share, represents an equal proportionate interest in the related
investment portfolio 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 investment portfolio as are
declared in the discretion of Galaxy's Board of Trustees.

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% and automatically
convert to Retail A Shares of the same Fund six years after the date of
purchase. Retail A and Retail B Shares have certain exchange and other
privileges which are not available with respect to Trust Shares.

41
<PAGE> 751

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 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 FD
Distributors; 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 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 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 to 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

FDISG has entered into an agreement with Fleet Bank, an affiliate of Fleet,
pursuant to which Fleet Bank performs certain sub-account and administrative
functions ("Sub-Account Services") on a per account basis with respect to Trust
Shares of each Fund held by defined contribution plans, including maintaining
records reflecting separately with respect to each plan participant's
sub-account all purchases and redemptions of Trust Shares and the dollar value
of Trust Shares in each sub-account; crediting to each participant's sub-account
all dividends and distributions with respect to that sub-account; and
transmitting to each participant a periodic statement regarding the sub-account
as well as any proxy materials, reports and other material Fund communications.
Fleet Bank is compensated by FDISG for the Sub-Account Services and in
connection

42
<PAGE> 752

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 ("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. ("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 5108, 4400 Computer Drive, Westboro,
Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and FDISG bear all expenses in connection with
the performance of their services for the Funds. Galaxy bears the expenses
incurred in the Funds' operations. Such expenses include: taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
FDISG); SEC fees; state securities fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory, administration, shareholder servicing, Rule 12b-1
distribution, 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 shareholder
reports and 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, 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 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

43
<PAGE> 753

performance and yield data will be calculated separately for Trust Shares,
Retail A Shares and/or 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 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.

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.

44
<PAGE> 754

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 755

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 756
Galaxy

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

February 28, 1997

PROSPECTUS

[Galaxy Logo]

FN-041 975024 (3/97)

<PAGE> 757

THE GALAXY FUND

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

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes 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:

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.
<PAGE> 758

This Prospectus describes the Retail A Shares representing interests in
each Fund and 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 FIS Securities, Inc., Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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.

FEBRUARY 28, 1997
<PAGE> 759

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, EQUITY GROWTH, EQUITY INCOME,
INTERNATIONAL EQUITY, SMALL COMPANY EQUITY, ASSET ALLOCATION, SMALL CAP VALUE
and GROWTH AND INCOME FUNDS. Prospectuses for Galaxy's MONEY MARKET, GOVERNMENT,
U.S. TREASURY, TAX-EXEMPT, CONNECTICUT MUNICIPAL MONEY MARKET, MASSACHUSETTS
MUNICIPAL MONEY MARKET, INSTITUTIONAL TREASURY MONEY MARKET, 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 may be obtained by calling
1-800-628-0414.

Q: Who advises the Funds?

A: The Funds are managed by Fleet Investment Advisors Inc. ("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,
1996 of approximately $85 billion. Oechsle International Advisors, L.P.
("Oechsle") serves as the sub-adviser to the International Equity Fund. Oechsle
currently has discretionary management authority over approximately $9.2 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 First Data 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 FIS Securities, Inc., Fleet Brokerage
Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, 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
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 Equity Value, Equity Growth,
Small Company Equity, Asset Allocation and Growth and Income 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 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" below.

Q: When are dividends paid?

A: 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. Net realized capital gains of each Fund 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 with respect to which the
dividend or distribution was declared 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

1
<PAGE> 760

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 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 and foreign
currency exchange transactions. Derivative securities derive their value from
the performance of underlying assets, interest or currency exchange 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 additional sales or CDSC charges. Galaxy offers
Individual Retirement Accounts ("IRAs"), Simplified Employee Pension Plan
("SEP") and Keogh Plan accounts which can be established by contacting First
Data Distributors, Inc. 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> 761

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>
INTER-
EQUITY EQUITY EQUITY NATIONAL SMALL COMPANY
VALUE GROWTH INCOME EQUITY EQUITY
FUND FUND FUND FUND FUND
------------------- ------------------- -------- -------- -------------------
RETAIL A RETAIL B RETAIL A RETAIL B RETAIL A RETAIL A RETAIL A RETAIL B
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum 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) 3.75%(1) None
Maximum Deferred Sales Charge (as a
percentage of offering price)..... None 5.00%(2) None 5.00%(2) None None None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends......................... None None None None None None None None
Redemption Fees(3)................. 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% .75% .75% .67% .75% .75%
-------- -------- -------- -------- -------- -------- -------- --------
12b-1 Fees(4)...................... None .95% None .95% None None None .95%
Other Expenses (After Fee Waivers
and Expense Reimbursements)....... .79% .42% .73% .39% .77% 1.20% .83% .46%
-------- -------- -------- -------- -------- -------- -------- --------
Total Fund Operating Expenses
(After Fee Waivers and Expense
Reimbursements)................... 1.54% 2.12% 1.48% 2.09% 1.52% 1.87% 1.58% 2.16%
========= ========= ========= ========= ========= ========= ========= =========

<CAPTION>
SMALL
ASSET CAP GROWTH
ALLOCATION VALUE AND INCOME
FUND FUND 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>
Maximum Front-End Sales Charge
Imposed on Purchases (as a
percentage of offering price)..... 3.75%(1) None 3.75%(1) 3.75%(1) None
Maximum Deferred Sales Charge (as a
percentage of offering price)..... None 5.00%(2) None None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends......................... None None None None None
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).......................... .75% .75% .75% .75% .75%
-------- -------- -------- -------- --------
12b-1 Fees(4)...................... None .95% None None .95%
Other Expenses (After Fee Waivers
and Expense Reimbursements)....... .79% .45% .56% .53% .36%
-------- -------- -------- -------- --------
Total Fund Operating Expenses
(After Fee Waivers and Expense
Reimbursements)................... 1.54% 2.15% 1.31% 1.28% 2.06%
========= ========= ========= ========= =========
</TABLE>

- ----------------------------------
(1) Reduced front-end 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) Retail A Shares do not currently pay 12b-1 fees. Long-term investors in
Retail B Shares (as well as investors in Retail A Shares if 12b-1 fees are
charged in the future) 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> 762

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(3)
Assuming no redemption................................................. $ 21 $65 $ 112 $214(3)
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(3)
Assuming no redemption................................................. $ 21 $65 $ 111 $209(3)
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(3)
Assuming no redemption................................................. $ 22 $67 $ 114 $218(3)
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(3)
Assuming no redemption................................................. $ 22 $66 $ 114 $215(3)
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(3)
Assuming no redemption................................................. $ 21 $64 $ 109 $197(3)
</TABLE>

The Expense Summary and Example are intended to assist investors in
understanding the costs and expenses that an investor in the Funds will bear
directly or indirectly. The information contained in the Expense Summary and
Example is based on expenses incurred by each Fund during the last fiscal year,
restated to reflect the expenses each Fund expects to incur during the current
fiscal year on its Retail A and/or Retail B Shares. Without voluntary fee
waivers and/or expense reimbursements by Fleet and/or the Funds' administrator,
Advisory Fees would be 1.15% for Retail A Shares of the International Equity
Fund, Other Expenses would be .74% for Retail B Shares of the Equity Value Fund,
.71% for Retail B Shares of the Equity Growth Fund, .80% for Retail B Shares of
the Small Company Equity Fund, .63% for Retail B Shares of the Asset Allocation
Fund, .82% for Retail A Shares of the Small Cap Value Fund and .83% and .69% for
Retail A Shares and Retail B Shares, respectively, of the Growth and Income Fund
and Total Fund Operating Expenses would be 2.44% for Retail B Shares of the
Equity Value Fund, 2.41% for Retail B Shares of the Equity Growth Fund, 2.35%
for Retail A Shares of the International Equity Fund, 2.50% for Retail B Shares
of the Small Company Equity Fund, 2.33% for Retail B Shares of the Asset
Allocation Fund, 1.57% for Retail A Shares of the Small Cap Value Fund and 1.58%
and 2.39% for Retail A Shares and Retail B Shares, respectively, of the Growth
and Income 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 Statements 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 EXAMPLE 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> 763

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 relating to the Funds dated October 31, 1996 (the "Annual Report").
Such financial highlights should be read in conjunction with the financial
statements and notes thereto contained in the Annual Report and incorporated by
reference into the Statement of Additional Information relating to these Funds.
Information in the financial highlights presented below with respect to Retail A
Shares of these Funds for periods prior to the fiscal year ended October 31,
1994 reflects the investment results of both Retail A Shares and Trust Shares of
the Funds (Retail A Shares of the 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 the Annual Report, which may be obtained without charge by
contacting Galaxy at its telephone number or address provided above.

5
<PAGE> 764

EQUITY VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------------------------
1996 1995 1994 PERIOD
------------------- ----------- ----------- ENDED
RETAIL A RETAIL B RETAIL RETAIL OCTOBER 31,
SHARES SHARES(3) SHARES SHARES 1993(2) 1992(2) 1991(2) 1990(2) 1989(2) 1988(1,2)
-------- -------- ----------- ----------- -------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period...... $ 14.33 $ 14.74 $ 13.31 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41 $ 10.00
-------- ------ ------- ------- -------- -------- ------- ------- ------- -------
Income from
Investment
Operations:
Net
investment
income(4)... 0.14 0.04 0.22 0.18 0.19 0.26 0.37 0.39 0.36 0.03
Net
realized
and
unrealized
gain
(loss)
on
investments... 2.74 1.25 2.24 0.45 2.14 0.33 2.41 (1.37) 1.10 0.38
-------- ------ ------- ------- -------- -------- ------- ------- ------- -------
Total
from
Investment
Operations:... 2.88 1.29 2.46 0.63 2.33 0.59 2.78 (0.98) 1.46 0.41
-------- ------ ------- ------- -------- -------- ------- ------- ------- -------
Less
Dividends:
Dividends
from net
investment
income.... (0.14) (0.04) (0.23) (0.16) (0.20) (0.27) (0.37) (0.38) (0.36) --
Dividends
from net
realized
capital
gains..... (1.11) -- (1.21) (0.28) (0.42) (0.43) (0.34) (0.70) -- --
-------- ------ ------- ------- -------- -------- ------- ------- ------- -------
Total
Dividends: ... (1.25) (0.04) (1.44) (0.44) (0.62) (0.70) (0.71) (1.08) (0.36) --
-------- ------ ------- ------- -------- -------- ------- ------- ------- -------
Net increase
(decrease)
in
net asset
value....... 1.63 1.25 1.02 0.19 1.71 (0.11) 2.07 (2.06) 1.10 0.41
-------- ------ ------- ------- -------- -------- ------- ------- ------- -------
Net Asset
Value, End
of Period... $ 15.96 $ 15.99 $ 14.33 $ 13.31 $ 13.12 $ 11.41 $ 11.52 $ 9.45 $ 11.51 $ 10.41
======== ====== ======= ======= ======== ======== ======= ======= ======= =======
Total
Return(7)... 21.49% 8.80% (5) 20.81% 4.97% 21.18% 5.66% 30.45% (9.43)% 14.19% 4.10%(5)
Ratios/Supplemental
Data:
Net Assets,
End of
Period
(000's)..... $131,998 $ 1,916 $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... 1.00% 0.43% (6) 1.62% 1.45% 1.52% 2.24% 3.25% 3.66% 3.25% 1.89%(6)
Operating
expenses
including
reimbursement/waiver... 1.45% 1.94% (6) 1.49% 1.08% 0.97% 0.94% 0.94% 0.95% 0.97% 0.95%(6)
Operating
expenses
excluding
reimbursement/waiver... 1.45% 2.24% (6) 1.50% 1.11% 0.97% 0.94% 0.94% 0.95% 0.98% 0.94%(6)
Portfolio
Turnover
Rate........ 116% 116% 76% 71% 50% 136% 40% 94% 44% 4%(5)
Average
Commission
Rate
Paid(8)..... $ 0.0605 $0.0605 N/A N/A N/A N/A N/A N/A N/A N/A
</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) The Fund began issuing Retail B Shares on March 4, 1996.
(4) Net investment income per share for Retail B Shares before fee waivers by
the Fund's administrator for the period ended October 31, 1996 was $0.01.
(5) Not Annualized.
(6) Annualized.
(7) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(8) Required for fiscal years beginning on or after September 1, 1995.

6
<PAGE> 765

EQUITY GROWTH FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------
1996 1995 1994 PERIOD
--------------------- ------- ------- ENDED
RETAIL A RETAIL B RETAIL RETAIL OCTOBER 31,
SHARES SHARES(3) SHARES SHARES 1993(2) 1992(2) 1991(1,2)
-------- -------- ------- ------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 17.29 $ 18.77 $ 14.18 $ 13.76 $ 12.90 $ 11.99 $ 10.00
------- ------- ------ ------ ------- ------- ------
Income from Investment Operations:
Net investment income(4)............... 0.10 (0.01) 0.14 0.17 0.15 0.17 0.16
Net realized and unrealized gain (loss)
on investments....................... 3.39 1.50 3.28 0.47 0.95 0.91 1.97
------- ------- ------ ------ ------- ------- ------
Total from Investment
Operations:................... 3.49 1.49 3.42 0.64 1.10 1.08 2.13
------- ------- ------ ------ ------- ------- ------
Less Dividends:
Dividends from net investment income... (0.11) -- (0.14) (0.16) (0.15) (0.17) (0.14)
Dividends from net realized capital
gains................................ (0.30) -- (0.17) (0.06) (0.09) -- --
------- ------- ------ ------ ------- ------- ------
Total Dividends:................ (0.41) -- (0.31) (0.22) (0.24) (0.17) (0.14)
------- ------- ------ ------ ------- ------- ------
Net increase (decrease) in net asset
value.................................. 3.08 1.49 3.11 0.42 0.86 0.91 1.99
------- ------- ------ ------ ------- ------- ------
Net Asset Value, End of Period........... $ 20.37 $ 20.26 $ 17.29 $ 14.18 $ 13.76 $ 12.90 $ 11.99
======= ======= ====== ====== ======= ======= ======
Total Return(7).......................... 20.51% 7.95% (5) 24.54% 4.72% 8.58% 9.10% 21.39%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........ $160,800 $ 3,995 $98,911 $70,338 $427,298 $224,630 $92,224
Ratios to average net assets:
Net investment income including
reimbursement/waiver................. 0.50% (0.16)% (6) 0.85% 1.22% 1.20% 1.37% 1.46%
Operating expenses including
reimbursement/waiver................. 1.40% 1.92% (6) 1.45% 0.98% 0.97% 0.95% 0.83%(6)
Operating expenses excluding
reimbursement/waiver................. 1.40% 2.29% (6) 1.47% 0.99% 0.97% 0.95% 0.83%(6)
Portfolio Turnover Rate.................. 36% 36% 14% 18% 16% 22% 16%(5)
Average Commission Rate Paid(8).......... $ 0.0615 $0.0615 N/A N/A N/A N/A N/A
</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) The Fund began issuing Retail B Shares on March 4, 1996.
(4) Net investment income (loss) per share before reimbursement/waiver of fees
by Fleet and/or the Fund's administrator for the year ended October 31, 1995
for Retail A Shares was $0.13 and for the period ended October 31, 1996 for
Retail B Shares was $(0.03).
(5) Not Annualized.
(6) Annualized.
(7) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(8) Required for fiscal years beginning on or after September 1, 1995.

7
<PAGE> 766

EQUITY INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1996 1995 1994
-------- ------- ------- PERIOD ENDED
RETAIL A RETAIL RETAIL OCTOBER 31,
SHARES SHARES SHARES 1993(2) 1992(2) 1992(1,2)
-------- ------- ------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 14.98 $ 12.74 $ 12.85 $ 11.85 $ 11.29 $10.00
-------- ------- ------- -------- ------- ------
Income from Investment Operations:
Net investment income(3)............................ 0.30 0.28 0.30 0.30 0.30 0.29
Net realized and unrealized gain (loss) on
investments....................................... 2.47 2.47 0.07 1.09 0.76 1.26
-------- ------- ------- -------- ------- ------
Total from Investment Operations:............ 2.77 2.75 0.37 1.39 1.06 1.55
-------- ------- ------- -------- ------- ------
Less Dividends:
Dividends from net investment income................ (0.30) (0.30) (0.29) (0.28) (0.30) (0.26)
Dividends from net realized capital gains........... (0.54) (0.21) (0.19) (0.11) (0.20) --
-------- ------- ------- -------- ------- ------
Total Dividends:............................. (0.84) (0.51) (0.48) (0.39) (0.50) (0.26)
-------- ------- ------- -------- ------- ------
Net increase (decrease) in net asset value............ 1.93 2.24 (0.11) 1.00 0.56 1.29
-------- ------- ------- -------- ------- ------
Net Asset Value, End of Period........................ $ 16.91 $ 14.98 $ 12.74 $ 12.85 $ 11.85 $11.29
======== ======= ======= ======== ======= ======
Total Return(6)....................................... 19.01% 22.23% 2.94% 11.85% 9.71% 15.61%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)..................... $126,952 $81,802 $63,532 $123,970 $21,778 $7,096
Ratios to average net assets:
Net investment income including
reimbursement/waiver.............................. 1.86% 2.08% 2.45% 2.34% 2.84% 2.72%(5)
Operating expenses including reimbursement/waiver... 1.40% 1.49% 1.11% 1.16% 1.03% 0.85%(5)
Operating expenses excluding reimbursement/waiver... 1.40% 1.51% 1.12% 1.22% 1.54% 1.39%(5)
Portfolio Turnover Rate............................... 45% 21% 31% 27% 18% 77%(4)
Average Commission Rate Paid(7)....................... $ 0.0620 N/A N/A N/A N/A N/A
</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 Fleet
and/or the Fund's 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.
(6) Calculation does not include sales charge for Retail A Shares.
(7) Required for fiscal years beginning on or after September 1, 1995.

8
<PAGE> 767

INTERNATIONAL EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------
1996 1995 1994 PERIOD
-------- ------- ------- ENDED
RETAIL A RETAIL RETAIL OCTOBER 31,
SHARES SHARES SHARES 1993(2) 1992(1,2)
-------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $ 12.92 $ 13.20 $ 12.13 $ 9.66 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income(3)..................................... 0.11 0.11 0.06 0.02 0.06
Net realized and unrealized gain (loss) on investments....... 1.27 (0.21) 1.02 2.51 (0.40)
-------- -------- -------- -------- --------
Total from Investment Operations:.......................... 1.38 (0.10) 1.08 2.53 (0.34)
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income......................... (0.12) (0.02) (0.01) (0.06) --
Dividends from net realized capital gains.................... (0.24) (0.16) -- -- --
-------- -------- -------- -------- --------
Total Dividends:........................................... (0.36) (0.18) (0.01) (0.06) --
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value..................... 1.02 (0.28) 1.07 2.47 (0.34)
-------- -------- -------- -------- --------
Net Asset Value, End of Period................................. $ 13.94 $ 12.92 $ 13.20 $ 12.13 $ 9.66
======== ======== ======== ======== ========
Total Return(6)................................................ 10.86% (0.64)% 8.91% 26.36% (3.40)%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............................. $35,144 $30,104 $32,887 $39,246 $12,584
Ratios to average net assets:
Net investment income including reimbursement/waiver......... 0.78% 0.84% 0.69% 0.37% 1.19%(5)
Operating expenses including reimbursement/waiver............ 1.70% 1.76% 1.49% 1.57% 1.61%(5)
Operating expenses excluding reimbursement/waiver............ 1.98% 2.03% 1.79% 2.04% 2.79%(5)
Portfolio Turnover Rate........................................ 146% 48% 39% 29% 21%(4)
Average Commission Rate Paid(7)................................ $0.0381 N/A N/A N/A N/A
</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 Fleet
and/or the Fund's administrator for the years ended October 31, 1996, 1995,
1994 and 1993 and for the period ended October 31, 1992 were $0.07, $0.08,
$0.03, $0.00 and $0.00, respectively.
(4) Not Annualized.
(5) Annualized.
(6) Calculation does not include sales charge for Retail A Shares.
(7) Required for fiscal years beginning on or after September 1, 1995.

9
<PAGE> 768

SMALL COMPANY EQUITY FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------
1996 1995 1994 PERIOD
--------------------- ------- ------- ENDED
RETAIL A RETAIL B RETAIL RETAIL OCTOBER 31,
SHARES SHARES(3) SHARES SHARES 1993(2) 1991(1,2)
-------- -------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 16.28 $ 17.27 $ 12.35 $ 12.41 $ 8.79 $ 10.00
-------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income(4)............................. (0.14) (0.19) (5) (0.09) (0.01) (0.04) (0.03)
Net realized and unrealized gain (loss) on
investments........................................ 3.99 2.83 4.21 -- 3.66 (1.18)
-------- ------- ------- ------- ------- -------
Total from Investment Operations:.................. 3.85 2.64 4.12 (0.01) 3.62 (1.21)
-------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income................. -- -- -- -- -- --
Dividends from net realized capital gains............ (0.17) -- (0.19) (0.05) -- --
-------- ------- ------- ------- ------- -------
Total Dividends:................................... (0.17) -- (0.19) (0.05) -- --
-------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value............. 3.68 2.64 3.93 (0.06) 3.62 (1.21)
-------- ------- ------- ------- ------- -------
Net Asset Value, End of Period......................... $ 19.96 $ 19.91 $ 16.28 $ 12.35 $ 12.41 $ 8.79
======== ======= ======= ======= ======= =======
Total Return(8)........................................ 23.97% 15.34% (6) 34.01% (0.06)% 41.18% (12.10)%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...................... $111,101 $ 3,659 $45,668 $30,845 $55,683 $29,072
Ratios to average net assets:
Net investment income including
reimbursement/waiver............................... (1.03)% (1.50)% (7) (0.85)% (0.40)% (0.66)% (0.63)%(7)
Operating expenses including reimbursement/waiver.... 1.57% 2.04% (7) 1.60% 1.31% 1.18% 1.06%(7)
Operating expenses excluding reimbursement/waiver.... 1.57% 2.44% (7) 1.64% 1.34% 1.22% 1.33%(7)
Portfolio Turnover Rate................................ 82% 82% 54% 35% 57% 87%(6)
Average Commission Rate Paid(9)........................ $ 0.0531 $0.0531 N/A N/A N/A N/A
</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) The Fund began issuing Retail B Shares on March 4, 1996.
(4) Net investment income (loss) per share before reimbursement/waiver of fees
by Fleet and/or the Fund's administrator for the period ended October 31,
1992 for Retail A Shares was $(0.05) and for the period ended October 31,
1996 for Retail B Shares was $(0.24).
(5) The selected per share data was calculated using the weighted average shares
outstanding method for the period.
(6) Not Annualized.
(7) Annualized.
(8) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(9) Required for fiscal years beginning on or after September 1, 1995.

10
<PAGE> 769

ASSET ALLOCATION FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 1995 1994 PERIOD
--------------------- ------- -------- ENDED
RETAIL A RETAIL B RETAIL RETAIL OCTOBER 31,
SHARES SHARES(3) SHARES SHARES 1993(2) 1991(1,2)
-------- -------- ------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 12.82 $ 13.59 $ 10.67 $ 11.15 $ 10.16 $ 10.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(4)............................ 0.30 0.13 0.30 0.27 0.25 0.15
Net realized and unrealized gain (loss) on 1.83 0.91 2.16 (0.49) 0.99 0.13
investments.......................................
------- ------- ------- ------- ------- -------
Total from Investment Operations:............ 2.13 1.04 2.46 (0.22) 1.24 0.28
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income................ (0.30) (0.12) (0.31) (0.26) (0.25) (0.12)
Dividends from net realized capital gains........... (0.13) -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Dividends:............................. (0.43) (0.12) (0.31) (0.26) (0.25) (0.12)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value............ 1.70 0.92 2.15 (0.48) 0.99 0.16
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period........................ $ 14.52 $ 14.51 $ 12.82 $ 10.67 $ 11.15 $ 10.16
======= ======= ======= ======= ======= =======
Total Return(7)....................................... 16.92% 7.71%(5) 23.42% (2.02)% 12.37% 2.85%(5)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)..................... $116,852 $ 3,557 $76,368 $ 73,574 $92,348 $11,555
Ratios to average net assets:
Net investment income including 2.29% 1.73%(6) 2.52% 2.66% 2.59% 2.80%(6)
reimbursement/waiver..............................
Operating expenses including reimbursement/waiver... 1.42% 1.95%(6) 1.48% 1.21% 1.14% 1.11%(6)
Operating expenses excluding reimbursement/waiver... 1.42% 2.15%(6) 1.50% 1.22% 1.25% 2.39%(6)
Portfolio Turnover Rate............................... 48% 48% 41% 23% 7% 2%(5)
Average Commission Rate Paid(8)....................... $ 0.0635 $0.0635 N/A N/A N/A N/A
</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) The Fund began issuing Retail B Shares on March 4, 1996.
(4) Net investment income per share before reimbursement/waiver of fees by
Fleet and/or the Fund's administrator for the year ended October 31, 1993
and for the period ended October 31, 1992 for Retail A Shares was $0.24 and
$0.08, respectively, and for the period ended October 31, 1996 for Retail B
Shares was $0.12.
(5) Not Annualized.
(6) Annualized.
(7) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(8) Required for fiscal years beginning on or after September 1, 1995.

11
<PAGE> 770

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 (i) the investment results of the Small Cap Value Fund's Retail A
Shares and the Growth and Income Fund's Retail A Shares and Retail B Shares for
the fiscal year ended October 31, 1996 and (ii) the investment results of the
Predecessor Small Cap Value and Predecessor Growth and Income 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
about the Small Cap Value and Growth and Income Funds for the fiscal year ended
October 31, 1996 has been audited by Coopers & Lybrand L.L.P., Galaxy's
independent accountants, whose report is contained in Galaxy's Annual Report to
Shareholders relating to the Funds dated October 31, 1996 (the "Annual Report").
The information about the Predecessor Small Cap Value and Predecessor Growth and
Income Funds for the fiscal years ended October 31, 1995 and October 31, 1994
and the fiscal period ended October 31, 1993 was audited by Price Waterhouse
L.L.P., independent accountants for the Predecessor Funds, whose report is
contained in The Shawmut Funds' Annual Report to Shareholders relating to the
Predecessor Funds dated October 31, 1995 (the "Shawmut Annual Report"). The
financial highlights should be read in conjunction with the financial statements
and notes thereto contained in the Annual Report and the Shawmut Annual Report
and incorporated by reference into the Statement of Additional Information
relating to these Funds. More information about the performance of the Funds is
contained in the Annual Report which may be obtained without charge by
contacting Galaxy at its telephone number or address provided above.

12
<PAGE> 771

SMALL CAP VALUE FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------
1996
-------- PERIOD ENDED
RETAIL A OCTOBER 31,
SHARES(2) 1995 1994 1993(1)
-------- ------- ------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............................ $ 12.68 $ 11.06 $ 11.21 $ 10.52
------- ------- ------- -------
Income from Investment Operations:
Net investment income(3,4).................................... 0.01 (0.02) (0.01) (0.01)
Net realized gain (loss) on investments....................... 2.95 2.21 0.18 0.70
------- ------- ------- -------
Total from Investment Operations:..................... 2.96 2.19 0.17 0.69
------- ------- ------- -------
Less Dividends:
Dividends from net investment income.......................... (0.02) -- -- --
Dividends in excess of net investment income.................. -- -- -- --
Dividends from net realized gains............................. (0.87) (0.57) (0.32) --
------- ------- ------- -------
Total Dividends:...................................... (0.89) (0.57) (0.32) --
------- ------- ------- -------
Net increase (decrease) in net asset value...................... 2.07 1.62 (0.15) 0.69
------- ------- ------- -------
Net Asset Value, End of Period.................................. $ 14.75 $ 12.68 $ 11.06 $ 11.21
======= ======= ======= =======
Total Return(5)................................................. 24.77% 21.27% 1.64% 6.56%(6)
Ratios/Supplemental Data:
Net Assets, End of Period (000s)................................ $34,402 $27,546 $19,764 $ 15,014
Ratios to average net assets:
Net investment income including reimbursement/waiver.......... 0.08% (0.19)% (0.10)% (0.19)%(7)
Operating Expenses including reimbursement/waiver............. 1.40% 1.35% 1.31% 1.33%(7)
Operating Expenses excluding reimbursement/waiver............. 1.55% 1.85% 1.84% 1.87%(7)
Portfolio Turnover Rate......................................... 39% 32% 29% 29%(6)
Average Commission Rate Paid(8)................................. $0.0559 N/A N/A N/A
</TABLE>

- ----------------------------------
(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. The Predecessor
Fund began offering Investment Shares on February 12, 1993.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of Galaxy. Prior to the reorganization, the Predecessor Fund offered and
sold two series of shares, Investment Shares and Trust Shares, that were
similar to the Fund's Retail A and Trust Shares, respectively. In connection
with the reorganization, shareholders of the Predecessor Fund exchanged
Investment Shares and Trust Shares for Retail A Shares and Trust Shares,
respectively, in the Fund.
(3) Net investment income (loss) per share before reimbursement/waiver of fees
by other parties for the years ended October 31, 1995 and 1994 and for the
period ended October 31, 1993 were $(0.08), $(0.06) and $(0.05),
respectively (unaudited).
(4) Net investment income per share does not reflect the tax reclassifications
arising in the current period.
(5) Calculation does not include sales charge for Retail A Shares.
(6) Not Annualized.
(7) Annualized.
(8) Required for fiscal years beginning on or after September 1, 1995.

13
<PAGE> 772

GROWTH AND INCOME FUND(1)
(FOR A SHARE(2) OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------
1996 1996
-------- --------- PERIOD ENDED
RETAIL A RETAIL B OCTOBER 31,
SHARES(2) SHARES(3) 1995 1994 1993(1)
-------- --------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 12.35 $ 12.97 $ 11.15 $ 10.69 $ 10.23
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(4,5).................... 0.21 0.07 0.24 0.22 0.15
Net realized gain (loss) on investments....... 2.16 0.81 1.70 0.72 0.48
------- ------- ------- ------- -------
Total from Investment Operations:........ 2.37 0.88 1.94 0.94 0.63
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income............. (0.21) (0.08) (0.25) (0.20) (0.17)
Dividends from net realized gains................ (0.73) -- (0.49) (0.28) --
------- ------- ------- ------- -------
Total Dividends: ........................ (0.94) (0.08) (0.74) (0.48) (0.17)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value......... 1.43 0.80 1.20 0.46 0.46
------- ------- ------- ------- -------
Net Asset Value, End of Period..................... $ 13.78 $ 13.77 $ 12.35 $ 11.15 $ 10.69
======= ======= ======= ======= =======
Total Return(6).................................... 20.25% 6.83%(7) 18.52% 9.12% 6.20%(7)
Ratios/Supplemental Data:
Net Assets, End of Period (000s)................... $77,776 $ 4,562 $51,078 $22,244 $ 16,280
Ratios to average net assets:
Net investment income including reimbursement/
waiver........................................ 1.65% 0.79%(8) 2.10% 2.06% 1.77%(8)
Operating Expenses including reimbursement/
waiver........................................ 1.34% 1.96%(8) 1.32% 1.29% 1.25%(8)
Operating Expenses excluding reimbursement/
waiver........................................ 1.45% 2.11%(8) 1.77% 1.74% 1.78%(8)
Portfolio Turnover Rate............................ 59% 59% 51% 73% 38%(7)
Average Commission Rate Paid(9).................... $0.0654 $0.0654 N/A N/A N/A
</TABLE>

- ----------------------------------
(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. The Predecessor
Fund began offering Investment Shares on February 12, 1993.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of Galaxy. Prior to the reorganization, the Predecessor Fund offered and
sold two series of shares, Investment Shares and Trust Shares, that were
similar to the Fund's Retail A and Trust Shares, respectively. In connection
with the reorganization, shareholders of the Predecessor Fund exchanged
Investment Shares and Trust Shares for Retail A Shares and Trust Shares,
respectively, in the Fund.
(3) The Fund began issuing Retail B Shares on March 4, 1996.
(4) Net investment income per share before reimbursement/waiver of fees by Fleet
and/or the Fund's administrator for the year ended October 31, 1996 for
Retail A Shares was $0.19, and for the period ended October 31, 1996 for
Retail B Shares was $0.05. Net investment income per share before
reimbursement/waiver of fees by other parties for the years ended October
31, 1995 and 1994 and for the period ended October 31, 1993 were $0.22,
$0.18 and $0.18, respectively.
(5) Net investment income per share does not reflect the tax reclassifications
arising in the current period.
(6) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(7) Not Annualized.
(8) Annualized.
(9) Required for fiscal years beginning on or after September 1, 1995.

14
<PAGE> 773

INVESTMENT OBJECTIVES AND POLICIES

Fleet, and, with respect to the International Equity Fund, Fleet and
Oechsle, will use their 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.

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.

15
<PAGE> 774

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."

16
<PAGE> 775

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. See "Other Investment Policies and Risk Considerations" below
regarding additional investment policies of the International Equity Fund.

SMALL COMPANY EQUITY FUND

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

The Fund may also invest up to 20% of its total assets in foreign
securities. Such foreign investments may be made directly, by purchasing
securities issued or guaranteed by foreign corporations, banks or governments
(or their political subdivisions or instrumentalities) or by supranational banks
or other organizations, or indirectly, by purchasing ADRs and EDRs. 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. See
"Special Risk Considerations" and "Other Investment Policies and Risk
Considerations" below. The Fund may also invest in dollar-denominated high
quality debt obligations of U.S. corporations issued outside the United States.
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

17
<PAGE> 776

Considerations" below) and U.S. Government obligations at such times and in such
proportions as, in the opinion of Fleet, 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 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.

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 foreign issuers 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
Fleet 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 Fleet, 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 assigned by a nationally recognized statistical rating organization,
such as Standard & Poor's Rating 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 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 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.

18
<PAGE> 777

As a temporary defensive measure, in such proportions as, in the judgment
of Fleet, 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 assigned 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

INTEREST RATE RISK

FOREIGN SECURITIES

Investments in foreign securities may 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 dividends or principal and
interest on foreign obligations.

Certain of the risks associated with investments in foreign securities are
heightened with respect to investment in countries with emerging economies or
securities markets. 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

19
<PAGE> 778

or S&P ("AAA," "AA," "A" and "BBB"), or, if not rated, are determined to be of
comparable quality by Fleet. Debt securities rated "Baa" by Moody's or "BBB" by
S&P 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.

The Small Cap Value and Growth and Income Funds may purchase convertible
bonds rated "Ba" or higher by Moody's or "BB" or higher by S&P or Fitch, 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 "Ba" or "BB". 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 assigned by a nationally recognized statistical rating agency, such
as Moody's, S&P 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 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.

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." The
Funds will invest in the obligations of U.S. branches of foreign banks or
foreign branches of U.S. banks only when Fleet and/or Oechsle believe that the
credit risk with respect to the instrument is minimal.

20
<PAGE> 779

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 Fleet and/or Oechsle under guidelines approved by Galaxy's Board
of Trustees. No Fund will enter into repurchase agreements with Fleet or Oechsle
or any of their 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.

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 Fleet and/or Oechsle to be of good standing and only when, in Fleet's
and/or Oechsle'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 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

21
<PAGE> 780

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 Fleet or Oechsle. 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.

REITS

Each Fund may invest up to 10% of its net assets in real estate investment
trusts ("REITs"). Equity REITS invest directly in real property while mortgage
REITs invest in mortgages on real property. REITS may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. In addition, equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while mortgage REITs
may be affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, are not diversified and are subject to the
risks of financing projects. REITS are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and to maintain exemption from the 1940 Act. REITs pays dividends
to their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. Each Fund intends to include the gross dividends from such REITs in
its periodic distributions to its shareholders and, accordingly, a portion of
the Fund's distributions may also be designated as a return of capital. See
"Taxes."

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. The Fund 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 Fleet and/or Oechsle does not anticipate significant short-term
capital appreciation.

22
<PAGE> 781

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 Fleet 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.

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 a Fund enters 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, 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

23
<PAGE> 782

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.

ASSET-BACKED SECURITIES--ASSET ALLOCATION FUND

MORTGAGE-BACKED SECURITIES--ASSET ALLOCATION FUND

24
<PAGE> 783

MORTGAGE DOLLAR ROLLS--ASSET ALLOCATION FUND

For financial reporting and tax purposes, the Fund proposes to treat
mortgage dollar rolls as two separate transactions; one involving the purchase
of a security and a separate transaction involving a sale. The Fund does not
currently intend to enter into mortgage dollar rolls that are accounted for as a
financing.

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 the assets of the issuer 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 issuer.
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 nonconvertible 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 Fleet's and/or
Oechsle's opinion, the investment characteristics of the underlying common stock
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, Fleet 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, Fleet 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.

25
<PAGE> 784

issuer, as well as by monitoring broad economic trends and corporate and
legislative developments. If a convertible bond is rated below "BB" or "Ba"
after a 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 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 or currency exchange rates, or indices, and include,
but are not limited to, put and call options, stock index futures and options,
indexed securities and swap agreements, and foreign currency exchange
transactions.

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest or exchange 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 or exchange 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 a 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.

Fleet and/or Oechsle will evaluate the risks presented by the derivative
securities purchased by the Funds, and will determine, in connection with their
day-to-day management of the Funds, how such securities will be used in
furtherance of the Funds' investment objectives. It is possible, however, that
Fleet'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 applicable Statements of Additional Information relating to these Funds for
additional information.

WHEN-ISSUED AND DELAYED SETTLEMENT TRANSACTIONS--INTERNATIONAL EQUITY,
SMALL CAP VALUE AND GROWTH AND INCOME FUNDS

PORTFOLIO TURNOVER

26
<PAGE> 785

INVESTMENT LIMITATIONS

The Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation Funds may not:

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 a 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.

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.

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(2) of the Securities Act of 1933
and certain securities which meet the criteria for 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.)

27
<PAGE> 786

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,
and (b) mortgage dollar rolls entered into by the Asset Allocation Fund that are
not accounted for as financings shall not constitute borrowings.

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
as amended by 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
Fleet and/or Oechsle 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 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

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 Galaxy's 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

28
<PAGE> 787

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.

HOW TO PURCHASE SHARES

DISTRIBUTOR

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.

FD Distributors 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 FIS Securities, Inc., Fleet Brokerage Securities, Inc.,
Fleet Securities, Inc., Fleet Enterprises, 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 FD Distributors 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 FD Distributors on a Business Day in
accordance with FD Distributors' procedures.

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 FD Distributors and for wiring required funds in
payment to Galaxy's custodian on a timely basis. FD Distributors 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 particular 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 5108
4400 Computer Drive
Westboro, MA 01581

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

29
<PAGE> 788

tion of a prior transaction, (b) a subsequent order form that may be obtained
from FD Distributors, 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.

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. ("FDISG"), Galaxy's
transfer agent. Prior to making any purchase by wire, an investor must telephone
FD Distributors at 1-800-628-0414 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. Applications may be obtained by
calling FD Distributors at 1-800-628-0414. Redemptions will not be processed
until the application in proper form has been received by FD Distributors.
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 (including 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 Oechsle, the sub-adviser to
the International Equity Fund.

Effective Time of Purchases. A purchase order for Retail Shares received
and accepted by FD Distributors 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 FD Distributors on a Business Day in accordance with
the above procedures.

30
<PAGE> 789

APPLICABLE SALES CHARGE--RETAIL A SHARES

Further reductions in the sales charges shown above are also possible. See
"Quantity Discounts" below.

At various times FD Distributors may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts. Also, FD Distributors in its discretion may from time to time, pursuant
to objective criteria established by FD Distributors, 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 FD
Distributors 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.

- reinvestment of dividends and distributions;

- 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. ("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

31
<PAGE> 790

information about quantity discounts, please contact FD Distributors 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.

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.

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 FD Distributors 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. Certain
affiliates of Fleet may, at their own expense, provide additional compensation
to Fleet Enterprises, Inc., a broker-dealer affiliate of Fleet, whose customers
purchase significant amounts of Retail B Shares of a

32
<PAGE> 791

Fund. See "Applicable Sales Charge--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>

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 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 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

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 currently
subject to ongoing shareholder servicing fees at an annual rate of up to .30% of
a Fund's average daily net assets attributable to its Retail A Shares.

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 currently 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 Alloca-

33
<PAGE> 792

tion 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 FD Distributors 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. Upon conversion, the converted shares will be relieved of the
distribution and shareholder servicing fees borne by Retail B Shares, although
they will be 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 particular 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 respect to the advisability of purchasing Retail B
Shares in amounts exceeding $250,000.

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 the 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 FD Distributors. 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.

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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 FD
Distributors 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 FD Distributors on a Business
Day will normally be wired on the third 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 5108
4400 Computer Drive
Westboro, MA 01581

A written redemption request must (i) state the name of the Fund and 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. FD Distributors will not accept guarantees from notaries public. FD
Distributors 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 FD Distributors
receives all required documents in proper form. The Funds ordinarily will make
payment for Retail Shares redeemed by mail within three Business Days after
proper receipt by FD Distributors of the redemption request. Questions with
respect to the proper form for redemption requests should be directed to FD
Distributors at 1-800-628-0414.

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 FD Distributors 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. FD Distributors 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 FD
Distributors. To request redemption of Retail Shares by wire, Direct Investors
should call FD Distributors at 1-800-628-0414.

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 FD
Distributors. 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.

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<PAGE> 794

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

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 Money Market, 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.

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 1-800-628-0414. 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. Telephone 1-800-628-0414 for a
prospectus or to make an exchange. See "How to Purchase and Redeem
Shares--Redemption Procedures--Direct Investors--Redemption by Wire" above for a
description of Galaxy's policy regarding telephone transactions.

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<PAGE> 795

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
(including 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 FD Distributors (call 1-800-628-0414) 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 three 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 Galaxy's 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.

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.

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<PAGE> 796

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 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 1-800-628-0414 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.

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.

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<PAGE> 797

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.

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, or (b) if they itemize their deductions, to
deduct such proportionate amount from their U.S. income, should they so choose.
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.

STATE AND LOCAL

MANAGEMENT OF THE FUNDS

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<PAGE> 798

INVESTMENT ADVISER AND SUB-ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, 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 $85 billion at December 31,
1996. 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, High Quality Bond, Corporate Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal Bond, 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 Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and shareholder support services which they provide to beneficial shareholders.
For the fiscal year ended October 31, 1996, Fleet received advisory fees (after
fee waivers) at the effective annual rates of .75%, .75%, .75%, .69%, .75% and
.75% of the average daily net assets of the Equity Value, Equity Growth, Equity
Income, International Equity, Small Company Equity and Asset Allocation Funds,
respectively. For the period from December 4, 1995 through October 31, 1996,
Fleet received advisory fees at the effective annual rate of .75% of the average
daily net assets of each of the Small Cap Value and Growth and Income Funds.
During the fiscal year/period ended October 31, 1996, Fleet also reimbursed the
Small Company Equity, Asset Allocation, Small Cap Value and Growth and Income
Funds for certain operating expenses, which reimbursement may be revised or
discontinued at any time.

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 Oechsle, a Delaware limited partnership with principal offices at One
International Place, Boston, Massachusetts 02210, as the sub-adviser to the
International Equity Fund. The general partner of Oechsle is Oechsle Group,
L.P., and the managing general partner of Oechsle Group, L.P. is Walter Oechsle.
Oechsle currently manages approximately $9.2 billion in assets. Oechsle began
serving as sub-adviser to the International Equity Fund on August 12, 1996.

For the services provided and the expenses assumed pursuant to the
sub-advisory agreement, Fleet pays a fee to Oechsle, computed daily and paid
quarterly, at the annual rate of .40% of the first $50 million of the
International Equity Fund's average daily net assets, plus .35% of average daily
net assets in excess of $50 million. For the period from August 12, 1996 through
October 31, 1996, Oechsle received sub-advisory fees from Fleet at the effective
rate of .36% of the International Equity Fund's average daily net assets.

40
<PAGE> 799

computed daily and paid quarterly, at the annual rate of .50% of the first $50
million of the International Equity 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 period from November 1, 1995 through August 11, 1996,
Wellington Management received sub-advisory fees at the effective annual rate of
.32% of the Fund's average daily net assets.

The International Equity Fund's portfolio managers, David von Hemert of
Fleet and S. Dewey Keesler, Jr. and Kathleen Harris of Oechsle, are primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. vonHemert, a Senior Vice President, has been with Fleet and its predecessors
since 1980 and has been managing the Fund since August, 1994. Mr. Keesler,
General Partner and Portfolio Manager, has been with Oechsle since its founding
in 1986. Ms. Harris has been a Portfolio Manager at Oechsle since January 1995.
Prior thereto, she was Portfolio Manager and Investment Director for the State
of Wisconsin Investment Board and a Fund Manager and Equity Analyst for Northern
Trust Company.

The Small Company Equity Fund's portfolio manager, Stephen D. Barbaro, is
primarily responsible for the day-today 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 co-portfolio managers, Donald Jones and David
Lindsay, are primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Jones determines the allocation of the Fund's assets
between equity and fixed income investments and manages the equity portion of
the Fund's investment portfolio. Mr. Lindsay manages the fixed income portion 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. Mr. Lindsay, a
Senior Vice President, has been with Fleet and its predecessors since 1986. He
has managed the fixed income portion of the Fund's portfolio since January, 1997
and has managed Galaxy's Corporate Bond Fund since its inception in December
1994.

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. Fleet, the 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 Share or result in financial loss to any
shareholder.

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<PAGE> 800

ADMINISTRATOR

FDISG generally assists the Funds in their administration and operation.
FDISG also serves as administrator to the other portfolios of Galaxy. Effective
September 5, 1996, 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 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 .075% of combined average daily net assets over $5 billion. Prior to
September 5, 1996, FDISG was 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 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 voluntarily all or a portion of the administration fee payable
to it by the Funds. For the fiscal year ended October 31, 1996, 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 .085% of each Fund's average daily net assets.

The Predecessor Small Cap Value and Predecessor Growth and Income Funds
bore administration fees during the period from November 1, 1995 through
December 3, 1995 pursuant to the administration agreement then in effect with
Federated Administrative Services, their prior administrator, at the effective
annual rate of .15% 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 FD Distributors 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 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
investment portfolio 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 investment portfolio as are
declared in the discretion of Galaxy's Board of Trustees.

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<PAGE> 801

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 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 FD
Distributors; 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 the applicable 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 to their Customers 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) FD Distributors 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 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.

43
<PAGE> 802

AFFILIATE AGREEMENT FOR SUB-ACCOUNT SERVICES

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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 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. ("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 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 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 fees; costs of preparing and printing prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory,
administration, shareholder servicing, Rule 12b-1 distributions, 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 shareholder reports and 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/or Retail B Shares of the Funds.

44
<PAGE> 803

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
charges imposed on the purchase of Retail A Shares or the redemption of Retail B
Shares in accordance with the rules of the Securities and Exchange Commission.
Quotations that do not reflect the sales charges will be higher than quotations
that do reflect the sales charges.

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 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.

45
<PAGE> 804

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<PAGE> 805

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<PAGE> 806

[This Page Intentionally Left Blank]
<PAGE> 807

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 FIRST DATA DISTRIBUTORS, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE FUNDS OR BY FIRST DATA DISTRIBUTORS, INC. 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............ 15
Equity Value Fund........................... 15
Equity Growth Fund.......................... 15
Equity Income Fund.......................... 16
International Equity Fund................... 16
Small Company Equity Fund................... 17
Asset Allocation Fund....................... 17
Small Cap Value Fund........................ 18
Growth and Income Fund...................... 18
Special Risk Considerations................. 19
Other Investment Policies and Risk
Considerations........................... 19
INVESTMENT LIMITATIONS........................ 27
PRICING OF SHARES............................. 28
HOW TO PURCHASE SHARES........................ 29
Distributor................................. 29
General..................................... 29
Purchase Procedures--Customers of
Institutions............................. 29
Purchase Procedures--Direct Investors....... 29
Other Purchase Information.................. 30
Applicable Sales Charge--Retail A Shares.... 31
Quantity Discounts.......................... 31
Applicable Sales Charges--Retail B Shares... 32
Characteristics of Retail A Shares and
Retail B Shares.......................... 33
Factors to Consider When Selecting Retail A
Shares or Retail B Shares................ 34
HOW TO REDEEM SHARES.......................... 34
General..................................... 34
Redemption Procedures--Customers of
Institutions............................. 35

<CAPTION>
PAGE
----
<S> <C>
Redemption Procedures--Direct Investors..... 35
Other Redemption Information................ 36
INVESTOR PROGRAMS............................. 36
Exchange Privilege.......................... 36
Retirement Plans............................ 37
Automatic Investment Program and Systematic
Withdrawal Plan.......................... 37
Payroll Deduction Program................... 37
College Investment Program.................. 38
Direct Deposit Program...................... 38
INFORMATION SERVICES.......................... 38
Galaxy Information Center--24 Hour
Information Service...................... 38
Voice Response System....................... 38
Galaxy Shareholder Services................. 38
DIVIDENDS AND DISTRIBUTIONS................... 38
TAXES......................................... 39
Federal..................................... 39
State and Local............................. 39
MANAGEMENT OF THE FUNDS....................... 39
Investment Adviser and Sub-Adviser.......... 40
Authority to Act as Investment Adviser...... 41
Administrator............................... 42
DESCRIPTION OF GALAXY AND ITS SHARES.......... 42
Shareholder Services Plan................... 43
Distribution and Services Plan.............. 43
Affiliate Agreement for Sub-Account
Services................................. 44
CUSTODIAN AND TRANSFER AGENT.................. 44
EXPENSES...................................... 44
PERFORMANCE AND YIELD INFORMATION............. 44
MISCELLANEOUS................................. 45
</TABLE>

(LOGO)
50% Recycled Paper
FN-175 (3/97) 10% Post-Consumer Waste
<PAGE> 808
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 28, 1997

<PAGE> 809
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectuses (the "Prospectuses") for the Money
Market, Government, Tax-Exempt, U.S. Treasury and Institutional Treasury Money
Market Funds, each dated February 28, 1997, 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., 4400 Computer Drive, Westboro,
Massachusetts 01581-5180 or by calling Galaxy at 1-800-628-0414.

<PAGE> 810
TABLE OF CONTENTS
Page
----

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
U.S. 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..................................... 15
In General......................................................... 15
Tax-Exempt Fund.................................................... 17
State Taxation..................................................... 18

TRUSTEES AND OFFICERS....................................................... 18
Shareholder and Trustee Liability.................................. 22

ADVISORY, ADMINISTRATION, CUSTODIAN AND TRANSFER
AGENCY AGREEMENTS......................................................... 23
Custodian and Transfer Agent....................................... 26

PORTFOLIO TRANSACTIONS...................................................... 26

SHAREHOLDER SERVICES PLAN................................................... 28

DISTRIBUTION AND SERVICES PLAN.............................................. 29

DISTRIBUTOR................................................................. 31

AUDITORS.................................................................... 32

COUNSEL..................................................................... 32

PERFORMANCE AND YIELD INFORMATION........................................... 33

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<PAGE> 811
Page
----

MISCELLANEOUS.............................................................. 34

FINANCIAL STATEMENTS....................................................... 39

APPENDIX A................................................................. A-1

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<PAGE> 812
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, Fleet
Investment Advisors Inc. ("Fleet"), the investment adviser to the Funds, 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 institution will be deemed
to include the assets of its U.S. and foreign branches.

<PAGE> 813
ASSET-BACKED SECURITIES

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

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<PAGE> 814
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 Services, 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 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> 815
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 including applicable 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.

-4-

<PAGE> 816
review the proceedings relating to the issuance of Municipal Securities or the
bases for such opinions.

WHEN-ISSUED SECURITIES

When the Tax-Exempt Fund or Institutional Treasury Money Market 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

The Tax-Exempt Fund may acquire "stand-by commitments" with respect to
Municipal Securities held by it. Under a stand-by commitment, a dealer agrees to
purchase from the Fund, at the Fund's option, specified Municipal Securities at
a specified price. Stand-by commitments are exercisable by the Fund at any time
before the maturity of the underlying Municipal 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 depreciation for the period during which the commitment
is held by the Fund.

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<PAGE> 817
The Fund 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 Fund will acquire stand-by commitments solely to facilitate
liquidity and does not intend to exercise its 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

Each Fund, except the U.S. Treasury and Institutional Treasury Money
Market Funds, may enter into repurchase agreements. The repurchase price under a
repurchase agreement 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").

Each Fund, except the U.S. Treasury and Institutional Treasury Money
Market Funds, may enter into reverse repurchase agreements. Whenever a Fund
enters into a reverse repurchase agreement, the Fund 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 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.

U.S. 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

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<PAGE> 818
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 Fund. The Board of Trustees or Fleet, 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 Fleet 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:

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> 819
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 Market Fund may purchase securities of issuers which
deal in real estate or interests therein; and except that the
Tax-Exempt Fund 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.

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 the Tax-Exempt
and 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 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.

-8-

<PAGE> 820
3. The Tax-Exempt Fund 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 Funds may not purchase foreign securities, except that the
Money Market Fund 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.

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 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

-9-

<PAGE> 821
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.

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

-10-

<PAGE> 822
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 First Data
Distributors, Inc. ("FD Distributors"), and FD Distributors has agreed to use
appropriate efforts to solicit all purchase orders. As described in the
applicable 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 FIS Securities, Inc.,
Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises,
Inc., Fleet Financial Group, Inc., its affiliates, their correspondent banks,
and other qualified banks, savings and loan associations and broker/dealers
("Institutions"). As described in the applicable Prospectus, Retail A Shares of
the Money Market, Government, Tax-Exempt and U.S. Treasury 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"). As described in the applicable
Prospectus, Retail B Shares of the Money Market Fund are not offered for
purchase and are available only to the holders of Retail B Shares in Galaxy's
Short-Term Bond, High Quality Bond, Tax-Exempt Bond, Equity Value, Equity
Growth, Small Company Equity, Asset Allocation and Growth and Income Fund ("CDSC
Funds") who wish to exchange their Retail B Shares in such CDSC Funds for Retail
B Shares in the Money Market Fund. As described in the applicable Prospectuses,
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., and with respect to each of these Funds except the Tax-Exempt Fund, to
participants in employer-sponsored defined contribution plans.

Retail B Shares of the Money Market Fund are subject to a maximum
contingent deferred sales charge of 5.00% if such Shares are sold within six
years of the date of purchase of the exchanged Retail B Shares of a CDSC Fund.

-11-

<PAGE> 823
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 by
order has 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, U.S. Treasury Fund,
Tax-Exempt 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, Small Cap Value Fund, Growth
and Income 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 (plus a third series of
shares, i.e. Retail B Shares, of the Money Market Fund) are offered under
separate Prospectuses to different categories of investors. The Institutional
Treasury Money Market Fund offers only one series of shares.

Shares have no preemptive rights and only such conversion or exchange
rights as the Board of Trustees may grant in its

-12-

<PAGE> 824
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 the Money
Market 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 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 and the Money Market Fund's Retail B Shares
would be solely responsible for the Fund's payments to FD Distributors 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 the Money Market
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 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

-13-

<PAGE> 825
ratification of the appointment of independent public accountants, the approval
of principal underwriting contracts, and the election of trustees may be
effectively acted upon by shareholders of Galaxy voting without regard to class
or series.

Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. Voting rights are not cumulative
and, accordingly, the holders of more than 50% of the aggregate of Galaxy's
outstanding shares may elect all of the trustees, irrespective of the votes of
other shareholders.

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

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

-14-

<PAGE> 826
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.

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 "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 "Income Requirement").
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

-15-

<PAGE> 827
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 designate any distribution of the excess of net long-term
capital gain over net short-term capital loss as a capital gain dividend in a
written notice mailed to shareholders within 60 days after the close of the
Fund's taxable year. Shareholders should note that, upon the sale or exchange of
Fund Shares, if the shareholder has not held such Shares for more than six
months, any loss on the sale or exchange of those Shares will be treated as
long-term capital loss to the extent of the capital gain dividends received with
respect to the Shares.

Ordinary income of individuals is taxable at a maximum marginal 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 rate of 28%. For corporations, long-term capital gains and
ordinary income are both taxable at a maximum nominal rate of 35%.

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

-16-

<PAGE> 828
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-Exempt Fund, 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.

In order for the Tax-Exempt Fund 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.

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<PAGE> 829
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:

<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 Fire
Age 62 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>

-18-

<PAGE> 830
<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'Neill1 President, Executive Vice President
Hasbro, Inc. Treasurer & and CFO, Hasbro, Inc.
200 Narragansett Trustee (toy and game
Park Drive manufacturer), since
Pawtucket, RI 02862 1987; Trustee, The Galaxy
Age 52 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 55 Religious Communities
Trust; Trustee, The
Galaxy VIP Fund; Trustee,
Galaxy Fund II.

Donald B. Miller Trustee Chairman, Horizon Media,
10725 Quail Covey Road Inc. (broadcast
Boynton Beach, FL services);
33436 Director/Trustee,
Age 70 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 55 Incorporated (previously,
Buffinton Box Company
manufacturer of cardboard
boxes); Trustee, The
Galaxy VIP Fund; Trustee,
Galaxy Fund II;
Commissioner, Rhode
Island Investment
Commission.
</TABLE>

-19-

<PAGE> 831
<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 to
Age 65 1991; President, Pingree
Associates, Inc.
(timberland management),
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 law firm
Philadelphia National Drinker Biddle & Reath,
Bank Building Philadelphia,
1345 Chestnut Street Pennsylvania.
Philadelphia, PA 19107
Age 53

Jylanne Dunne Vice First Data Investor
First Data Investor President Services Group, Inc.,
Services Group, Inc. and 1990 to present.
4400 Computer Drive Assistant
Westboro, MA 01581 Treasurer
Age 37
</TABLE>

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

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

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<PAGE> 832
meeting in which the trustee participates. The Chairman of the Boards of the
Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets.

For the fiscal year ended October 31, 1996, each trustee was authorized
to receive an annual aggregate fee of $18,000 for his services as a trustee of
Galaxy and Galaxy VIP plus a separate annual fee of $5,000 for his services as a
trustee of Galaxy II, in addition to meeting fees of $1,500 for each in-person
Galaxy Board meeting attended, $1,500 for each in-person Galaxy VIP Board
meeting attended not held concurrently with a Galaxy Board meeting, and $750 for
each Galaxy II Board meeting attended, and reimbursement for expenses incurred
in attending meetings. Annual fees to the Chairman of the Boards and the
President and Treasurer of the Trusts were the same as the current fees as were
the fees for telephone and Board committee meetings.

Beginning March 1, 1996, each trustee is also entitled to participate
in The Galaxy Fund, The Galaxy VIP Fund and Galaxy Fund II Deferred Compensation
Plans (the "Original Plans"). Effective January 1, 1997, the Original Plans were
merged into The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II Deferred
Compensation Plan (together with the Original Plans, the "Plan"). Under the
Plan, a trustee may elect to have his deferred fees treated as if they had been
invested by the Trusts in the shares of one or more portfolios in the Trusts, or
other types of investment options, and the amount paid to the trustees under the
Plan will be determined based upon the performance of such investments. Deferral
of trustees' fees will have no effect on a portfolio's assets, liabilities, and
net income per share, and will not obligate the Trusts to retain the services of
any trustee or obligate a portfolio to any level of compensation to the trustee.
The Trusts may invest in underlying securities without shareholder approval.

No employee of First Data Investor Services Group, Inc., ("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.

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

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<PAGE> 833
<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. Wellman $26,702 None $35,000
Trustee

Dwight E. Vicks, Jr. $29,124 None $37,450
Chairman & Trustee

Donald B. Miller** $26,776 None $31,000
Trustee

Rev. Louis DeThomasis $25,713 None $34,000
Trustee

John T. O'Neill $26,702 None $34,250
President, Treasurer &
Trustee

James M. Seed** $25,713 None $34,000
Trustee
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of
$10,976 and $17,967 accrued during Galaxy's fiscal year
ended October 31, 1996 for Messrs. Miller and Seed,
respectively.

SHAREHOLDER AND TRUSTEE LIABILITY

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<PAGE> 834
omissions outside such capacity or some other reason. The Declaration of Trust
also provides that Galaxy shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of Galaxy, and shall
satisfy any judgment thereon. Thus, the risk of shareholder liability is limited
to circumstances in which Galaxy itself would be unable to meet its obligations.

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

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

ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS

Fleet serves as investment adviser to the Funds. In its advisory
agreement, Fleet has agreed to provide investment advisory services to the Funds
as described in the Prospectuses. Fleet 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 year ended October 31, 1994 advisory fees of $2,680,260
with respect to the Money Market Fund; and $2,595,929 with respect to the
Government Fund. For the fiscal years ended October 31, 1995 and October 31,
1996, Galaxy paid Fleet advisory fees (net of fee waivers) of $3,321,036 and
$6,802,258, respectively, with respect to the Money Market Fund; and $3,551,367
and $3,790,727, respectively, with respect to the Government Fund. For the same
periods, Fleet

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<PAGE> 835
waived advisory fees of $142,311 and $543,180, respectively, with respect to the
Money Market Fund; and $63,124 and $113,057 , respectively, with respect to the
Government Fund.

For the fiscal year ended October 31, 1996, Fleet reimbursed expenses
in the amounts of $85,430 and $13,713, respectively, with respect to the Money
Market Fund and Government Fund, respectively.

For the fiscal year ended October 31, 1994, Galaxy paid Fleet advisory
fees of $1,082,702 with respect to the Tax-Exempt Fund; and $1,890,386 with
respect to the U.S. Treasury Fund. For the fiscal years ended October 31, 1995
and October 31, 1996, Galaxy paid Fleet advisory fees (net of expense
reimbursements) of $1,138,568 and $1,287,528, respectively, with respect to the
Tax-Exempt Fund; and $2,126,647 and $2,716,788, respectively, with respect to
the U.S. Treasury Fund.

For the same periods, Fleet reimbursed expenses in the amounts of
$36,228 and $16,727, respectively, with respect to the Tax-Exempt Fund; and
$17,558 and $828, respectively, with respect to the U.S. Treasury Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and
October 31, 1996, Fleet received advisory fees (net of fee waivers) of $91,691,
$387,361 and $487,246, respectively, with respect to the Institutional Treasury
Money Market Fund. For the same periods, Fleet waived advisory fees of $317,212,
$387,360 and $484,786, respectively, with respect to the Institutional Treasury
Money Market Fund.

For the fiscal year ended October 31, 1996, Fleet reimbursed expenses
in the amount of $31,826 with respect to the Institutional Treasury Money Market
Fund.

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<PAGE> 836
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 Bank, an affiliate of Fleet, is paid a fee for sub-account and
administrative services performed with respect to Trust Shares of the Funds
(other than the Tax-Exempt Fund) held by defined contribution plans. Pursuant to
an agreement between Fleet Bank and FDISG, Fleet Bank is paid $21.00 per year
for each defined contribution plan participant account. As of October 31, 1996,
there were approximately 14,312 defined contribution plan participant
sub-accounts invested in Trust Shares of the Funds; thus it is expected that
Fleet Bank will receive annually approximately $300,552 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.

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, 1994 October 31, 1995 and
October 31, 1996, FDISG and/or its predecessors received administration fees of
$567,866, $763,921 and $1,556,983, respectively, with respect to the Money
Market Fund; $544,223, $799,533 and $828,248, respectively, with respect to the
Government Fund; $227,241, $257,052 and $273,302, respectively,

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<PAGE> 837
with respect to the Tax-Exempt Fund; and $396,349, $469,163 and $577,419,
respectively, with respect to the U.S. Treasury Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and
October 31, 1996, FDISG and/or its predecessors received administration fees
(net of fee waivers) of $86,068, $125,448 and $243,008, respectively, with
respect to the Institutional Treasury Money Market Fund and waived
administration fees of $137,300, $213,577 and $174,704, respectively, with
respect to such Fund.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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

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<PAGE> 838
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 commissions. With respect to over-the-counter
transactions, Fleet 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, Fleet,
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 Fund has acquired during its most recent fiscal year. At
October 31, 1996, (a) the Money Market Fund held commercial paper of J.P. Morgan
& Co., Inc. with a value of $29,851,533 due December 5, 1996 and $19,885,367 due
December 9, 1996 and had entered into repurchase transactions with HSBC
Securities, Inc. in the amount of $189,160,015 to be repurchased on November 1,
1996 at $189,188,914; and (b) the Government Fund had entered into repurchase
transactions with HSBC Securities, Inc. in the amount of $90,048,802 to be
repurchased on November 1, 1996 at $90,062,559. J.P. Morgan & Co., Inc. and HSBC
Securities, Inc. 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

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<PAGE> 839
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, except the Institutional
Treasury Money Market Fund, Galaxy may enter into agreements ("Servicing
Agreements") pursuant to its Shareholder Services Plan ("Services Plan") 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, 1996, Galaxy had entered into Servicing Agreements only with
Fleet Bank and affiliates.

Each Servicing Agreement between Galaxy and a Service Organization
relating to the Services Plan 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 Services Plan to the extent
necessary to ensure that the fees required to be accrued with respect to the
Retail A 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 years ended October 31, 1995 and October 31, 1996,
payments to Service Organizations totaled $451,861 and $765,457, respectively,
with respect to Retail A Shares of the Money Market Fund; $269,314 and $320,372,
respectively, with respect to Retail A Shares of the Government Fund; $115,812
and $125,962, respectively, with respect to Retail A Shares of the Tax-Exempt
Fund; and $261,774 and $348,084, respectively, with respect to Retail A Shares
of the U.S. Treasury Fund.

Galaxy's Servicing Agreements are governed by the Services Plan that
has been adopted by Galaxy's Board of Trustees in

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<PAGE> 840
connection with the offering of Retail A Shares of each Fund. Pursuant to the
Services Plan, the Board of Trustees reviews, at least quarterly, a written
report of the amounts paid under the Servicing 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.

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan (the "12b-1 Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to Retail B Shares of the
Money Market Fund. The 12b-1 Plan is described in the applicable Prospectus.

Under the 12b-1 Plan, 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 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 Statement of Additional
Information, Galaxy intends to limit the Money Market Fund's payments for
shareholder liaison and administrative support services under the 12b-1 Plan to
an aggregate fee of not more than .10% (on an annualized basis) of the average
daily net asset value of Retail B Shares owned of record or beneficially by
Customers of Institutions.

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<PAGE> 841
Payments for distribution expenses under the 12b-1 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 12b-1 Plan
provides that a report of the amounts expended under the 12b-1 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 12b-1 Plan provides that it may
not be amended to increase materially the costs which Retail B Shares of the
Money Market Fund may bear for distribution pursuant to the 12b-1 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 12b-1 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 12b-1 Plan will benefit the Money Market Fund and holders of
Retail B Shares. The 12b-1 Plan is subject to annual reapproval by a majority of
the Disinterested Trustees and is terminable at any time with respect to the
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. Any agreement entered into pursuant
to the 12b-1 Plan with a Service Organization is terminable with respect to the
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 the
Fund, by FD Distributors or by the Service Organization. An agreement will also
terminate automatically in the event of its assignment.

As long as the 12b-1 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 discretion of such Disinterested Trustees.

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<PAGE> 842
DISTRIBUTOR

First Data 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 FD Distributors. Prior to that time, FD
Distributors 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,
FD Distributors and its parent, FDISG, remains in effect until May 31, 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.

FD Distributors is entitled to the payment of contingent deferred
sales charges upon the redemption of Retail B Shares of the Money Market Fund.
As of the date of this Statement of Additional Information, no Retail B Shares
of the Money Market Fund had been issued.

The following table shows all sales charges, commissions and other
compensation received by FD Distributors directly or indirectly from the Funds
during the fiscal year ended October 31, 1996:

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<PAGE> 843
<TABLE>
<CAPTION>
Brokerage
Net Commissions in
Underwriting Compensation on Connection
Discounts and Redemption and with Fund Other
Fund Commissions(1) Repurchase(2) Transactions Compensation(3)
---- -------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Money Market N/A $0 N/A $816,101

Government N/A N/A N/A $321,662

Tax-Exempt N/A N/A N/A $132,575

U.S. Treasury N/A N/A N/A $356,088

Institutional N/A N/A N/A N/A
Treasury
Money Market
</TABLE>

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

(1) Represents amounts received from front-end sales charges on Retail A
Shares and commissions received in connection with sales of Retail B
Shares.
(2) Represents amounts received from contingent deferred sales charges on
Retail B Shares. The basis on which such sales charges are paid is
described in the Prospectus relating to Retail B Shares.
(3) Represents payments made under the Shareholder Services Plan and
Distribution and Services Plan that have been adopted by Galaxy during
the fiscal year ended October 31, 1996, which includes fees accrued in
the fiscal year ended October 31, 1995, which were paid in 1996 (see
"Shareholder Services Plan" and "Distribution and Services Plan"
above).

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

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<PAGE> 844
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 Institutional Treasury Money Market Funds may be obtained by
calling FD Distributors at the telephone numbers provided on the cover page of
the Prospectus. For the seven-day period ended October 31, 1996, the annualized
yields for Retail A Shares of the Money Market, Government, Tax- Exempt and U.S.
Treasury Funds were 4.62%, 4.58%, 2.81% and 4.49%, respectively, and the
effective yields for Retail A Shares of such Funds for the same period were
4.73%, 4.68%, 2.85% and 4.59%, respectively. For the seven-day period ended
October 31, 1996, the annualized and effective yields for the Institutional
Treasury Money Market Fund were 4.89% and 5.01% , respectively.

For a seven-day period ended October 31, 1996, the annualized yields
for Trust Shares of the Money Market, Government, Tax-Exempt and U.S. Treasury
Funds were 4.84%, 4.80%, 2.95% and 4.66%, respectively, and the effective yields
of Trust Shares of such Funds were 4.95%, 4.91%, 2.99% and 4.76%, respectively.

In addition, the Tax-Exempt Fund may calculate a "tax equivalent
yield." The tax equivalent yield for the Fund is

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<PAGE> 845
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, 1996 for Retail A Shares was 4.07%. The
tax-equivalent yield for Trust Shares of the Tax-Exempt Fund for the seven-day
period ended October 31, 1996 was 4.28%.

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, 1996 for Retail A Shares of the U.S. Treasury Fund were
4.63%, 4.83% and 5.04%, respectively. The state flow through yields for the
seven-day period ended October 31, 1996 for Trust Shares of the U.S. Treasury
Fund were 4.80%, 5.01% and 5.24%, respectively.

The state flow through yields for the seven-day period ended October
31, 1996 were 5.04%, 5.26% and 5.49%, respectively, with respect to the
Institutional Treasury Money Market Fund.

MISCELLANEOUS

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<PAGE> 846
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 3, 1997, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail A
Shares of each of Galaxy's investment portfolios (including shares of the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds) were as follows: Tax-Exempt Money Market Fund -- Hope H. Van Beuren, East
Main RR 25 Enterprise Center, Middletown, Rhode Island 02842 (13.14%);
Massachusetts Municipal Money Market Fund -- Joel Alvord, DBA Chestnut
Associates, 20 Rowes Wharf, Unit 710, Boston, Massachusetts 02110 (13.20%);
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14638 (35.27%); Connecticut Municipal Money Market Fund --
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14638 (29.95%); Massachusetts Municipal Bond Fund -- Leonard
M. Caruso, 225 Lynn Fella Parkway, Sangus, Massachusetts 09106-3119 (5.14%); and
Rhode Island Municipal Bond Fund -- James R. McCulloch c/o Microfibre, P.O. Box
1208, Pawtucket, Rhode Island 02860 (7.21%); Norstar Trust Company, Galles &
Co.; Funds Control, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
(46.39%).

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<PAGE> 847
Rochester, New York 14638 (74.15%); Equity Growth Fund -- Norstar Trust Company,
Gales & Co., Funds Control, Account 00000030718, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (14.58%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000010017, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (20.03%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000082, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (64.76%); Equity Income Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (13.49%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000003748, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (30.99%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000015771, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (54.90%); International Equity Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000004088, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (10.96%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000876, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (37.98%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000073, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (47.78%); Growth and Income Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 05000503793, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (38.98%); Norstar Trust Company, Gales & Co., Funds
Control, Account 05000603873, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (59.43%); Asset Allocation Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000006709, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (9.63%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000002598, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (14.30%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000073, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (76.07%); Small Company Equity Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000006102, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (5.24%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000001492, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (24.42%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000046, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (67.93%); Small Cap Value Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 05000503917, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (11.77%); Norstar Trust Company, Gales & Co., Funds
Control, Account 05000503999, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (85.30%); Short-Term Bond Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000000064, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (40.18%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000001090, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (13.75%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000008627, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (46.28%); Intermediate Government Income Fund -- Norstar Trust Company,
Gales & Co., Funds Control, Account 00000007183, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (26.86%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (28.78%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000038408, Attn:

-36-
<PAGE> 848
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (43.37%); High
Quality Bond Fund -- Norstar Trust Company, Gales & Co., Funds Control, Account
00000006095, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(11.50%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000001465, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(24.50%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000000037, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(62.89%); Corporate Bond Fund --Norstar Trust Company, Gales & Co., Funds
Control, Account 0000000004, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (41.10%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000006102, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (48.20%); Tax-Exempt Bond Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000670, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (22.04%); Norstar Trust Company, Gales & Co., Funds
Control, Account 0000000002, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (33.58%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000005899, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (43.92%); New York Municipal Bond Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000005292, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (9.95%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000019, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (12.52%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000001107, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (76.77%); Connecticut Municipal Bond Fund -- Norstar Trust Company, Gales
& Co., Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (41.88%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000019, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (52.89%); and Massachusetts Municipal Bond Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000000073, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (32.81%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000019, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (67.19%).

-37-
<PAGE> 849
Massachusetts 01748 (9.09%); Chelsea Police Relief Association, John R.
Phillips, Treasurer and Michael McCona, Clerk, 19 Park Street, Chelsea,
Massachusetts 02150 (9.44%); Michael J. Sangiacomo, 4 Hubbard Road, Hartford,
Connecticut 06114 (10.37%); Colonial Marble Co., Inc., Stephen B. Fichera, 25
Garvey Street, P.O. Box 187, Everett, Massachusetts 02149 (20.69%); and Tax-
Exempt Bond Fund -- Betsy Royal, 51 Hoyt Street, New Canann, Connecticut
06840-5618 (5.48%); Edward A. Pitts, P.O. Box 119, 152 Maih Street, Broad Brook,
Connecticut 06016 (5.58%); William R. Droll and William F. Droll JTWROS, 16
Manning Drive, Lowell, Massachusetts 01851-3930 (5.64%); Louis Dicola and Ester
Dicola JTWROS, 4 April Court, Providence, Rhode Island 02908-2111 (8.78%); David
Fendler and Sylvia Fendler JTWROS, 72 Brinkenhoff Avenue, Stamford, Connecticut
06905 (9.57%); Leonard F. Szadtowski and Francis Willy JTWROS, 162 Friendship
Street, Bolivar, New York 14715 (9.61%); Jeannette E. Seiter, 121 Schuyler
Street, Boonville, New York 13309 (9.96%); Katrina A. Seiter, 121 Schuyler
Street, Boonville, New York 13309 (11.06%).

As of February 3, 1997, the name, address and share ownership of the
entities or persons that held beneficially more than 5% of the outstanding Trust
Shares of each of Galaxy's investment portfolios (including shares of the
Institutional Treasury Money Market Fund) were as follows: U.S. Treasury Money
Market Fund -- Loring Walcott Sweep Account, Loring Walcott & Coolidge, Attn:
Richard Ferrari, 230 Congress Street, Boston, Massachusetts 02110 (15.19%);
Institutional Treasury Money Market Fund -- Charon Industries Inc. IM, c/o
Robert J. McDermott, 370 Old Country Road, Garden City, New York 11530 (5.85%);
Equity Value Fund -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50
Kennedy Plaza, Providence, Rhode Island 02903 (12.36%); Equity Growth Fund --
Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (22.12%); International Equity Fund -- Fleet
Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence,
Rhode Island 02903 (9.73%); FFG Retirement & Pension Equity, Fleet Financial
Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (19.23%); Growth
and Income Fund -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50
Kennedy Plaza, Providence, Rhode Island 02903 (40.32%); Asset Allocation Fund --
Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(25.91%); Small Company Equity Fund -- Fleet Savings Plus Plan, Fleet Financial
Group, Inc., 50 Kennedy Plaza, Providence, Rhode

-38-
<PAGE> 850
Island 02903 (40.41%); Small Cap Value Fund -- Fleet Bank N.A., Rogers Corp,
Attn: James DeLucin, Fleet Bank CT, 157 Church Street, P.O. Box 1909, New Haven,
Connecticut 06509 (6.92%); FFG Employee Retirement Miscellaneous Assets, Fleet
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(31.25%); Intermediate Government Income Fund -- NUSCO Retiree Health VEBA
Trust, P.O. Box 270, Hartford, Connecticut 06141 (5.69%); High Quality Bond Fund
- -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (25.76%); Corporate Bond Fund -- Cole Hersee
Pension, C/o Fleet Financial Group, Inc., One East Avenue, Rochester, New York
11530 (5.62%); BNE Unified Retirement Trust, Attn: Ben Branch, Trustee, 21
Merchants Road, Boston, Massachusetts 02109 (21.29%); Tax-Exempt Bond Fund --
Nusco Retiree Health, P.O. Box 270, Hartford, Connecticut 06141 (31.59%);
Connecticut Municipal Bond Fund -- Robert A. Simons, c/o Fleet Financial Group,
Inc., One East Avenue, Rochester, New York 11530 (5.81%); Ruthan Wein, 18
Timberlane Drive, Farmington, Connecticut 06032 (6.35%); Florence M. Roberts,
336 Drummond Road, Orange, Connecticut 06477 (7.55%); and Massachusetts
Municipal Bond Fund -- Philip H. Tobey, c/o Fleet Financial Group, Inc., One
East Avenue, Rochester, New York 11530 (5.33%); Margaret U. Davis, 8 Kilsyth
Terrace #21, Brighton, Massachusetts 02146 (5.53%); Alice Gardner, c/o Fleet
Financial Group, Inc., One East Avenue, Rochester, New York 11530 (5.53%).

FINANCIAL STATEMENTS

Galaxy's Annual Reports to Shareholders with respect to the Funds for
the fiscal year ended October 31, 1996 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, 1996 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 by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

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<PAGE> 851
APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

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

Corporate and Tax-Exempt Bond Ratings

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

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

A-1

<PAGE> 852
conditions and circumstances, however, are more likely to have an adverse impact
on these bonds, and therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings.

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

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

A-2

<PAGE> 853
completion of construction or elimination of the basis of the condition.

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

Corporate and Tax-Exempt Commercial Paper Ratings

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

A-3

<PAGE> 854
Fitch's short-term ratings apply to tax-exempt and corporate debt
obligations that are payable on demand or have original maturities of up to
three years. The four highest ratings of Fitch for short-term securities are
F-1+, F-1, F-2 and F-3. F-1+ securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment. F-1 securities possess very strong credit
quality. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+. F-2 securities possess good
credit quality. Issues carrying this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories. F-3 securities possess fair credit quality. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade. Fitch may also
use the symbol "LOC" with its short-term ratings to indicate that the rating is
based upon a letter of credit issued by a commercial bank.

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

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

A-4

<PAGE> 855
the characteristics of Prime-1 rated issues, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained. Issuers rated
Prime-3 (or related supporting institutions) have an acceptable capacity for
repayment of short-term promissory obligations. Issuers rated Not Prime do not
fall within any of the Prime rating categories.

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

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

Tax-Exempt Note Ratings

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

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

A-5

<PAGE> 856
differences between short-term credit risk and long-term risk. Loans bearing the
designation MIG-1 or VMIG-1 are of the best quality, enjoying strong protection
by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing. Loans bearing the designation
MIG-2 or VMIG-2 are of high quality, with margins of protection ample although
not so large as with loans rated MIG-1 or VMIG-1. Loans bearing the designation
MIG-3 or VMIG-3 are of favorable quality with all security elements accounted
for but lacking the undeniable strength of the preceding grades. Liquidity and
cash flow protection may be narrow and market access for refinancing is likely
to be less well established. Loans bearing the designation MIG-4 or VMIG-4 are
of adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.

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

A-6

<PAGE> 857
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 28, 1997

<PAGE> 858
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 28, 1997, 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- 5108 or by calling Galaxy at
1-800-628-0414. Capitalized terms used herein but not otherwise defined have the
same meanings as in the Prospectuses.

<PAGE> 859
TABLE OF CONTENTS
Page
----

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 and Delayed Delivery Transactions...................... 4
Stand-By Commitments............................................... 4
Munipreferred Securities........................................... 5
Variable Rate Demand Notes......................................... 5
Temporary Investments.............................................. 5
Restricted and Illiquid Securities................................. 5
Repurchase Agreements, Reverse Repurchase Agreements
and Lending of Portfolio Securities.............................. 7
Derivative Securities.............................................. 8
Portfolio Securities Generally..................................... 12
Portfolio Turnover................................................. 12
Special Considerations Relating to Connecticut
Municipal Securities............................................. 12
Additional Investment Limitations.................................. 14

NET ASSET VALUE - CONNECTICUT MUNICIPAL MONEY MARKET AND
MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS......................... 20

DIVIDENDS - MONEY MARKET FUNDS.............................................. 21

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.............................. 21

DESCRIPTION OF SHARES....................................................... 23

ADDITIONAL INFORMATION CONCERNING TAXES..................................... 26
In General......................................................... 26
Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds..................................... 28
Growth and Income and Small Cap Value Funds........................ 29
Taxation of Certain Financial Instruments.......................... 29
State Taxation .................................................... 32
Massachusetts State Income Tax .................................... 32

TRUSTEES AND OFFICERS....................................................... 33
Shareholder and Trustee Liability.................................. 37

ADVISORY, ADMINISTRATION, CUSTODIAN AND TRANSFER
AGENCY AGREEMENTS......................................................... 38
Custodian and Transfer Agent....................................... 41

PORTFOLIO TRANSACTIONS...................................................... 42

-i-

<PAGE> 860
Page
----

SHAREHOLDER SERVICES PLAN.................................................. 44

DISTRIBUTION AND SERVICES PLAN............................................. 46

DISTRIBUTOR................................................................ 47

AUDITORS .................................................................. 49

COUNSEL .................................................................. 49

PERFORMANCE AND YIELD INFORMATION.......................................... 50
Yield Quotations -- Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds........... 50
Tax-Equivalency Tables - Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds........... 51
Yield and Performance of the Growth and
Income and Small Cap Value Funds................................ 53

MISCELLANEOUS.............................................................. 57

FINANCIAL STATEMENTS....................................................... 61

APPENDIX A................................................................. A-1

APPENDIX B................................................................. B-1

-ii-

<PAGE> 861
THE GALAXY FUND

The Galaxy Fund ("Galaxy") is an open-end management company currently
offering shares of beneficial interest in twenty-four investment portfolios.
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 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 personal income taxes
imposed by the Commonwealth of Massachusetts

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<PAGE> 862
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 total assets in equity
securities. The securities in which the Growth and Income Fund may invest
include foreign securities, as described in the Prospectuses.

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 equity securities of companies that have a market value
capitalization of up to $1 billion. 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

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<PAGE> 863
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.

Examples of U.S. Government agencies and 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.

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<PAGE> 864
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

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

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

The 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, a 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

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<PAGE> 865
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 Securities, 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.

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

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<PAGE> 866
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 Galaxy's Board of
Trustees are quite liquid. The Equity Funds intend, therefore, to treat the
restricted securities that meet the criteria for liquidity established by the
Board of 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,
safeharbor 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. Galaxy, 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 Board of Trustees considers the following criteria in
determining the liquidity of certain restricted securities:

- 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.

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<PAGE> 867
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 a repurchase agreement 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 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

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<PAGE> 868
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
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

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<PAGE> 869
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 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

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<PAGE> 870
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.

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.

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<PAGE> 871
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 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 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, neither Equity Fund will 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

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<PAGE> 872
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 Funds' investment adviser,
Fleet Investment Advisors Inc. ("Fleet"), 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 Fleet
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
Fleet 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 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

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<PAGE> 873
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 has historically been
Connecticut's single most important economic activity. The State's manufacturing
industry is diversified, but from 1970 to 1995 manufacturing employment declined
35.5%. During this period, employment in other non-agricultural establishments
(including government) increased 69.7%, particularly in the service, trade, and
finance categories. In 1995, manufacturing accounted for only 17.9% 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 5.5% in 1995.
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, 1994-95, and
1995-96 with operating surpluses of $110,000,000, $113,500,000, $19,700,000,
$80,500,000, and $250,000,000, respectively.

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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. Since its
enactment, the personal income tax has superseded the other two as the largest
revenue source for the State's General Fund. 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 taxes 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

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

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<PAGE> 875
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
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.

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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 Galaxy'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 Galaxy'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
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

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<PAGE> 877
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.

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.

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<PAGE> 878
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.

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 Galaxy or Fleet, owning
individually more than 1/2 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 or leases; 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

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<PAGE> 879
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 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

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<PAGE> 880
and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items".

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.

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 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 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 neither 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 Money Market Fund, calculated by using
available market

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<PAGE> 881
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 Money Market 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 Money Market
Fund's outstanding shares without monetary consideration; or utilizing a net
asset value per share determined by using available market quotations.

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

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<PAGE> 882
Shares of the Growth and Income Fund 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"). As described in the applicable Prospectuses, 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., and to participants in employer-sponsored defined contribution
plans.

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 Prospectus. 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 Prospectus.

Retail A Shares of the Equity 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 Equity Funds, using the value of each Fund's net assets and
number of outstanding Retail A Shares at the close of business on October 31,
1996, is as follows:

<TABLE>
<CAPTION>
Growth and Small Cap
Income Fund Value Fund
----------- ----------
<S> <C> <C>
Net Assets..................... $77,776,362 $34,402,292
Outstanding Shares 5,643,469 2,332,328

Net Asset Value Per
Share.......................... $ 13.78 $ 14.75

Sales Charge (3.75% of
the offering price) $ 0.54 $ 0.57

Offering to Public $ 14.32 $ 15.32
</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.

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<PAGE> 883
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 by
order has 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, 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, Small Cap Value Fund, Growth and Income
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 Equity Funds (plus a third series of
shares, i.e. Retail B Shares, of the Growth and Income Fund) are offered under
separate Prospectuses to different categories of investors. Each Money Market
Fund offers only one series of shares.

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<PAGE> 884
Plan (which is currently applicable only to Retail A Shares of the Equity Funds
and to shares of the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds), the Distribution and Services Plan for Retail B
Shares of the Growth and Income 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 Equity Fund's Retail A Shares (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 and the Growth and Income Fund's Retail B Shares would
be solely responsible for the Fund's payments to FD Distributors 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 (shares of the Money Market Funds)
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 the Growth and Income 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

-24-

<PAGE> 885
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.

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 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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<PAGE> 886
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.

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 "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 "Income Requirement").
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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<PAGE> 887
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 "Short-Short Gain 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
Short-Short Gain 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 the mark-to-market rules) 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

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<PAGE> 888
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 Short-Short Gain
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.

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.

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<PAGE> 889
In the case of a corporate shareholder, dividends of the Funds that
represent interest on Municipal Securities may be subject to the 20% 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 interested income on
some temporary investments, and any realized net short-term gains are taxed as
ordinary income. Long-term capital gains distributions ar taxed as long-term
capital gains, regardless of the length of time the Fund shares have been held
the by the shareholder. These tax consequences apply whether dividend 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 Distribution Requirement, on the
income or gain qualifying under the Income Requirement and on their ability to
comply with the Short-Short Gain Test described above.

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

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<PAGE> 890
rule"). The amount of any capital gain or loss actually realized by a Fund in a
subsequent sale or other disposition of those Instruments is adjusted to reflect
any capital gain or loss taken into account by the Fund in a prior year as a
result of the constructive sale of the Instruments. Losses with respect to
futures contracts to sell, related options and certain foreign currency
contracts, which are regarded as parts of a "mixed straddle" because their
values fluctuate inversely to the values of specific securities held by the
Funds, are subject to certain loss deferral rules, which limit the amount of
loss currently deductible on either part of the straddle to the amount thereof
that exceeds the unrecognized gain ,if any, with respect to the other part of
the straddle, and to certain wash sales regulations. Under short sales rules,
which also are applicable, the holding period of the securities forming part of
the straddle (if they have not been held for the long-term holding period) will
be deemed not to begin prior to termination of the straddle. With respect to
certain Instruments, deductions for interest and carrying charges may not be
allowed. Notwithstanding the rules described above, with respect to futures
contracts that are part of a "mixed straddle" to sell related options, and
certain foreign currency contracts that are properly identified as such, a Fund
may make an election which will exempt (in whole or in part) those identified
futures contracts, options and foreign currency contracts from the Rules of
Section 1256 of the Code including "the 40-60 rule" and "mark-to-market," but
gains and losses will be subject to such short sales, wash sales and loss
deferral rules and the requirement to capitalize interest and 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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<PAGE> 891
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 charges 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
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 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

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<PAGE> 892
disposition of passive foreign investment companies even if it distributes the
income to its shareholders.

STATE TAXATION

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

MASSACHUSETTS STATE INCOME TAX

Shareholders of the Massachusetts Municipal Money Market Fund subject
to Massachusetts personal income taxation will not be required to pay
Massachusetts personal income tax on that portion of their dividends which is
attributable to (and is properly designated as 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. Shareholders subject to Massachusetts income taxation
will be subject to Massachusetts personal income tax and Corporate shareholders
subject to the Massachusetts corporate excise tax will be subject to that tax on
all dividends from the Massachusetts Municipal Money Market Fund.

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<PAGE> 893

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:

John T. O'Neill1 President, Executive Vice President
Hasbro, Inc. Treasurer & and CFO, Hasbro, Inc.
200 Narragansett Trustee (toy and game
Park Drive manufacturer), since
Pawtucket, RI 02862 1987; Trustee, The Galaxy
Age 52 VIP Fund; Trustee, Galaxy
Fund II; Managing
Partner, KPMG Peat
Marwick (accounting
firm), 1986.
</TABLE>

-33-

<PAGE> 894
<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- ----------------------
<S> <C> <C>
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 55 Religious Communities
Trust; Trustee, The
Galaxy VIP Fund; Trustee,
Galaxy Fund II.

Donald B. Miller Trustee Chairman, Horizon Media,
10725 Quail Covey Road Inc. (broadcast
Boynton Beach, FL 33436 services);
Age 70 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.

-34-
<PAGE> 895
<TABLE>
<CAPTION>
Positions Principal Occupation
with The During Past 5 Years
Name and Address Galaxy Fund and Other Affiliations
- ---------------- ----------- ----------------------
<S> <C> <C>
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 law firm
Philadelphia National Drinker Biddle & Reath,
Bank Building Philadelphia,
1345 Chestnut Street Pennsylvania.
Philadelphia, PA 19107
Age 53

Jylanne Dunne Vice First Data Investor
First Data Services President Services Group, Inc.,
Group, Inc. and 1990 to present.
4400 Computer Drive Assistant
Westboro, MA 01581-5108 Treasurer
Age 37
</TABLE>

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

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

Effective November 1, 1996, each trustee receives an annual aggregate
fee of $29,000 for his services as a trustee of Galaxy, The Galaxy VIP Fund
("Galaxy VIP") and Galaxy Fund II ("Galaxy") (collectively, the "Trusts"), plus
an additional $2,250 for each in-person Galaxy Board meeting attended and $1,500
for each inperson Galaxy VIP or Galaxy II Board meeting attended not held
concurrently with an in-person Galaxy meeting, and is reimbursed for expenses
incurred in attending all meetings. Each trustee also receives $500 for each
telephone Board meeting in which the trustee participates, $1,000 for each
in-person Board committee meeting attended and $500 for each telephone Board
committee meeting in which the trustee participates. The Chairman of the Boards
of the Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets.

For the fiscal year ended October 31, 1996, each trustee was authorized
to receive an annual aggregate fee of $18,000 for his

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<PAGE> 896
services as a trustee of Galaxy and Galaxy VIP plus a separate annual fee of
$5,000 for his services as a trustee of Galaxy II, in addition to meeting fees
of $1,500 for each in-person Galaxy Board meeting attended, $1,500 for each
in-person Galaxy VIP Board meeting attended not held concurrently with a Galaxy
Board meeting, and $750 for each Galaxy II Board meeting attended, and
reimbursement for expenses incurred in attending meetings. Annual fees to the
Chairman of the Boards and the President and Treasurer of the Trusts were the
same as the current fees as were the fees for telephone and Board committee
meetings.

The following chart provides certain information about the fees
received by Galaxy's trustees for the fiscal year ended October 31, 1996:

<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 $ 26,702 None $ 35,000
Trustee

Dwight E. Vicks, Jr. $ 29,124 None $ 37,450
Chairman and Trustee
</TABLE>

-36-

<PAGE> 897
<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>
Donald B. Miller** $ 26,776 None $ 31,000
Trustee

Rev. Louis DeThomasis $ 25,713 None $ 34,000
Trustee

John T. O'Neill $ 26,702 None $ 34,250
President, Treasurer
and Trustee

James M. Seed** $ 25,713 None $ 34,000
Trustee
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of
$ 10,976 and $ 17,967 accrued during Galaxy's fiscal year
ended October 31, 1996 for Messrs. Miller and Seed,
respectively.

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.

-37-
<PAGE> 898
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, ADMINISTRATION, CUSTODIAN AND
TRANSFER AGENCY AGREEMENTS

For the period from December 4, 1995 to October 31, 1996, Fleet
received advisory fees of $386,073, $154,616, $1,143,059 and $1,790,255 with
respect to the Connecticut Municipal Money Market Fund, Massachusetts Municipal
Money Market Fund, Small Cap Value Fund and Growth and Income Fund,
respectively, and reimbursed expenses of $93,862, $90,548, $63,394 and $99,656
with respect to the Connecticut Municipal Money Market Fund, Massachusetts
Municipal Money Market Fund, Small Cap Value Fund and Growth and Income Fund,
respectively.

For the period from November 1, 1995 to December 3, 1995, Shawmut Bank,
N.A. ("Shawmut"), the investment adviser for the Predecessor Funds, earned the
following advisory fees: $43,242, $17,003, $128,152 and $207,833 with respect to
the Predecessor Connecticut Municipal Money Market Fund, Predecessor
Massachusetts Municipal Money Market Fund, Predecessor Small Cap Value Fund and
Predecessor Growth and Income Fund, respectively.

For the fiscal year ended October 31, 1995, Shawmut 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

-38-
<PAGE> 899
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.

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 $21,600 was voluntarily waived;
Predecessor Growth and Income Fund, $1,720,866, of which $354,887 was
voluntarily waived; and Predecessor Small Cap Value Fund, $1,180,502, of which
$302,952 was voluntarily waived.

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

The advisory agreement provides that Fleet 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 Fleet 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, 1997, 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 Bank, an affiliate of Fleet, 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
Bank and FDISG, Fleet will be paid $21.00 per year for each defined contribution

-39-
<PAGE> 900
plan participant sub-account. As of October 31, 1996, there were approximately
80,883 defined contribution plan participant subaccounts invested in Trust
Shares of the Equity Funds; thus it is expected that Fleet Bank will receive
annually $1,412,651 for sub-account services. 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.

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.

For the period December 4, 1995 through October 31, 1996, FDISG
received administration fees of $81,178, $32,643, $129,102 and $203,187 with
respect to the Connecticut Municipal Money Market Fund, Massachusetts Municipal
Money Market Fund, Small Cap Value Fund and Growth and Income Fund,
respectively.

For the period from November 1, 1995 to December 3, 1995, Federated
Administrative Services ("Federated"), a subsidiary of Federated Investors,
served as administrator of the Predecessor Funds and earned the following
administrative fees: Predecessor Connecticut Municipal Money Market Fund,
$12,973, none of which was waived; Predecessor Massachusetts Municipal Money
Market Fund, $5,101, none of which was waived; Predecessor Small Cap Value Fund,
$19,223, none of which was waived; and Predecessor Growth and Income Fund,
$31,175, none of which was waived.

For the fiscal year ended October 31, 1995, Federated earned the
following administrative fees: Predecessor Connecticut Municipal Money Market
Fund, $109,347, none of which was voluntarily waived; Predecessor Massachusetts
Municipal Money Market Fund, $50,000, none of which was voluntarily waived;
Predecessor Small Cap Value Fund, $131,149, none of which was

-40-
<PAGE> 901
voluntarily waived; and Predecessor Growth and Income Fund, $207,280, 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.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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 percentage of net Fund assets, plus
certain transaction costs.

-41-
<PAGE> 902
For the fiscal year ended October 31, 1995, Shawmut earned the
following custody 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 custody fees: Predecessor Connecticut Municipal Money 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.

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

-42-
<PAGE> 903
commissions. With respect to over-the-counter transactions, Fleet 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 period December 4, 1995 through October 31, 1996, the Growth
and Income and Small Cap Value Funds paid $398,181 and $118,396, respectively,
in brokerage commissions on brokerage transactions. 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, $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 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 the Funds have acquired during Galaxy's most recent fiscal
year. At October 31, 1996, (i) the Growth and Income Fund held 40,000 shares of
common stock of J.P. Morgan & Co., Inc. (value $3,455,000) and entered into a
repurchase transaction with Chase Securities, Inc. in the amount of $21,980,581
to be repurchased on November 1, 1996 at $21,983,909; and (ii) the Small Cap
Value Fund held 106,700 shares of SEI Corp. (value $2,160,675) and entered into
a repurchase transaction with Chase Securities, Inc. in the amount of
$13,959,202 to be repurchased on November 1, 1996 at $13,961,315. Chase
Manhattan Bank, J.P. Morgan and SEI Financial

-43-
<PAGE> 904
are considered "regular brokers or dealers" of Galaxy. Chase Manhattan Bank,
J.P. Morgan & Co., Inc. and SEI Corp. are the parents of Chase Securities, Inc.,
J.P. Morgan and SEI Financial, respectively.

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 the Funds, Galaxy may enter into
agreements ("Servicing Agreements") pursuant to its Shareholder Services Plan
("Services Plan") 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 shares of the Money
Market Funds. As of October 31, 1996, Galaxy had entered into Servicing
Agreements only with Fleet Bank and affiliates.

Each Servicing Agreement between Galaxy and a Service Organization
relating to the Services 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 Services
Plan to the extent necessary to ensure that the fees required to be accrued with
respect to the Retail A Shares of such Funds (shares of the Money Market Funds)
on any day do not exceed the income to be accrued to such shares on that day.

For the period December 4, 1995 through October 31, 1996, payments to
Service Organizations totaled $104,877 with respect to shares of the Connecticut
Municipal Money Market Fund, $38,441 with respect to shares of the Massachusetts
Municipal Money Market Fund, $154,838 with respect to Retail A Shares of

-44-
<PAGE> 905
the Growth and Income Fund, and $79,503 with respect to Retail A Shares of the
Small Cap Value Fund.

Galaxy's Servicing Agreements are governed by the Services 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 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 Servicing 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 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.

Investment Shares of the Predecessor Funds were subject to a Plan
adopted pursuant to Rule 12b-1 under the 1940 Act (the "Shawmut Plan"). The
Shawmut 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 Shawmut
Plan was designed to stimulate administrators to provide distribution and
administrative support services to the Predecessor Funds and their shareholders.

-45-
<PAGE> 906
For the fiscal years ended October 31, 1994 and October 31, 1995, the
Predecessor Connecticut Municipal Money Market Fund paid $217,698 and $377,953,
respectively, in 12b-1 fees, of which $108,849 and $188,976, respectively, was
voluntarily waived. During the same periods, the Predecessor Massachusetts
Municipal Money Market Fund did not accrue 12b-1 fees. For the fiscal years
ended October 31, 1994 and October 31, 1995, the Predecessor Growth and Income
and Predecessor Small Cap Value Funds paid $96,587 and $166,932 and $89,974 and
$111,535, respectively, in 12b-1 fees, of which $48,234 and $83,466 and $44,987
and $55,768, respectively, was voluntarily waived.

DISTRIBUTION AND SERVICES PLAN

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

Under the 12b-1 Plan,, 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 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 Statement of Additional
Information, Galaxy intends to limit the Growth and Income Fund's payments for
shareholder liaison and administrative support services under the 12b-1 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.

-46-
<PAGE> 907
it may not be amended to increase materially the costs which Retail B Shares of
the Growth and Income Fund may bear for distribution pursuant to the 12b-1 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 12b-1 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").

For the period from March 4, 1996 (date of initial public offering of
Retail B Shares) through October 31, 1996, Retail B Shares of the Growth and
Income Fund bore $7,070 in distribution fees and $3,263 in shareholder servicing
fees. For the fiscal year ended October 31, 1996, all amounts paid under the
12b-1 Plan were attributable to payments to broker-dealers.

Galaxy's Board of Trustees has concluded that there is a reasonable
likelihood that the 12b-1 Plan will benefit the Growth and Income Fund and
holders of Retail B Shares. The 12b-1 Plan is subject to annual reapproval by a
majority of the Disinterested Trustees and is terminable at any time with
respect to the Growth and Income 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. Any
agreement entered into pursuant to the 12b-1 Plan with a Service Organization is
terminable with respect to the 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 the Fund, by FD Distributors or by the Service
Organization. An agreement will also terminate automatically in the event of its
assignment.

DISTRIBUTOR

First Data 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 FD Distributors. Prior to that time, FD
Distributors was a wholly-owned subsidiary of 440 Financial Group of Worcester,
Inc. and an indirect subsidiary of State Mutual Life Assurance Company of
America.

-47-
<PAGE> 908
Unless otherwise terminated, the Distribution Agreement among Galaxy
and FD Distributors and its parent First Data, remains in effect until May 31,
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.

FD Distributors is entitled to the payment of a front-end sales charge
on the sale of Retail A Shares of the Equity Funds as described in the
applicable Prospectus. For the period December 4, 1995 through October 31, 1996,
FD Distributors received front-end sales charges in connection with Retail A
Share purchases as follows: Growth and Income Fund -- $279,670 ; and Small Cap
Value Fund -- $34,022.

FD Distributors is also entitled to the payment of contingent deferred
sales charges upon the redemption of Retail B Shares of the Growth and Income
Fund. For the period from March 4, 1996 (date of the initial public offering of
Retail B Shares) through October 31, 1996, FD Distributors received $2,815 in
contingent deferred sales charges in connection with redemptions of Retail B
Shares of the Growth and Income Fund. All such amounts were paid over to
affiliates of Fleet.

The following table shows all sales charges, commissions and other
compensation received by FD Distributors directly or indirectly from the Funds
during the fiscal year ended October 31, 1996:

-48-

<PAGE> 909
<TABLE>
<CAPTION>
Brokerage
Net Compensation Commissions
Underwriting on Redemption in Connection
Discounts and and with Fund Other
Fund Commissions(1) Repurchase(2) Transactions Compensation(3)
---- -------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Connecticut N/A N/A N/A $ 83,549
Municipal Money
Market

Massachusetts N/A N/A N/A $ 34,586
Municipal Money
Market

Growth and Income $228,000.31 $2,814.97 $4,484.90 $173,942

Small Cap Value $ 32,876.87 N/A $1,144.96 $ 86,194
</TABLE>

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

(1) Represents amounts received from front-end sales charges on Retail A
Shares and commissions received in connection with sales of Retail B
Shares.
(2) Represents amounts received from contingent deferred sales charges on
Retail B Shares. The basis on which such sales charges are paid is
described in the Prospectus relating to Retail B Shares. All such
amounts were paid to affiliates of Fleet.
(3) Represents payments made under the Shareholder Services Plan and
Distribution and Services Plan that have been adopted by Galaxy (see
"Shareholder Services Plan" and "Distribution and Services Plan"
above).

AUDITORS

Coopers & Lybrand L.L.P., independent certified public accountants,
with offices at One Post Office Square, Boston, Massachusetts 02109, serve as
auditors to Galaxy. The financial highlights for the Funds for the fiscal year
ended October 31,1996 including in their Prospectuses and the financial
statements for the fiscal year ended October 31, 1996 contained in Galaxy's
Annual Report to Shareholders and incorporated by reference into the Statement
of Additional Information have been audited by Coopers & Lybrand L.L.P. for the
period included in their report which appears therein.

COUNSEL

-49-
<PAGE> 910
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 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 FD
Distributors at the telephone numbers provided on the cover page of the
applicable Prospectus. For the seven-day period ended October 31, 1996, the
annualized and effective yields of the Connecticut Municipal Money Market Fund
were 2.84% and 2.88%, respectively. For the seven-day period ended

-50-
<PAGE> 911
October 31, 1996, the annualized and effective yields of the Massachusetts
Municipal Money Market Fund was were 2.83% and 2.87%, 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 Connecticut Municipal Money
Market Fund and Massachusetts Municipal Money Market Fund, for the seven-day
period ended October 31, 1996 were 4.21% and 4.72%, 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 margina(l) 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.

- --------
(1) Some portion of either Fund's income may be subject to the federal
alternative minimum tax and state and local regular or alternative
minimum taxes.

-51-

<PAGE> 912
TAXABLE YIELD EQUIVALENT FOR 1996
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%
- --------------------------------------------------------------------------------------------------------------
Join
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
- --------------------------------------------------------------------------------------------------------------
Tax-Exempt
Yield:
Taxable Yield Equivalent
- --------------------------------------------------------------------------------------------------------------

1.50% 1.86% 2.22% 2.33% 2.52% 2.68%

2.00% 2.48% 2.96% 3.10% 3.36% 3.58%

2.50% 3.11% 3.70% 3.88% 4.20% 4.47%

3.00% 3.73% 4.44% 4.65% 5.04% 5.37%

3.50% 4.35% 5.19% 5.43% 5.88% 6.26%

4.00% 4.97% 5.93% 6.20% 6.72% 7.16%

4.50% 5.59% 6.67% 6.98% 7.56% 8.05%

5.00% 6.21% 7.41% 7.75% 8.40% 8.94%

5.50% 6.83% 8.15% 8.53% 9.24% 9.84%

6.00% 7.45% 8.89% 9.30% 10.08% 10.73%
</TABLE>

-52-

<PAGE> 913
TAXABLE YIELD EQUIVALENT FOR 1996
STATE OF MASSACHUSETTS

<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:
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

2.00% 2.74% 3.33% 3.51% 3.85% 4.13%

2.50% 3.42% 4.17% 4.39% 4.81% 5.17%

3.00% 4.11% 5.00% 5.26% 5.77% 6.20%

3.50% 4.79% 5.83% 6.14% 6.73% 7.23%

4.00% 5.48% 6.67% 7.02% 7.69% 8.26%

4.50% 6.16% 7.50% 7.89% 8.65% 9.30%

5.00% 6.85% 8.33% 8.77% 9.62% 10.33%

5.50% 7.53% 9.17% 9.65% 10.58% 11.36%

6.00% 8.22% 10.00% 10.53% 11.54% 12.40%
</TABLE>

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
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

-53-
<PAGE> 914
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.

-54-

<PAGE> 915
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

-55-
<PAGE> 916
(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, 1996, the 30-day yields for Retail A
Shares of the Growth and Income and Small Cap Value Funds were 1.48% and
(0.14)%, respectively, and the 30-day yields for Trust Shares of the Growth and
Income Fund and Small Cap Value Fund were 1.77% and 0.10%, respectively.

The average annual total returns for the one-year period ended October
31, 1996 and for the period from February 12, 1993 (date of initial public
offering) to October 31, 1996 were 15.75% and 13.98%, respectively, for Retail A
Shares of the Growth and Income Fund and 20.13% and 14.60%, respectively, for
Retail A Shares of the Small Cap Value Fund. The average annual total returns
for the one-year period ended October 31, 1996 and for the period from December
14, 1992 (date of initial public offering) to October 31, 1996 were 20.77% and
14.81%, respectively, for Trust Shares of the Growth and Income Fund, and
25.22% and 15.31%, respectively, for Trust Shares of the Small
Cap Value Fund.

The aggregate total returns for Retail A Shares of the Growth and
Income Fund and Small Cap Value Fund for the period from February 12, 1993 (date
of initial public offering) to October 31, 1996 were 62.61% and 65.93%,
respectively. The aggregate total returns for Trust Shares of the Growth and
Income Fund and Small Cap Value Fund for the period December 14, 1992 (date of
initial public offering) to October 31, 1996 were 70.85% and 73.78%,
respectively.

For the period ended October 31, 1996, the 30-day yield for Retail B
Shares of the Growth and Income Fund was 0.92%. The average annual total return
for the period from March 4, 1996 (date of initial public offering) to October
31, 1996 was 1.83% for Retail B Shares of the Growth and Income Fund.

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.

-56-
<PAGE> 917
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.

-57-

<PAGE> 918
Rochester, New York 14638 (20.03%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000082, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (64.76%); Equity Income Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (13.49%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000003748, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (30.99%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000015701, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (54.90%); International Equity Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000004088, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (10.96%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000876, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (37.98%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000073, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (47.78%); Growth and Income Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 05000503793, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (38.98%); Norstar Trust Company, Gales & Co., Funds
Control, Account 05000603873, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (59.43%); Asset Allocation Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000006709, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (9.63%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000002598, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (14.30%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000073, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (76.07%); Small Company Equity Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000006102, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (5.24%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000001492, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (24.42%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000046, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (67.93%); Small Cap Value Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 05000503917, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (11.77%); Norstar Trust Company, Gales & Co., Funds
Control, Account 05000503999, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (85.30%); Short-Term Bond Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000000064, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (40.18%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000001090, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (13.75%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000008627, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (46.28%); Intermediate Government Income Fund -- Norstar Trust Company,
Gales & Co., Funds Control, Account 00000007183, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (26.86%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (28.78%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000038408, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (43.37%); High Quality Bond Fund -- Norstar Trust Company, Gales
& Co., Funds Control, Account 00000006095, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (11.50%); Norstar Trust Company, Gales & Co.,
Funds Control, Account

-58-
<PAGE> 919
00000001465, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(24.50%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000000037, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(62.89%); Corporate Bond Fund --Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000046, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (41.10%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000006102, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (48.20%); Tax-Exempt Bond Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000670, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (22.04%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000028, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (33.58%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000005899, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (43.92%); New York Municipal Bond Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000005292, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (9.95%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000019, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (12.52%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000001107, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (76.77%); Connecticut Municipal Bond Fund -- Norstar Trust Company, Gales
& Co., Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (41.88%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000019, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (52.89%); and Massachusetts Municipal Bond Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000000073, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (32.81%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000019, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (67.19%).

-59-
<PAGE> 920
P.O. Box 1208, Pawtucket, Rhode Island 02860 (7.21%); Norstar Trust Company,
Galles & Co.; Funds Control, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York (46.39%).

As of February 3 , 1997, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail B
Shares of each of Galaxy's investment portfolio were as follows: High Quality
Bond Fund -- Michael J. Sangiacomo, 4 Hubbard Road, Hartford, Connecticut 06114
(6.13%); Colonial Marble Co., Inc., Stephen B. Fichera, 25 Garvey Street, P.O.
Box 187, Everett, Massachusetts 02149 (6.88%); Helen M. Boylan, 21 Putnam Lane,
Danvers, Massachusetts 01923 (7.23%); Thomas R. Spaltabak, 950 Rice Road, Elma,
New York 14059-9583 (10.50%); Short-Term Bond Fund -- Leonard J. Mercer, 21
Portsmouth Road, Amesbury, Massachusetts 01913 (5.87%); Natale Costa and Mary
Castle JTWROS, 11 Maple Avenue, Hopkinton, Massachusetts 01748 (9.09%); Chelsea
Police Relief Association, John R. Phillips, Treasurer and Michael McCona,
Clerk, 19 Park Street, Chelsea, Massachusetts 02150 (9.44%); Michael J.
Sangiacomo, 4 Hubbard Road, Hartford, Connecticut 06114 (10.37%); Colonial
Marble Co., Inc., Stephen B. Fichera, 25 Garvey Street, P.O. Box 187, Everett,
Massachusetts 02149 (20.69%); and Tax- Exempt Bond Fund -- Betsy Royal, 51 Hoyt
Street, New Canann, Connecticut 06840-5618 (5.48%); Edward A. Pitts, P.O. Box
119, 152 Maih Street, Broad Brook, Connecticut 06016 (5.58%); William R. Droll
and William F. Droll JTWROS, 16 Manning Drive, Lowell, Massachusetts 01851-3930
(5.64%); Louis Dicola and Ester Dicola JTWROS, 4 April Court, Providence, Rhode
Island 02908-2111 (8.78%); David Fendler and Sylvia Fendler JTWROS, 72
Brinkenhoff Avenue, Stamford, Connecticut 06905 (9.57%); Leonard F. Szadtowski
and Francis Willy JTWROS, 162 Friendship Street, Bolivar, New York 14715
(9.61%); Jeannette E. Seiter, 121 Schuyler Street, Boonville, New York 13309
(9.96%); Katrina A. Seiter, 121 Schuyler Street, Boonville, New York 13309
(11.06%).

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<PAGE> 921
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(19.23%); Growth and Income Fund -- Fleet Savings Plus Plan, Fleet Financial
Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (40.32%); Asset
Allocation Fund -- Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence,
Rhode Island 02903 (25.91%); Small Company Equity Fund -- Fleet Savings Plus
Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island
02903 (40.41%); Small Cap Value Fund -- Fleet Bank N.A., Rogers Corp, Attn:
James DeLucin, Fleet Bank CT, 157 Church Street, P.O. Box 1909, New Haven,
Connecticut 06509 (6.92%); FFG Employee Retirement Miscellaneous Assets, Fleet
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(31.25%); Intermediate Government Income Fund -- NUSCO Retiree Health VEBA
Trust, P.O. Box 270, Hartford, Connecticut 06141 (5.69%); High Quality Bond Fund
- -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (25.76%); Corporate Bond Fund -- Cole Hersee
Pension, C/o Fleet Financial Group, Inc., One East Avenue, Rochester, New York
11530 (5.62%); BNE Unified Retirement Trust, Attn: Ben Branch, Trustee, 21
Merchants Road, Boston, Massachusetts 02109 (21.29%); Tax-Exempt Bond Fund --
Nusco Retiree Health, P.O. Box 270, Hartford, Connecticut 06141 (31.59%);
Connecticut Municipal Bond Fund -- Robert A. Simons, c/o Fleet Financial Group,
Inc., One East Avenue, Rochester, New York 11530 (5.81%); Ruthan Wein, 18
Timberlane Drive, Farmington, Connecticut 06032 (6.35%); Florence M. Roberts,
336 Drummond Road, Orange, Connecticut 06477 (7.55%); and Massachusetts
Municipal Bond Fund -- Philip H. Tobey, c/o Fleet Financial Group, Inc., One
East Avenue, Rochester, New York 11530 (5.33%); Margaret U. Davis, 8 Kilsyth
Terrace #21, Brighton, Massachusetts 02146 (5.53%); Alice Gardner, c/o Fleet
Financial Group, Inc., One East Avenue, Rochester, New York 11530 (5.53%).

FINANCIAL STATEMENTS

Galaxy's Annual Reports to Shareholders with respect to the Funds for
the fiscal year ended October 31, 1996 has 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, 1996 have been
audited by Galaxy's independent accountants, Coopers & Lybrand L.L.P., whose
reports thereon also appear in such Annual Reports and is incorporated herein by
reference. The Financial Statements in such Annual Reports have been
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.

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<PAGE> 922
The Shawmut Funds' Annual Report to Shareholders with respect to 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 "Shawmut Financial Statements") are incorporated into this Statement
of Additional Information. The Shawmut Financial Statements included in the
Annual Report for the Predecessor Funds 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 Shawmut 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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<PAGE> 923
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
("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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<PAGE> 924
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

A-2

<PAGE> 925
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

A-3

<PAGE> 926
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.

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.

A-4

<PAGE> 927
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.

A-5

<PAGE> 928
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.

A-6

<PAGE> 929
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.

B-1

<PAGE> 930
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery of
securities. Closing out a futures contract sale is effected by a Fund's entering
into a futures contract purchase for the same aggregate amount of the specific
type of financial instrument and the same delivery date. If the price of the
sale exceeds the price of the offsetting purchase, the Fund immediately is paid
the difference and thus realizes a gain. If the offsetting purchase price
exceeds the sale price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by a Fund
entering into a futures contract sale. If the offsetting sale price exceeds the
purchase price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.

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

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

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

B-2

<PAGE> 931
In that case, the five point loss in the market value of the portfolio
security would be offset by the five point gain realized by closing out the
futures contract sale. Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.

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

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

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

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

B-3

<PAGE> 932
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

B-4

<PAGE> 933
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 Fleet. 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> 934
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> 935
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> 936
THE GALAXY FUND

Statement of Additional Information

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

Rhode Island Municipal Bond Fund

February 28, 1997
<PAGE> 937
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectuses (the "Prospectuses") for 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, each dated
February 28, 1997, 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 1-800-628-0414.
<PAGE> 938
TABLE OF CONTENTS
Page
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<TABLE>
<CAPTION>

<S> <C>
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 and Forward Commitment and
Delayed Settlement Transactions ................................... 5
Stand-By Commitments .............................................. 5
Repurchase Agreements; Reverse Repurchase Agreements;
Loans of Portfolio Securities ..................................... 6
U.S. Government Securities ........................................ 7
Derivative Securities ............................................. 7
Foreign Currency Exchange Transactions ............................ 7
Special Considerations Relating to New York Municipal
Securities ........................................................ 8
Special Considerations Relating to Connecticut
Municipal Securities .............................................. 23
Additional Investment Limitations ................................. 25

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION .......................... 27

DESCRIPTION OF SHARES ................................................... 30

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 Bonds, Intermediate Government Income, High
Quality Bond and Corporate Bond Funds ............................. 36
Taxation of Certain Financial Instruments ......................... 37
State Taxation .................................................... 40

TRUSTEES AND OFFICERS ................................................... 40
Shareholder and Trustee Liability ................................. 45

ADVISORY, ADMINISTRATION, CUSTODIAN AND TRANSFER AGENCY
AGREEMENTS .............................................................. 46
Custodian and Transfer Agent ...................................... 50

PORTFOLIO TRANSACTIONS .................................................. 50

SHAREHOLDER SERVICES PLAN ............................................... 52

DISTRIBUTION AND SERVICES PLAN .......................................... 53

DISTRIBUTOR ............................................................. 55
</TABLE>

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<PAGE> 939
<TABLE>
<CAPTION>
Page
----
<S> <C>
AUDITORS .......................................................... 57

COUNSEL ........................................................... 58

PERFORMANCE AND YIELD INFORMATION ................................. 58
Yield and Performance of the Funds .......................... 58

MISCELLANEOUS ..................................................... 64

APPENDIX A .............................................................. A-1
APPENDIX B .............................................................. B-1
FINANCIAL STATEMENTS .................................................... FS-1
</TABLE>

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<PAGE> 940
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: the Short-Term Bond Fund, Intermediate Government Income
Fund (formerly, the Intermediate Bond Fund), High Quality Bond Fund and
Corporate Bond Fund (the "Taxable Bond Funds"), and the Tax-Exempt Bond Fund,
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, Fleet Investment
Advisors Inc. ("Fleet"), the investment adviser to the Funds, must determine
that such instrument is comparable to rated instruments eligible for purchase by
a Fund and will consider the earning power, cash flows and other liquidity
ratios of the issuers and guarantors of such instruments and will continuously
monitor their financial status in order to meet payment on demand. In
determining average weighted portfolio maturity of each of these Funds, a
variable or floating rate instrument issued or guaranteed by the U.S. Government
or an agency or instrumentality thereof will be deemed to have a maturity equal
to the period remaining until the obligation's next interest rate adjustment.
Variable and floating rate obligations with a demand feature will be deemed to
have a maturity equal to the longer of the period remaining to the next interest
rate adjustment or the demand notice period.

BANK OBLIGATIONS

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

ASSET-BACKED SECURITIES

Asset-backed securities are generally issued as pass-through certificates,
which represent undivided fractional ownership
<PAGE> 941
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.

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 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

-2-
<PAGE> 942
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 of interest on and principal of
its Municipal Securities may be materially adversely affected by litigation or
other conditions.

-3-
<PAGE> 943
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.

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 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 will review the proceedings relating to the
issuance of Municipal Securities or the bases for such opinions.

-4-
<PAGE> 944
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

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

-5-
<PAGE> 945
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 a Fund pays
any consideration directly or indirectly for a stand-by commitment, its cost
will be reflected as unrealized depreciation for the period during which the
commitment is held by the Fund.

A Fund 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, Fleet 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
a repurchase agreement 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 a Fund would be invested in high quality, short-term
"money market" instruments.

-6-
<PAGE> 946
U.S. 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.

DERIVATIVE SECURITIES

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. 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 Short-Term Bond and Corporate Bond 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

-7-
<PAGE> 947
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, neither Fund will 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.

SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL SECURITIES

Some of the significant financial considerations relating to the New York
Municipal Bond 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.

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.

-8-
<PAGE> 948
There can be no assurance that the State economy will not experience
worse-than-predicted results in the 1996-97 or 1997- 1998 fiscal years, with
corresponding material and adverse effects on the State's projections of
receipts and disbursements.

State per capita personal income has historically been significantly
higher than the national average, although the ratio has varied substantially.
Between 1975 and 1990, total employment grew by 21.3 percent while the labor
force grew only by 15.7 percent, unemployment fell from 9.5 percent to 5.2
percent of the labor force. In 1991 and 1992, however, total employment in the
State fell by 5.5 percent. As a result, the unemployment rate rose to 8.5
percent reflecting a recession that has had a particularly strong impact on the
entire Northeast. Calendar years 1993 and 1994 saw only a partial recovery, with
the unemployment rate decreasing to 7.8 percent and 6.9 percent, respectively.
The unemployment rate for 1995 was 6.3 percent and was projected by the Division
of Budget to be 6.2 percent for 1996.

STATE BUDGET. The State Constitution requires the governor (the "Governor") to
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 1996-97 fiscal year was enacted by the
Legislature on July 13, 1996, more than three 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, including necessary appropriations for all State-supported
debt service. The State Financial Plan for the 1996- 97 fiscal year was
formulated on July 25, 1996 and was based on the State's budget as enacted by
the Legislature and signed into law by the Governor, as well as actual results
for the first quarter of the current fiscal year (the "1996-97 State Financial
Plan").

The State issued its first update to the 1996-97 State Financial Plan (the
"Mid-Year Update") on October 25, 1996. Revisions were made to estimates of both
receipts and

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<PAGE> 949
disbursements based on: (1) updated economic forecasts for both the nation and
the State, (2) an analysis of actual receipts and disbursements through the
first six months of the fiscal year, and (3) an assessment of changing program
requirements. The Mid-Year Update reflected a balanced 1996-97 State Financial
Plan, with a reserve for contingencies in the General Fund of $300 million.

The State revised the 1996-97 State Financial Plan on January 14, 1997
(the "Third Quarter Update"), in conjunction with the release of the Executive
Budget for the 1997-98 fiscal year.

The Third Quarter Update continues to be balanced. As compared to the
Mid-Year Update, underlying estimates of General Fund receipts have been revised
upward $566 million, primarily in personal income taxes and business taxes.
However, the actions described below offset these projected increases, producing
a projected $627 million reduction in available General Fund receipts as
compared to the Mid-Year Update. These actions include implementing reduced
personal income tax withholding to reflect the impact of tax reduction actions
which took effect on January 1, 1997; the use of $250 million was assumed for
this purpose in the Third Quarter Update. In addition, $943 million is projected
to be used to pay tax refunds during the 1996-97 fiscal year or reserved to pay
refunds during the 1997-98 fiscal year, which produces a benefit for the 1997-98
financial plan. Finally, $80 million is projected to be deposited into the Tax
Stabilization Reserve Fund ("TSRF"), increasing the cash balance in that fund to
$317 million by the end of 1996-97.

Projected General Fund disbursements are reduced by a total of $348
million from the Mid-Year Update, with changes made in most categories of the
financial plan. Most of this savings is attributable to reductions in local
assistance spending, primarily due to significant reestimates in social services
spending to reflect lower caseload growth.

The Mid-Year Update had reserved $300 million in the General Fund for
certain contingencies, including litigation which could have produced an adverse
impact on the State's finances, either by itself or because of the precedential
nature of the court's decision. The Third Quarter Update no longer includes this
reserve, reflecting the State's belief that such risks are unlikely to
materialize before the end of the 1996-97 fiscal year. Other reserves are,
however, contained in the Third Quarter Update.

The Governor presented his 1997-98 Executive Budget to the Legislature on
January 14, 1997. It is expected that the Governor will prepare amendments to
his Executive Budget as permitted under law. There can be no assurance that the

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<PAGE> 950
Legislature will enact the Executive Budget as proposed by the Governor into
law, or that the State's adopted budget projections will not differ materially
and adversely from the projections set forth therein.

The 1997-98 Executive Budget projects balance on a cash basis in the
General Fund. It reflects a continuing strategy of substantially reduced State
spending, including program restructurings, reductions in social welfare
spending, and efficiency and productivity initiatives. Total General Fund
receipts and transfers from other funds are projected to be $32.88 billion, a
decrease of $88 million from total receipts projected in the current fiscal
year. Total General Fund disbursements and transfers to other funds are
projected to be $32.84 billion, a decrease of $56 million from spending totals
projected for the current fiscal year. As compared to the 1996- 97 State
Financial Plan, the 1997-98 Executive Budget proposes a year-to-year decline in
General Fund spending of 0.2 percent. State funds spending (i.e., General Fund
plus other dedicated funds, with the exception of federal aid) is projected to
grow by 1.2 percent. Spending from all governmental funds (excluding transfers)
is proposed to increase by 2.2 percent from the prior fiscal year.

The 1997-98 Executive Budget proposes $2.3 billion in actions to balance
the 1997-98 financial plan. Before reflecting any actions proposed by the
Governor to restrain spending, General Fund disbursements for 1997-98 were
projected to grow by approximately 4 percent. This increase would have resulted
from growth in Medicaid, higher fixed costs such as pensions and debt service,
collective bargaining agreements, inflation, and the loss of non-recurring
resources that offset spending in 1996-97. General Fund receipts were projected
to fall by roughly 3 percent. This reduction would have been attributable to
modest growth in the State's economy and underlying tax base, the loss of
non-recurring revenues available in 1996-97 and implementation of previously
enacted tax reduction programs. The 1997-98 Executive Budget proposes to close
this gap primarily through a series of spending reductions and Medicaid cost
containment measures, the use of a portion of the 1996-97 projected budget
surplus, and other actions, with a projected 1997-98 closing fund balance in the
General Fund of $397 million.

The 1997-98 Executive Budget projects General Fund receipts of $33.02
billion and $33.91 billion for 1998-99 and 1999-2000, respectively. The receipts
projections were prepared on the basis of an economic forecast of a steadily
growing national economy, in an environment of low inflation and slow employment
growth. The forecast for the State's economic performance likewise is for slow
but steady economic growth. The receipt projections reflect tax reductions
proposed in the 1997-98 Executive Budget that will reduce receipts by an
estimated $798

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<PAGE> 951
million in 1998-99 and at $1.43 billion in 1999-2000. The bulk of previously
enacted tax reductions are annualized in 1997-98 and their impact in the out
years is largely proportional to projected growth in the underlying tax
liability.

Disbursements from the General Fund are projected at $34.60 billion in
1998-99 and $35.93 billion in 1999-2000, before assuming additional spending
efficiencies and/or additional federal revenue maximization. Assuming
implementation of proposed cost containment and other actions proposed in the
1997-98 Executive Budget, annual disbursements for fiscal years 1998-99 and
1999-2000 grow by $1.77 billion and $1.33 billion, respectively.

It is expected that the 1997-98 financial plan will reflect a continuing
strategy of substantially reduced State spending, including agency
consolidations, reductions in the State workforce, and efficiency and
productivity initiatives.

The Division of the Budget believes that the economic assumptions and
projections of receipts and disbursements accompanying the 1997-98 Executive
Budget are reasonable. However, the economic and financial condition of the
State may be affected by various financial, social, economic and political
factors. Those factors can be very complex, can vary from fiscal year to fiscal
year, and are frequently the result of actions taken not only by the State but
also by entities, such as the federal government, that are outside the State's
control. Because of the uncertainty and unpredictability of changes in these
factors, their impact cannot be fully included in the assumptions underlying the
State's projections. There can be no assurance that the State economy will not
experience results that are worse than predicted, with corresponding material
and adverse effects on the State's financial projections.

To make progress toward addressing recurring budgetary imbalances, the
1997-98 Executive Budget proposes significant actions to align recurring
receipts and disbursements in future fiscal years. 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 either 1997- 98 or in future fiscal
years. In the State's 1996-1997 fiscal year and in certain recent fiscal years,
the State has failed to enact a budget prior to the beginning of the State's
fiscal year.

In addition, there has been discussion of additional tax reductions,
beyond those reflected in the State's current projections for 1997-98 and the
out years that, if enacted, could make it more difficult to achieve budget
balance over this period. In particular, modifying the State's sales tax
treatment of clothing has been discussed. The State now receives

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approximately $700 million annually under the current tax statutes from taxation
on clothing, and localities receive a roughly equivalent amount.

Uncertainties with regard to both the economy and potential decisions at
the federal level add further pressure on future budget balance in New York
State. Risks to the financial plan include either a financial market or broader
economic "correction" during the period, a risk heightened by the relatively
lengthy expansions currently underway. In addition, a normal "forecast error" of
one percentage point in the expected growth rate could raise or lower receipts
by $600 million during the last year of the projection period. Potential changes
to federal tax law could alter the federal definitions of income on which many
State taxes rely. Similarly, the financial plan assumes no significant federal
disallowances or other actions which could affect State finances.

On August 22, 1996, the President signed into law the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996. This federal
legislation fundamentally changed the programmatic and fiscal responsibilities
for administration of welfare programs at the federal, state and local levels.
The new law abolishes the federal Aid to Families with Dependent Children
program (AFDC), and creates a new Temporary Assistance to Needy Families program
(TANF) funded with a fixed federal block grant to states. The new law also
imposes (with certain exceptions) a five-year durational limit on TANF
recipients, requires that virtually all recipients be engaged in work or
community service activities within two years of receiving benefits, and limits
assistance provided to certain immigrants and other classes of individuals.
States are required to meet work activity participation targets for their TANF
caseload; these requirements are phased in over time. States that fail to meet
these federally mandated job participation rates, or that fail to conform with
certain other federal standards, face potential sanctions in the form of a
reduced federal block grant.

On October 16, 1996, the Governor submitted the State's TANF
implementation plan to the federal government as required under the new federal
welfare law. On December 13, 1996, the State's plan was approved by the federal
government . Legislation will be required to implement the State's TANF plan,
and the Governor has introduced legislation necessary to conform with federal
law.

States are required to comply with the new federal welfare reform law no
later than July 1, 1997. There can be no assurances that the State Legislature
will enact welfare reform proposals as submitted by the Governor and as required
under federal law.

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An additional risk to the financial plan arises from the potential impact
of certain litigation now pending against the State, which could produce adverse
effects on the State's projections of receipts and disbursements. Specifically,
in the case of Tug Buster Bouchard et al. v. Wetzler, the Division of the Budget
believes that the court's decision, as interpreted by the State, will reduce tax
revenues by approximately $5 million in 1997-98 and $2 million thereafter.

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 General Fund is projected to be balanced on a cash basis for the
1996-97 fiscal year. Total receipts and transfers from other funds are projected
to be $33.17 billion, an increase of $365 million from the prior fiscal year.
Total General Fund disbursements and transfers to other funds are projected to
be $33.12 billion, an increase of $444 million from the total in the prior
fiscal year.

The State's financial position on a GAAP (generally accepted accounting
principles) basis as of March 31, 1996 showed an accumulated deficit in its
combined governmental funds of $1.23 billion, reflecting liabilities of $14.59
billion and assets of $13.35 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

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State-guaranteed 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 expect 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. The State has also entered into a
contractual-obligation financing arrangement with the Local Government
Assistance Corporation ("LGAC") 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 were 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
issued 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 was thus permitted in any fiscal year, it was 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.

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,

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guaranteed and contractual obligation debt. 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 anticipated that its capital programs would be financed, in
part, by State and public authorities borrowings in 1996-97. The State expected
to issue $411 million in general obligation bonds (including $153.6 million for
purposes of redeeming outstanding bond anticipation notes) and $154 million in
general obligation commercial paper. The Legislature had also authorized the
issuance of up to $101 million in certificates of participation during the
State's 1996-97 fiscal year for equipment purchases. The projection of the State
regarding its borrowings for the 1996-97 fiscal year may change if circumstances
require.

In November 1996 voters approved a $1.75 billion State general obligation
bond referendum to finance various environmental improvement and remediation
projects. As a result, the amount of general obligation bonds issued during the
1996-97 fiscal year may increase above the $411 million currently included in
the 1996-97 borrowing plan to finance a portion of this new program.

Principal and interest payments on general obligation bonds and interest
payments on bond anticipation notes were $735 million for the 1995-96 fiscal
year, and were estimated to be $719 million for the 1996-97 fiscal year.
Principal and interest payments on fixed rate and variable rate bonds issued by
LGAC were $340 million for the 1995-96 fiscal year, and were estimated to be
$323 million for 1996-97.

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

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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 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 a State lottery game; (10) an action seeking reimbursement
from the State for certain costs arising out of the provision of pre-school
services and programs for children with handicapped conditions; and (ii)
challenges to regulations promulgated by the Superintendent of Insurance
establishing excess malpractice premium rates for the 1986-87 through 1995-96
and 1996-97 fiscal years, respectively.

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 developed a
plan to restore the State's retirement systems to prior funding levels. Such
funding is expected to exceed prior levels by $116 million in fiscal 1996-97,
$193 million in fiscal 1997-98, peaking 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 was required to
make aggregate payments of $351.4 million. 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. Litigation challenging the constitutionality of the treatment of
certain moneys held in a reserve fund was settled in June 1996 and certain
amounts in a Supplemental Reserve Fund previously credited by the State against
prior State and local pension contributions will be paid in 1998.

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 1996-97 State Financial
Plan. An adverse decision in any of these

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proceedings could exceed the amount of the 1996-97 State Financial Plan reserve
for the payment of judgments and, therefore, could affect the ability of the
State to maintain a balanced 1996-97 State Financial Plan. In its audited
financial statements for the fiscal year ended March 31, 1996, the State
reported its estimated liability for awarded and anticipated unfavorable
judgments to be $474 million.

Although other litigation is pending against New York State, except as
described herein, 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 as 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, 1995, date of the latest
data available, there were 17 Authorities that had outstanding debt of $100
million or more. The aggregate outstanding debt, including refunding bonds, of
these 17 Authorities was $73.45 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 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.

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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. There
can be no assurance that there will not be reductions in State aid to the City
from amounts currently projected or that State budgets will be adopted by the
April 1 statutory deadline or that any such reductions or delays will not have
adverse effects on the City's cash flow or expenditures. In addition, the
Federal budget negotiation process could result in a reduction in or a delay in
the receipt of Federal grants which could have additional adverse effects on the
City's cash flow or revenues.

For each of the 1981 through 1996 fiscal years, the City achieved balanced
operating results as reported in accordance with then applicable GAAP. The City
was required to close substantial budget gaps in recent years in order to
maintain balanced operating results. There can be no assurance that the City
will continue to maintain a balanced operating results. There can be no
assurance that the City will continue to maintain a balanced budget as required
by State law without additional tax or other revenue increases or additional
reductions in City services or entitlement programs, which could adversely
affect the City's economic base.

In 1975, New York City suffered a fiscal crisis that impaired the
borrowing ability of both the City and New York State. In that year the City
lost access to the 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 rating 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 downgraded its rating
on the City's $23 billion of outstanding general obligation bonds to "BBB+" from
"A-", citing 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

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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. This rating was
re-affirmed by Standard & Poor's on November 1996.

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. Since
its creation, MAC has provided, among other things, financing assistance to the
City by refunding maturing City short-term debt and transferring to the City
funds received from sales of MAC bonds and notes. 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 a portion of
MAC's debt. MAC bonds and notes constitute general obligations of MAC and do not
constitute an enforceable obligation or debt of either the State or the City. As
of September 30, 1996, MAC had outstanding an aggregate of approximately $4.563
billion of its bonds. MAC is authorized to issue bonds and notes to refunds its
outstanding bonds and notes and to fund certain reserves, without limitation as
to principal amount, and to finance certain capital commitments to the Transit
Authority and the New York City School Construction Authority for the 1992
through 1997 fiscal years in the event the City fails to provide such financing.

As of September 30, 1996, the City had received an aggregate of
approximately $4.85 billion from MAC for certain authorized uses by the City
exclusive of capital purposes. In addition, the City had received an aggregate
of approximately $2.352 billion from MAC for capital purposes in exchange for
serial bonds in a like principal amount, of which $760 million was held by MAC
as of September 30, 1996, from which $626.165 million was redeemed on January 7,
1997. MAC has also exchanged $1.839 billion principal amount of MAC bonds for
City debt, of which approximately $57.1 million was held by MAC on September 30,
1996.

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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.

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.

On November 14, 1996, the City submitted to the Control Board the
Financial Plan for the 1997 through 2000 fiscal years, which relates to the
City, the Board of Education ("BOE") and the City University of New York
("CUNY"). The 1997-2000 Financial Plan projects revenues and expenditures for
1997 fiscal year balanced in accordance with GAAP, and projects gaps of $1.2
billion, $2.1 billion and $3.0 billion for the 1998, 1999 and 2000 fiscal years,
respectively.

The 1997-2000 Financial Plan assumes (i) approval by the Governor and the
State Legislature of the extension of the 12.5% personal income tax surcharge,
which expired on December 31, 1996 and is projected to provide revenue of $170
million, $463 million, $492 million, and $521 million, in the 1997 through 2000
fiscal years, respectively; (ii) collection of the projected rent payments for
the City's airports, totalling $270 million and $180 million in the 1998 and
1999 fiscal years, respectively, which may depend on the successful completion
of negotiations with the Port Authority or the enforcement of the City's rights
under

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the existing leases thereto through pending legal actions; (iii) the ability of
the New York City Health and Hospitals Corporation ("HHC") and BOE to identify
actions to offset substantial City and State revenue reductions and the receipt
by BOE of additional State aid; (iv) State approval of the cost containment
initiatives and State aid proposed by the City; and (v) a reduction in City
funding for labor settlements for certain public authorities or corporations.
Legislation extending the 12.5% personal income tax surcharge beyond December
31, 1996, was not enacted in the special legislative session held in December
1996. Such legislation may be enacted in the 1997 State legislative session. The
1997-2000 Financial Plan does not reflect any increased costs which the City
might incur as a result of welfare legislation recently enacted by Congress or
legislation proposed by the Governor, which would, if enacted, implement such
Federal welfare legislation.

The City's projections set forth in the 1997-2000 Financial Plan are based
on various assumptions and contingencies which are uncertain and which may not
materialize. Changes in major assumptions could significantly affect the City's
ability to balance its budget as required by State law and to meet its annual
cash flow and financing requirements. Such assumptions and contingencies include
the condition of the regional and local economies, the impact on real estate tax
revenues of the real estate market, wage increases for City employees consistent
with those assumed in the 1997-2000 Financial Plan, employment growth, the
ability to implement proposed reductions in City personnel and other cost
reduction initiatives, the ability of the HHC and the BOE to take actions to
offset reduced revenues, the ability to complete revenue generating
transactions, provision of State and Federal aid and mandate relief and the
impact on City revenues and expenditures of Federal and State welfare reform and
any future legislation affecting Medicare or other entitlements.

Implementation of the 1997-2000 Financial Plan is also dependent upon the
City's ability to market its securities successfully. The City's financing
program for fiscal years 1997 through 2000 contemplates the issuance of $9
billion of general obligation bonds and $3.8 billion of bonds to be issued by
the proposed New York City Finance Authority (the "Finance Authority") to
finance City capital projects. The creation of the Finance Authority, which is
subject to the enactment of State legislation, is being proposed as part of the
City's effort to assist in keeping the City's indebtedness within the forecast
level of the constitutional restrictions on the amount of debt the City is
authorized to incur. Indebtedness subject to the constitutional debt limit
includes liability on capital contracts that are expected to be funded with
general obligation bonds, as well as general obligation bonds. The City's
projections of total debt subject to the general debt limit that would be
required to be issued to fund the Updated Ten-Year Capital

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Strategy published in April 1995 indicates that projected contracts for capital
projects and debt issuance may exceed the general debt limit by the end of
fiscal year 1997 and would exceed the general debt limit by a substantial amount
thereafter, unless legislation is enacted creating the Finance Authority or
other legislative initiatives are identified and implemented. Depending on a
number of factors, the City may find it necessary to curtail its currently
defined capital program before the end of fiscal year 1997 to ensure that there
is ongoing capacity to enter into capital contracts necessary to preserve
projects designed to safeguard health and safety in the City. Without the
Finance Authority or other legislatives relief, the City's general obligation
financed capital program with respect to new projects would be virtually brought
to a halt during the 1997-2000 Financial Plan period.

The City since 1981 has fully satisfied its seasonal financing needs in
the public credit markets, repaying all short-term obligations within their
fiscal year of issuance. The City has issued $2.4 billion of short-term
obligations in fiscal year 1997 to finance the City's current estimate of its
seasonal cash flow needs for the 1997 fiscal year. Seasonal financing
requirements for the 1996 fiscal year increased to $2.4 billion from $2.2
billion and $1.75 billion in the 1995 and 1994 fiscal years, respectively.
Seasonal financing requirements were $1.4 billion and $2.25 billion in the 1993
and 1992 fiscal years, respectively. The delay in the adoption of the State's
budget in certain past fiscal years has required the City to issue short-term
notes in amounts exceeding those expected early in such fiscal year.

Certain localities, in addition to the City, could 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
State's projections of its receipts and disbursements.

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 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.

Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the City
of Troy in 1994. The Supervisory Board's powers were increased in 1995, when
Troy MAC was created to help Troy avoid default on certain obligations. The
legislation creating Troy MAC prohibits the city of Troy from

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seeking federal bankruptcy protection while Troy MAC bonds are outstanding.

Seventeen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities.

Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1994, the total indebtedness of all localities in
New York State other than New York City was approximately $17.7 billion. A small
portion (approximately $82.9 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. Seventeen
localities had outstanding indebtedness for deficit financing at the close of
their fiscal year ending in 1994.

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

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<PAGE> 964
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.

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, 1994-95, and
1995-96 with operating surpluses of $110,000,000, $113,500,000, $19,700,000,
$80,500,000, and $250,000,000, 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. Since its enactment, the

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<PAGE> 965
personal income tax has superseded the other two as the largest revenue source
for the State's General Fund. 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.

ADDITIONAL INVESTMENT LIMITATIONS

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

Each Fund may not:

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

2. Act as an underwriter within the meaning of the
Securities Act of 1933; except insofar as a Fund might

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<PAGE> 966
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
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 New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode
Island Municipal Bond Funds may enter into municipal
bond index futures contracts, and each Fund, except the
Tax-Exempt Bond Fund, may enter into interest rate
futures contracts to the extent permitted under the
Commodity Exchange Act and the 1940 Act; and further
provided that the Short-Term Bond and Corporate Bond
Funds may enter into forward currency contracts and
foreign currency futures contracts and related options
to the extent permitted by their respective investment
objectives and policies.

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

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.

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<PAGE> 967
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 and High Quality Bond Funds and the Tax-Exempt
Bond Funds may purchase certificates of deposit,
bankers' acceptances, or other similar obligations
issued by U.S. branches of foreign banks or foreign
branches of U.S. banks; and 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

(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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

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<PAGE> 968
("Direct Investors"). As described in the applicable Prospectuses, Trust Shares
in the Funds are offered to investors maintaining qualified accounts at bank and
trust 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.

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 Prospectuses. 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, 1996, is as
follows:

<TABLE>
<CAPTION>
Intermediate
Short-Term Government Income
Bond Fund Fund
--------- -----------------

<S> <C> <C>
Net Assets ....................... $ 33,387,721 $ 79,740,652
Outstanding Shares ............... 3,341,269 7,923,739

Net Asset Value Per
Share ............................ $ 9.99 $ 10.06

Sales Charge (3.75% of
the offering price) .............. $ 0.39 $ 0.39

Offering to Public ............... $ 10.38 $ 10.45
</TABLE>

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<PAGE> 969
<TABLE>
<CAPTION>
High Quality Tax-Exempt
Bond Fund Bond Fund
--------- ---------
<S> <C> <C>
Net Assets ....................... $ 30,984,198 $ 28,339,203
Outstanding Shares ............... 2,960,244 2,628,976

Net Asset Value Per
Share ............................ $ 10.47 $ 10.78

Sales Charge (3.75% of
the offering price) .............. $ 0.41 $ 0.42

Offering to Public ............... $ 10.88 $ 11.20
</TABLE>

New York Municipal Connecticut Municipal
Bond Fund Bond Fund
------------------ --------------------
<S> <C> <C>
Net Assets ....................... $ 40,154,063 $ 23,244,072
Outstanding Shares ............... 3,735,346 2,291,223

Net Asset Value Per
Share ............................ $ 10.75 $ 10.14

Sales Charge (3.75% of
the offering price) .............. $ 0.42 $ 0.40

Offering to Public ............... $ 11.17 $ 10.54
</TABLE>

<TABLE>
<CAPTION>
Massachusetts Rhode Island
Municipal Bond Municipal
Fund Bond Fund
-------------- -------------
<S> <C> <C>
Net Assets ....................... $ 26,274,732 $ 14,899,739
Outstanding Shares ............... 2,642,762 1,398,502

Net Asset Value Per
Share ............................ $ 9.94 $ 10.65

Sales Charge (3.75% of
the offering price) .............. $ 0.39 $ 0.41

Offering to Public ............... $ 10.33 $ 11.06
</TABLE>

If the Board of Trustees determines that conditions exist that make
payment of redemption proceeds wholly in cash unwise or undesirable, Galaxy may
make payment wholly or partly in securities or other property. Such redemptions
will only be made

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<PAGE> 970
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 by order has
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, U.S. Treasury Fund,
Tax-Exempt 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> 971
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 FD Distributors 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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<PAGE> 972
effectively acted upon by shareholders of Galaxy voting without regard to class
or series.

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.

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.

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<PAGE> 973
No attempt is made to present a detailed explanation of the tax treatment of the
Funds or their shareholders, and the discussion here and in the Prospectuses is
not intended as a substitute for careful tax planning. Potential investors
should consult their tax advisers with specific reference to their own tax
situation.

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

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that each Fund distribute to its
shareholders an amount equal to at least the sum of 90% of its investment
company taxable income and 90% of its tax-exempt interest income, if any, net of
certain deductions for such year (the "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 "Income Requirement").
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.

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

-34-
<PAGE> 974
sale or other disposition of the following investments held for less than three
months (the "Short-Short Gain 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 the mark-to-market rules) 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 Short-Short Gain
Test is met.

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<PAGE> 975
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.

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 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

-36-
<PAGE> 976
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.

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, INTERMEDIATE GOVERNMENT INCOME, HIGH QUALITY
BOND AND CORPORATE BOND FUNDS

Income received by the Taxable 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

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<PAGE> 977
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) of the
shareholder itemizes deductions, to deduct such portion from their U.S taxable
income, if any, should the shareholder so choose. 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. Certain limitations are imposed on 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 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 Taxable Bond
Funds (as described above) (collectively, the "Instruments") at the close of
their taxable year are treated for federal income tax purposes as sold

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<PAGE> 978
for their fair market value on the last business day of such year, a process
known as "mark-to-market." Forty percent of any gain or loss resulting from such
constructive sales will be treated as short-term capital gain or loss, and 60%
of such gain or loss will be treated as long-term capital gain or loss without
regard to the period a Fund has held the Instruments ("the 40-60 rule"). The
amount of any capital gain or loss actually realized by a Fund in a subsequent
sale or other disposition of those Instruments is adjusted to reflect any
capital gain or loss taken into account by the Fund in a prior year as a result
of the constructive sale of the Instruments. Losses with respect to futures
contracts to sell related options, and certain foreign currency contracts, which
are regarded as parts of a "mixed straddle" because their values fluctuate
inversely to the values of specific securities held by the Funds, are subject to
certain loss deferral rules, which limit the amount of loss currently deductible
on either part of the straddle to the amount thereof that exceeds the
unrecognized gain, if any, with respect to the other part of the straddle, and
to certain wash sales regulations. Under short sales rules, which also are
applicable, the holding period of the securities forming part of the straddle
(if they have not been held for the long-term holding period) will be deemed not
to begin prior to termination of the straddle. With respect to certain
Instruments, deductions for interest and carrying charges may not be allowed.
Notwithstanding the rules described above, with respect to futures contracts
that are part of a "mixed straddle" to sell related options, and certain foreign
currency contracts that are properly identified as such, a Fund may make an
election which will exempt (in whole or in part) those identified futures
contracts, options and foreign currency contracts from the Rules of Section 1256
of the Code including "the 40-60 rule" and "mark-to-market," but gains and
losses will be subject to such short sales, wash sales and loss deferral rules
and the requirement to capitalize interest and carrying charges. Under Temporary
Regulations, a Fund would be allowed (in lieu of the foregoing) to elect either
(1) to offset gains or losses from portions that are part of a mixed straddle by
separately identifying each mixed straddle to which such treatment applies, or
(2) to establish a mixed straddle account for which gains and losses would be
recognized and offset on a periodic basis during the taxable year. Under either
election, "the 40-60 rule" will apply to the net gain or loss attributable to
the Instruments, but in the case of a mixed straddle account election, not more
than 50% of any net gain may be treated as long-term and no more than 40% of any
net loss may be treated as short-term.

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<PAGE> 979
depends; (2) the contract must be entered into at arm's length at a price
determined by reference to the price in the interbank market; and (3) the
contract must be traded in the interbank market. The Treasury Department has
broad authority to issue regulations under the provisions respecting foreign
currency contracts. As of the date of this Statement of Additional Information,
the Treasury Department has not issued any such regulations. Other foreign
currency contracts entered into by a Fund may result in the creation of one or
more straddles for federal income tax purposes, in which case certain loss
deferral, short sales, and wash sales rules and the requirement to capitalize
interest and carrying charges may apply.

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

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<PAGE> 980
stocks), is treated as capital gain or loss and is not segregated from the gain
or loss on the underlying transaction.

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

STATE TAXATION

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

TRUSTEES AND OFFICERS

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

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<PAGE> 981
<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 Fire
Age 62 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 52 VIP Fund; Trustee, Galaxy
Fund II; Managing
Partner, KPMG Peat
Marwick (accounting
firm), 1986.

</TABLE>

-42-
<PAGE> 982
<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 services);
33436 Director/Trustee,
Age 70 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.

Bradford S. Wellman(1) Trustee Private Investor;
2468 Ohio Street President, Ames &
Bangor, ME 04401 Wellman, from 1978 to
Age 65 1991; President, Pingree
Associates, Inc.
(timberland management),
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>

-43-
<PAGE> 983
<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, Secretary Partner of the law firm
III Drinker Biddle & Reath,
Philadelphia National Philadelphia,
Bank Building Pennsylvania.
Broad & Chestnut Sts.
Philadelphia, PA 19107
Age 53

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

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

Effective November 1, 1996, each trustee receives an annual aggregate fee
of $29,000 for his services as a trustee of Galaxy, The Galaxy VIP Fund ("Galaxy
VIP") and Galaxy Fund II ("Galaxy") (collectively, the "Trusts"), plus an
additional $2,250 for each in-person Galaxy Board meeting attended and $1,500
for each in-person Galaxy VIP or Galaxy II Board meeting attended not held
concurrently with an in-person Galaxy meeting, and is reimbursed for expenses
incurred in attending all meetings. Each trustee also receives $500 for each
telephone Board meeting in which the trustee participates, $1,000 for each
in-person Board committee meeting attended and $500 for each telephone Board
committee meeting in which the trustee participates. The Chairman of the Boards
of the Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets.

-44-
<PAGE> 984
Board meeting attended, $1,500 for each in-person Galaxy VIP Board meeting
attended not held concurrently with a Galaxy Board meeting, and $750 for each
Galaxy II Board meeting attended, and reimbursement for expenses incurred in
attending meetings. Annual fees to the Chairman of the Boards and the President
and Treasurer of the Trusts were the same as the current fees as were the fees
for telephone and Board committee meetings.

Beginning March 1, 1996, each trustee is also entitled to participate in
The Galaxy Fund, The Galaxy VIP Fund and Galaxy Fund II Deferred Compensation
Plans (the "Original Plans"). Effective January 1, 1997, the Original Plans were
merged into The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II Deferred
Compensation Plan (together with the Original Plans, the "Plan"). Under the
Plan, a trustee may elect to have his deferred fees treated as if they had been
invested by the Trusts in the shares of one or more portfolios in the Trusts, or
other types of investment options, and the amount paid to the trustees under the
Plan will be determined based upon the performance of such investments. Deferral
of trustees' fees will have no effect on a portfolio's assets, liabilities, and
net income per share, and will not obligate the Trusts to retain the services of
any trustee or obligate a portfolio to any level of compensation to the trustee.
The Trusts may invest in underlying securities without shareholder approval.

No employee of First Data Investor Services Group, Inc., ("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 in the most recently completed fiscal year.

-45-
<PAGE> 985
<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 $26,702 None $35,000
Trustee

Dwight E. Vicks, Jr. $29,124 None $37,450
Chairman & Trustee

Donald B. Miller** $26,772 None $31,000
Trustee

Rev. Louis DeThomasis $25,713 None $34,000
Trustee

John T. O'Neill $26,702 None $34,250
President, Treasurer
& Trustee

James M. Seed** $25,713 None $34,000
Trustee
</TABLE>

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

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

** Deferred compensation in the amounts of $10,976 and $17,967 accrued
during Galaxy's fiscal year ended October 31, 1996 for Messrs. Miller and
Seed, respectively.

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

-46-
<PAGE> 986
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.

ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, Fleet received advisory fees (net of fee waivers) of $463,521,
$293,801 and $531,062, respectively, with respect to the Short-Term Bond Fund;
$2,055,130, $1,467,085 and $1,653,803, respectively, with respect to the
Intermediate Government Income Fund; $862,228, $783,564 and $932,381,
respectively, with respect to the High Quality Bond Fund; $725,718, $568,671 and
$696,116, respectively, with respect to the Tax-Exempt Bond Fund; and $372,534,
$240,943 and $360,298, respectively, with respect to the New York Municipal Bond
Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, Fleet waived advisory fees of $175,814, $130,062 and $193,702,
respectively, with respect to

-47-
<PAGE> 987
the Short-Term Bond Fund; $757,729, $557,058 and $608,385, respectively, with
respect to the Intermediate Government Income Fund; $316,813, $297,640 and
$339,047, respectively, with respect to the High Quality Bond Fund; $300,314,
$238,933 and $253,133, respectively, with respect to the Tax-Exempt Bond Fund;
and $155,369, $126,783 and $131,020, respectively, with respect to the New York
Municipal Bond Fund.

For the fiscal years ended October 31, 1995 and October 31, 1996, Fleet
reimbursed advisory fees of $65,354 and $40,375, respectively, with respect to
the Short-Term Bond Fund; $60,356 and $0, respectively, with respect to the
Intermediate Government Income Fund; and $34,946 and $2,956, respectively, with
respect to the High Quality Bond Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, Fleet reimbursed advisory fees of $10,125, $88,394 and $62,854,
respectively, with respect to the Tax-Exempt Bond Fund; and $10,583, $107,711
and $123,317, respectively, with respect to the New York Municipal Bond Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, Fleet received advisory fees (net of fee waivers) of $0, $29,758 and
$67,091, respectively, with respect to the Connecticut Municipal Bond Fund; and
$0, $161,226 and $78,783, respectively, with respect to the Massachusetts
Municipal Bond Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, Fleet waived advisory fees of $172,537, $125,384 and $163,904,
respectively, with respect to the Connecticut Municipal Bond Fund; and $165,730,
$128,981 and $191,624, respectively, with respect to the Massachusetts Municipal
Bond Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, Fleet reimbursed advisory fees of $54,947, $1,528 and $0, with respect
to the Connecticut Municipal Bond Fund; and $33,698, $14,041 and $0
respectively, with respect to the Massachusetts Municipal Bond Fund.

For the period December 12, 1994 (commencement of operations) to October
31, 1995 and for the fiscal year ended October 31, 1996, Fleet received advisory
fees (net of fee waivers) of $171,959 and $604,322, respectively, with respect
to the Corporate Bond Fund. For the same periods, Fleet waived advisory fees of
$62,531 and $219,753, respectively, with respect to the Corporate Bond Fund.

For the period December 20, 1994 (commencement of operations) to October
31, 1995 and for the fiscal year ended October 31, 1996, Fleet received advisory
fees (net of fee

-48-
<PAGE> 988
waivers) of $0 and $38,943, respectively, with respect to the Rhode Island
Municipal Bond Fund.

For the period December 20, 1994 (commencement of operations) through
October 31, 1995 and for the fiscal year ended October 31, 1996, Fleet
reimbursed advisory fees of $71,657 and $15,079, respectively, and waived
advisory fees of $32,013 and $60,030, respectively, with respect to the Rhode
Island Municipal Bond Fund.

The advisory agreement provides that Fleet 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 Fleet in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder. Unless sooner terminated, the advisory agreement will
continue in effect with respect to a particular Fund from year to year as long
as such continuance is approved at least annually (i) by the vote of a majority
of trustees who are not parties to such advisory agreement or interested persons
(as defined in the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such approval; and (ii) by Galaxy's Board of
Trustees, or by a vote of a majority of the outstanding shares of such Fund. The
term "majority of the outstanding shares of such Fund" means, with respect to
approval of an advisory agreement, the vote of the lesser of (i) 67% or more of
the shares of the Fund present at a meeting, if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Fund. The advisory agreement may
be terminated by Galaxy or by Fleet on sixty days' written notice, and will
terminate immediately in the event of its assignment.

Fleet Bank, an affiliate of Fleet, 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 Bank and FDISG, Fleet Bank will be paid $21.00 per year for each defined
contribution plan participant sub-account. As of October 31, 1996, there were
approximately 17,497 defined contribution plan participant sub-accounts invested
in Trust Shares of the Taxable Bond Funds; thus it is expected that Fleet Bank
will receive annually approximately $367,437 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.

-49-
<PAGE> 989
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, 1994, October 31, 1995 and October
31, 1996, FDISG and/or its predecessors received administration fees of $71,444,
$57,153 and $82,440, respectively, with respect to the Short-Term Bond Fund;
$312,525, $244,446 and $256,059, respectively, with respect to the Intermediate
Government Income Fund; $131,746, $130,250 and $143,905, respectively, with
respect to the High Quality Bond Fund; $115,702, $104,560 and $108,062,
respectively, with respect to the Tax-Exempt Bond Fund and $60,223, $55,482 and
$55,624, respectively, with respect to the New York Municipal Bond Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and October
31, 1996, 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; and $0, $0 and $0, respectively, with respect to the
Massachusetts Municipal Bond Fund. For the fiscal years ended October 31, 1994,
October 31, 1995 and October 31, 1996, FDISG and/or its predecessors waived
administration fees of $51,576, $39,479 and $46,559, respectively, with respect
to the Connecticut Municipal Bond Fund; and $50,862, $39,900 and $46,772,
respectively, with respect to the Massachusetts Municipal Bond Fund.

For the period December 12, 1994 (commencement of operations) to October
31, 1995 and for the fiscal year ended October 31, 1996, FDISG and/or its
predecessors received administration fees of $27,410 and $93,185, respectively
with respect to the Corporate Bond Fund.

-50-
<PAGE> 990
For the period December 20, 1994 (commencement of operations) to October
31, 1995 and for the fiscal year ended October 31, 1996, FDISG and/or its
predecessors received administration fees of $4,850 and $11,196, respectively
with respect to the Rhode Island Municipal Bond Fund.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("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 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.

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

-51-
<PAGE> 991
transactions directly with the issuer of an instrument. The cost of securities
purchased from underwriters includes an underwriting commission or concession,
and the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down.

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

Galaxy is required to identify any securities of its "regular brokers or
dealers" that the Funds have acquired during Galaxy's most recent fiscal year.
At October 31, 1996, (a) the Short-Term Bond Fund had entered into repurchase
transactions with Chase Securities, Inc. in the amount of $3,114,281 to be
repurchased on November 1, 1996 at $3,114,752; (b) the Intermediate Government
Income Fund had entered into repurchase transactions with Chase Securities, Inc.
in the amount of $3,333,250 to be repurchased on November 1, 1996 at $3,333,755;
(c) the Corporate Bond Fund held corporate bonds of Chase Manhattan Corp. in the
amount of $1,008,750 and had entered into repurchase transactions with Chase
Securities, Inc. in the amount of $2,463,354 to be repurchased on November 1,
1996 at $2,463,726; and (d) the High Quality Bond Fund had entered into
repurchase transactions with Chase Securities, Inc. in the amount of $3,113,332
to be repurchased on November 1, 1996 at $3,113,803. Chase Manhattan Bank is
considered a "regular broker or dealer" of Galaxy. Chase Manhattan Corp. is the
parent of Chase Securities, Inc.

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<PAGE> 992
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 ("Servicing Agreements") pursuant to its Shareholder Services Plan
("Services Plan") 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, 1996, Galaxy
had entered into Servicing Agreements only with Fleet Bank and affiliates.

For the one-month period October 1, 1994 (date of implementation of
Services Plan) through October 31, 1994, payments to Service Organizations
totaled $4,524, $3,465, $12,348, $4,723, $5,577, $2,410 and $2,114 with respect
to the Short-Term Bond Fund, High Quality Bond Fund, Intermediate Government
Income Fund, Tax-Exempt Bond Fund, New York Municipal Bond Fund, Connecticut
Municipal Bond Fund and Massachusetts Municipal Bond Fund, respectively.

For the fiscal years ended October 31, 1995 and October 31, 1996, payments
to Service Organizations totaled $45,148 and $54,596, respectively, with respect
to Retail A Shares of the Short-Term Bond Fund; $122,743 and $122,781,
respectively, with respect to Retail A Shares of the Intermediate Government
Income Fund; $39,826 and $45,938, respectively, with respect to Retail A Shares
of the High Quality Bond Fund, $47,093 and $42,210, respectively, with respect
to Retail A Shares of the Tax-Exempt Bond Fund; $60,513 and $57,674,
respectively, with respect to

-53-
<PAGE> 993
Retail A Shares of the New York Municipal Bond Fund; $25,383 and $36,878,
respectively, with respect to Retail A Shares of the Connecticut Municipal Bond
Fund; $22,206 and $38,823, respectively, with respect to Retail A Shares of the
Massachusetts Municipal Bond Fund; and $0 and $0, respectively, with respect to
Retail A Shares of the Rhode Island Municipal Bond Fund. As of the date of this
Statement of Additional Information, Galaxy has not offered Retail A Shares of
the Corporate Bond Fund.

Galaxy's Servicing Agreements are governed by the Services Plan that has
been adopted by Galaxy's Board of Trustees in connection with the offering of
Retail A Shares of each Fund. Pursuant to the Services Plan, the Board of
Trustees reviews, at least quarterly, a written report of the amounts paid under
the Servicing 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 (the "12b-1 Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to Retail B Shares of the
Short-Term Bond, High Quality Bond and Tax-Exempt Bond Funds. The 12b-1 Plan is
described in the applicable Prospectuses.

Under the 12b-1 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

-54-
<PAGE> 994
shareholder liaison services and/or administrative support services may not
exceed .15% (annualized) and .15% (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 Statement of
Additional Information, Galaxy intends to limit the Funds' payments for
shareholder liaison and administrative support services under the 12b-1 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 12b-1 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 12b-1 Plan
provides that a report of the amounts expended under the 12b-1 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 12b-1 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 12b-1 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 12b-1 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").

For the period from March 4, 1996 (date of initial public offering of
Retail B Shares) through October 31, 1996, Retail B Shares of the Short-Term
Bond, High Quality Bond and Tax-Exempt Bond Funds bore the following
distribution and shareholder servicing fees under the 12b-1 Plan: $822 in
distribution fees and $190 in shareholder servicing fees with respect to Retail
B Shares of the Short-Term Bond Fund; $1,580 in distribution fees and $365 in
shareholder servicing fees with respect to Retail B Shares of the High Quality
Bond Fund; and $300 in distribution fees and $0 in shareholder servicing fees
with respect to Retail B Shares of the Tax-Exempt Bond Fund. For the fiscal year
ended October 31, 1996, all amounts paid under the 12b-1 Plan were attributable
to payments to broker-dealers.

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<PAGE> 995
Galaxy's Board of Trustees has concluded that there is a reasonable
likelihood that the 12b-1 Plan will benefit the Funds and holders of Retail B
Shares. The 12b-1 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 12b-1 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 FD Distributors or by the Service Organization. An agreement will also
terminate automatically in the event of its assignment.

As long as the 12b-1 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 discretion of such Disinterested Trustees.

DISTRIBUTOR

First Data 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 FD Distributors. Prior to that time, FD Distributors 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, FD
Distributors and its parent, FDISG, remains in effect until May 31, 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.

FD Distributors is entitled to the payment of a front-end sales charge on
the sale of Retail A Shares of the Funds as described in the applicable
Prospectuses. For the period December 1, 1995 (date of imposition of such
charge) through October 31, 1996, the Distributor received front-end sales
charges in connection with Retail A Share purchases as follows: Short-Term Bond
Fund -- $36,663; Intermediate Government Income Fund -- $41,808; High Quality
Bond Fund -- $63,476; Tax-Exempt Bond Fund -- $32,788; New York Municipal Bond
Fund -- $58,347; Connecticut Municipal Bond Fund -- $28,847;

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<PAGE> 996
Massachusetts Municipal Bond Fund -- $119,132; and Rhode Island Municipal Bond
Fund -- $27,227. Of these amounts, FD Distributors and affiliates of Fleet
retained $0 and $36,663, respectively, with respect to the Short-Term Bond Fund;
$0 and $41,808, respectively, with respect to the Intermediate Government Income
Fund; $0 and $63,476, respectively, with respect to the High Quality Bond Fund;
$0 and $32,788, respectively, with respect to the Tax-Exempt Bond Fund; $0 and
$58,347, respectively, with respect to the New York Municipal Bond Fund; $0 and
$28,847, respectively, with respect to the Connecticut Municipal Bond Fund; $0
and $119,132, respectively, with respect to the Massachusetts Municipal Bond
Fund; and $0 and 27,227, respectively, with respect to the Rhode Island
Municipal Bond Fund.

FD Distributors is also entitled to the payment of contingent deferred
sales charges upon the redemption of Retail B Shares of the Funds. For the
period from March 4, 1996 (date of the initial public offering of Retail B
Shares) through October 31, 1996, FD Distributors received contingent deferred
sales charges in connection with Retail B Share redemptions as follows:
Short-Term Bond Fund -- $499; High Quality Bond Fund -- $951; and Tax-Exempt
Bond Fund -- $0. All such amounts were paid over to affiliates of Fleet.

The following table shows all sales charges, commissions and other
compensation received by FD Distributors directly or indirectly from the Funds
during the fiscal year ended October 31, 1996:

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<PAGE> 997
<TABLE>
<CAPTION>
Brokerage
Net Commissions in
Underwriting Compensation on Connection
Discounts and Redemption and with Fund Other
Fund Commissions(1) Repurchase(2) Transactions Compensation(3)
---- -------------- ------------- ------------ ---------------

<S> <C> <C> <C> <C>
Short-Term $ 36,449.57 $498.99 $712.50 $ 53,369
Bond

Intermediate $ 40,870.48 N/A $937.50 $123,353
Government
Income

High Quality $ 64,095.72 $951.21 $331.47 $ 42,536
Bond

Corporate Bond $ 0 N/A $ 0 $ 0

Tax-Exempt $ 32,788.31 $ 0 $ 0 $ 42,656
Bond

New York $ 58,159.81 N/A $187.50 $ 61,415
Municipal
Bond

Connecticut $ 28,847.40 N/A $ 0 $ 36,247
Municipal
Bond

Massachusetts $119,132.24 N/A $ 0 $ 38,098
Municipal
Bond

Rhode Island $ 27,226.75 N/A $ 0 $ 0
Municipal
Bond
</TABLE>

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

(1) Represents amounts received from front-end sales charges on Retail A
Shares and commissions received in connection with sales of Retail B
Shares.

(2) Represents amounts received from contingent deferred sales charges on
Retail B Shares. The basis on which such sales charges are paid is
described in the Prospectus relating to Retail B Shares. All such amounts
were paid to affiliates of Fleet.

(3) Represents payments made under the Shareholder Services Plan and
Distribution and Services Plan that have been adopted by Galaxy during the
fiscal year ended October 31, 1996, which includes fees accrued in the
fiscal year ended October 31, 1995 which were paid in 1996 (see
"Shareholder Services Plan" and "Distribution and Services Plan" above).

AUDITORS

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<PAGE> 998
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. 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, Cityplace, 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

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

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

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

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<PAGE> 999
b = expenses accrued for the period
(net of reimbursements);

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

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

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

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

-60-
<PAGE> 1000
value that are less than the then-remaining portion of the original issue
discount (market premium), the yield to maturity is based on the market value.

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

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 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 for the 30-
day period ended October 31, 1996 were 4.72%, 5.30%, 5.29%, 4.32%, 4.49%, 4.30%,
4.31% and 4.47%, respectively, and (ii) the 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, 1996 were 6.26%, 7.06%, 6.53%, 7.09% and 7.39%,
respectively.

Based on the foregoing calculation, (i) the standard yields for Retail B
Shares of the Short-Term Bond, High Quality Bond and Tax-Exempt Bond Funds for
the 30-day period ended October 31, 1996 were 4.38%, 5.00% and 3.98%,
respectively, and (ii) the
-61-
<PAGE> 1001
tax-equivalent yield for Retail B Shares of the Tax-Exempt Bond Fund for the
30-day period ended October 31, 1996 was 5.76%.

Based on the foregoing calculation, (i) the standard yield for Trust
Shares of the Short-Term Bond, Intermediate Government Income, High Quality
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, 1996 were 5.17%, 5.83%, 5.72%, 5.90%, 4.74%, 4.89%, 4.70% and
4.69%, 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, 1996
were 6.87%, 7.69%, 7.13% and 7.73%, respectively.

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

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

Where: T = average annual total return;

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

The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment

-62-
<PAGE> 1002
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, 1996 was
72.21%. From September 1, 1988 (inception) to October 31, 1996, the average
annual total return for Retail A Shares of the Intermediate Government Income
Fund was 6.88%. For the one-year and five-year periods ended October 31, 1996,
the average annual total returns for Retail A Shares of the Intermediate
Government Income Fund were (0.30)% and 5.01%, respectively.

Aggregate total returns for Retail A Shares of the High Quality Bond Fund
from December 14, 1990 (inception) to October 31, 1996 was 52.80%. From December
14, 1990 (inception) to October 31, 1996, the average annual total return for
Retail A Shares of the High Quality Bond Fund was 7.48%. For the one-year period
ended October 31, 1996, the average annual total return for Retail A Shares of
the High Quality Bond Fund was 0.37%.

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, 1996 were 23.02%, 31.67% and 29.28%, respectively.
From December 30, 1991 (inception) to October 31, 1996, average annual total
returns for Retail A Shares of the Short-Term Bond, Tax-Exempt Bond and New York
Municipal Bond Funds were 4.38%, 5.86% and 5.45%, respectively. For the one-year
period ended October 31, 1996, the average annual total returns for Retail A
Shares of the Short-Term Bond, Tax-Exempt Bond and New York Municipal Bond Funds
were 0.72%, 0.84% and 0.39%, respectively.

Aggregate total return for Retail A Shares of the Connecticut Municipal
Bond Fund from March 16, 1993 (inception) to October 31, 1996 was 14.29%; and
for Retail A Shares of the Massachusetts Municipal Bond Fund from March 12, 1993
(inception) to October 31, 1996 was 13.09%. From March 16, 1993 (inception) to
October 31, 1996, average annual total return for Retail A Shares of the
Connecticut Municipal Bond Fund was 3.75%. From March 12, 1993 (inception) to
October 31, 1996, average annual total return for Retail A Shares of the
Massachusetts Municipal Bond Fund was 3.44%. For the one-year period ending
October 31, 1996, the average annual total returns for Retail A Shares of the
Connecticut Municipal Bond and

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<PAGE> 1003
Massachusetts Municipal Bond Funds were 0.45% and 0.14%, respectively.

Aggregate total return for Retail A Shares of the Rhode Island Municipal
Bond Fund from December 20, 1994 (inception) to October 31, 1996 was 12.70%.
From December 20, 1994 (inception) to October 31, 1996, average annual total
return for Retail A Shares of the Rhode Island Municipal Bond Fund was 6.62% .
For the one-year period ended October 31, 1996, the average annual return for
Retail A Shares of the Rhode Island Municipal Bond Fund was 1.23%.

Aggregate total return for Trust Shares of the Intermediate Government
Income Fund for the period September 1, 1988 (inception) to October 31, 1996 was
80.02%. From September 1, 1988 (inception) to October 31, 1996, average annual
total return for Trust Shares of the Intermediate Government Income Fund was
7.47%. For the one-year and five-year periods ended October 31, 1996, the
average annual total returns for Trust Shares of the Intermediate Government
Income Fund were 3.88% and 5.95%, respectively.

Aggregate total return for Trust Shares of the High Quality Bond Fund from
December 14, 1990 (inception) to October 31, 1996 was 59.39%. From December 14,
1990 (inception) to October 31, 1995, average annual total return for Trust
Shares of the High Quality Bond Fund was 8.25%. For the one-year period ended
October 31, 1996, the average annual total return for Trust Shares of the High
Quality Bond Fund was 4.46%.

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, 1996 were 28.50%, 37.42% and 34.88%, respectively.
From December 30, 1991 (inception) to October 31, 1996, average annual total
returns for Trust Shares of the Short-Term Bond, Tax-Exempt Bond and New York
Municipal Bond Funds were 5.32%, 6.79% and 6.38%, respectively. For the one-year
period ended October 31, 1996, the average annual total returns for Trust Shares
of the Short-Term Bond, Tax-Exempt Bond and New York Municipal Bond Funds were
4.91%, 5.03% and 4.55%, respectively.

Aggregate total returns for Trust Shares of the Connecticut Municipal Bond
Fund from March 16, 1993 (inception) to October 31, 1996 was 19.30% and for
Trust Shares of the Massachusetts Municipal Bond Fund from March 12, 1993
(inception) to October 31, 1996 was 17.95%. From March 16, 1993 (inception) to
October 31, 1996, the average annual total return for Trust Shares of the
Connecticut Municipal Bond Fund was 4.99%. From March 12, 1993 (inception) to
October 31, 1996, average annual total return for Trust Shares of the
Massachusetts Municipal Bond Fund was 4.64%. For the one-year period ended

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<PAGE> 1004
October 31, 1996, the average annual total returns for Trust Shares of the
Connecticut Municipal Bond and Massachusetts Municipal Bond Funds were 4.54% and
4.27%, respectively.

Aggregate total return for Trust Shares of the Corporate Bond Fund from
December 12, 1994 (inception) to October 31, 1996 was 19.54%. From December 12,
1994 (inception) to October 31, 1996, average annual total return for Trust
Shares of the Corporate Bond Fund was 9.92%. For the one-year period ended
October 31, 1996, the average annual total return for Trust Shares of the
Corporate Bond Fund was 5.00%.

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 3, 1997, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail A
Shares of each of Galaxy's investment portfolios (including shares of the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds) were as follows: Tax-Exempt Money Market Fund -- Hope H. Van Beuren, East
Main RR 25 Enterprise Center, Middletown, Rhode Island 02842 (13.14%);
Massachusetts Municipal Money Market Fund -- Joel Alvord, DBA Chestnut
Associates, 20 Rowes Wharf, Unit 710, Boston, Massachusetts 02110 (13.20%);
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14638 (35.27%); Connecticut Municipal Money Market Fund --
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14638 (29.95%); Massachusetts Municipal Bond Fund -- Leonard
M. Caruso, 225 Lynn Fella Parkway, Sangus, Masschusetts 09106-3119 (5.14%); and
Rhode Island Municipal Bond Fund -- James R. McCulloch c/o Microfibre,

-65-
<PAGE> 1005
P.O. Box 1208, Pawtucket, Rhode Island 02860 (7.21%); Norstar Trust Company,
Galles & Co.; Funds Control, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York (46.39%).

As of February 3 , 1997, 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 (including shares of the
Institutional Treasury Money Market Fund) were as follows: Money Market Fund --
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14863 (98.53%); Government Money Market Fund -- Fleet New
York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C, Rochester,
New York 14638 (97.86%); U.S. Treasury Money Market Fund -- Fleet New York,
Fleet Investment Services, 159 East Main Street, NY/RO/TO3C, Rochester, New York
14638 (95.32%); Tax-Exempt Money Market Fund -- Fleet New York, Fleet Investment
Services, 159 East Main Street, NY/RO/TO3C, Rochester, New York 14638 (99.50%);
Institutional Treasury Money Market Fund -- Security-Connecticut Life Insurance
Co., Attn: Investment Department, 20 Security Drive, Avon, Connecticut 06001
(7.76%); Fleet New York, Fleet Investment Services, 159 East Main Street;
NY/RO/TO3C, Rochester, New York 14638 (89.62%); Equity Value Fund -- Norstar
Trust Company, Gales & Co., Funds Control, Account 00000003294, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (21.28%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000064, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (74.15%); Equity Growth Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000030718, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (14.58%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000010017, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (20.03%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000082, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (64.76%); Equity Income Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000000037, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (13.49%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000003748, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (30.99%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000015771, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (54.90%); International Equity Fund
- -- Norstar Trust Company, Gales & Co., Funds Control, Account 00000004088, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (10.96%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000876, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (37.98%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000073, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (47.78%); Growth and Income Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 05000503793, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (38.98%); Norstar
Trust Company, Gales & Co., Funds Control, Account 05000603873, Attn: Julie
Hogestyn, One East Avenue,

-66-
<PAGE> 1006
Rochester, New York 14638 (59.43%); Asset Allocation Fund -- Norstar Trust
Company, Gales & Co., Funds Control, Account 00000006709, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (9.63%); Norstar Trust Company, Gales
& Co., Funds Control, Account 00000002508, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (14.30%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000073, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (76.07%); Small Company Equity Fund -- Norstar Trust
Company, Gales & Co., Funds Control, Account 00000006102, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (5.24%); Norstar Trust Company, Gales
& Co., Funds Control, Account 00000001492, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (24.42%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000046, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (67.93%); Small Cap Value Fund -- Norstar Trust
Company, Gales & Co., Funds Control, Account 05000503917, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (11.77%); Norstar Trust Company,
Gales & Co., Funds Control, Account 05000503999, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (85.30%); Short-Term Bond Fund -- Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000064, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (40.18%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000001090, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (13.75%); Norstar Trust Company,
Gales & Co., Funds Control, Account 00000008627, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (46.28%); Intermediate Government Income Fund
- -- Norstar Trust Company, Gales & Co., Funds Control, Account 00000007183, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (26.86%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000037, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (28.78%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000038408, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (43.37%); High Quality Bond Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000006095, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (11.50%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000001465, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (24.50%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000037, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (62.89%); Corporate Bond Fund
- -- Norstar Trust Company, Gales & Co., Funds Control, Account 00000000046, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (41.10%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000006102, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (48.20%); Tax-Exempt Bond
Fund -- Norstar Trust Company, Gales & Co., Funds Control, Account 00000000670,
Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638 (22.04%);
Norstar Trust Company, Gales & Co., Funds Control, Account 00000000028, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (33.58%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000005899, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (43.92%); New York
Municipal Bond Fund -- Norstar Trust Company, Gales & Co., Funds Control,
Account 00000005292, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (9.95%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000000019, Attn: Julie Hogestyn, One

-67-
<PAGE> 1007
East Avenue, Rochester, New York 14638 (12.52%); Norstar Trust Company, Gales &
Co., Funds Control, Account 00000001107, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (76.77%); Connecticut Municipal Bond Fund -- Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000037, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (41.88%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000019, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (52.89%); and Massachusetts Municipal
Bond Fund -- Norstar Trust Company, Gales & Co., Funds Control, Account
00000000073, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(32.81%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000000019, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(67.19%).

As of February 3, 1997, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail B
Shares of Galaxy's investment portfolios were as follows: High Quality Bond Fund
- -- Michael J. Sangiacomo, 4 Hubbard Road, Hartford, Connecticut 06114 (6.13%);
Colonial Marble Co., Inc., Stephen B. Fichera, 25 Garvey Street, P.O. Box 187,
Everett, Massachusetts 02149 (6.88%); Helen M. Boylan, 21 Putnam Lane, Danvers,
Masachusetts 01923 (7.23%); Thomas R. Spaltabak, 950 Rice Road, Elma, New York
14059-9583 (10.50%); Short-Term Bond Fund -- Leonard J. Mercer, 21 Portsmouth
Road, Amesbury, Massachusetts 01913 (5.87%); Natale Costa and Mary Castle
JTWROS, 11 Maple Avenue, Hopkinton, Massachusetts 01748 (9.09%); Chelsea Police
Relief Association, John R. Phillips, Treasurer and Michael McCona, Clerk, 19
Park Street, Chelsea, Massachsuetts 02150 (9.44%); Michael J. Sangiacomo, 4
Hubbard Road, Hartford, Connecticut 06114 (10.37%); Colonial Marble Co., Inc.,
Stephen B. Fichera, 25 Garvey Street, P.O. Box 187, Everett, Massachusetts 02149
(20.69%); and Tax-Exempt Bond Fund -- Betsy Royal, 51 Hoyt Street, New Canann,
Connecticut 06840-5618 (5.48%); Edward A. Pitts, P.O. Box 119, 152 Maih Street,
Broad Brook, Connecticut 06016 (5.58%); William R. Droll and William F. Droll
JTWROS, 16 Manning Drive, Lowell, Massachusetts 01851-3930 (5.64%); Louis Dicola
and Ester Dicola JTWROS, 4 April Court, Providence, Rhode Island 02908-2111
(8.78%); David Fendler and Sylvia Fendler JTWROS, 72 Brinkenhoff Avenue,
Stamford, Connecticut 06905 (9.57%); Leonard F. Szadtowski and Francis Willy
JTWROS, 162 Friendship Street, Bolivar, New York 14715 (9.61%); Jeannette E.
Seiter, 121 Schuyler Street, Boonville, New York 13309 (9.96%); Katrina A.
Seiter, 121 Schuyler Street, Boonville, New York 13309 (11.06%).

-68-
<PAGE> 1008
Coolidge, Attn: Richard Ferrari, 230 Congress Street, Boston, Massachusetts
02110 (15.19%); Institutional Treasury Money Market Fund -- Charon Industries
Inc. IM, c/o Robert J. McDermott, 370 Old Country Road, Garden City, New York
11530 (5.85%); Equity Value Fund -- Fleet Savings Plus Plan, Fleet Financial
Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (12.36%); Equity
Growth Fund -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy
Plaza, Providence, Rhode Island 02903 (22.12%); International Equity Fund --
Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (9.73%); FFG Retirement & Pension Equity, Fleet
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(19.23%); Growth and Income Fund -- Fleet Savings Plus Plan, Fleet Financial
Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (40.32%); Asset
Allocation Fund -- Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence,
Rhode Island 02903 (25.91%); Small Company Equity Fund -- Fleet Savings Plus
Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island
02903 (40.41%); Small Cap Value Fund -- Fleet Bank N.A., Rogers Corp, Attn:
James DeLucin, Fleet Bank CT, 157 Church Street, P.O. Box 1909, New Haven,
Connecticut 06509 (6.92%); FFG Employee Retirement Miscellaneous Assets, Fleet
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(31.25%); Intermediate Government Income Fund -- NUSCO Retiree Health VEBA
Trust, P.O. Box 270, Hartford, Connecticut 06141 (5.69%); High Quality Bond Fund
- -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (25.76%); Corporate Bond Fund -- Cole Hersee
Pension, C/o Fleet Financial Group, Inc., One East Avenue, Rochester, New York
11530 (5.62%); BNE Unified Retirement Trust, Attn: Ben Branch, Trustee, 21
Merchants Road, Boston, Massachusetts 02109 (21.29%); Tax-Exempt Bond Fund --
Nusco Retiree Health, P.O. Box 270, Hartford, Connecticut 06141 (31.59%);
Connecticut Municipal Bond Fund -- Robert A. Simons, c/o Fleet Financial Group,
Inc., One East Avenue, Rochester, New York 11530 (5.81%); Ruthan Wein, 18
Timberlane Drive, Farmington, Connecticut 06032 (6.35%); Florence M. Roberts,
336 Drummond Road, Orange, Connecticut 06477 (7.55%); and Massachusetts
Municipal Bond Fund -- Philip H. Tobey, c/o Fleet Financial Group, Inc., One
East Avenue, Rochester, New York 11530 (5.33%); Margaret U. Davis, 8 Kilsyth
Terrace #21, Brighton, Massachusetts 02146 (5.53%); Alice Gardner, c/o Fleet
Financial Group, Inc., One East Avenue, Rochester, New York 11530 (5.53%).

FINANCIAL STATEMENTS

-69-
<PAGE> 1009
by reference. The Financial Statements included in the Annual Reports for the
Funds for the fiscal year ended October 31, 1996 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 by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

-70-
<PAGE> 1010
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 conditions and circumstances
than bonds with higher ratings. BBB bonds are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic

A-1
<PAGE> 1011
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 Moody's for tax-exempt and corporate bonds are
Aaa, Aa, A and Baa. Tax-exempt and corporate bonds rated Aaa are judged to be of
the "best quality." The rating of Aa is assigned to bonds which are of "high
quality by all standards." Aa bonds are rated lower than Aaa bonds because
margins of protection may not be as large or fluctuations of protective elements
may be of greater amplitude or there may be other elements which make the
long-term risks appear somewhat larger. Bonds that are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present that suggest a susceptibility to impairment
sometime in the future. Bonds that are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. Moody's
may modify a rating of Aa, A or Baa by adding numerical modifiers of 1, 2 or 3
to show relative standing within these categories. The foregoing ratings are
sometimes presented in parentheses preceded with a "con" indicating the bonds
are rated conditionally. Such parenthetical rating denotes the probable credit
stature upon

A-2
<PAGE> 1012
completion of construction or elimination of the basis of the condition.

Corporate and Tax-Exempt Commercial Paper Ratings

A-3
<PAGE> 1013
Fitch's short-term ratings apply to tax-exempt and corporate debt
obligations that are payable on demand or have original maturities of up to
three years. The four highest ratings of Fitch for short-term securities are
F-1+, F-1, F-2 and F-3. F-1+ securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment. F-1 securities possess very strong credit
quality. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+. F-2 securities possess good
credit quality. Issues carrying this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories. F-3 securities possess fair credit quality. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade. Fitch may also
use the symbol "LOC" with its short-term ratings to indicate that the rating is
based upon a letter of credit issued by a commercial bank.

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

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

A-4
<PAGE> 1014
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.

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

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> 1015
differences between short-term credit risk and long-term risk. Loans bearing the
designation MIG-1 or VMIG-1 are of the best quality, enjoying strong protection
by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing. Loans bearing the designation
MIG-2 or VMIG-2 are of high quality, with margins of protection ample although
not so large as with loans rated MIG-1 or VMIG-1. Loans bearing the designation
MIG-3 or VMIG-3 are of favorable quality with all security elements accounted
for but lacking the undeniable strength of the preceding grades. Liquidity and
cash flow protection may be narrow and market access for refinancing is likely
to be less well established. Loans bearing the designation MIG-4 or VMIG-4 are
of adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.

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

A-6
<PAGE> 1016
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

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

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

B-1
<PAGE> 1017
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.

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.

B-2
<PAGE> 1018
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.

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.

B-3
<PAGE> 1019
by the 5 point gain realized by closing out the futures contract purchase.

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

II. Municipal Bond Index Futures Contracts

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

The Tax-Exempt Bond Fund, 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

B-4
<PAGE> 1020
occurring prior to sales 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:

B-5
<PAGE> 1021
<TABLE>

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

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> 1022
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 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
Fleet.

B-7
<PAGE> 1023
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.

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

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

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

B-8
<PAGE> 1024
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 contract. However, as described
above, there is no guarantee that the price of the securities will in fact
correlate with the price movements in the futures contract and thus provide an
offset on a futures contract.

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

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

B-9
<PAGE> 1025
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 28, 1997

<PAGE> 1026

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 28, 1997 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 01581-5108 or by calling Galaxy at
1-800-628-0414.

<PAGE> 1027

TABLE OF CONTENTS

Page
----

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................................ 24

ADVISORY, SUB-ADVISORY, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS................................ 25
Custodian and Transfer Agent..................................... 28

PORTFOLIO TRANSACTIONS.................................................... 29

SHAREHOLDER SERVICES PLAN................................................. 31

DISTRIBUTION AND SERVICES PLAN............................................ 32

DISTRIBUTOR............................................................... 34

AUDITORS.................................................................. 36

COUNSEL................................................................... 36

PERFORMANCE AND YIELD INFORMATION......................................... 37

MISCELLANEOUS............................................................. 41

FINANCIAL STATEMENTS...................................................... 45

APPENDIX A................................................................ A-1

-i-

<PAGE> 1028

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, Fleet Investment Advisors Inc.
("Fleet"), the investment adviser to the Funds, 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 instruments, which are also known as
collateralized obligations,

<PAGE> 1029

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.

REPURCHASE AGREEMENTS; REVERSE REPURCHASE AGREEMENTS; LOANS OF
PORTFOLIO SECURITIES

The Funds may enter into repurchase agreements. The repurchase price
under a repurchase agreement 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 a repurchase agreement 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").

-2-
<PAGE> 1030

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.

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,

-3-
<PAGE> 1031
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, Oechsle International Advisors, L.P. ("Oechsle") the Fund's sub-adviser,
believes 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 income tax purposes, and losses on
closing purchase transactions are treated as short-term capital losses.

-4-
<PAGE> 1032

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 Oechsle'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.

-5-
<PAGE> 1033

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 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.

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.

-6-
<PAGE> 1034

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

3. Purchase or sell real estate; except that each Fund may
purchase securities that are secured by real estate, and 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.

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:

-7-
<PAGE> 1035

(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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Funds are sold on a continuous basis by First Data
Distributors, Inc. ("FD Distributors"), and FD Distributors has agreed to use
appropriate efforts to solicit all purchase orders. As described in the
applicable Prospectus, 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 FIS Securities, Inc.,
Fleet Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises,
Inc., Fleet Financial Group, Inc., its affiliates, their correspondent banks,
and other qualified banks, savings and loan associations and broker/dealers
("Institutions"). As described in the applicable Prospectus, Retail A Shares of
the Funds and Retail B Shares of the CDSC 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"). As described in the applicable Prospectuses, Trust Shares in the
Funds 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.
Shares of the International Equity Fund are also available for purchase by
clients, partners and employees of Oechsle.

-8-
<PAGE> 1036

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 Prospectus.

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, 1996, is as follows:

<TABLE>
<CAPTION>
Equity Value Equity Growth
Fund Fund
--------------- ---------------
<S> <C> <C>
Net Assets ......................... $ 131,997,695 $ 160,800,425
Outstanding Shares ................. 8,269,298 7,893,497
Net Asset Value Per Share .......... $ 15.96 $ 20.37
Sales Charge (3.75% of
the offering price) ................ $ 0.62 $ 0.79
Offering to Public ................. $ 16.58 $ 21.16

Equity International
Income Fund Equity Fund
--------------- ---------------
Net Assets ......................... $ 126,951,595 $ 35,143,798
Outstanding Shares ................. 7,506,038 2,521,956
Net Asset Value Per Share .......... $ 16.91 $ 13.94
Sales Charge (3.75% of
the offering price) ................ $ 0.66 $ 0.54
Offering to Public ................. $ 17.57 $ 14.48
</TABLE>

-9-
<PAGE> 1037

<TABLE>
<CAPTION>
Small Company Asset
Equity Fund Allocation Fund
--------------- ---------------
<S> <C> <C>
Net Assets ......................... $ 111,100,513 $ 116,851,805
Outstanding Shares ................. 5,567,469 8,046,520
Net Asset Value Per Share .......... $ 19.96 $ 14.52
Sales Charge (3.75% of
the offering price) ................ $ 0.78 $ 0.57
Offering to Public ................. $ 20.74 $ 15.09
</TABLE>

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

DESCRIPTION OF SHARES

-10-
<PAGE> 1038

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 FD Distributors and to Service
Organizations under the Distribution and Services Plan.

-11-
<PAGE> 1039

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 effectively acted
upon by shareholders of Galaxy voting without regard to class or series.

-12-
<PAGE> 1040

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 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.

-13-
<PAGE> 1041

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
"Income Requirement"). 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.

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 "Short-Short Gain 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
Short-Short Gain 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

-14-
<PAGE> 1042

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 the mark-to-market rules) 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 Short-Short
Gain Test is met.

-15-
<PAGE> 1043

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."

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) if the
shareholder itemizes deductions, to deduct such portion from their U.S taxable
income, if any, should the shareholder so choose. 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. Certain limitations are imposed on 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 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.

-16-
<PAGE> 1044

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 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 which 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

-17-
<PAGE> 1045

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 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

-18-
<PAGE> 1046
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> 1047
<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 Fire
Age 62 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.

-20-

<PAGE> 1048
<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 70 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 55 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> 1049
<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 law firm
Philadelphia National Drinker Biddle & Reath,
Bank Building Philadelphia,
Broad & Chestnut Sts. Pennsylvania.
Philadelphia, PA 19107
Age 53

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

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

Effective November 1, 1996, each trustee receives an annual aggregate
fee of $29,000 for his services as a trustee of Galaxy, The Galaxy VIP Fund
("Galaxy VIP") and Galaxy Fund II ("Galaxy") (collectively, the "Trusts"), plus
an additional $2,250 for each in-person Galaxy Board meeting attended and $1,500
for each in- person Galaxy VIP or Galaxy II Board meeting attended not held
concurrently with an in-person Galaxy meeting, and is reimbursed for expenses
incurred in attending all meetings. Each trustee also receives $500 for each
telephone Board meeting in which the trustee participates, $1,000 for each
in-person Board committee meeting attended and $500 for each telephone Board
committee meeting in which the trustee participates. The Chairman of the Boards
of the Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets.

-22-

<PAGE> 1050
Annual fees to the Chairman of the Boards and the President and Treasurer of the
Trusts were the same as the current fees as were the fees for telephone and
Board committee meetings.

No employee of First Data Investor Services Group, Inc., ("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
Oechsle, serves as a trustee, officer or employee of Galaxy. The trustees and
officers of Galaxy own less than 1% of its outstanding shares.

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

-23-

<PAGE> 1051
<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 $26,702 None $35,000
Trustee

Dwight E. Vicks, Jr. $29,124 None $37,450
Chairman and Trustee

Donald B. Miller** $26,776 None $31,000
Trustee

Rev. Louis DeThomasis $25,713 None $34,000
Trustee

John T. O'Neill $26,702 None $34,250
President, Treasurer
and Trustee

James M. Seed** $25,713 None $34,000
Trustee
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of $10,976
and $17,967 accrued during Galaxy's fiscal year ended October 31, 1996
for Messrs. Miller and Seed, respectively.

SHAREHOLDER AND TRUSTEE LIABILITY

-24-

<PAGE> 1052
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.

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, 1994, October 31, 1995 and October
31, 1996 advisory fees (net of expense reimbursements) of $1,570,179,
$1,797,623 and $2,220,230, respectively, with respect to the Equity Value
Fund; and $3,192,753, $3,406,615 and $4,746,270, 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.

-25-
<PAGE> 1053
For the fiscal years ended October 31, 1994, October 31, 1995 and
October 31, 1996, Galaxy paid Fleet advisory fees (net of fee waivers ) of
$1,008,936, $1,097,887 and $1,533,644, respectively, with respect to the
Equity Income Fund. 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, 1994, October 31, 1995 and
October 31, 1996, Fleet received advisory fees (net of expense reimbursements)
of $585,753, $807,983 and $1,447,310, respectively, with respect to the Small
Company Equity Fund; and $978,630, $982,310 and $1,459,822, respectively, with
respect to the Asset Allocation Fund. For the fiscal years ended October 31,
1994, October 31, 1995 and October 31, 1996, Fleet reimbursed advisory fees of
$7,017, $11,087 and $331, respectively, with respect to the Small Company
Equity Fund; and $6,171, $37,161 and $12,512, respectively, with respect to
the Asset Allocation Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and
October 31, 1996, Fleet received advisory fees (net of fee waivers and/or
expense reimbursements) of $658,583, $850,924 and $1,154,303, respectively,
with respect to the International Equity Fund. During the same periods, Fleet
waived advisory fees of $232,756, $291,265 and $464,938, respectively, with
respect to the International Equity Fund. For the fiscal year ended October 31,
1994, Fleet reimbursed advisory fees of $3,042 with respect to the International
Equity Fund.

The advisory agreement provides that Fleet 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 Fleet 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, 1997, 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

-26-
<PAGE> 1054
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 Bank, an affiliate of Fleet, 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 Bank and
FDISG, Fleet Bank will be paid $21.00 per year for each defined contribution
plan participant account. As of October 31, 1996, there were approximately
80,883 defined contribution plan participant sub-accounts invested in Trust
Shares of the Funds; thus it is expected that Fleet Bank will receive annually
approximately $1,412,651 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.

Oechsle, with principal offices at One International Place, Boston,
Massachusetts 02210, serves as sub-adviser to the International Equity Fund.
Oechsle is a Delaware limited partnership. The general partner of Oechsle is
Oechsle Group, L.P., and the managing general partner of Oechsle Group, L.P. is
Walter Oechsle. As of December 31, 1996, Oechsle had discretionary management
authority with respect to approximately $9.2 billion of assets.

Under its sub-advisory agreement with Fleet, Oechsle 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 Fleet with foreign broker research and a
quarterly review of international economic and investment developments. Fleet,
among other things, assists and consults with Oechsle in connection with the
International Equity Fund's continuous investment program; approves lists of
foreign countries recommended by Oechsle 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 Oechsle with
information concerning relevant economic and political developments. Oechsle
will provide services under this agreement in accordance with the Fund's
investment objectives, policies and restrictions. Unless sooner terminated by
Fleet 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 period from August 12,
1996 through October 31, 1996, Oechsle received sub-advisory fees of $119,374
with respect to the International Equity Fund.

-27-
<PAGE> 1055
Prior to August 12, 1996, Wellington Management Company served as
sub-adviser to the International Equity Fund. For the fiscal years ended October
31, 1994 and October 31, 1995 and for the period from November 1, 1995 through
August 11, 1996, Wellington Management Company received sub-advisory fees of
$350,844, $423,376 and $431,198, with respect to the International Equity
Fund.

For the fiscal years ended October 31, 1994, October 31, 1995 and
October 31, 1996, FDISG and/or its predecessors received administration fees of
$176,963, $210,049 and $251,209, respectively, with respect to the Equity
Value Fund; $357,466, $398,623 and $536,874, respectively, with respect to the
Equity Growth Fund; $116,740, $130,993 and $174,406, respectively, with
respect to the Equity Income Fund; $71,393, $97,015 and $141,571,
respectively, with respect to the International Equity Fund; $66,941, $95,582
and $176,590, respectively, with respect to the Small Company Equity Fund; and
$110,982, $118,968 and $165,077, respectively, with respect to the Asset
Allocation Fund.

CUSTODIAN AND TRANSFER AGENT

-28-
<PAGE> 1056
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 with dealers and the costs of such transactions involve
dealer spreads rather than brokerage commissions. With respect to
over-the-counter transactions, Fleet and Oechsle 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, 1994, October 31, 1995 and
October 31, 1996, the Equity Value Fund paid brokerage commissions aggregating
$492,387, $588,613 and $790,862,

-29-
<PAGE> 1057
respectively; the Equity Growth Fund paid brokerage commissions aggregating
$151,586, $192,433 and $539,416, respectively; the Equity Income Fund paid
brokerage commissions aggregating $158,677, $108,082 and $217,231,
respectively, the Asset Allocation Fund paid brokerage commissions aggregating
$101,007, $101,436 and $112,582, respectively; the Small Company Equity Fund
paid brokerage commissions aggregating $107,265, $109,014 and $258,606,
respectively; and the International Equity Fund paid brokerage commissions
aggregating $424,413, $341,377 and $1,155,060, 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 Oechsle 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 Oechsle 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,
Fleet, Oechsle, 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 Funds have acquired during Galaxy's most recent fiscal
year. At October 31, 1996, (a) the Equity Value Fund held common stock of Chase
Manhattan Corp. in the amount of $5,110,700 and had entered into a repurchase
transaction with Chase Securities, Inc. in the amount of $28,541,624 to be
repurchased on November 1, 1996 at $28,545,945; (b) the Equity Growth Fund held
common stock of Chase Manhattan Corp. in the amount of $10,718,750 and had
entered into a repurchase transaction with Chase Securities, Inc. in the amount
of $33,749,231 to be repurchased on November 1, 1996 at $33,754,341; (c) the
Equity Income Fund had entered into a repurchase transaction with Chase
Securities, Inc. in the amount of $41,255,979 to be repurchased on November 1,
1996 at $41,262,225; (d) the Small Company Equity Fund had entered into a
repurchase transaction with Chase Securities, Inc. in the amount of $12,320,320
to be repurchased on November 1, 1996 at $12,322,185; and (e) the Asset
Allocation Fund had entered into a repurchase transaction with Chase Securities,
Inc. in the amount of $28,461,013 to be repurchased on November 1, 1996 at
$28,465,322. Chase Manhattan Bank, the parent of Chase Securities, Inc., is
considered "regular broker or dealer" of Galaxy.

-30-
<PAGE> 1058
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 Oechsle. 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 Oechsle 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 Oechsle 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

For the one-month period October 1, 1994 (date of implementation of the
Services Plan) through October 31, 1994, 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 years ended October 31, 1995 and October 31,
1996, payments to Service Organizations totaled $245,304 and $331,670,
respectively, with respect to Retail A Shares of the Equity Value Fund; $237,326
and

-31-
<PAGE> 1059
$356,642, respectively, with respect to Retail A Shares of the Equity Growth
Fund; $203,471 and $309,334, respectively, with respect to Retail A Shares of
the Equity Income Fund; $93,434 and $79,239, respectively, with respect to
Retail A Shares of the International Equity Fund; $102,102 and $172,887,
respectively, with respect to Retail A Shares of the Small Company Equity Fund;
and $205,546 and $267,695, respectively, with respect to Retail A Shares of
the Asset Allocation Fund.

Galaxy's Servicing Agreements are governed by the Services Plan that
has been adopted by Galaxy's Board of Trustees in connection with the offering
of Retail A Shares of each Fund. Pursuant to the Services Plan, the Board of
Trustees reviews, at least quarterly, a written report of the amounts paid under
the Servicing 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 (the "12b-1 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 and Asset Allocation Funds.
The 12b-1 Plan is described in the applicable Prospectus.

Under the 12b-1 Plan, 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

-32-
<PAGE> 1060
.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 Statement of Additional
Information, Galaxy intends to limit the Funds' payments for shareholder liaison
and administrative support services under the 12b-1 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 12b-1 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 12b-1 Plan
provides that a report of the amounts expended under the 12b-1 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 12b-1 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 12b-1 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 12b-1 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").

For the period from March 4, 1996 (date of initial public offering of
Retail B Shares) through October 31, 1996, Retail B Shares of the Equity Value,
Equity Growth, Small Company Equity and Asset Allocation Funds bore the
following distribution and shareholder servicing fees until the 12b-1 Plan:
$3,518 in distribution fees and $1,624 in shareholder servicing fees with
respect to Retail B Shares of the Equity Value Fund; $7,613 in distribution
fees and $3,514 in shareholder servicing fees with respect to Retail B Shares
of the Equity Growth Fund; $7,282 in distribution fees and $3,361 in
shareholder servicing fees with respect to Retail B Shares of the Small Company
Equity Fund; and $6,389 in distribution fees and $2,949 in shareholder
servicing fees with respect to Retail B Shares of the Asset Allocation Fund. For
the fiscal year ended October 31, 1996, all amounts paid under the 12b-1 Plan
were attributable to payments to broker-dealers.

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<PAGE> 1061
Galaxy's Board of Trustees has concluded that there is a reasonable
likelihood that the 12b-1 Plan will benefit the Funds and holders of Retail B
Shares. The 12b-1 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 12b-1 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 FD Distributors or by the Service Organization. An agreement will
also terminate automatically in the event of its assignment.

DISTRIBUTOR

FD Distributors is entitled to the payment of a front-end sales
charge on the sale of Retail A Shares of the Funds as described in the
applicable Prospectus. For the period December 1, 1996 (date of imposition of
such charge) through October 31, 1996, FD Distributors received front-end
sales charges in connection with Retail A Share purchases as follows: Equity
Value Fund -- $115,099; Equity Growth Fund -- $221,387; Equity Income Fund
- -- $310,366; International Equity Fund -- $41,596; Small Company Equity Fund
- -- $241,805; and Asset Allocation Fund -- $283,218. Of these amounts, the
Distributor

-34-
<PAGE> 1062
and affiliates of Fleet retained $0 and $115,099, respectively, with respect
to the Equity Value Fund; $0 and $221,387, respectively, with respect to the
Equity Growth Fund; $0 and $310,366, respectively, with respect to the
Equity Income Fund; $0 and $41,596, respectively, with respect to the
International Equity Fund; $0 and $241,805, respectively, with respect to
the Small Company Equity Fund; and $0 and $283,218, respectively, with
respect to the Asset Allocation Fund.

FD Distributors is also entitled to the payment of contingent
deferred sales charges upon the redemption of Retail B Shares of the Funds. For
the period from March 4, 1996 (date of the initial public offering of Retail B
Shares) through October 31, 1996, FD Distributors received contingent deferred
sales charges in connection with Retail B Share redemptions as follows: Equity
Value Fund -- $1,517; Equity Growth Fund -- $7,662; Small Company Equity Fund
- -- $3,507; and Asset Allocation Fund -- $4,687. All such amounts were paid
over to affiliates of Fleet.

The following table shows all sales charges, commissions and other
compensation received by FD Distributors directly or indirectly from the Funds
during the fiscal year ended October 31, 1996:

-35-
<PAGE> 1063
<TABLE>
<CAPTION>
Brokerage
Net Commissions in
Underwriting Compensation on Connection
Discounts and Redemption and with Fund Other
Fund Commissions(1) Repurchase(2) Transactions Compensation(3)
---- -------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Equity Value $116,541.61 $1,517.16 $ 75.00 $325,060

Equity Growth $228,205.15 $7,662.31 $ 843.75 $375,093

Equity Income $307,977.82 N/A $2,388.22 $305,009

International $ 41,360.91 N/A $ 235.09 $ 84,107
Equity

Small Company $240,361.40 $3,507.21 $4,950.66 $185,596
Equity

Asset $285,924.84 $4,686.95 $1,979.73 $275,020
Allocation
</TABLE>

- ----------------------
(1) Represents amounts received from front-end sales charges on Retail A
Shares and commissions received in connection with sales of Retail B
Shares.
(2) Represents amounts received from contingent deferred sales charges on
Retail B Shares. The basis on which such sales charges are paid is
described in the Prospectus relating to Retail B Shares. All such
amounts were paid to affiliates of Fleet.
(3) Represents payments made under the Shareholder Services Plan and
Distribution and Services Plan that have been adopted by Galaxy during
the fiscal year ended October 31, 1996, which includes fees accrued in
the fiscal year ended October 31, 1995, which were paid in 1996 (see
"Shareholder Services Plan" and "Distribution and Services Plan"
above).

AUDITORS

COUNSEL

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<PAGE> 1064
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.

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

-37-
<PAGE> 1065
(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 yield for Retail A
Shares of the Equity Value, Equity Growth, Equity Income, International Equity,
Small Company Equity and Asset Allocation Funds for the 30-day period ended
October 31, 1996 were 0.77%, 0.21%, 1.77%, (1.04)%, (1.15)% and 2.18%,
respectively.

Based on the foregoing calculation, the standard yield for Retail B
Shares of the Equity Value, Equity Growth, Small Company Equity and Asset
Allocation Funds for the 30-day period ended October 31, 1996 were 0.41%,
(0.24)%, (1.67)% and 1.89%,
respectively.

Based on the foregoing calculation, the standard yield for Trust Shares
of the Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation Funds for the 30-day period ended October
31, 1996 were 1.22%, 0.66%, 2.31%, (0.36)%, (0.75)% and 2.51%, 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

-38-
<PAGE> 1066
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

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 Equity Value Fund for
the period September 1, 1988 (inception) to October 31, 1996 was 166.63%. From
September 1, 1988 (inception) to October 31, 1996, average annual total return
for Retail A Shares of the Equity Value Fund was 12.76%. For the one-year and
five-year periods ending October 31, 1996, the average annual total returns for
Retail A Shares of the Equity Value Fund were 16.92% and 13.68%,
respectively.

Aggregate total returns for Retail A Shares of the Equity Growth and
Equity Income Funds from December 14, 1990 (inception) to October 31, 1996 were
117.53% and 104.45%, respectively. From December 14, 1990 (inception) to
October 31, 1996, average annual total returns for Retail A Shares of the Equity
Growth and Equity Income Funds were 14.13% and 12.93%, respectively. For the
one-year and five-year periods ending October 31, 1996, the average annual total
returns for Retail A Shares of the Equity Growth and Equity Income Funds were
16.01% and 12.37% and 14.57% and 12.08%, respectively.

Aggregate total returns for Retail A Shares of the Small Company
Equity, International Equity and Asset Allocation Funds

-39-
<PAGE> 1067
from December 30, 1991 (inception) to October 31, 1996 were 98.32%, 40.93% and
57.29%, respectively. From December 30, 1991 (inception) to October 31, 1996,
average annual total returns for Retail A Shares of the Small Company Equity,
Asset Allocation and International Equity Funds were 15.21%, 9.82% and
7.35%, respectively. For the one-year period ending October 31, 1996, the
average annual total returns for Retail A Shares of the Small Company Equity,
Asset Allocation and International Equity Funds were 19.36%, 12.53% and
6.73%, respectively.

Aggregate total returns for Retail B Shares of the Equity Value, Equity
Growth, Small Company Equity and Asset Allocation Funds from March 4, 1996 (date
of their initial public offering) to October 31, 1996 were 3.80%, 2.95%,
10.40% and 2.71%,
respectively.

Aggregate total return for Trust Shares of the Equity Value Fund for
the period September 1, 1988 (inception) to October 31, 1996 was 179.68%. From
September 1, 1988 (inception) to October 31, 1996, average annual total return
for Trust Shares of the Equity Value Fund was 13.42%. For the one-year and
five-year periods ending October 31, 1996, the average annual total returns for
Trust Shares of the Equity Value Fund were 22.05% and 14.77%, respectively.

Aggregate total returns for Trust Shares of the Equity Growth and
Equity Income Funds from December 14, 1990 (inception) to October 31, 1996 were
128.13% and 114.75%, respectively. From December 14, 1990 (inception) to
October 31, 1996, average annual total returns for Trust Shares of the Equity
Growth and Equity Income Funds were 15.06% and 13.88%, respectively. For the
one-year and five-year periods ending October 31, 1996, the average annual total
returns for Trust Shares of the Equity Growth and Equity Income Funds were
21.03% and 13.45% and 19.65% and 13.19%, respectively.

Aggregate total returns for Trust Shares of the Small Company Equity,
International Equity and Asset Alloation Funds from December 30, 1991
(inception) to October 31, 1996 were 108.62%, 48.20% and 64.29%,
respectively. From December 30, 1991 (inception) to October 31, 1996, average
annual total returns for Trust Shares of the Small Company Equity,
International Equity and Asset Allocation Funds were 16.42%, 8.48% and
10.81%, respectively. For the one-year period ending October 31, 1996, the
average annual total returns for Trust Shares of the Small Company Equity,
International Equity and Asset Allocation Funds were 24.75%, 11.51% and
17.19%, respectively.

-40-
<PAGE> 1068
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 3, 1997, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail A
Shares of each of Galaxy's investment portfolios (including shares of the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds) were as follows: Tax-Exempt Money Market Fund -- Hope H. Van Beuren, East
Main RR 25 Enterprise Center, Middletown, Rhode Island 02842 (13.14%);
Massachusetts Municipal Money Market Fund -- Joel Alvord, DBA Chestnut
Associates, 20 Rowes Wharf, Unit 710, Boston, Massachusetts 02110 (13.20%);
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14638 (35.27%); Connecticut Municipal Money Market Fund --
Fleet New York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C,
Rochester, New York 14638 (29.95%); Massachusetts Municipal Bond Fund -- Leonard
M. Caruso, 225 Lynn Fella Parkway, Sangus, Masschusetts 09106-3119 (5.14%); and
Rhode Island Municipal Bond Fund -- James R. McCulloch c/o Microfibre, P.O. Box
1208, Pawtucket, Rhode Island 02860 (7.21%); Norstar Trust Company, Galles &
Co.; Funds Control, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
(46.39%).

-41-
<PAGE> 1069
14638 (97.86%); U.S. Treasury Money Market Fund -- Fleet New York, Fleet
Investment Services, 159 East Main Street, NY/RO/TO3C, Rochester, New York 14638
(95.32%); Tax-Exempt Money Market Fund -- Fleet New York, Fleet Investment
Services, 159 East Main Street, NY/RO/TO3C, Rochester, New York 14638 (99.50%);
Institutional Treasury Money Market Fund -- Security-Connecticut Life Insurance
Co., Attn: Investment Department, 20 Security Drive, Avon, Connecticut 06001
(7.76%); Fleet New York, Fleet Investment Services, 159 East Main Street;
NY/RO/TO3C, Rochester, New York 14638 (89.62%); Equity Value Fund -- Norstar
Trust Company, Gales & Co., Funds Control, Account 00000003294, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (21.28%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000064, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (74.15%); Equity Growth Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000030718, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (14.58%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000010017, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (20.03%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000082, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (64.76%); Equity Income Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000000037, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (13.49%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000003748, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (30.99%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000015771, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (54.90%); International Equity Fund
- -- Norstar Trust Company, Gales & Co., Funds Control, Account 00000004088, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (10.91%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000876, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (37.98%); Norstar Trust
Company, Gales & Co., Funds Control, Account 00000000073, Attn: Julie Hogestyn,
One East Avenue, Rochester, New York 14638 (47.78%); Growth and Income Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 05000503793, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (38.98%); Norstar
Trust Company, Gales & Co., Funds Control, Account 05000603873, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (59.43%); Asset Allocation
Fund -- Norstar Trust Company, Gales & Co., Funds Control, Account 00000006709,
Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638 (9.63%);
Norstar Trust Company, Gales & Co., Funds Control, Account 00000002598, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (14.30%); Norstar
Trust Company, Gales & Co., Funds Control, Account 00000000073, Attn: Julie
Hogestyn, One East Avenue, Rochester, New York 14638 (76.07%); Small Company
Equity Fund -- Norstar Trust Company, Gales & Co., Funds Control, Account
00000006102, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(5.24%); Norstar Trust Company, Gales & Co., Funds Control, Account 00000001492,
Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638 (24.42%);

-42-
<PAGE> 1070
Norstar Trust Company, Gales & Co., Funds Control, Account 00000000046, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (67.93%); Small Cap
Value Fund -- Norstar Trust Company, Gales & Co., Funds Control, Account
05000503917, Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638
(11.77%); Norstar Trust Company, Gales & Co., Funds Control, Account 0500053990,
Attn: Julie Hogestyn, One East Avenue, Rochester, New York 14638 (85.30%);
Short-Term Bond Fund -- Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000064, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (40.18%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000001090, Attn: Julie Hogestyn, One East Avenue, Rochester, New York, 14638
(13.75%); Norstar Trust Company, Gales & Co., Funds Control, Account
00000008602, Attn: Julie Hogestyn, One East Avenue, Rochester, New York, 14638
(46.28%); Intermediate Government Income Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000007183, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (26.86%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000037, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (28.78%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000038408, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (43.37%); High Quality Bond Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000006095, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (11.50%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000001465, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (24.50%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000000037, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (62.89%); Corporate Bond Fund --Norstar Trust Company, Gales & Co., Funds
Control, Account 0000000046, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (41.10%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000006102, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (48.20%); Tax-Exempt Bond Fund -- Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000670, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (22.04%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000028, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (33.58%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000005899, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (43.92%); New York Municipal Bond Fund -- Norstar Trust Company, Gales &
Co., Funds Control, Account 00000005292, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (9.95%); Norstar Trust Company, Gales & Co., Funds
Control, Account 00000000019, Attn: Julie Hogestyn, One East Avenue, Rochester,
New York 14638 (12.52%); Norstar Trust Company, Gales & Co., Funds Control,
Account 00000001107, Attn: Julie Hogestyn, One East Avenue, Rochester, New York
14638 (76.77%); Connecticut Municipal Bond Fund -- Norstar Trust Company, Gales
& Co., Funds Control, Account 00000000037, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (41.88%); Norstar Trust Company, Gales & Co.,
Funds Control, Account 00000000019, Attn: Julie Hogestyn, One East Avenue,
Rochester, New York 14638 (52.89%); and Massachusetts Municipal Bond Fund --
Norstar Trust Company, Gales & Co., Funds Control, Account 00000008073, Attn:
Julie Hogestyn, One East Avenue, Rochester, New York 14638 (32.81%); Norstar
Trust Company, Gales

-43-
<PAGE> 1071
& Co., Funds Control, Account 00000000019, Attn: Julie Hogestyn, One East
Avenue, Rochester, New York 14638 (67.19%).

As of February 3, 1997, the name, address and share ownership of the
entities or persons that held of record more than 5% of the outstanding Retail B
Shares of each of Galaxy's investment portfolios were as follows: High Quality
Bond Fund -- Michael J. Sangiacomo, 4 Hubbard Road, Hartford, Connecticut 06114
(6.13%); Colonial Marble Co., Inc., Stephen B. Fichera, 25 Garvey Street, P.O.
Box 187, Everett, Massachusetts 02149 (6.88%); Helen M. Boylan, 21 Putnam Lane,
Danvers, Masachusetts 01923 (7.23%); Thomas R. Spaltabak, 950 Rice Road, Elma,
New York 14059-9583 (10.50%); Short-Term Bond Fund -- Leonard J. Mercer, 21
Portsmouth Road, Amesbury, Massachusetts 01913 (5.87%); Natale Costa and Mary
Castle JTWROS, 11 Maple Avenue, Hopkinton, Massachusetts 01748 (9.09%); Chelsea
Police Relief Association, John R. Phillips, Treasurer and Michael McCona,
Clerk, 19 Park Street, Chelsea, Massachsuetts 02150 (9.44%); Michael J.
Sangiacomo, 4 Hubbard Road, Hartford, Connecticut 06114 (10.37%); Colonial
Marble Co., Inc., Stephen B. Fichera, 25 Garvey Street, P.O. Box 187, Everett,
Massachusetts 02149 (20.69%); and Tax- Exempt Bond Fund -- Betsy Royal, 51 Hoyt
Street, New Canann, Connecticut 06840-5618 (5.48%); Edward A. Pitts, P.O. Box
119, 152 Maih Street, Broad Brook, Connecticut 06016 (5.58%); William R. Droll
and William F. Droll JTWROS, 16 Manning Drive, Lowell, Massachusetts 01851-3930
(5.64%); Louis Dicola and Ester Dicola JTWROS, 4 April Court, Providence, Rhode
Island 02908-2111 (8.78%); David Fendler and Sylvia Fendler JTWROS, 72
Brinkenhoff Avenue, Stamford, Connecticut 06905 (9.57%); Leonard F. Szadtowski
and Francis Willy JTWROS, 162 Friendship Street, Bolivar, New York 14715
(9.61%); Jeannette E. Seiter, 121 Schuyler Street, Boonville, New York 13309
(9.96%); Katrina A. Seiter, 121 Schuyler Street, Boonville, New York 13309
(11.06%).

As of February 3, 1997, the name, address and share ownership
of the entities or persons that held beneficially more than 5% of the
outstanding Trust Shares of each of Galaxy's investment portfolios (including
shares of the Institutional Treasury Money Market Fund) were as follows: U.S.
Treasury Money Market Fund -- Loring Walcott Sweep Account, Loring Walcott &
Coolidge, Attn: Richard Ferrari, 230 Congress Street, Boston, Massachusetts
02110 (15.19%); Institutional Treasury Money Market Fund -- Charon Industries
Inc. IM, c/o Robert J. McDermott, 370 Old Country Road, Garden City, New York
11530 (5.85%); Equity Value Fund -- Fleet Savings Plus Plan, Fleet Financial
Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903 (12.36%); Equity
Growth Fund -- Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy
Plaza, Providence, Rhode Island 02903 (22.12%); International Equity Fund --
Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (9.73%); FFG Retirement & Pension Equity, Fleet
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island

-44-
<PAGE> 1072
02903 (19.23%); Growth and Income Fund -- Fleet Savings Plus Plan, Fleet
Financial Group, Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903
(40.32%); Asset Allocation Fund -- Fleet Financial Group, Inc., 50 Kennedy
Plaza, Providence, Rhode Island 02903 (25.91%); Small Company Equity Fund --
Fleet Savings Plus Plan, Fleet Financial Group, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903 (40.41%); Small Cap Value Fund -- Fleet Bank
N.A., Rogers Corp, Attn: James DeLucin, Fleet Bank CT, 157 Church Street, P.O.
Box 1909, New Haven, Connecticut 06509 (6.92%); FFG Employee Retirement
Miscellaneous Assets, Fleet Financial Group, Inc., 50 Kennedy Plaza, Providence,
Rhode Island 02903 (31.25%); Intermediate Government Income Fund -- NUSCO
Retiree Health VEBA Trust, P.O. Box 270, Hartford, Connecticut 06141 (5.69%);
High Quality Bond Fund -- Fleet Savings Plus Plan, Fleet Financial Group, Inc.,
50 Kennedy Plaza, Providence, Rhode Island 02903 (25.76%); Corporate Bond Fund
- -- Cole Hersee Pension, C/o Fleet Financial Group, Inc., One East Avenue,
Rochester, New York 11530 (5.62%); BNE Unified Retirement Trust, Attn: Ben
Branch, Trustee, 21 Merchants Road, Boston, Massachusetts 02109 (21.29%);
Tax-Exempt Bond Fund -- Nusco Retiree Health, P.O. Box 270, Hartford,
Connecticut 06141 (31.59%); Connecticut Municipal Bond Fund -- Robert A. Simons,
c/o Fleet Financial Group, Inc., One East Avenue, Rochester, New York 11530
(5.81%); Ruthan Wein, 18 Timberlane Drive, Farmington, Connecticut 06032
(6.35%); Florence M. Roberts, 336 Drummond Road, Orange, Connecticut 06477
(7.55%); and Massachusetts Municipal Bond Fund -- Philip H. Tobey, c/o Fleet
Financial Group, Inc., One East Avenue, Rochester, New York 11530 (5.33%);
Margaret U. Davis, 8 Kilsyth Terrace #21, Brighton, Massachusetts 02146 (5.53%);
Alice Gardner, c/o Fleet Financial Group, Inc., One East Avenue, Rochester, New
York 11530 (5.53%).

FINANCIAL STATEMENTS

Galaxy's Annual Report to Shareholders with respect to the Funds for
the fiscal year ended October 31, 1996 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, 1996 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 by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

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<PAGE> 1073
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

A-1
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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> 1075
completion of construction or elimination of the basis of the condition.

Corporate and Tax-Exempt Commercial Paper Ratings

A-3
<PAGE> 1076
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.

A-4
<PAGE> 1077
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.

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> 1078
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